Companies Act

LAWS OF KENYA
THE COMPANIES ACT
CAP. 486
Revised and published by the National Council for Law Reporting
with the authority of the Attorney-General as gazetted by the Government Printer
www.kenyalaw.org

Kenya
Companies Act
Cap. 486
Legislation as at 27 December 2024
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Share widely and freely.

Companies Act (Cap. 486)
Contents
Part 1 – PRELIMINARY ...................................................................................................................................................................................... 1
1. Short title and commencement .......................................................................................................................................................... 1
2. Objects of this Act ................................................................................................................................................................................... 1
3. Interpretation of provisions of this Act ........................................................................................................................................... 1
4. Provisions supplementing definition of “holding company” in section 3 ......................................................................... 10
Part II – COMPANIES AND COMPANY FORMATION ............................................................................................................................. 10
5.

COMPANY FORMATION ............................................................................................................................. 10
5.

Limited companies ................................................................................................................................................................................ 10
6. Companies limited by shares ............................................................................................................................................................ 10
7. Companies limited by guarantee ..................................................................................................................................................... 11
8. Unlimited companies ........................................................................................................................................................................... 11
9. Private companies ................................................................................................................................................................................. 11
10. Public companies ................................................................................................................................................................................ 11
11.

............................................................................................................................................... 11
11.

Method of forming company .......................................................................................................................................................... 12
12. Memorandum of association .......................................................................................................................................................... 12
13. Registration documents .................................................................................................................................................................... 12
14. Statement of capital and initial shareholdings ....................................................................................................................... 13
15. Statement of guarantee .................................................................................................................................................................... 14
16. Statement of proposed officers ..................................................................................................................................................... 14
16A.

.............................................................................................................................................. 14
16A.

Statement of particulars of beneficial owners ...................................................................................................................... 14
17. Registrar to register company if requirements of Act are complied with ....................................................................... 15
18. Registrar to issue company with certificate of incorporation ............................................................................................. 15
19. Effect of registration .......................................................................................................................................................................... 15
Part III – A COMPANY'S CONSTITUTION ................................................................................................................................................. 15
20. Regulation may prescribe model articles .................................................................................................................................. 16
21.

del articles .................................................................................................................................. 16
21.

Default application of model articles ......................................................................................................................................... 16
22. Amendment of articles ..................................................................................................................................................................... 16
23. Effect of amendment of articles on company’s members .................................................................................................... 16
24. Amended articles to be sent to Registrar .................................................................................................................................. 16
25. Registrar’s notice to comply in case of failure with respect to amended articles ....................................................... 17
26. Existing companies provisions of memorandum treated as provisions of articles ..................................................... 17
27. Copies of resolutions or agreements recorded by Registrar ................................................................................................ 17
28.

esolutions or agreements recorded by Registrar ................................................................................................ 17
28.

Statement of company’s objects .................................................................................................................................................... 18
29. Documents to be provided to members ..................................................................................................................................... 18
30. Effect of company’s constitution ................................................................................................................................................... 19

................................................................................................................................................... 19

31. Right to participate is profits otherwise than a member is void ...................................................................................... 19
32. Application to single member companies of enactment and rules of law .................................................................... 19
Part IV – CAPACITY OF COMPANY .............................................................................................................................................................. 20
33. Company’s capacity ............................................................................................................................................................................. 20
34. Power of directors to bind company ........................................................................................................................................... 20
35. Company contracts ............................................................................................................................................................................. 20
36.

............................................................................................................................................... 20
36.

Constitutional limitations: transactions involving directors or their associates .......................................................... 21
37. Execution of documents ................................................................................................................................................................... 21
38. [Deleted by Act No. 1 of 2020, s. 31.] ........................................................................................................................................ 22
39. Execution of deeds by companies ................................................................................................................................................ 22
40. Execution of deeds or other documents by attorney ............................................................................................................ 22
41. Authentication of documents ......................................................................................................................................................... 22
42. [Deleted by Act No. 1 of 2020, s.

............................................................................................................. 22
42. [Deleted by Act No. 1 of 2020, s.

32.] ........................................................................................................................................ 22
43. [Deleted by Act No. 1 of 2020, 33.] ............................................................................................................................................. 22
44. Pre-incorporation contracts, deeds and obligations .............................................................................................................. 22
45. Execution of bills of exchange and promissory notes by companies .............................................................................. 23
46. Company to have registered office ............................................................................................................................................... 23
47. Company to notify change of address of registered office .................................................................................................. 23
Part V – NAME OF COMPANY ...................................................................................................................................................................... 23
48.

............................................................................................................................................... 23
48.

Reservation of name .......................................................................................................................................................................... 23
49. Prohibited names ................................................................................................................................................................................ 23
50. Name suggesting connection with the State or local or public authority ..................................................................... 24
51. Applicant to seek views of specified public officer or body if regulations so require ................................................ 24
52. Regulations may permit or prohibit the use of certain characters, signs or symbols ................................................ 24
53. Registration of public limited companies .................................................................................................................................. 24
54. Registration of private limited companies ................................................................................................................................ 24
55.

ited companies ................................................................................................................................ 24
55.

Exemption from requirement to use of “limited” ................................................................................................................... 25
56. Inappropriate use of company type or legal form .................................................................................................................. 25
57. Name not to be the same a another in the index .................................................................................................................. 25
58. Power to direct change of name in case of similarity to existing name ........................................................................ 25
59. Power to make regulations for purposes of sections 57 and 58 ....................................................................................... 26
60. Power of Registrar to direct company to change its name because of misleading information given for
registration of company or because its name gives misleading indication of company’s activities ............................. 26
61. Company may apply to court for order to quash direction under section 60 ............................................................... 27
62.

26
61. Company may apply to court for order to quash direction under section 60 ............................................................... 27
62.

Company may change the name ................................................................................................................................................... 27

................................................................................................................................................... 27

63. Change of name by special resolution ....................................................................................................................................... 27
64. Change of name by means provided for in articles of company ....................................................................................... 28
65. Change of name: registration and issue of certificate of change of name .................................................................... 28
66. Effect of change of name ................................................................................................................................................................ 28
67. Company to display its company name etc ............................................................................................................................... 28
68. Minor variations in form of name ................................................................................................................................................

name ................................................................................................................................................

29
Part VI – ALTERATION OF STATUS OF COMPANIES ............................................................................................................................. 29
69. How companies may alter their status ....................................................................................................................................... 29
70. Conversion of private company to public company ............................................................................................................... 29
71. Requirement as to share capital ................................................................................................................................................... 30
72. Requirements as to net assets ....................................................................................................................................................... 31
73. Recent allotment of shares for non-cash consideration ....................................................................................................... 31
74.

nt of shares for non-cash consideration ....................................................................................................... 31
74.

Requirements for registration of conversion of private company ..................................................................................... 32
75. Statement of proposed secretary .................................................................................................................................................. 33
76. Registrar to issue certificate of incorporation on registration of conversion ................................................................ 33
77. Conversion of public company into private limited company ............................................................................................. 34
78. Application to Court to cancel conversion resolution ........................................................................................................... 34
79. Notices of application to Court and court order application or order to be given to Registrar .............................. 35
80. Requirements for registration of conversion of public company into private company ............................................ 35
81.

........ 35
80. Requirements for registration of conversion of public company into private company ............................................ 35
81.

Registrar to issue certificate of incorporation on registration of conversion ................................................................ 35
82. Registration of conversion of private limited company into unlimited company ........................................................ 36
83. Requirements for application for registration of conversion of company into unlimited company ....................... 36
84. Registrar to issue certificate of incorporation on registration of conversion ................................................................ 36
85. Conversion of unlimited company into a private limited company .................................................................................. 37
86. Requirements for registration of unlimited company as private limited company ..................................................... 37
87. Registrar to issue certificate of incorporation on registration of conversion ................................................................ 38
88. Statement of capital required if company already has share capital .............................................................................. 38
89.

atement of capital required if company already has share capital .............................................................................. 38
89.

Conversion of public company into private and unlimited company ............................................................................... 39
90. Registrar not to register conversion unless application for registration complies with prescribed
requirements ................................................................................................................................................................................................. 39
91. Registrar to issue certificate of incorporation on registration of conversion ................................................................ 40
91A. Information sharing ......................................................................................................................................................................... 40
Part VII – COMPANY MEMBERS ................................................................................................................................................................... 40
92. How persons become members of company ............................................................................................................................ 40
93.

members of company ............................................................................................................................ 40
93.

Company to keep register of members ....................................................................................................................................... 40

of members ....................................................................................................................................... 40

93A. Company to keep register of beneficial owners ................................................................................................................... 41
94. Company to keep register of members of its registered office .......................................................................................... 42
95. Certain companies to keep index of members ........................................................................................................................ 43
96. Rights of persons to inspect register of members and require copies ............................................................................ 43
97. Consequences of company refusing inspection of its register or to provide copy of its register of members
............................................................................................................................................................................................................................. 44
98. Offence to refuse inspection of register of members or to fail to provide copy .......................................................... 44
99.

4
98. Offence to refuse inspection of register of members or to fail to provide copy .......................................................... 44
99.

Register of members: offences in connection with request for or disclosure of information .................................. 44
100. Company to provide information as to state of register of members and index of members’ names ................ 45
101. Removal of entries relating to former members .................................................................................................................. 45
102. Single member companies ............................................................................................................................................................ 45
103. Power of Court to rectify register .............................................................................................................................................. 46
104. [Repealed by Act No. 10 of 2023, Sch.] ................................................................................................................................... 46
105. Register to be evidence ................................................................................................................................................................. 46
106.

.............................................................................................................................................. 46
106.

Time limit for claims arising from entry in register ............................................................................................................ 46
107. Interpretation: Division 3 ............................................................................................................................................................... 46
108. Prohibition on subsidiary being a member of its holding company .............................................................................. 47
109. Subsidiary acting as executor, administrator or trustee ..................................................................................................... 47
110. Interest to be disregarded: residual interest under pension scheme or employees’ share scheme .................... 47
111. Employers' rights of recovery under pension scheme or employees' share scheme ................................................ 48
112. Subsidiary acting as authorised dealer in securities ........................................................................................................... 48
113.

as authorised dealer in securities ........................................................................................................... 48
113.

Protection of third parties in cases if subsidiary acting as dealer in securities ........................................................ 49
Part VIII – EXERCISE OF RIGHTS OF MEMBERS ................................................................................................................................... 49
114. Effect of provisions of articles relating to enjoyment or exercise of rights of members ........................................ 49
115. Traded companies: nomination of persons to enjoy information rights ....................................................................... 50
116. Information rights: form in which copies to be provided .................................................................................................. 50
117. Information on possible rights in relation to voting ........................................................................................................... 51
118. Information rights and status of rights .................................................................................................................................... 51
119.

of rights .................................................................................................................................... 51
119.

Termination or suspension of nomination .............................................................................................................................. 51
120. Exercise of rights if shares held on behalf of others ......................................................................................................... 52
121. Exercise of rights if shares held on behalf of others: members’ requests ................................................................... 53
Part IX – COMPANY DIRECTORS ................................................................................................................................................................. 53
122. Persons who are connected with a director for purposes of this Part .......................................................................... 54
123. Members of a director’s family .................................................................................................................................................... 54
124. When a director connected with a body corporate for purposes of this Part ............................................................. 55

... 54
124. When a director connected with a body corporate for purposes of this Part ............................................................. 55

125. When a director is to be regarded as controlling a body corporate for purposes of this Part .............................. 55
126. When bodies corporate are to be treated as being associated for purposes of this Part ....................................... 56
127. References to company’s constitution ....................................................................................................................................... 56
128. Company required to have directors ......................................................................................................................................... 56
129. Company required to have at least one natural person as a director ........................................................................... 56
130. Direction requiring company to make appointment ........................................................................................................... 56
131. Minimum age for director ............................................................................................................................................................. 57
132.

.............................................................................................................................................. 57
132.

Appointment of director of public company .......................................................................................................................... 57
133. Validity of acts of directors .......................................................................................................................................................... 57
134. Company to keep register of directors ..................................................................................................................................... 58
135. Particulars of directors to be registered: natural persons ................................................................................................. 58
136. Particulars of directors to be registered: corporate directors .......................................................................................... 59
137. Company to keep register of directors’ residential addresses .......................................................................................... 59
138. Duty of company to notify Registrar of changes of directors and directors’ addresses ........................................... 59
138A.

.... 59
138. Duty of company to notify Registrar of changes of directors and directors’ addresses ........................................... 59
138A.

Register of nominee directors ................................................................................................................................................... 60
139. Resolution to remove directors from office ............................................................................................................................ 60
140. Scope and nature of general duties .......................................................................................................................................... 61
141. Director’s right to protest against removal ............................................................................................................................. 61
142. Duty of director to act within powers ...................................................................................................................................... 62
143. Duty of director to promote the success of the company ................................................................................................. 62
144.

rector to promote the success of the company ................................................................................................. 62
144.

Duty of director to exercise independent judgement ......................................................................................................... 62
145. Duty of director to exercise reasonable care, skill and diligence ................................................................................... 63
146. Duty of director to avoid conflicts of interest ....................................................................................................................... 63
147. Duty not to accept benefits from third parties ...................................................................................................................... 64
148. Civil consequences of breach of general duties ................................................................................................................... 65
149. Cases within more than one of the general duties ............................................................................................................. 65
150. Consent, approval or authorisation by members .................................................................................................................. 65
151.

or authorisation by members .................................................................................................................. 65
151.

Duty to declare interest in proposed or existing transaction or arrangement ........................................................... 66
152. Director to make declaration by notice in writing ............................................................................................................... 67
153. General notice to be regarded as sufficient declaration .................................................................................................... 67
154. Declaration of interest in case of company with sole director ....................................................................................... 67
155. Definition of credit transaction for purposes of Division 5 .............................................................................................. 68
156. Meaning of "quasi-loan" and related expressions ................................................................................................................ 68
157. Director’s long-term service contracts: requirement of members’ approval ................................................................ 69
158.

