A constitutional petition has been filed at the Employment and Labour Relations Court showing the restructuring of the shareholders’ scheme.
Fintech company, M-Kopa Holdings, has been accused of crafting a shareholder scheme that allegedly protected global investors, including an equity firm co-founded by former US Vice President Al Gore, even as Kenyan employees and others of African descent were disadvantaged.
A constitutional petition filed at the Employment and Labour Relations Court shows how a controversial M-Kopa’s restructuring of its employee shareholding scheme in 2019 led to the dilution of shares held by employees of African descent while their white peers were cushioned.
It is common practice for start-ups without the financial muscle to pay better salaries, to offer their pioneer employees a stake to encourage them to give their all, with the hope that their sacrifice will be rewarded later as the business grows.
The constitutional petition, filed by Elizabeth Njoki, a long-serving Kenyan employee of M-Kopa, alleges that the company created a discriminatory shareholding structure that favoured white employees and protected institutional investors from share dilution.
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M-Kopa, a British-headquartered fintech firm widely recognised for its "pay-as-you-go" solar and mobile phone financing models across Africa, is backed by high-profile investors.
Among them are British International Investment (BII), a UK government-owned development finance institution, and Generation Investment Management (GIM), co-founded and chaired by Al Gore.
These investors hold preferred shares, a class of stock that carries superior rights and privileges, including the right to board seats.
Outsized influence
The petition reveals how investors — including so-called impact investors like BII and GIM — wield outsized influence in company decisions, including share structuring, board appointments and financial reengineering.
The petition suggests this power is often exercised without accountability to local employees or markets such as Kenya, which has recently become a magnet for Silicon Valley largesse due to its growing profile as the Silicon Savannah.
Court documents reveal how, in early 2019, M-Kopa's board grew concerned after a shareholder — Treehouse Investments — converted its debt into new shares, in the process diluting existing Preferred Shareholders' positions.
Concerned that the dilution would hurt them, the board and the majority investors allegedly designed a two-step “anti-dilution” plan that would see them tighten their control and protect their returns.
Ms Njoki claims that this plan was executed through the creation of new classes of employee shares — known as Growth Shares — which were largely for expatriate and white employees.
However, African employees, who until then held or expected Ordinary Shares, were left out of the new structure or classified as “Minor Holders” — a designation that stripped them of key shareholder rights including voting, information access, and participation in meetings.
“The holders of Growth Shares may receive copies of notices or any documents normally sent by the company to other shareholders, meaning they may receive notices of meetings, minutes of meetings or any other information Preferred Shareholders are entitled to,” says Njoki.
“This privilege is not granted to Minor Holders who are all Kenyan employees,” she adds.
The share restructuring was approved in a board meeting held in April 2019. Minutes show the directors openly discussed how to cushion Preferred Shareholders from dilution.
As a result, between 2019 and 2022, Growth Shares ballooned from zero to over 3.3 million, while Preferred Shares grew from 3.4 million to 12.6 million. However, their 73 percent ownership remained unchanged, the company’s share register shows.
The only losers in the changes were the Ordinary Shareholders — mainly Kenyan staff — whose stake shrank from 27 per cent to just seven percent, without their knowledge or consent.
Jurisdiction
M-KOPA Holdings Limited, in a preliminary objection, seeks to strike out the petition, arguing that disputes touching on shareholder agreements must be heard in the Courts of England and Wales.
Filed through law firm Anjarwalla & Khanna LLP, the objection also reckons that their no employment relationship between Ms Njoki and M-Kopa Holdings, making the matter unsuitable for hearing in the Employment and Labour court. It terms the suit an abuse of the court process.
The court filings reveal that of the first 48 recipients of Growth Shares, only seven were of African descent. In a more exclusive second round — the Series B Growth Shares — no Kenyan employee was included.
Two African employees from the UK were the only Black recipients.
The petition goes on to show how these Growth Shares were structured to be superior in many aspects, including having buyback rights, better pricing ($1 per share versus full market value for Ordinary Shares), access to company documents, and even a guaranteed exit at fair market value.
These benefits, the petition claims, were denied to African employees.
The petition also argues that the Growth Shares were designed “in the money” from inception, ensuring maximum gains without risk.
Njoki, who served at M-Kopa Kenya Limited from 2012 to 2023, says she was threatened with legal consequences and job repercussions when she sought clarification about her share options.
Emails submitted to the court show she was warned that seeking legal advice might result in her being labeled a "bad leaver" — a classification that would disqualify her from receiving any shares.
The petition also accuses the board of engineering what it reckons is a sham recapitalization in 2021.
Rather than securing fresh investment, the board allegedly influenced an internal valuation to artificially suppress the company’s worth — enabling a share reallocation that preserved investor control while locking in gains for Growth Shareholders.
According to the financial expert cited, comparable companies such as Tala — which shares M-Kopa’s consumer credit model — would have yielded much higher valuations if used in the benchmark. But M-Kopa’s board rejected these and instead cherry-picked outdated and irrelevant transactions, some dating back over a decade, to justify a lower company value.
“It was a valuation exercise designed to legitimize what was fundamentally a value grab,” the analyst stated.
The petition outlines further conflict of interest among board members, particularly so-called “independent directors” who approved the share restructuring while also receiving lucrative Growth Shares.
Elizabeth Littlefield, a former chairperson, reportedly received shares worth over $1.8 million.
Ian McCaig, another director, received a similar package. Susan Githuku and Yesse Oenga — both of African descent — also received Growth Shares, but of significantly lower value.
The petition claims that the executives who represented Ordinary Shareholders — Jesse Moore and Nick Hughes — allegedly approved the same restructuring that ultimately protected their interests but diluted those of the employees they were supposed to represent.
By 2022, M-Kopa had been recognised by the Financial Times as one of Africa’s fastest-growing companies for four consecutive years and had become a dominant mobile phone distributor in Kenya.
Despite the company’s rapid rise and profitability, the petition alleges that the employees who contributed most — African staff at the operational core — were systemically denied the opportunity to benefit from this success.
The filing comes amid broader scrutiny of how so-called “impact investors” — including development finance institutions like BII and sustainability-linked firms like GIM — conduct business in Africa.
The case challenges the moral and legal standing of these entities, particularly when their investment practices result in racial and economic inequities.
