Two Companies and an Association: The Curious Case of The Bloggers Association of Kenya

The Bloggers' Association of Kenya (BAKE) is a community organization that was formed in 2011 to represent a group of Kenyan online content creators. The Association seeks to empower and recognize online content creation as well as to improve the quality of content created on the web.

The idea for a Bloggers' Association first came up in 2009, with
Kennedy Kachwanya, who is the current chairman of BAKE, takes credit for the formation of the association. "The idea for BAKE came to me in early in 2011, where it would be a community for local content creators and bloggers. The community would promote local content creation and aggregate existing blogs. As a blogger at the time, I was unable to make money from blogging due to the fact that all the advertisers then thought my stats were too low for them to justify advertising on my site."

"The idea was to get the top bloggers in Kenya to join forces and use their audience numbers to compete with existing media houses for advertising", Kachwanya adds. "I then approached the leading bloggers at the time with the idea of an association and all of them agreed that it was a great idea. And that is how the Bloggers Association of Kenya came about."

Once the members had agreed on the name and the structure of the association, Kachwanya, along with James Wamathai, were effectively running association. The members approached the Government to register the organization but this request was declined at the time.

BML was started in the interim to serve as a temporary legal organization for the management of the organization. The limited company was registered with 41 bloggers as members, each with one share.

BAKE's fortunes changed in late 2013, when the Government agreed to register them as a non-profit organization. At this point, Wamathai explains that the association would take over the management of activities such as organizing the Kenyan Blog Awards, training of bloggers and aggregation of content.

Matters came to a head at the BML Annual General Meeting in February of 2016, when a motion was proposed to make BML a BAKE subsidiary.

In its 5 years of existence, BML has never held an AGM. This, according to Wamathai, is because it has been hard to convene a meeting with all the directors and members present.

At the Shareholders' AGM in February, the BML directors presented the idea of legally connecting BAKE and BML. This would involve the transfer of 57 percent of BML shares to BAKE, while the founding shareholders were to remain with 43 percent. The argument here was that BAKE needed to source for funds and raise revenues, and BML would be run as a commercial operation to do this.

The Allegations

Phileas Fogg (not their real name) is a founding member of the association. Phileas alleges that BAKE has turned into a private enterprise run at the behest of two individuals - Kachwanya and James Wamathai, who were Chairman and Director of Partnerships respectively. Phileas further alleges that the two got to their positions by virtue of heading the process of getting BAKE registered.

Phileas had been an employee at BAKE and a shareholder in BML. At the The February AGM resolved that BML would have five directors - two executive, two non-executive and one independent non-executive director.

At the AGM, Wamathai and Kachwanya were voted out, and Robert Mwirigi was retained as an executive director. Njeri Wangari was appointed as a new executive director, while Sam Mbugua and Muthoni Maingi were was voted in as non-executive directors. The independent non-executive director would be appointed at a later date.

Muthoni Maingi however had to step down due to a potential conflict of interest with her employer.

Minutes from the February 2016 AGM Minutes from the February 2016 AGM.

The proposal to allocate BML shares to BAKE was rejected by the members. Phileas attributes this to a perception that Kachwanya and Wamathai have failed to act in the interest of bloggers while at BML, and so allocating a controlling interest of the company to BAKE where they remain directors would maintain the status quo.

"Bloggers Media Ltd was registered in 2011 to carry out the activities of the association, that is to enable brands to work with bloggers and influencers", Phileas adds. "During that time, the two were executive directors, and they continue to undermine bloggers, instead enabling brands and other agencies to undercut us and deny us an important source of revenue."

Upon losing their directorship positions in BML, Phileas adds that Kachwanya immediately registered another limited company, BAKE Kenya Limited, supposedly as an entity of BAKE. According to Phileas, BAKE Kenya Ltd has Kennedy Kachwanya, James Wamathai and Naomi Wanjiru among its listed board members.

Kachwanya confirms that he did go on to register BAKE Kenya Limited following the BML shareholders' decision to keep BML and BAKE separate at the February AGM. He adds that this move was in response to the fact that BAKE had no means to generate income and pay employees. The new company would act as the commercial arm of BAKE, and would not be a separate entity as was the case with BML.

A lawyer we spoke to regarding this matter is of the opinion that what Kachwanya did is legal. However, if an association does an act that has not been approved by members where such approval is required under its constitution, the members can, at a duly convened meeting, either ratify that action or revoke it. Therefore, it is up to BAKE members to ratify or disaffirm the registration of the new company.

It would appear that the discontent that Phileas is expressing is driven by the fact that the registration of BAKE Kenya Limited was done with the approval of the directors at BAKE, where Kachwanya remains the Chairman, but the members were not involved. Coming so soon after he was voted out of BML and after the motion to allocate shares to BAKE was shot down, it would appear that Kachwanya was determined to set up a company by whatever means necessary.

Phileas attributes these actions to high-handedness on Kachwanya's part, adding that the general attitude has been one of frustration among the members.

"I am aware of various BAKE members' complaints that the association lacks value for membership. It feels more like a club or private entity, rather than being inclusive and welcoming to all. I don't think any of these concerns have ever been addressed," Phileas adds.

Kachwanya disagrees with these allegations, adding that he and Wamathai have only acted in good faith. Following the resignation from their board positions, the two have begun the process of handing over all the properties of BML to the new office holders. However, he states that the new office holders have been making allegations that he and Wamathai have been working against them.

Wamathai adds that he has reached out to the new board members to collect material and documents related to the company that are still in his posession, four months after he resigned from the board.

It seems there are two factors at play here. One is the perception that the two individuals associated with the establishment of BAKE continue to have an undue influence in how its activities are carried out. The other is that the organizational structure and relationship between BAKE and BML needs to be sorted out.

The organization has grown in scope and membership, the quirk that led to its registration as a limited company first before it could be registered as an association has put it in a tenuous position. The company that was intended to be a placeholder for the association remains in place even as BAKE continues to grow, and now the Chairman has thrown yet another cat amongst the pigeons by incorporating a new company.

To move on from this and get back to its mandate of furthering the cause of content creation in Kenya, the Bloggers Association of Kenya needs to do a lot of administrative housekeeping.

Cover Image: BAKE Chairman Kennedy Kachwanya at the 2016 Kenyan Blog Awards | #BAKEawards 2016 Winners Gala