157. Director’s long-term service contracts: requirement of members’ approval ................................................................ 69
158.

Substantial property transactions: requirement of members’ approval ....................................................................... 70

Substantial property transactions: requirement of members’ approval ....................................................................... 70

159. Exception for transactions with members or other group companies .......................................................................... 71
160. Exception in case of company in liquidation or under administration ......................................................................... 71
161. Exception for transactions on recognised investment exchange .................................................................................... 71
162. Property transactions: civil consequences of contravening section 159 ...................................................................... 71
163. Property transactions: effect of subsequent affirmation .................................................................................................... 72
164. Loans to directors to be approved by members ................................................................................................................... 72
165. Quasi-loans to directors: requirement of members' approval .......................................................................................... 73
166.

oans to directors: requirement of members' approval .......................................................................................... 73
166.

Loans or quasi-loans to persons connected with directors: requirement of members’ approval ......................... 74
167. Credit transactions: requirement of members' approval .................................................................................................... 75
168. Related arrangements: requirement of members’ approval .............................................................................................. 75
169. Exceptions for expenditure on company business ............................................................................................................... 76
170. Exception for expenditure on defending proceedings etc ................................................................................................ 77
171. Exception for expenditure in connection with regulatory action or investigation ................................................... 77
172. Exceptions for minor and business transactions .................................................................................................................. 78
173.

r and business transactions .................................................................................................................. 78
173.

Exceptions for intra-group transactions ................................................................................................................................... 78
174. Exceptions for money-lending companies .............................................................................................................................. 78
175. Other relevant transactions or arrangements ........................................................................................................................ 79
176. The value of transactions and arrangements ........................................................................................................................ 79
177. The person for whom a transaction or arrangement is entered into ............................................................................ 80
178. Loans etc: civil consequences for contravention .................................................................................................................. 80
179. Loans etc: effect of subsequent affirmation ........................................................................................................................... 81
180.

equent affirmation ........................................................................................................................... 81
180.

Payment for loss of office ............................................................................................................................................................. 81
181. Amounts taken to be payments for loss of office ................................................................................................................ 82
182. Members’ approval required for payment by company ...................................................................................................... 82
183. Members’ approval required for payment in connection with transfer of undertaking etc ................................... 83
184. Members’ approval required for payment in connection with share transfer ............................................................ 84
185. Exception for payments in discharge of legal obligations etc ........................................................................................ 84
186. Exception for small payments ..................................................................................................................................................... 85
187.

.............................................................................................................................................. 85
187.

Payments made without approval: civil consequences ....................................................................................................... 85
188. Approval by written resolution: accidental failure to send memorandum .................................................................. 86
189. What happens if approval is required under more than one provision ........................................................................ 86
190. Directors’ service contracts ........................................................................................................................................................... 86
191. Company to keep copy of contract or memorandum of terms available for inspection .......................................... 87
192. Right of member to inspect and to obtain copy of memorandum ................................................................................. 87
193. Contract with sole member who is also a director ............................................................................................................. 88

th sole member who is also a director ............................................................................................................. 88

194. Provisions protecting directors from liability ......................................................................................................................... 88
195. Provision of insurance not prevented ....................................................................................................................................... 88
196. Qualifying third party indemnity provision not affected ................................................................................................... 88
197. Directors to disclose qualifying indemnity provision in directors’ report .................................................................... 89
198. Copy of qualifying indemnity provision to be available for inspection ........................................................................ 90
199. Right of member to inspect and request copy of qualifying indemnity provision .................................................... 90
200. Interpretation: Division 10 ............................................................................................................................................................ 91
201.

.............................................................................................................................................. 91
201.

Protected information: restriction on use or disclosure by company ............................................................................ 91
202. Protected information: restriction on use or disclosure by Registrar ............................................................................ 91
203. Permitted use or disclosure by the Registrar ......................................................................................................................... 91
204. Disclosure under Court order ....................................................................................................................................................... 92
205. Circumstances in which Registrar may place address on the public record ............................................................... 93
206. Placing the director’s address on the public record ............................................................................................................ 93
207. Ratification of acts of directors ................................................................................................................................................... 94
208.

.............................................................................................................................................. 94
208.

Power to make provision for employees on cessation or transfer of business .......................................................... 94
209. Limitations on the exercise of the power to make provision for employees .............................................................. 95
210. Minutes of directors’ meetings .................................................................................................................................................... 95
211. Minutes taken to be evidence of proceedings at meeting of company until contrary proved .............................. 95
212. Transactions under foreign law ................................................................................................................................................... 95
Part X – DISQUALIFICATION OF DIRECTORS ......................................................................................................................................... 95
213. Interpretation: Part X ...................................................................................................................................................................... 96
214.

.............................................................................................................................................. 96
214.

Effect of order disqualifying person from being a director or secretary ...................................................................... 96
215. Disqualification on conviction for offence .............................................................................................................................. 96
216. Disqualification for fraud or breach of duty committed while company in liquidation or under
administration .............................................................................................................................................................................................. 96
217. Disqualification on conviction of offence involving failure to lodge returns or other documents with
Registrar .......................................................................................................................................................................................................... 97
218. Duty of court to disqualify unfit directors and secretaries of insolvent companies ................................................. 97
219.

. 97
218. Duty of court to disqualify unfit directors and secretaries of insolvent companies ................................................. 97
219.

Applications to court under section 219 ................................................................................................................................. 98
220. Disqualification undertakings ...................................................................................................................................................... 99
221. Disqualification after investigation of company ................................................................................................................... 99
222. Variation of disqualification undertaking ................................................................................................................................ 99
223. Offence for undischarged bankrupts to act as director or secretary of company ................................................... 100
224. Personal liability for company’s debts if person acts while disqualified ................................................................... 100
225. Application for leave under an order or undertaking ...................................................................................................... 101
226.

or leave under an order or undertaking ...................................................................................................... 101
226.

Application for leave under an order or undertaking ...................................................................................................... 101

ion for leave under an order or undertaking ...................................................................................................... 101

227. Register of disqualification orders and disqualification undertakings ........................................................................ 101
228. Offence to breach of disqualification order or undertaking ........................................................................................... 102
229. Disqualified person may apply to the Court for permission to act in way that would otherwise breach
disqualification .......................................................................................................................................................................................... 102
230. Statements from persons who are disqualified .................................................................................................................. 102
231. Statements to be made public ................................................................................................................................................. 102
232. Offence relating to statement ................................................................................................................................................... 103
233.

............................................................................................................................................. 103
233.

Persons who are subject to foreign restrictions ................................................................................................................. 103
234. Disqualification of persons who are subject to foreign restrictions ............................................................................ 103
235. Persons subject to foreign restrictions to be personally liable for debts of company .......................................... 104
236. Registrar to establish and maintain Register of foreign restrictions ........................................................................... 104
237. Admissibility in evidence of statements ................................................................................................................................ 104
Part XI – DERIVATIVE ACTIONS ................................................................................................................................................................ 105
238. Interpretation: Part XI .................................................................................................................................................................. 105
239.

............................................................................................................................................. 105
239.

Application for permission to continue derivative claim ................................................................................................ 105
240. Application to Court for permission to continue claim as a derivative claim: how disposed of ........................ 106
241. Application for permission to continue claim as a derivative action ......................................................................... 106
242. Application for permission to continue derivative claim brought by another member ........................................ 107
Part XII – COMPANY SECRETARIES ......................................................................................................................................................... 108
243. Private company not required to have secretary ............................................................................................................... 108
243A. Companies electing to have a company secretary or a contact person .................................................................. 108
244.

8
243A. Companies electing to have a company secretary or a contact person .................................................................. 108
244.

Public company required to have secretary ......................................................................................................................... 109
245. Direction requiring public company to appoint secretary .............................................................................................. 109
246. Qualifications of secretaries of public companies ............................................................................................................. 110
247. Discharge of functions if office vacant or secretary unable to act ............................................................................... 110
248. Duty to keep register of secretaries ....................................................................................................................................... 110
249. Duty to notify Registrar of change of secretary or joint secretary ............................................................................... 111
250. What particulars of secretaries are required to be registered: natural persons ...................................................... 111
251.

11
250. What particulars of secretaries are required to be registered: natural persons ...................................................... 111
251.

What particulars of secretaries are required to be registered: corporate secretaries and firms ......................... 112
252. Offence to include misleading, false or deceptive particulars in register of secretaries ..................................... 112
253. Offence to fail to keep register of secretaries .................................................................................................................... 112
254. Acts done by person in dual capacity .................................................................................................................................... 112
Part XIII – RESOLUTIONS AND MEETINGS ........................................................................................................................................... 112
255. Requirements for passing company resolutions ................................................................................................................. 112
256. Requirements for passing an ordinary resolution of a company .................................................................................. 113

6. Requirements for passing an ordinary resolution of a company .................................................................................. 113

257. Requirements for the passing of special resolution .......................................................................................................... 113
258. General rules for voting on company resolutions ............................................................................................................. 114
259. Specific requirements for voting on company resolutions ............................................................................................. 114
260. Votes of joint holders of shares ............................................................................................................................................... 114
261. Effect of provision in company’s articles as to admissibility of votes ........................................................................ 114
262. Written resolutions of private companies ............................................................................................................................. 115
263. Who is entitled to vote on a written resolution ................................................................................................................ 115
264.

vote on a written resolution ................................................................................................................ 115
264.

Circulation date for written resolutions ................................................................................................................................ 115
265. Circulation of written resolutions proposed by directors ............................................................................................... 115
266. Right of members to require circulation of written resolution ..................................................................................... 116
267. Circulation of written resolution proposed by members ................................................................................................. 117
268. Requisitioning members to meet expenses of circulation .............................................................................................. 117
269. Application not to circulate members’ statement ............................................................................................................. 117
270. Procedure for signifying agreement to written resolution ............................................................................................. 118
271.

for signifying agreement to written resolution ............................................................................................. 118
271.

Deadline for agreeing to written resolution ........................................................................................................................ 118
272. Sending documents relating to written resolutions by electronic means ................................................................ 118
273. Publication of written resolution on website ...................................................................................................................... 118
274. Relationship between this Division and provisions of company's articles ................................................................ 118
275. Resolutions at general meetings ............................................................................................................................................. 118
275A. Annual general meeting ........................................................................................................................................................... 119
276. Power of directors to convene general meetings .............................................................................................................. 119
277.

rs to convene general meetings .............................................................................................................. 119
277.

Right of members to require directors to convene general meeting .......................................................................... 119
278. Directors’ duty to convene general meeting required by members ............................................................................ 120
279. Power of members to convene general meeting at the expense of the company ................................................. 120
280. Power of Court to order general meeting to be convened ............................................................................................. 120
281. Amount of notice to be given for general meetings ........................................................................................................ 121
282. Manner in which notice of general meeting to be given ............................................................................................... 121
283. Publication of notice of general meeting on company's website ................................................................................ 122
284.

ublication of notice of general meeting on company's website ................................................................................ 122
284.

Persons entitled to receive notice of general meetings .................................................................................................. 122
285. Contents of notices of general meetings .............................................................................................................................. 122
286. Offence for company to fail to comply with section 281, 282, 283, 284 or 285 .................................................... 123
287. Resolution requiring special notice ......................................................................................................................................... 123
288. Accidental failure to give notice of resolution or general meeting ............................................................................ 123
289. Power of members to require circulation of statements ................................................................................................. 123
290. Duty of company to circulate members’ statements ........................................................................................................ 124

company to circulate members’ statements ........................................................................................................ 124

291. Who is liable to meet cost of circulating members’ statements .................................................................................. 124
292. Quorum for general meetings ................................................................................................................................................... 125
293. Members present may elect person to preside at general meeting ........................................................................... 125
294. Person presiding at general meeting may declare result of voting on a show of hands ..................................... 125
295. Right of members to demand a poll at general meeting ............................................................................................... 125
296. Member not obliged to use all votes when voting on a poll at general meeting .................................................. 126
297. Representation of bodies corporate at general meetings ............................................................................................... 126
298.

ation of bodies corporate at general meetings ............................................................................................... 126
298.

Right of members to appoint proxies .................................................................................................................................... 126
299. Notice of general meeting to contain statement of rights of members to appoint proxies ................................ 126
300. Company sponsored invitations to appoint proxies .......................................................................................................... 127
301. Notice of appointment of proxy to be given to company ............................................................................................... 127
302. Proxy can be elected to preside at general meeting ....................................................................................................... 127
303. Right of proxy to demand a poll at general meeting ...................................................................................................... 127
304. Notice to be given to company of termination of proxy’s authority ........................................................................... 128
305.

Notice to be given to company of termination of proxy’s authority ........................................................................... 128
305.

Articles may confer more extensive rights on members and proxies ......................................................................... 129
306. Resolutions passed at adjourned general meeting ........................................................................................................... 129
307. Sending to members documents relating to general meetings in electronic form ................................................ 129
308. Application of Division 3 to meetings of holders of classes of shares ...................................................................... 129
309. Application of Division to meetings of classes of members of company having no share capital .................... 130
310. Public companies: annual general meeting ......................................................................................................................... 131
311. Public companies: notice of annual general meeting ...................................................................................................... 131
312. Public companies: members’ power to require circulation of resolutions for annual general meeting .......... 131
313.

....................... 131
312. Public companies: members’ power to require circulation of resolutions for annual general meeting .......... 131
313.

Public companies; company’s duty to circulate members’ resolutions for annual general meetings ............... 132
314. Public companies: expenses of circulating members’ resolutions for annual general meeting ......................... 133
315. Results of poll to be made available on website .............................................................................................................. 133
316. Requirements as to website availability ............................................................................................................................... 133
317. Records of resolutions and meetings, etc. ............................................................................................................................ 134
318. Records as evidence of resolutions, etc. ............................................................................................................................... 134
319. Records of decisions by sole member .................................................................................................................................... 135
320.

e member .................................................................................................................................... 135
320.

Inspection of records of resolutions and meetings ........................................................................................................... 135
321. Records of resolutions and meetings of class of members ............................................................................................ 136
Part XIV – SHARE CAPITAL OF COMPANY ............................................................................................................................................ 136
322. Shares no longer capable of being converted into stock ............................................................................................... 136
323. Nature of shares ............................................................................................................................................................................. 136
324. Nominal value of shares ............................................................................................................................................................. 136

.................................................................................................................................................. 136

325. Shares to be numbered ............................................................................................................................................................... 136
326. Transferability of shares .............................................................................................................................................................. 137
327. Exercise by directors of power to allot shares, etc. ........................................................................................................... 137
328. Power of directors to allot shares etc: private company with only one class of shares ....................................... 137
329. Power of directors to allot shares etc: authorisation by company ............................................................................... 137
330. General prohibition of commissions, discounts and allowances .................................................................................. 138
331. Permitted commission .................................................................................................................................................................. 139
332.

............................................................................................................................................. 139
332.

Registration of allotment ............................................................................................................................................................ 139
333. Return of allotment by limited company .............................................................................................................................. 139
334. Return of allotment by unlimited company allotting new class of shares ............................................................... 140
335. Offence for company to fail to lodge return of allotment for registration ............................................................... 140
336. Provisions about allotment not applicable to shares taken on formation ................................................................ 140
337. Interpretation: Division 3 ............................................................................................................................................................ 140
338. Existing shareholders’ right of pre-emption ........................................................................................................................ 141
339.

right of pre-emption ........................................................................................................................ 141
339.

Communication of pre-emption offers to shareholders ................................................................................................... 141
340. Liability of company and officers in case of contravention ........................................................................................... 141
341. Exception to pre-emption right; issue for non-cash consideration ............................................................................. 142
342. Exception to preemption right: securities held under employees' share scheme .................................................. 142
343. Exception to preemption right: securities held under employees' share scheme .................................................. 142
344. [Repealed by Act No. 28 of 2017, s. 24.] .............................................................................................................................. 142
345. Exclusion of pre-emption right: articles conferring corresponding right .................................................................. 142
346. Disapplication of pre-emption rights: private company with only one class of shares ........................................

................ 142
346. Disapplication of pre-emption rights: private company with only one class of shares ........................................

143
347. Disapplication of pre-emption rights: directors acting under general authorisation ............................................. 143
348. Disapplication of pre-emption rights by special resolution ........................................................................................... 143
349. Disqualification of pre-emption rights: sale of treasury shares .................................................................................... 144
350. References to holder of shares in relation to offer ........................................................................................................... 144
351. Provisions about pre-emption not applicable to shares taken on formation ........................................................... 145
352. Saving for other restrictions on offer or allotment ........................................................................................................... 145
353. Saving for certain older pre-emption requirements ......................................................................................................... 145
354.

tain older pre-emption requirements ......................................................................................................... 145
354.

Public companies: allotment if issue not fully subscribed ............................................................................................. 145
355. Public companies: effect of irregular allotment if issue not fully subscribed .......................................................... 146
356. Shares not to be allotted at a discount ................................................................................................................................ 146
357. Provision for different amounts to be paid on shares ...................................................................................................... 146
358. General rule as to means of payment ................................................................................................................................... 146
359. Meaning of payment in cash ..................................................................................................................................................... 147

.................................................................................................................................................. 147

360. Public companies: shares taken by subscribers of memorandum ................................................................................ 147
361. Public companies: not to accept undertaking for work or services ............................................................................. 147
362. Public companies: shares to be at least one quarter paid up ....................................................................................... 148
363. Public companies: payment by long-term undertaking ................................................................................................... 148
364. Liability of subsequent holders of shares ............................................................................................................................ 149
365. Power of the Court to grant relief .......................................................................................................................................... 149
366. Offences involving contravention of section 358, 363, 364 and 365 ......................................................................... 150
367.

. Offences involving contravention of section 358, 363, 364 and 365 ......................................................................... 150
367.

Meaning of “appropriate rate of interest” for purpose of this Division ...................................................................... 150
368. Restrictions on public company allocating shares for non-cash consideration ...................................................... 150
369. Exception to valuation requirement: arrangement with another company .............................................................. 151
370. Exception to valuation requirement: merger ....................................................................................................................... 152
371. Non-cash consideration for shares: requirements as to valuation and report ......................................................... 152
372. Copy of report to be lodged with Registrar ......................................................................................................................... 153
373. Public company: agreement for transfer of non-cash asset in initial period ........................................................... 153
374. Agreement for transfer of non-cash asset: requirement of independent valuation ............................................... 154
375.

..... 153
374. Agreement for transfer of non-cash asset: requirement of independent valuation ............................................... 154
375.

Agreement for transfer of non-cash asset: requirements as to valuation and report ........................................... 154
376. Agreement for transfer of non-cash asset: requirement of approval by members ................................................. 155
377. Copy of resolution to be lodged with Registrar .................................................................................................................. 155
378. Modification of provisions in relation to company whose conversion into a public company has been
registered ..................................................................................................................................................................................................... 155
379. Agreement for transfer of non-cash inset; effect of contravention ............................................................................. 156
380. Liability of subsequent holders of shares ............................................................................................................................ 156
381.

olders of shares ............................................................................................................................ 156
381.

Power of Court to grant relief .................................................................................................................................................. 157
382. Offence to contravene section 368 or 373 .......................................................................................................................... 158
383. Enforceability of undertakings to do work, etc. ................................................................................................................. 158
384. What is the appropriate rate of interest for the purposes of this Division? ............................................................. 158
385. Interpretation: Division 7 ............................................................................................................................................................ 158
386. Company’s share premium account and application of share premiums ................................................................... 159
387. Relief from requirements as to share premiums: Group reconstruction relief ......................................................... 159
388.

159
387. Relief from requirements as to share premiums: Group reconstruction relief ......................................................... 159
388.

Merger relief .................................................................................................................................................................................... 160
389. Merger relief: meaning of ninety percent equity holding ............................................................................................... 160
390. Power to make further provision by regulations for the purposes of this Division ............................................... 161
391. Relief may be reflected in company’s balance sheet ........................................................................................................ 161
392. Classes of shares ............................................................................................................................................................................ 161
393. Variation of class rights: companies having a share capital .......................................................................................... 161

ation of class rights: companies having a share capital .......................................................................................... 161

394. Variation of class rights: companies without a share capital ........................................................................................ 162
395. Section 393 and 394 not to affect powers of Court under certain provisions ......................................................... 162
396. Right to object to variation: companies having a share capital ................................................................................... 162
397. Right to object to variation: companies having a share capital .................................................................................... 163
398. Copy of Court order to be lodged with Registrar .............................................................................................................. 163
399. Notice of name or other designation of class of shares ................................................................................................. 164
400. Notice of particulars of variation of rights attached to shares to be lodged with Registrar ............................... 164
401.

........ 164
400. Notice of particulars of variation of rights attached to shares to be lodged with Registrar ............................... 164
401.

Notice of new class of members to be lodged with Registrar ...................................................................................... 164
402. Notice of name or other designation of class of members to be lodged with Registrar ...................................... 165
403. Notice of particulars of variation of class rights ............................................................................................................... 165
Part XV – REORGANISATION OF COMPANY'S SHARE CAPITAL ..................................................................................................... 165
404. Alteration of share capital of limited company .................................................................................................................. 165
405. Sub-division or consolidation of shores ................................................................................................................................ 165
406. Notice to Registrar of sub-division or consolidation ........................................................................................................ 166
407.

rar of sub-division or consolidation ........................................................................................................ 166
407.

Special resolution for reduction of share capital ............................................................................................................... 166
408. Application to Court for confirming order ............................................................................................................................ 167
409. Creditors entitled to object to reduction .............................................................................................................................. 167
410. Order confirming reduction and powers of Court on making such order .................................................................. 168
411. Registration of Court order and statement of capital ...................................................................................................... 168
412. Liability of members following reduction of capital ........................................................................................................ 169
413. Liability to creditors omitted from list of creditors .......................................................................................................... 169
414.

ors omitted from list of creditors .......................................................................................................... 169
414.

Offence to conceal name of creditor, etc. ............................................................................................................................. 170
415. Shares no bar to damages against company ....................................................................................................................... 170
416. Public companies: duty of directors to convene a meeting on loss of capital ......................................................... 170
417. Public company reducing capital below authorised minimum ...................................................................................... 171
418. Expedited procedure for registration of conversion of company into a private company ................................... 171
419. Reduction of capital of private company supported by solvency statement ............................................................ 171
420. What is a solvency statement? ................................................................................................................................................. 172
421.

............................................................................................................................................. 172
421.

Registration of resolution and supporting documents .................................................................................................... 172
422. General power to make further provision by regulations ............................................................................................... 173
Part XVI – ACQUISITION BY LIMITED COMPANY OF ITS OWN SHARES .................................................................................... 173
423. Interpretation: Part XVI ................................................................................................................................................................ 173
424. General rule against limited company acquiring its own shares ................................................................................. 174
425. Treatment of shares held by nominee ................................................................................................................................... 174
426. Liability of others if nominee fails to make payment in respect of shares .............................................................. 175

174
426. Liability of others if nominee fails to make payment in respect of shares .............................................................. 175

427. Duty to cancel shares in public company held by or for the company ...................................................................... 175
428. Notice of cancellation of shares .............................................................................................................................................. 176
429. Conversion of public company into private company in consequence of cancellation of shares ...................... 177
430. Issue of certificate of incorporation on registration of conversion of public company into private company
.......................................................................................................................................................................................................................... 177
431. Effect of failure to apply for registration of company's conversion into private company .................................. 178
432. Offence to fail to cancel shares or apply for registration of company's conversion into private company ..... 178
433.

...................... 178
432. Offence to fail to cancel shares or apply for registration of company's conversion into private company ..... 178
433.

Application of sections 437 to 442 to private company that applies for registration of conversion into
public company ......................................................................................................................................................................................... 178
434. Transfer to reserve on acquisition of shares by public company or nominee .......................................................... 179
435. Public companies: general rule against lien or charges on own shares .................................................................... 179
436. Interests to be disregarded in determining whether company has beneficial interest ......................................... 179
437. Residual interest under pension scheme or employees’ share scheme ...................................................................... 179
438. Employer’s charges and other rights of recovery ............................................................................................................... 180
439.

and other rights of recovery ............................................................................................................... 180
439.

Rights as executor, administrator or trustee ....................................................................................................................... 180
440. Meaning of “financial assistance” for purposes of this Part ........................................................................................... 181
441. [Repealed by Act No. 28 of 2017, s. 27.] ............................................................................................................................... 181
442. Assistance for acquisition of shares in public company .................................................................................................. 181
443. Assistance by public company for acquisition of shares in its private holding company ..................................... 182
444. Offence to give prohibited assistance .................................................................................................................................... 183
445. Certain transactions excepted unconditionally from sections 442 and 443 ............................................................ 183
446.

183
445. Certain transactions excepted unconditionally from sections 442 and 443 ............................................................ 183
446.

Certain transactions excepted from sections 442 and 443 conditionally ................................................................. 183
447. Power of limited company to purchase own shares ......................................................................................................... 184
448. Purchase of company’s own shares ......................................................................................................................................... 184
449. Financing of purchase of company's own shares ............................................................................................................... 184
450. Approval for company to purchase own shares ................................................................................................................. 185
451. Authorisation for off-market purchase ................................................................................................................................... 185
452. Resolution authorising off-market purchase: exercise of voting rights ..................................................................... 186
453.

. Resolution authorising off-market purchase: exercise of voting rights ..................................................................... 186
453.

Resolution approving off-market purchase: disclosure of details of contract .......................................................... 186
454. Variation of contract for off-market purchase ..................................................................................................................... 187
455. Resolution approving variation: exercise of voting rights .............................................................................................. 187
456. Resolution approving variation: disclosure of details of variation .............................................................................. 187
457. Release of company’s rights under contract for off-market purchase ......................................................................... 188
458. Approval for company to make market purchase .............................................................................................................. 188
459. Copy of contract or memorandum to be available for inspection ............................................................................... 189
460.

Copy of contract or memorandum to be available for inspection ............................................................................... 189
460.

Enforcement of right to inspect copy or memorandum .................................................................................................. 189

orcement of right to inspect copy or memorandum .................................................................................................. 189

461. Company’s right to purchase own shares not assignable ............................................................................................... 190
462. Payments apart from purchase price to be made out of distributable profits ......................................................... 190
463. How shares purchased are to be treated .............................................................................................................................. 190
464. Return of purchase of own shares to be lodged with Registrar ................................................................................... 190
465. Notice to Registrar of cancellation of shares ...................................................................................................................... 191
466. Interpretation: Division 4 ............................................................................................................................................................ 192
467. Power of private limited company to redeem or purchase own shares out of capital .......................................... 192
468.

........ 192
467. Power of private limited company to redeem or purchase own shares out of capital .......................................... 192
468.

The permissible capital payment ............................................................................................................................................. 192
469. What profits are available .......................................................................................................................................................... 192
470. Determination of available profits .......................................................................................................................................... 193
471. Requirements for payment out of capital ............................................................................................................................. 193
472. Directors’ statement and auditor’s report ............................................................................................................................. 193
473. Directors’ statement: offence if no reasonable grounds for opinion ........................................................................... 194
474.

irectors’ statement: offence if no reasonable grounds for opinion ........................................................................... 194
474.

Payment to be approved by special resolution .................................................................................................................. 194
475. Resolution authorising payment: exercise of voting rights ............................................................................................ 194
476. Resolution authorising payment: disclosure of directors’ statement and auditor’s report ................................... 195
477. Public notice of proposed payment ......................................................................................................................................... 195
478. Company to make directors’ statement and auditor’s report to be available for inspection ............................... 196
479. Objection to payment by members or creditors: application to the Court to cancel resolution ........................ 196
480. Notice of Court application or order to be lodged with Registrar ............................................................................... 197
481.

ice of Court application or order to be lodged with Registrar ............................................................................... 197
481.

When payment out of capital to be made ........................................................................................................................... 198
482. Company whose shares are redeemed or purchased to transfer amount to capital redemption reserve ....... 198
483. Accounting consequences of payment out of capital ....................................................................................................... 199
484. Effect of company’s failure to redeem or purchase .......................................................................................................... 199
Part XVII – HOW COMPANY'S ASSETS ARE TO BE DISTRIBUTED ................................................................................................ 200
485. Interpretation: Part XVII .............................................................................................................................................................. 200
486. Distributions to be made only out of profits available for the purpose .................................................................... 201
487.

. Distributions to be made only out of profits available for the purpose .................................................................... 201
487.

Net asset restriction on distributions by public companies ........................................................................................... 201
488. Justification of distribution by reference to relevant financial statements ............................................................... 202
489. Successive distribution etc by reference to the same financial statements ............................................................. 202
490. Treatment of development costs .............................................................................................................................................. 203
491. Determination of profit or loss in respect of asset where records incomplete ....................................................... 203
492. Distribution in kind: determination of amount ................................................................................................................... 204
493. Distributions in kind: treatment of unrealised profits ...................................................................................................... 204
494.

kind: treatment of unrealised profits ...................................................................................................... 204
494.

Consequences of unlawful distribution ................................................................................................................................. 204

ful distribution ................................................................................................................................. 204

Part XVIII – CERTIFICATION AND TRANSFER OF SECURITIES ....................................................................................................... 205
495. Share certificate to be evidence of title ................................................................................................................................ 205
496. Duty of company as to issue of certificates etc. on allotment ...................................................................................... 205
497. Registration of transfer of shares and debentures ............................................................................................................ 206
498. Procedure on transfer being lodged ....................................................................................................................................... 206
499. Transfer of shares on application of transferor .................................................................................................................. 206
500. Execution of share transfer by executor or administrator .............................................................................................. 206
501.

of share transfer by executor or administrator .............................................................................................. 206
501.

Evidence of grant of probate, etc ............................................................................................................................................ 207
502. Certification of document of transfer of shares or debentures ..................................................................................... 207
503. Duty of company as to issue of certificates etc on transfer ........................................................................................... 207
504. Company no longer authorised to issue share warrants after commencement of this section .......................... 208
505. Power of Court to order company to make good failure to issue certain documents ........................................... 208
506. Provision enabling procedures for evidencing and transferring title .......................................................................... 209
507. Power to make regulations requiring arrangements to be adopted ............................................................................ 209
508. Provision enabling or requiring arrangements to be adopted: order-making powers ........................................... 210
509.

........ 209
508. Provision enabling or requiring arrangements to be adopted: order-making powers ........................................... 210
509.

Duty to consult ............................................................................................................................................................................... 210
Part XIX – PUBLIC OFFERS OF SECURITIES BY COMPANIES ........................................................................................................ 210
510. Interpretation: Part XIX ............................................................................................................................................................... 210
511. Prohibition of public offers by private companies ............................................................................................................ 211
512. Enforcement of prohibition: order restraining proposed contravention .................................................................... 212
513. Enforcement of prohibition: orders available to the Court after contravention ...................................................... 212
514. Enforcement of prohibition: power of Court to make remedial orders ...................................................................... 212
515.

14. Enforcement of prohibition: power of Court to make remedial orders ...................................................................... 212
515.

Validity of allotment etc not affected .................................................................................................................................... 213
516. Public company: requirement for minimum share capital .............................................................................................. 213
517. Procedure for obtaining trading certificate .......................................................................................................................... 213
518. The authorised minimum ............................................................................................................................................................ 213
519. Consequences of doing business etc without a trading certificate ............................................................................. 214
Part XX – REDEEMABLE SHARES ............................................................................................................................................................. 214
520. Power of limited company to issue redeemable shares ..................................................................................................

Power of limited company to issue redeemable shares ..................................................................................................

214
521. Terms and manner of redemption ........................................................................................................................................... 214
522. Payment for redeemable shares ............................................................................................................................................... 214
523. Financing of redemption ............................................................................................................................................................. 215
524. Redeemed shares treated as cancelled ................................................................................................................................. 215
525. Notice to Registrar of redemption ........................................................................................................................................... 215

mption ........................................................................................................................................... 215

Part XXI – TREASURY SHARES .................................................................................................................................................................. 216
526. Treasury shares ............................................................................................................................................................................... 216
527. Treasury shares: maximum holdings ....................................................................................................................................... 217
528. Exercise of rights in respect of treasury shares ................................................................................................................. 217
529. Disposal of treasury shares ........................................................................................................................................................ 217
530. Treasury shares: notice of disposal ......................................................................................................................................... 218
531.

sal ......................................................................................................................................... 218
531.

Cancellation of treasury shares ................................................................................................................................................ 218
532. Treasury shares: notice of cancellation .................................................................................................................................. 218
533. Treatment of proceeds of sale of treasury shares ............................................................................................................. 219
534. Treasury shares: offences ............................................................................................................................................................ 219
Part XXII – INFORMATION ABOUT INTERESTS IN A PUBLIC COMPANY'S SHARES ............................................................... 219
535. Application of Part XXII .............................................................................................................................................................. 220
536. Notice by public company requiring information about interests in its shares ...................................................... 220
537.

220
536. Notice by public company requiring information about interests in its shares ...................................................... 220
537.

Public company may apply to Court for order imposing restrictions on the relevant shares if notice
requiring information is not complied with ................................................................................................................................... 221
538. Notice requiring information: offences .................................................................................................................................. 221
539. Notice requiring information: persons exempted from obligation to comply .......................................................... 221
540. Consequences of order imposing restrictions ..................................................................................................................... 222
541. Offence to attempt to evade restrictions .............................................................................................................................. 222
542. Relaxation of restrictions ............................................................................................................................................................ 223
543.

............................................................................................................................................. 223
543.

Removal of restrictions ................................................................................................................................................................ 223
544. Order of Court for sale of shares ............................................................................................................................................. 223
545. Application of proceeds of sale under order of Court ...................................................................................................... 224
546. Power of members of company to require company to act ........................................................................................... 224
547. Duty of company to comply with requirement ................................................................................................................... 225
548. Report to members on outcome of investigation .............................................................................................................. 225
549. Offences relating to a failure to comply with requirement of section 560 .............................................................. 226
550.

549. Offences relating to a failure to comply with requirement of section 560 .............................................................. 226
550.

Right to inspect and request copy of reports ..................................................................................................................... 226
551. Company to keep register of interest disclosed ................................................................................................................. 227
552. Register to be kept available for inspection ........................................................................................................................ 227
553. Rights to inspect and require copy of entries ..................................................................................................................... 227
554. Court supervision of purpose for which rights may be exercised ................................................................................ 228
555. Register of interests disclosed: refusal of inspection or default in providing copy ............................................... 228
556. Register of interests disclosed: offences in connection with request for or disclosure of information ........... 229
557.

.................. 228
556. Register of interests disclosed: offences in connection with request for or disclosure of information ........... 229
557.

Entries not to be removed from register ............................................................................................................................... 229

oved from register ............................................................................................................................... 229

558. Removal of entries from register: old entries ..................................................................................................................... 229
559. Removal of entries from register: incorrect entry relating to third party .................................................................. 230
560. Adjustment of entry relating to share acquisition agreement ...................................................................................... 230
561. Duty of company ceasing to be public company ............................................................................................................... 230
562. Interest in shares: general .......................................................................................................................................................... 230
563. Interest in shares: right to subscribe for shares ................................................................................................................. 231
564. Interest in shares: family interests .......................................................................................................................................... 231
565.

ts .......................................................................................................................................... 231
565.

Interest in shares: corporate interests ................................................................................................................................... 231
566. Interest in shares: agreement to acquire interests in a particular company ............................................................ 232
567. Extent of obligation in case of share acquisition agreement ........................................................................................ 233
568. Information protected from wider disclosure ...................................................................................................................... 233
569. Calculating periods for fulfilling obligations ....................................................................................................................... 234
Part XXIII – COMPANY DEBENTURES ..................................................................................................................................................... 234
570.

............................................................................................................................................. 234
570.

Perpetual debentures ................................................................................................................................................................... 234
571. Enforcement of contracts to subscribe for debentures .................................................................................................... 234
572. Company to register allotment of debentures .................................................................................................................... 234
573. Company to establish and maintain register of debenture holders ............................................................................ 234
574. Rights of debenture holders and others to inspect and obtain copies of register of debenture holders ........ 235
575. Offence to refuse inspection of register of debenture holders or to fail to provide copy .................................... 236
576. Register of debenture holders: offences in connection with request for or disclosure of information ............ 236
577. Time limit for claims arising from entry in register of debenture holders ................................................................ 237
578.

7. Time limit for claims arising from entry in register of debenture holders ................................................................ 237
578.

Right of debenture holder to obtain copy of trust deed securing debentures ........................................................ 237
579. Provisions protecting trustees of deed securing debentures to be void .................................................................... 237
580. Power of company to re-issue redeemed debentures ...................................................................................................... 238
581. Deposit of debentures to secure advances .......................................................................................................................... 238
582. Priorities when debentures are secured by floating charge .......................................................................................... 238
Part XXIV – COMPANY TAKEOVERS ........................................................................................................................................................ 238
583. Interpretation: Part XXIV ............................................................................................................................................................. 239
584.

............................................................................................................................................. 239
584.

What constitutes a takeover offer ........................................................................................................................................... 239
585. Shares already held by the offeror, etc. ................................................................................................................................ 240
586. Cases in which offer is treated as being on same terms ................................................................................................ 240
587. Effect of impossibility etc of communicating or accepting offer .................................................................................. 241
588. Certain shares excluded from offer ......................................................................................................................................... 241
589. Persons who are associates of offerors for purposes of this Part ................................................................................ 242
590. How debentures that confer voting rights are treated for the purposes of this Part ............................................ 243

......... 242
590. How debentures that confer voting rights are treated for the purposes of this Part ............................................ 243

591. How convertible securities are to be treated for purposes of this Part ..................................................................... 243
592. Power of Authority to make Takeover Rules ........................................................................................................................ 243
593. Further provisions about Takeover Rules .............................................................................................................................. 244
594. Power of Authority to give rulings in takeover cases ....................................................................................................... 244
595. Rules may empower Authority to give directions ............................................................................................................. 244
596. Power of Authority to require documents and Information ........................................................................................... 245
597. Restrictions on disclosure of information about affairs of natural person or particular business ..................... 245
598.

............. 245
597. Restrictions on disclosure of information about affairs of natural person or particular business ..................... 245
598.

Offence to disclose information in contravention of section 597 ............................................................................... 246
599. Power of Authority to impose sanctions for breaches of Takeover Rules ................................................................. 246
600. Failure to comply with the Takeover Rules relating to bid documentation ............................................................. 247
601. Enforcement of Takeover Rules by the Court ...................................................................................................................... 248
602. Authority not liable for damages in connection with the performance of its functions under this Part ......... 248
603. No action for breach of statutory duty etc .......................................................................................................................... 248
604. Privilege against self-incrimination ........................................................................................................................................ 248
605.

tion ........................................................................................................................................ 248
605.

Interpretation: Division 3 ............................................................................................................................................................ 249
606. Impediments to takeovers: opting in and opting out ....................................................................................................... 249
607. Further provision about opting-in and opting-out resolutions ..................................................................................... 250
608. Consequences of opting in: effect on contractual restrictions ...................................................................................... 250
609. Power of offeror to require general meeting to be convened ....................................................................................... 251
610. Requirements as to notification of opting-in or opting out resolutions .................................................................... 251
611. Right of offeror to buy out minority shareholder .............................................................................................................. 251
612.

o buy out minority shareholder .............................................................................................................. 251
612.

Further provision about notices given under section 611 ............................................................................................. 253
613. Effect of notices under section 611 ........................................................................................................................................ 253
614. Further provision about consideration held on trust under section 613 .................................................................. 254
615. Right of minority shareholder to be bought out by offeror ........................................................................................... 255
616. Further provision about rights conferred by section 615 ............................................................................................... 256
617. Effect of exercising the rights conferred by section 615 ................................................................................................. 257
618. Circumstances in which offeror or minority shareholder may apply to the Court ................................................. 257
619.

.... 257
618. Circumstances in which offeror or minority shareholder may apply to the Court ................................................. 257
619.

When takeover offers are made by two or more persons jointly ................................................................................. 259
Part XXV – COMPANY ACCOUNTING RECORDS AND FINANCIAL STATEMENTS ..................................................................... 259
620. Interpretation: Part XXV .............................................................................................................................................................. 259
621. Notes to a company’s financial statements .......................................................................................................................... 260
622. Application of this Part ............................................................................................................................................................... 260
623. Companies subject to the small companies regime ......................................................................................................... 261
624. Companies qualifying as small: general rules .................................................................................................................... 261

fying as small: general rules .................................................................................................................... 261

625. Companies qualifying as small: parent companies ........................................................................................................... 261
626. Companies excluded from the small companies regime ................................................................................................. 262
627. When company is a quoted company or an unquoted company for the purposes of this Part ........................... 263
628. Duty of company to keep proper accounting records ...................................................................................................... 263
629. Offence for company to fail to keep proper accounting records .................................................................................. 263
630. Where and for how long company is required to keep its records .............................................................................. 264
631. Offences relating to company’s failure to preserve its records ..................................................................................... 264
632.

s relating to company’s failure to preserve its records ..................................................................................... 264
632.

How company’s financial year is to be determined .......................................................................................................... 264
633. How accounting reference periods and accounting reference date of company are determined ...................... 265
634. Power of company to change its accounting reference date ......................................................................................... 265
635. Duty of directors to prepare individual financial statement .......................................................................................... 266
636. Financial statements to give true and fair view ................................................................................................................ 266
637. Accounting framework applicable to individual financial statements ........................................................................ 266
638. Requirements for individual financial statements ............................................................................................................. 266
639.

individual financial statements ............................................................................................................. 266
639.

Company that is not a small company to prepare group financial statement ......................................................... 267
640. Exemption for company included in group financial statement of larger group .................................................... 267
641. Exemption if no subsidiary undertakings need to be included in consolidation .................................................... 268
642. Group financial statements: applicable accounting framework .................................................................................... 268
643. Requirements for group financial statements ..................................................................................................................... 269
644. Group financial statements: subsidiary undertakings to be included in consolidation ........................................ 269
645. Directors of parent company to ensure consistency of financial reporting within group .................................... 270
646.

......... 269
645. Directors of parent company to ensure consistency of financial reporting within group .................................... 270
646.

Certain information may be omitted from individual profit and loss account when group financial
statement is prepared ............................................................................................................................................................................ 270
647. Information about related undertakings to be provided in notes to financial statements .................................. 270
648. Information about related undertakings: alternative compliance ................................................................................ 271
649. Information about employee numbers and costs to be included in company’s annual financial statement
.......................................................................................................................................................................................................................... 272
650.

............................................................................................................................................. 272
650.

Directors to include in notes to company's annual financial statement details of their benefits other than
remuneration .............................................................................................................................................................................................. 272
651. Information about directors’ benefits to be included in notes to company’s individual financial statement
.......................................................................................................................................................................................................................... 273
652. Directors to approve and sign financial statements ......................................................................................................... 274
653. Duty to prepare directors’ report ............................................................................................................................................. 275
654. General requirements for contents of directors’ report ................................................................................................... 275
655.

rements for contents of directors’ report ................................................................................................... 275
655.

Business review to be included in certain directors’ reports ......................................................................................... 275
656. When business review not required ....................................................................................................................................... 276
657. Contents of directors’ report: statement as to disclosure to auditors ......................................................................... 276

7. Contents of directors’ report: statement as to disclosure to auditors ......................................................................... 276

658. Directors to approve and sign directors’ report ................................................................................................................. 277
659. Duty of directors of quoted company to prepare directors’ remuneration report .................................................. 277
660. Regulations may prescribe requirements for contents of directors’ remuneration report ................................... 278
661. Directors to approve and sign directors’ remuneration report ...................................................................................... 278
662. Company’s duty to circulate copies of annual financial statement and reports ...................................................... 278
663. Deadline for sending out copies of annual financial statement and reports ........................................................... 279
664. Offence to fail to send out copies of financial statements and reports .................................................................... 279
665. Option to provide summary financial statement ............................................................................................................... 279
666.

e summary financial statement ............................................................................................................... 279
666.

Duty of company to send financial statement to persons entitled ............................................................................. 279
667. Form and contents requirements for summary financial statements of unquoted companies ........................... 279
668. Form and contents requirements for summary financial statements of quoted companies ............................... 280
669. Offences relating to summary financial statements ......................................................................................................... 281
670. Quoted company to make annual financial statement available on company's website ..................................... 281
671. Quoted company to make preliminary statement of results available on company’s website ........................... 282
672. Requirements as to website availability ............................................................................................................................... 282
673.

availability ............................................................................................................................... 282
673.

Right of member or debenture holder of unquoted company to copies of company's financial statements
and directors’ reports ............................................................................................................................................................................. 283
674. Right of member or debenture holder of quoted company to copies of company's financial statement and
reports .......................................................................................................................................................................................................... 283
675. Name of signatory to be stated in published copies of annual financial statement and reports, etc .............. 284
676. Requirements in connection with publication of statutory financial statement ..................................................... 284
677. Requirements in connection with publication of non-statutory financial statement ............................................. 284
678. Meaning of “publication” in relation to company’s financial statement and reports ............................................. 285
679.

.... 284
678. Meaning of “publication” in relation to company’s financial statement and reports ............................................. 285
679.

Public company to present annual financial statement and reports at general meeting of company ............. 285
680. Offence for public company to fail to present annual financial statement and reports at general meeting
of company ................................................................................................................................................................................................. 285
681. Directors of quoted company required to obtain members' approval of directors' remuneration report ....... 286
682. Offence for directors of quoted company to fail to comply with section 694 ......................................................... 286
683. Company’s directors to lodge certain documents with Registrar ................................................................................. 286
684. Deadline for lodging financial statements with Registrar .............................................................................................. 286
685. Calculation of deadline for lodging financial statements with Registrar .................................................................. 287
686.

5. Calculation of deadline for lodging financial statements with Registrar .................................................................. 287
686.

Lodgement requirements for companies subject to small companies regime ........................................................ 287
687. Lodgement requirements for unquoted companies ........................................................................................................... 288
688. Lodgement requirements for quoted companies ............................................................................................................... 289
689. Exemption of unlimited companies from requirement to lodge financial statements with Registrar ............. 289
690. Special auditor's report required if abbreviated financial statement is lodged with Registrar .......................... 290

ar ............. 289
690. Special auditor's report required if abbreviated financial statement is lodged with Registrar .......................... 290

691. Directors of company to approve and sign abbreviated financial statement ........................................................... 290
692. Offence to fail to lodge annual financial statement and reports with Registrar .................................................... 291
693. Power of the Court to order compliance if annual financial statement or reports not lodged with Registrar
.......................................................................................................................................................................................................................... 291
694. Company liable to default penalty for failure to lodge annual financial statement and reports with
Registrar ....................................................................................................................................................................................................... 291
695. Voluntary revision of defective financial statements and reports ................................................................................ 292
696.

ntary revision of defective financial statements and reports ................................................................................ 292
696.

Cabinet Secretary may give notice in respect of company's financial statements or reports that are
believed to be defective ........................................................................................................................................................................ 293
697. Application to the Court to rectify defective annual financial statement or directors’ report of company ..... 293
698. Power of Cabinet Secretary to authorise other persons to make application to the Court under section 710
.......................................................................................................................................................................................................................... 294
699. Power of Kenya Revenue Authority to disclose information to authorised person for certain purposes ......... 295
700. Power of Cabinet Secretary or authorised person to require documents, information and explanations ....... 296
701. Restrictions on disclosure of information obtained under compulsory powers ...................................................... 296
702.

.. 296
701. Restrictions on disclosure of information obtained under compulsory powers ...................................................... 296
702.

Permitted disclosure of information obtained under compulsory powers ................................................................ 297
703. Liability of directors for false or misleading statements in company’s financial statement and reports ........ 298
704. Regulations may make further provision about financial statements and reports of companies ...................... 298
Part XXVI – COMPANIES TO MAKE ANNUAL RETURNS TO REGISTRAR .................................................................................... 299
705. Duty of company to lodge annual returns with Registrar .............................................................................................. 299
706. Contents of annual return: general ......................................................................................................................................... 299
707. Contents of annual return: information about share capital and shareholders ....................................................... 300
708. Offence for company not to lodge annual return on time, etc .....................................................................................

708. Offence for company not to lodge annual return on time, etc .....................................................................................

301
Part XXVII – AUDITING OF COMPANY FINANCIAL STATEMENTS ................................................................................................. 301
709. Requirements for auditing financial statements ................................................................................................................ 301
710. Right of members to require audit ......................................................................................................................................... 301
711. Small companies: conditions for exemption from audit ................................................................................................. 302
712. Companies excluded from small companies exemption ................................................................................................. 302
713. Availability of small companies exemption in case of group company ..................................................................... 302
714. Conditions for exemption from audit for dormant companies ...................................................................................... 303
715.

ditions for exemption from audit for dormant companies ...................................................................................... 303
715.

Companies excluded from dormant companies exemption ........................................................................................... 303
716. Exemption from audit for non-profit making companies ................................................................................................ 304
717. Appointment of auditors of private company: general ..................................................................................................... 304
718. Appointment of auditors of private company: default power of the Cabinet Secretary ....................................... 305
719. Term of office of auditors of private company .................................................................................................................... 305
720. Members of private company may block automatic re-appointment of auditor ..................................................... 306
721. Appointment of auditors of public company: general ...................................................................................................... 306

ment of auditors of public company: general ...................................................................................................... 306

722. Appointment of auditors of public company: default power of the Cabinet Secretary ......................................... 307
723. Term of office of auditors of public company ..................................................................................................................... 307
724. Fixing of auditor’s remuneration .............................................................................................................................................. 307
725. Company to disclose terms of audit appointment ............................................................................................................ 308
726. Regulations to provide for safeguarding disclosure of nature of services provided by company’s auditor .... 308
727. Auditor’s report on annual financial statement of company .......................................................................................... 308
728. Auditor's report on directors' report ....................................................................................................................................... 309
729.

eport ....................................................................................................................................... 309
729.

Auditor’s report on auditable part of directors’ remuneration report ......................................................................... 310
730. Responsibilities of auditor .......................................................................................................................................................... 310
731. Auditor's right to information .................................................................................................................................................... 311
732. Auditor's right to information from foreign subsidiaries ................................................................................................. 311
733. Auditor's rights to information: offences ............................................................................................................................... 312
734. Auditor's rights in relation to resolutions and meetings ................................................................................................ 312
735.

ghts in relation to resolutions and meetings ................................................................................................ 312
735.

Auditor to sign and date auditor’s report ............................................................................................................................. 312
736. Name of auditor to be stated in published copies of auditor’s report ....................................................................... 313
737. Circumstances in which auditors’ names may be omitted from published copies of auditors' report .............. 313
738. Offences in connection with auditor's report ...................................................................................................................... 313
739. Resolution removing auditor from office .............................................................................................................................. 314
740. Special notice required for resolution removing auditor from office .......................................................................... 314
741. Notice of resolution removing auditor from office ............................................................................................................ 315
742.

ion removing auditor from office ............................................................................................................ 315
742.

Rights of auditor who has been removed from office ..................................................................................................... 315
743. Failure to re-appoint auditor: special procedure required for written resolution ................................................... 315
744. Failure to re-appoint auditor: special notice required for resolution at general meeting ................................... 316
745. Resignation of auditor .................................................................................................................................................................. 317
746. Notice to Registrar of resignation of auditor ...................................................................................................................... 317
747. Rights of resigning auditor ......................................................................................................................................................... 318
748. Statement by auditor on ceasing to hold office to be lodged with company .......................................................... 319
749.

318
748. Statement by auditor on ceasing to hold office to be lodged with company .......................................................... 319
749.

Company’s duties in relation to statement .......................................................................................................................... 319
750. Auditor to lodge copy of statement with Registrar ........................................................................................................... 320
751. Duty of auditor to notify appropriate audit authority ...................................................................................................... 320
752. Duty of company to notify appropriate audit authority if auditor ceases to hold office before end of
auditor’s term ............................................................................................................................................................................................. 320
753. Appropriate audit authority to notify prescribed account body of cessation of auditor’s appointment ........... 321
754. Meaning of “appropriate audit authority” for purpose of this Division ...................................................................... 321
755.

Meaning of “appropriate audit authority” for purpose of this Division ...................................................................... 321
755.

Effect of casual vacancies .......................................................................................................................................................... 322

.................................................................................................................................................. 322

756. Members’ power to request website publication of audit concerns ............................................................................ 322
757. Requirements as to website availability ................................................................................................................................ 322
758. Website publication: company’s supplementary duties ................................................................................................... 323
759. Website publication: offences .................................................................................................................................................... 323
760. Meaning of “quoted company” for purposes of sections 757 to 760 .......................................................................... 323
761. Provisions protecting auditors from liability to be void .................................................................................................. 324
762. Indemnity for costs of successfully defending proceedings ........................................................................................... 324
763.

y for costs of successfully defending proceedings ........................................................................................... 324
763.

Power of Court to grant relief in certain cases .................................................................................................................. 324
764. Liability limitation agreements ................................................................................................................................................ 325
765. Terms of liability limitation agreement ................................................................................................................................. 325
766. Authorisation of agreement by members of the company ............................................................................................. 325
767. Effect of liability limitation agreement .................................................................................................................................. 326
768. Company to disclose liability limitation agreement ......................................................................................................... 326
769.

lose liability limitation agreement ......................................................................................................... 326
769.

Quoted Companies: audit committee ..................................................................................................................................... 327
770. Quoted companies: corporate governance ........................................................................................................................... 327
Part XXVIII – STATUTORY AUDITORS ..................................................................................................................................................... 327
771. Purpose of Part XXVIII ................................................................................................................................................................. 327
772. Eligibility for appointment as a statutory auditor ............................................................................................................. 328
773. Ineligible person prohibited from acting as a statutory auditor .................................................................................. 328
774.

gible person prohibited from acting as a statutory auditor .................................................................................. 328
774.

Statutory auditor to be independent ...................................................................................................................................... 328
775. Effect of lack of independence of statutory auditor ......................................................................................................... 329
776. Effect of appointment of a partnership as statutory auditor ......................................................................................... 329
777. Appropriate qualifications for appointment as a statutory auditor .............................................................................. 330
778. Power of Cabinet Secretary to recognise qualifications of foreign auditors for purposes of this Act ............... 330
779. Cabinet Secretary’s power to require eligible person to provide certain information ........................................... 331
Part XXIX – PROTECTION OF MEMBERS AGAINST OPPRESSIVE CONDUCT AND UNFAIR PREJUDICE ............................ 331
780. Application to Court by company member for order under section 796 ................................................................... 331
781.

1
780. Application to Court by company member for order under section 796 ................................................................... 331
781.

Application to Court by Attorney-General for order under section 783 ..................................................................... 332
782. Power of Court to make orders for protection of members against oppressive conduct and unfair prejudice
.......................................................................................................................................................................................................................... 332
783. Copy of order affecting company’s constitution to be lodged with Registrar .......................................................... 333
784. Supplementary provisions applicable if company’s constitution altered ................................................................... 333
Part XXX – COMPANY INVESTIGATIONS ................................................................................................................................................ 333
785. Interpretation: Part XXX .............................................................................................................................................................. 334
786.

............................................................................................................................................. 334
786.

Investigation of company’s affairs on application of members .................................................................................... 334

Investigation of company’s affairs on application of members .................................................................................... 334

787. Investigation of company's affairs in other cases .............................................................................................................. 334
788. Power of inspectors to carry investigation into affairs of related companies .......................................................... 335
789. General powers of Court to give directions to inspector ................................................................................................ 335
790. Power of Court to direct conduct of investigation under this Division to be terminated .................................... 336
791. Resignation and revocation of appointment of inspector appointed by the Court ................................................ 336
792. Power of Court to appoint replacement inspector ............................................................................................................ 336
793. Production of documents and evidence to inspector appointed by the Court ......................................................... 336
794. Obstruction of inspectors appointed by Court to be contempt of Court ...................................................................

.... 336
794. Obstruction of inspectors appointed by Court to be contempt of Court ...................................................................

337
795. Power of inspector appointed by Court to apply to Court to conduct examination of person ........................... 337
796. Power of Court to obtain information from former inspectpor etc. ............................................................................ 338
797. Inspector appointed by the Court to submit reports to the Court ............................................................................... 338
798. Power of Director of Public Prosecutions to bring prosecution for offences disclosed by inspectors’ report
.......................................................................................................................................................................................................................... 339
799. Expenses of investigation of company’s affairs .................................................................................................................. 339
800. Appointment of inspector to investigate ownership of company ................................................................................ 340
801. Power of inspector appointed by Attorney-General to investigate ownership, etc.

............................................................. 340
801. Power of inspector appointed by Attorney-General to investigate ownership, etc.

of related companies ...... 341
802. General powers of Attorney-General to give directions to inspectors appointed by the Attorney-General .... 341
803. Direction to terminate conduct of investigation under this Division .......................................................................... 342
804. Resignation and revocation of appointment of inspectors appointed by the Attorney-General ........................ 342
805. Appointment of replacement inspectors appointed by the Attorney-General ......................................................... 342
806. Production of documents and evidence on investigation under this Division ......................................................... 342
807. Obstruction of inspectors appointed by the Attorney-General to be contempt of Court ...................................... 343
808. Inspector appointed by the Attorney-General may apply to Court to conduct examination of person ............ 344
809. Inspector appointed by the Attorney-General to submit reports to the Attorney-General .................................. 344
810.

........... 344
809. Inspector appointed by the Attorney-General to submit reports to the Attorney-General .................................. 344
810.

Power of Director of Public Prosecutions to bring prosecution for offences disclosed by inspectors’ report
made under section 810 ....................................................................................................................................................................... 345
811. Power of Attorney-General to require information about persons interested in securities of a company ...... 345
812. Power of Attorney-General to impose restrictions on securities .................................................................................. 346
813. Inspector’s report to be evidence ............................................................................................................................................ 346
814. Power to bring civil proceedings on company’s behalf ................................................................................................... 346
815. Issue of warrants to enter and search premises ................................................................................................................ 346
816.

to enter and search premises ................................................................................................................ 346
816.

Protection in relation to certain disclosures: information provided to Attorney-General .................................... 347
817. Prohibition on disclosure of information obtained under section 812 or 817 ......................................................... 348
818. Offence to destroy, mutilate or falsify company documents ......................................................................................... 348
819. Offence to provide false information ..................................................................................................................................... 349
820. Disclosure of information by Attorney-General or inspector ......................................................................................... 349

sclosure of information by Attorney-General or inspector ......................................................................................... 349

821. Certain information protected from disclosure ................................................................................................................... 350
822. Answers to questions put by inspector during examination admissible in legal proceedings as evidence ... 350
823. Application of this Part to foreign companies .................................................................................................................... 351
824. Offences against this Part committed by bodies corporate ........................................................................................... 351
825. Consequence of order imposing restrictions ....................................................................................................................... 351
826. Offence to attempt to evade restriction imposed by or under this Part .................................................................... 352
827. Power of Court to order relaxation or removal of restrictions ...................................................................................... 352
828.

f Court to order relaxation or removal of restrictions ...................................................................................... 352
828.

Provisions applicable to sale by Court order of restricted securities .......................................................................... 354
Part XXXI – REGISTRAR OF COMPANIES AND REGISTRATION OF COMPANY DOCUMENTS ............................................... 354
829. Application of Part XXXI ............................................................................................................................................................. 354
830. Part to apply to foreign companies ........................................................................................................................................ 354
831. Registrar and Deputy and Assistant Registrars of Companies ....................................................................................... 354
832. Register of Companies and functions of Registrar ............................................................................................................ 355
833. Registrar’s official seal ................................................................................................................................................................. 355
834.

............................................................................................................................................. 355
834.

Fees payable to Registrar ........................................................................................................................................................... 356
835. Registrar to give public notice of issue of certificate of incorporation ...................................................................... 356
836. Right to obtain certificate of incorporation ......................................................................................................................... 356
837. Registrar to allocate number to each company .................................................................................................................. 357
838. Registrar to allocate unique number to each foreign company registered under this Act .................................. 357
839. Power of Registrar to impose requirements with respect to lodgement of documents ....................................... 357
840. Regulations may require documents to be lodged by electronic means ................................................................... 358
841.

7
840. Regulations may require documents to be lodged by electronic means ................................................................... 358
841.

Agreement for lodgement of documents by electronic means ..................................................................................... 358
842. Document not lodged for purposes of this Act until received by Registrar .............................................................. 358
843. Requirements for proper lodgement ...................................................................................................................................... 358
844. Powers of Registrar to correct documents in certain cases ........................................................................................... 359
845. Power of Registrar to accept replacement for document previously lodged ............................................................ 360
846. Power of Registrar to exclude unnecessary information ................................................................................................. 360
847. Registrar's notice to remedy defective lodgement ............................................................................................................. 360
848.

e to remedy defective lodgement ............................................................................................................. 360
848.

Annotation of the Register ......................................................................................................................................................... 361
849. Allocation of unique identifiers for purpose of identifying directors and certain other persons ....................... 361
850. Preservation of original documents ........................................................................................................................................ 362
851. Power of Registrar to destroy records of dissolved company after lapse of seven years ..................................... 362
852. Right of members of public to inspect Register ................................................................................................................ 362
853. Right of members of public to be provided with copies of records kept by Registrar .......................................... 362
854. Certain records not to be made available for public inspection .................................................................................. 363

Certain records not to be made available for public inspection .................................................................................. 363

855. Registrar can be required to make address unavailable for public inspection ........................................................ 363
856. Form of application for inspection or copy ......................................................................................................................... 364
857. Form and manner in which copies to be provided ............................................................................................................ 364
858. Certification of copies of records by Registrar .................................................................................................................... 364
859. Issue of legal process for production of records kept by the Registrar ...................................................................... 364
860. Registrar’s notice to resolve inconsistency on the Register ........................................................................................... 364
861. Administrative removal of information from the Register .............................................................................................. 365
862.

ative removal of information from the Register .............................................................................................. 365
862.

Rectification of Register on application to Registrar ........................................................................................................ 366
863. Rectification of the Register under Court order ................................................................................................................. 366
864. Powers of Court on ordering removal of entry from the Register ............................................................................... 367
865. Documents to be prepared and lodged in the English language ................................................................................ 367
866. Documents that may be prepared and lodged in other languages ............................................................................. 367
867. Voluntary lodgement of translations ...................................................................................................................................... 367
868. Certified translations .................................................................................................................................................................... 368
869.

............................................................................................................................................. 368
869.

Transliteration of names and addresses: permitted characters ..................................................................................... 368
870. Transliteration of names and addresses: voluntary translation into Roman characters ....................................... 368
871. Translation of names and addresses: certification ............................................................................................................ 368
872. Offence to lodge false or misleading documents or to make false or misleading statements to Registrar
.......................................................................................................................................................................................................................... 368
873. Enforcement of company’s lodgement obligations ........................................................................................................... 369
874. Supplementary provisions relating to electronic communications ............................................................................. 369
875.

Supplementary provisions relating to electronic communications ............................................................................. 369
875.

Provision for publishing notices by alternative means .................................................................................................... 369
876. Registrar’s power to make Rules .............................................................................................................................................. 369
Part XXXII – COMPANY CHARGES ............................................................................................................................................................ 370
877. Interpretation: Part XXXII ............................................................................................................................................................ 370
878. Charges created by a company ................................................................................................................................................. 370
879. Charges existing on property acquired .................................................................................................................................. 371
880.

y acquired .................................................................................................................................. 371
880.

Lodgement for registration of charge in series of debentures ..................................................................................... 372
881. Additional registration requirement for commission, allowance or discount in relation to debentures ......... 372
882. Certificate of registration to be endorsed on debentures ............................................................................................... 372
883. Charges created in, or over property located outside Kenya ........................................................................................ 373
884. Registrar to keep register of charges ..................................................................................................................................... 373
885. Deadline for registering a charge ............................................................................................................................................ 374
886.

............................................................................................................................................ 374
886.

Holder of floating charge to lodge with Registrar notice of appointment and cessation of appointment of
administrator of company ..................................................................................................................................................................... 374
887. Registrar to record memorandum of satisfaction or release .......................................................................................... 375

gistrar to record memorandum of satisfaction or release .......................................................................................... 375

888. Rectification of register of charges ......................................................................................................................................... 375
889. Consequences of failure to register charges created by a company ........................................................................... 375
890. Companies to keep copies of documents creating charges ........................................................................................... 376
891. Company’s register of charges .................................................................................................................................................. 376
892. Right of creditors, members and others to inspect documents that create company's charges and to
inspect company's register of charges ............................................................................................................................................. 376
Part XXXIII – DISSOLUTION AND RESTORATION TO THE REGISTER ......................................................................................... 377
893.

XXIII – DISSOLUTION AND RESTORATION TO THE REGISTER ......................................................................................... 377
893.

Interpretation: Part XXXIII .......................................................................................................................................................... 377
894. Power of Registrar to strike off company not carrying on business or in operation .............................................. 377
895. Duty of Registrar to act in case of company that has been liquidated or no liquidator is acting ...................... 378
896. Supplementary provisions as to service of letter or notice ........................................................................................... 379
897. Striking off company on company’s application ................................................................................................................. 379
898. Circumstances in which application not to be made: activities of company ........................................................... 380
899. Circumstances in which application not to be made: other proceedings not concluded ..................................... 380
900. Copy of application to be given to members, employees, etc.

to be made: other proceedings not concluded ..................................... 380
900. Copy of application to be given to members, employees, etc.

..................................................................................... 381
901. Copy of application to be given to new members, employees, etc. ............................................................................ 382
902. Copy of application: provisions as to service of documents .......................................................................................... 383
903. Circumstances in which application taken to be withdrawn ......................................................................................... 383
904. When withdrawal of application takes effect ..................................................................................................................... 384
904A. Record keeping after strike-off .............................................................................................................................................. 384
905. Property of dissolved company to vest in the State ......................................................................................................... 384
906.

solved company to vest in the State ......................................................................................................... 384
906.

Disclaimer of property vesting in the State ........................................................................................................................ 385
907. Effect of State disclaimer ............................................................................................................................................................ 386
908. General effect of disclaimer ...................................................................................................................................................... 386
909. Disclaimer of leaseholds ............................................................................................................................................................. 386
910. Power of Court to make vesting order .................................................................................................................................. 386
911. Protection of persons holding under a lease ...................................................................................................................... 387
912.

holding under a lease ...................................................................................................................... 387
912.

Application for administrative restoration to the Register ............................................................................................. 387
913. Requirements for administrative restoration ....................................................................................................................... 387
914. Registrar’s decision on application for administrative restoration ............................................................................... 388
915. Effect of administrative restoration ........................................................................................................................................ 388
916. Application to Court for restoration to the Register ......................................................................................................... 389
917. When application to the Court may be made ..................................................................................................................... 389
918. Decision on application for restoration by the Court ....................................................................................................... 390
919.

lication for restoration by the Court ....................................................................................................... 390
919.

Effect of Court order for restoration to the Register: power of Court to make consequential directions ........ 390

Effect of Court order for restoration to the Register: power of Court to make consequential directions ........ 390

920. Company’s name on being restored to the Register ......................................................................................................... 391
921. Effect of restoration to the Register if property has vested in the State under section 919 .............................. 392
Part XXXIV – COMPROMISES, ARRANGEMENTS, RECONSTRUCTIONS AND AMALGAMATIONS ........................................ 392
922. Part XXXIV: Application and interpretation ......................................................................................................................... 392
923. Court may order meeting of company’s creditors or members to be held ................................................................ 392
924. Explanatory statement setting out effect of arrangement or compromise to be circulated or made
available to company's creditors and members of company ................................................................................................... 393
925. Duty of directors and trustees to provide information .................................................................................................... 394
926.

tors and trustees to provide information .................................................................................................... 394
926.

Court order sanctioning compromise or arrangement ..................................................................................................... 394
927. Powers of the Court to facilitate reconstruction or amalgamation .............................................................................. 394
928. Copy of order to be lodged with the Registrar for registration .................................................................................... 395
929. Obligations of company with respect to its constitution ................................................................................................ 396
Part XXXV – MERGERS AND DIVISIONS OF PUBLIC COMPANIES ................................................................................................ 396
930. Interpretation: Part XXXV ........................................................................................................................................................... 396
931. Application of this Part ............................................................................................................................................................... 397
932.

............................................................................................................................................. 397
932.

Relationship of this Part to Part XXXIV ................................................................................................................................. 397
933. Introductory: mergers and merging companies .................................................................................................................. 398
934. Draft terms of scheme for proposed merger ....................................................................................................................... 398
935. Draft terms of proposed merger to be published .............................................................................................................. 399
936. Scheme not effective unless approved by members of merging companies ........................................................... 399
937. Directors of merging companies to prepare explanatory report relating to proposed merger ........................... 399
938. Merging companies to arrange for preparation of experts’ reports ............................................................................ 399
939.

Merging companies to arrange for preparation of experts’ reports ............................................................................ 399
939.

Supplementary financial statement for merger in certain cases .................................................................................. 400
940. Members of merging companies entitled to inspect merger documents .................................................................. 401
941. Articles of transferee company involved in merger to be approved ........................................................................... 401
942. Protection of holders of securities to which special rights attached (merger) ........................................................ 401
943. Allotment of shares to transferor company (or its nominee) prohibited ................................................................... 402
944. Circumstances in which certain particulars and reports not required in relation to merger .............................. 402
945. Circumstances in which meeting of members of transferee company not required for merger ........................ 402
946. Circumstances in which meeting of members of transferee company not required in relation to merger .... 403
947.

ger ........................ 402
946. Circumstances in which meeting of members of transferee company not required in relation to merger .... 403
947.

Other circumstances in which meeting of members of transferee company not required in relation to
merger .......................................................................................................................................................................................................... 403
948. Introductory: companies and involvement of companies in division .......................................................................... 404
949. Draft terms of scheme to be prepared and adopted in relation to division ............................................................. 404
950. Draft terms relating to division to be published ............................................................................................................... 405
951. Approval of members of companies involved in division ............................................................................................... 405

roval of members of companies involved in division ............................................................................................... 405

952. Directors to prepare explanatory report in relation to division ................................................................................... 405
953. Expert’s report to be prepared for each company involved in division ..................................................................... 406
954. Supplementary financial statement to be prepared in relation to division in certain cases ............................... 407
955. Members of companies involved in division entitled to inspect certain documents ............................................ 407
956. Report on material changes of assets of transferor company involved in division ............................................... 408
957. Articles of transferee company involved in division to be approved by transferor company .............................. 408
958. Protection of holders of securities to which special rights attached (division) ....................................................... 408
959. Allotment of shares to transferor company (or its nominee) prohibited ................................................................... 408
960.

59. Allotment of shares to transferor company (or its nominee) prohibited ................................................................... 408
960.

Circumstances in which meeting of members of transferor company involved in division is not required ... 408
961. Other exceptions: circumstances in which meeting of members of transferee company not required in
relation to division .................................................................................................................................................................................. 409
962. Members of companies involved in division can agree to dispense with reports, etc .......................................... 410
963. Power of the Court to exclude certain requirements in the case of division ........................................................... 410
964. Experts’s report: valuation by another person .................................................................................................................... 411
965. Experts and valuers: independence requirement ............................................................................................................... 411
966. Power of the Court to convene meeting of members or creditors of existing transferee company .................. 412
967.

.................... 411
966. Power of the Court to convene meeting of members or creditors of existing transferee company .................. 412
967.

Court to fix date for transfer of undertaking etc of transferor company ................................................................... 413
968. Liability of transferee companies for each other’s defaults ........................................................................................... 413
Part XXXVI – COMPANIES NOT FORMED UNDER THIS ACT .......................................................................................................... 413
969. [Repealed by Act No. 38 of 2017, s. 51.] .............................................................................................................................. 413
970. [Repealed by Act No. 38 of 2017, s. 51.] .............................................................................................................................. 413
971. [Repealed by Act No. 38 of 2017, s. 51.] .............................................................................................................................. 413
972. [Repealed by Act No. 38 of 2017, s. 51.] ..............................................................................................................................

No. 38 of 2017, s. 51.] ..............................................................................................................................

413
Part XXXVII – FOREIGN COMPANIES ...................................................................................................................................................... 413
973. Interpretation: Part XXXVII ......................................................................................................................................................... 414
974. When foreign company may carry on business in Kenya. ............................................................................................... 414
975. Application for registration of foreign companies ............................................................................................................. 414
976. Requirements with respect to names of foreign companies .......................................................................................... 415
977. Foreign company can be registered under alternative name under which it will carry on business in Kenya
.......................................................................................................................................................................................................................... 416
978.

............................................................................................................................................. 416
978.

Registrar to issue certificate of compliance on change of name of registered foreign company ...................... 416
979. Foreign company required to have local representative ................................................................................................. 416
980. Appointment and termination of appointment of local representation .................................................................... 417
981. Liability of local representative ............................................................................................................................................... 417
982. Particulars of places of businesses of registered foreign companies to be notified to Registrar ...................... 418
983. Registered foreign company to have registered office ..................................................................................................... 418

ed foreign company to have registered office ..................................................................................................... 418

984. Registered foreign company to display its name at office and places of business ................................................ 419
985. Registered foreign company to state its name and other information in documents and communications
relating to its business in Kenya ....................................................................................................................................................... 419
986. Registered foreign company to give notice of certain changes relating to its constitution, directors and
business in Kenya .................................................................................................................................................................................... 420
987. Copies of registered foreign company’s financial statements and other documents to be lodged with
Registrar ....................................................................................................................................................................................................... 420
988. Provision for registration of charges over Kenyan property of foreign company ...................................................

........... 420
988. Provision for registration of charges over Kenyan property of foreign company ...................................................

421
989. Registered foreign company to lodge certain returns with Registrar ......................................................................... 421
990. Natural person’s residential address to be protected from disclosure ....................................................................... 422
991. Local representative of registered foreign company to notify Registrar of certain events affecting the
company ....................................................................................................................................................................................................... 422
992. Power of Registrar to strike registered foreign company's name from Register of Foreign Companies in
certain circumstances ............................................................................................................................................................................. 423
992A. Record keeping after strike-off .............................................................................................................................................. 424
993.

............................................................................................................................................. 424
993.

Restoration of foreign company to Foreign Companies Register in certain circumstances ................................. 424
994. Registrar to keep Foreign Companies Register ................................................................................................................... 424
995. Power of Cabinet Secretary to make foreign companies regulations ......................................................................... 425
Part XXXVIII – OFFENCES AND LEGAL PROCEEDINGS .................................................................................................................... 425
996. Liability of officers who are in default .................................................................................................................................. 425
997. Application of section 996 to bodies other than companies ......................................................................................... 425
998. Proceedings against unincorporated bodies ........................................................................................................................ 426
999.

nincorporated bodies ........................................................................................................................ 426
999.

Legal professional privilege ....................................................................................................................................................... 426
1000. Production and inspection of documents if offence suspected .................................................................................. 426
1001. Power to enter and search of premises under warrant ................................................................................................. 427
1002. Offence of fraudulent trading ................................................................................................................................................. 428
1003. Power of the Court to prohibit payment or transfer of money, financial products or other property ............ 428
1004. Power of the Court to grant injunctions in certain cases ............................................................................................. 429
1005. Power of a court to grant relief in certain cases ............................................................................................................

a court to grant relief in certain cases ............................................................................................................

431
Part XXXIX – COMPANY RECORDS .......................................................................................................................................................... 431
1006. Form of company records ......................................................................................................................................................... 431
1006A. Duty of a company to keep records .................................................................................................................................. 432
1007. Power to make regulations about where certain company records can be kept .................................................. 433
1008. Power to make regulations about the inspection of records and the provision of copies ................................. 434
1009. Duty of company to take precautions against falsification of its records ............................................................... 434
Part XL – SERVICE OF DOCUMENTS ON AND BY COMPANIES ..................................................................................................... 434
1010.

RVICE OF DOCUMENTS ON AND BY COMPANIES ..................................................................................................... 434
1010.

Service of documents on companies ................................................................................................................................... 434

s on companies ................................................................................................................................... 434

1011. Service of documents on directors, secretaries and others ......................................................................................... 435
1012. Requirement for service addresses ....................................................................................................................................... 435
1013. Companies Communications Regulations ........................................................................................................................... 435
1014. Right to require company to provide hard copy version of company document or information ..................... 436
1015. Requirements for authentication of documents and information ............................................................................. 436
1016. When documents and information are taken to have been sent or supplied by company ............................... 436
Part XLI – GENERAL PROVISIONS RELATING TO INDEPENDENT VALUATION AND REPORT .............................................. 437
1017. Part XLI: Application and interpretation of valuation requirements ......................................................................... 437
1018.

Part XLI: Application and interpretation of valuation requirements ......................................................................... 437
1018.

Valuation to be carried out only by qualified valuer ..................................................................................................... 437
1019. Valuer to satisfy independence requirement .................................................................................................................... 438
1020. Meaning of “associate” for purposes of section 1034 .................................................................................................... 438
1021. Valuer entitled to full disclosure ........................................................................................................................................... 439
Part XLII – MISCELLANEOUS PROVISIONS ........................................................................................................................................... 439
1022. Power of Cabinet Secretary to make regulations for purposes of this Act ............................................................. 439
1023. Repeals and revocation ............................................................................................................................................................. 441
1024.

............................................................................................................................................ 441
1024.

Continuity of the law ................................................................................................................................................................. 441
1025. Sixth Schedule: savings and transitional provisions ...................................................................................................... 443
1026. Power to make savings and transitional regulations ..................................................................................................... 443
FIRST SCHEDULE [s. 124, 125] .................................................................................................................................................................. 443
SECOND SCHEDULE [s. 219] ....................................................................................................................................................................... 445
THIRD SCHEDULE [s. 489] ........................................................................................................................................................................... 446
FOURTH SCHEDULE [s.

.............................................................................................................................. 446
FOURTH SCHEDULE [s.

817] ....................................................................................................................................................................... 447
FIFTH SCHEDULE [s. 817] ............................................................................................................................................................................ 448
SIXTH SCHEDULE [s. 1025] ......................................................................................................................................................................... 448

.................................................................................................................................................. 448

Companies Act (Cap. 486) Kenya
COMPANIES ACT
CAP. 486
Published in Kenya Gazette Vol. CXVII—No. 101 on 18 September 2015
Assented to on 11 September 2015
Commenced
Note: 6th November 2015— Parts 1 to 14, 23, 31, 32, 38, 40, 42,
1st Schedule and 6th Schedule; 15th June 2016—All other parts
[Amended by Companies Act Commencement (Legal Notice 233 of 2015) on 20 November 2015]
[Amended by Companies Act Commencement (Legal Notice 109 of 2016) on 24 June 2016]
[Amended by Finance Act, 2016 (Act No. 38 of 2016) on 1 January 2017]
[Amended by Statute Law (Miscellaneous Amendments) Act, 2017 (Act No. 11 of 2017) on 4 May 2017]
[Amended by Movable Property Security Rights Act (Cap. 499A) on 16 May 2017]
[Amended by Companies (Amendment) Act, 2017 (Act No. 28 of 2017) on 16 August 2017]
[Amended by Statute Law (Miscellaneous Amendments) Act, 2018 (Act No. 18 of 2018) on 18 January 2019]
[Amended by Statute Law (Miscellaneous Amendments) Act, 2019 (Act No. 12 of 2019) on 23 July 2019]
[Amended by Business Laws (Amendment) Act, 2020 (Act No. 1 of 2020) on 18 March 2020]
[Amended by Business Laws (Amendment) (No. 2) Act, 2021 (Act No.

[Amended by Business Laws (Amendment) Act, 2020 (Act No. 1 of 2020) on 18 March 2020]
[Amended by Business Laws (Amendment) (No. 2) Act, 2021 (Act No.

1 of 2021) on 30 March 2021]
[Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]
[Amended by Anti-Money Laundering and Combating of Terrorism Financing
Laws (Amendment) Act, 2023 (Act No. 10 of 2023) on 15 September 2023]
[Amended by Business Laws (Amendment) Act, 2024 (Act No. 20 of 2024) on 27 December 2024]
AN ACT of Parliament to consolidate and reform the law relating to the incorporation, registration,
operation, management and regulation of companies; to provide for the appointment and functions of
auditors; to make other provision relating to companies; and to provide for related matters
Part 1 – PRELIMINARY
1. Short title and commencement
(1) This Act may be cited as the Companies Act. (2) This section comes into operation on the date on which this Act is published in Gazette. (3) The Cabinet Secretary shall, by notice published in the Gazette, bring into operation the remaining
provisions of this Act on such date or such different dates as the Cabinet Secretary appoint.

ished in the Gazette, bring into operation the remaining
provisions of this Act on such date or such different dates as the Cabinet Secretary appoint.

(4) If the Cabinet Secretary has failed to bring all of the remaining provisions into operation within
nine months after the date on which this section has come into operation, the Parliament may, by
resolution of each of its Houses, bring into operation such of those provisions as have not yet been
commenced. 2. Objects of this Act
The objects of this Act are to facilitate commerce, industry and other socio-economic activities by
enabling one or more natural persons to incorporate as entities with perpetual succession, with or without
limited liability, and to provide for the regulation of those entities in the public interest, and in particular
in the interests of their members and creditors. 3. Interpretation of provisions of this Act
(1) In this Act, unless the context otherwise requires—
1

in the interests of their members and creditors. 3. Interpretation of provisions of this Act
(1) In this Act, unless the context otherwise requires—
1

Companies Act (Cap. 486) Kenya
“address” includes—
(a) a fax number, e-mail address or any other electronic address used for the purposes of
sending or receiving documents or information by electronic means; and
(b) a postal and physical address;
“administrator”, in relation to a company, means an administrator appointed under the laws
relating to insolvency;
"allotted share capital", in relation to a company, means shares of the company that have been
allotted;
"approved securities exchange" means a securities exchange approved by the Capital Markets
Authority in accordance with the Capital Markets Act (Cap.

"approved securities exchange" means a securities exchange approved by the Capital Markets
Authority in accordance with the Capital Markets Act (Cap.

485A);
“articles” means the articles of association of a company;
“associate”—
(a) in relation to a natural person means—
(i) that person's spouse or child;
(ii) a body corporate of which that person is a director; and
(iii) an employee or partner of that person;
(b) in relation to a body corporate means—
(i) a body corporate of which that body corporate is a director;
(ii) a body corporate in the same group as that body; and
(iii) an employee or partner of that body corporate or of a body corporate in the same
group;
(c) in relation to a partnership that is not a legal person under the law by which it is governed,
means any person who is an associate of any of the partners;
“associated company” means—
(a) a subsidiary of the company;
(b) a holding company of the company; or
(c) a subsidiary of such a holding company;
“auditor” means—
(a) a person or firm appointed as an auditor of a company under Part XXVII; or
(b) a person or firm appointed as an auditor of a body of a kind prescribed by the regulations for
the purposes of this definition;
“authorised signatory” in relation to a company, means a director of the company and also means
—
(a) in the case of a public company, the secretary or a joint secretary of the company; and
(b) in the case of a private company that has a secretary, the secretary;
“Attorney-General” means the Attorney-General appointed under Article 156 the Constitution;
“beneficial owner” means the natural person who ultimately owns or controls a legal person or
arrangements or the natural person on whose behalf a transaction is conducted, and includes those
persons who exercise ultimate effective control over a legal person or arrangement;
2

n on whose behalf a transaction is conducted, and includes those
persons who exercise ultimate effective control over a legal person or arrangement;
2

Companies Act (Cap. 486) Kenya
“body corporate” includes a firm that is a legal person under the law by which it is governed;
"Cabinet Secretary" deleted by Act No. 28 of 2017, s. 2(b);
"called-up share capital" means so much of a company's share capital as equals the aggregate
amount of the calls made on its shares, whether or not those calls have been paid, together with—
(a) any share capital paid up without being called; and
(b) any share capital to be paid on a specified future date under the articles, the terms of
allotment of the relevant shares or any other arrangements for payment of those shares;
"company" means a company formed and registered under this Act or an existing company;
"company limited by guarantee" has the meaning given by section 7;
“company records" (or “records of a company”) means—
(a) any register, index, accounting records, agreement, memorandum, minutes or other
document required by or under this Act to be kept by the company; or
(b) any register kept by the company of its debenture holders;
“company secretary” has the meaning assigned to it under the Certified Public Secretaries of
Kenya Act (Cap.

by the company of its debenture holders;
“company secretary” has the meaning assigned to it under the Certified Public Secretaries of
Kenya Act (Cap.

534)
"the Court" means (unless some other court is specified) the High Court;
"credit sale agreement" means an agreement for the sale of goods under which payment of the
whole or a part of the purchase price is deferred and a security interest in the goods is created or
provided for in order to secure the payment of the whole or a part of the purchase price;
"debenture", in relation to a company, includes debenture stock, bonds and any other securities of
a company (whether or not constituting a charge on the assets of the company);
"deed" means a legal document that grants a right by transferring the right from one person to
another;
"direction" means direction in writing;
“director”, in relation to a body corporate, includes—
(a) any person occupying the position of a director of the body (by whatever name the person is
called); and
(b) any person in accordance with whose directions or instructions (not being advice given in a
professional capacity) the directors of the body are accustomed to act;
“document” means information recorded in any form; and in particular includes a summons,
notice, order or other legal process and a register (whether in hard copy or electronic form);
“dormant company” means a company that is dormant during any period in which it has no
significant accounting transaction;;
“electronic address” means an address used for the purposes of sending or receiving documents or
information by electronic means;
“electronic copy” in relation to a document or information, means a copy of the document or
information that is stored or kept in electronic form;
“electronic form” in relation to a document or information, means the storage or keeping of
the document or information in the form of data, text or images by means of guided or unguided
electromagnetic energy, or both;
3

torage or keeping of
the document or information in the form of data, text or images by means of guided or unguided
electromagnetic energy, or both;
3

Companies Act (Cap.

Companies Act (Cap.

486) Kenya
“electronic means”, in relation to a document or information, means—
(a) sending, supplying or delivering the document or information initially, and receiving it at
its destination, by means of electronic equipment for the processing (including by digital
compression) or storage of data; and
(b) being entirely transmitted, conveyed and received by wire, radio, optical means or by other
electromagnetic means;
“electronic money" means electronically (including magnetically) stored monetary value as
represented by a claim on the electronic money issuer that—
(a) is issued on receipt of funds for the purpose of making payment transactions;
(b) is accepted by a person other than the electronic money issuer; and
(c) is not excluded by the regulations;
"electronic money issuer" means a person authorised by the regulations to issue electronic money;
"eligible member", in relation a resolution of a company, means a member who, under the articles
of the company, is entitled to vote on the resolution;
"employees’ share scheme" means a scheme for encouraging or facilitating the holding of shares
in, or debentures of, a company by or for the benefit of—
(a) the bona fide employees or former employees of—
(i) the company;
(ii) a subsidiary of the company;
(iii) the company's holding company or a subsidiary of the company's holding company; or
(b) the spouses, surviving spouses, or minor children or step-children of those employees or
former employees;
"equity share capital" means a company's issued share capital excluding any part of that capital
that does not confer any right, either with respect to dividends or to capital, to participate beyond a
specified amount in a distribution;
“equity securities" means—
(a) ordinary shares in a company; or
(b) rights to subscribe for, or to convert securities into ordinary shares in the company;
"excluded from consolidation", in relation to a group financial statement, means that the
undertaking concerned is not included or liable to be included in that statement;
“expenses" includes costs; and “expenses” (of an investigation) includes expenses incidental to
the investigation;
"expression" includes sign, symbol, logo and mark;
“existing company" means—
(a) a company formed and registered under the repealed Act; or
(b) a company that was formed and registered under either of the repealed Ordinances (as
defined by that Act);
“firm" means an entity, whether or not a legal person, that is not a natural person; and includes a
body corporate, sole proprietorship, partnership or other unincorporated association;
“Foreign Companies Register" means the register kept under section 994;
4

orate, sole proprietorship, partnership or other unincorporated association;
“Foreign Companies Register" means the register kept under section 994;
4

Companies Act (Cap. 486) Kenya
“foreign company" means a company incorporated outside Kenya;
"foreign companies regulations" means regulations made under section 995 and in force;
"former name" means a name by which a natural person was formerly known for business purposes;
"general meeting" in relation to a company, means a general meeting which may be a physical,
virtual or hybrid meeting of the company;
“group", in relation to a body corporate, means the body corporate, any other body corporate that is
its holding company or subsidiary and any other body corporate that is a subsidiary of that holding
company;
“group undertaking", in relation to an individual undertaking, means an undertaking that is—
(a) a parent undertaking or subsidiary undertaking of the individual undertaking; or
(b) a subsidiary undertaking of any parent undertaking of the individual undertaking;
"hard copy form" means a document or information that is sent, supplied or delivered in a paper
copy or similar form capable of being read and references to hard copy have a corresponding
meaning;
"hire-purchase agreement" means a hire-purchase agreement as defined in section 2(1) of the
Hire Purchase Act (Cap.

copy have a corresponding
meaning;
"hire-purchase agreement" means a hire-purchase agreement as defined in section 2(1) of the
Hire Purchase Act (Cap.

507);
"holding company" (of another company) means a company of which the other company is a
subsidiary company of the company;
"holding company" in relation to another company, means a company that—
(a) controls the composition of that other company's board of directors;
(b) controls more than half of the voting rights in that other company;
(c) holds more than half of that other company's issued share capital; or
(d) is a holding company of a company that is that other company's holding company;
"hybrid meeting" in relation to a company general meeting, means a meeting where some
participants are in the same physical location while other participants join the meeting through
electronic means including video conference, audio conference, web conference or such other
electronic means;
"in default", in relation to an officer of a company, has the meaning given by section 996;
"in liquidation" has the same meaning as the meaning provided under the laws relating to
insolvency;
"intellectual property" means—
(a) any patent, trade mark, registered design, copyright or design right; or
(b) any licence under or in respect of a patent, trade mark, registered design, copyright or design
right;
"issued share capital", in relation to a company, means shares of the company that have been
issued;
"key performance indicators", in relation to a company, means factors by reference to which the
development, performance or position of the company's business can be measured effectively;
"liabilities" includes duties;
"limited company" has the meaning given by section 5;
5

position of the company's business can be measured effectively;
"liabilities" includes duties;
"limited company" has the meaning given by section 5;
5

Companies Act (Cap.

Companies Act (Cap.

486) Kenya
"lodge", in relation to a document or information required or permitted to be registered, includes
deliver, file, send, submit the document or information or, in the case of a notice, give the notice;
"member" means a member of a company;
"name", in relation to a natural person, means the person's given name and family name, or if the
person is usually known by a title, the person's title, either in addition to or instead of the person's
given name or family name, or both;
“nominator” means an individual, group of individuals or legal person that issues instructions
directly or indirectly to a nominee to act on their behalf in the capacity of a director or a
shareholder;
“nominee” means an individual or legal person instructed by the nominator to act on their behalf
in a certain capacity regarding a company;
“nominee director” means an individual or legal entity that routinely exercises the functions of
the director in the company on behalf of and subject to the direct or indirect instructions of the
nominator;
“nominee shareholder” means a shareholder who exercises the associated voting rights according
to the instructions of the nominator or receives dividends on behalf of the nominator;
"notice" means notice in writing;
"notify" means notify in writing;
“net assets", in relation to a company, means the aggregate of the assets less the aggregate of its
liabilities, and for the purpose of this definition, "liabilities" includes provisions of any kind;
“officer", in relation to a company or other body corporate, means—
(a) any director, manager or secretary of the company or body; and
(b) any other person who is, because of a provision of this Act, to be treated as an officer of the
company or body for the purposes of the provision;
"ordinary shares" means shares other than shares that, with respect to dividends and capital,
confer a right to participate only up to a specified amount in a distribution;
"parent undertaking" (of another undertaking) means an undertaking that—
(a) holds a majority of the voting rights in the other undertaking;
(b) is a member of the other undertaking and has the right to appoint or remove a majority of its
board of directors;
(c) has the right to exercise a dominant influence over the other undertaking—
(i) because of provisions contained in the other undertaking's articles; or
(ii) of a control contract;
(d) has the power to exercise, or actually exercises, dominant influence or control over the other
undertaking; or
(e) is a member of the other undertaking and controls alone, under an agreement with other
shareholders or members, a majority of the voting rights in it;
"pension scheme" means a scheme for the provision of benefits consisting of or including a
pension, lump sum benefit, gratuity or other similar benefit given or to be given on the retirement
or death, or in anticipation of the retirement of employees or former employees or, in connection
with the past service of employees or former employees, either after their retirement or death;
6

t of employees or former employees or, in connection
with the past service of employees or former employees, either after their retirement or death;
6

Companies Act (Cap. 486) Kenya
"personal injury" includes any disease and any impairment of a person's physical or mental
condition;
"printed" includes typewritten or lithographed or produced by any mechanical means;
"private company" has the meaning given by section 9;
“prescribed financial accounting standards” means statements of standard accounting practice
issued by the Institute of Certified Public Accountants of Kenya in accordance with the Accountants
Act (Cap.

atements of standard accounting practice
issued by the Institute of Certified Public Accountants of Kenya in accordance with the Accountants
Act (Cap.

531);
"profit and loss account" includes an income statement or other equivalent financial statement
required to be prepared in accordance with the prescribed financial accounting standards;
"property" includes all rights and interests in property;
"public company" has the meaning given by section 10;
“publish", in relation to a document or information, means to issue or circulate the document or
information or otherwise make it available for public inspection in a manner calculated to invite
members of the public generally, or any class of members of the public, to read it;
“qualified", in relation to an auditor's report (or a statement contained in an auditor's report) on
a company's financial statement, means that the report or statement does not state the auditor's
unqualified opinion that the financial statement has been properly prepared—
(a) in accordance with this Act; or
(b) if an undertaking not required to prepare financial statements in accordance with this Act
—in accordance with any corresponding written law under which the undertaking is, or its
directors are, required to prepare financial statements or accounts;
“qualifying person” in relation to a meeting of a company means—
(a) a natural person who is a member of the company;
(b) a person authorised under section 297 to act as the representative of a corporation in
relation to the meeting; or
(c) a person appointed as proxy of a member of the company in relation to the meeting;
“quoted company” means a company whose equity share capital has been included in the official
list on a stock exchange or other regulated market in Kenya;
“register” (when used as a verb) means register under this Act;
“Register” means the Register of Companies kept under this Act, but does not include the Foreign
Companies Register;
“registered foreign company” means a foreign company registered, or taken to be registered, in
accordance with Part XXXVII;
"the Registrar" means the person for the time being holding office as Registrar of Companies under
section 831;
"the regulations" means the companies general regulations made and in force under this Act,
but does not, unless expressly provided, include the foreign companies regulations or savings and
transitional regulations;
“the repealed Act" means the Companies Act (Cap.

xpressly provided, include the foreign companies regulations or savings and
transitional regulations;
“the repealed Act" means the Companies Act (Cap.

486) repealed by this Act;
“resolution for reducing share capital", in relation to a company that has a share capital, means a
special resolution passed by the company in accordance with section 407;
7

share capital", in relation to a company that has a share capital, means a
special resolution passed by the company in accordance with section 407;
7

Companies Act (Cap.

Companies Act (Cap.

486) Kenya
"retention of title agreement" means an agreement for the sale of goods to a company, being an
agreement—
(a) that does not constitute a charge on the goods; but
(b) under which, if the seller is not paid and the company is wound up, the seller will have
priority over all other creditors of the company with respect to the goods or any property
representing the goods;
“securities” includes—
(a) options;
(b) futures; and
(c) contracts for differences, and rights or interests in those investments;
“service address”, in relation to a person, means an address at which documents may be
effectively served on that person for the purposes of this Act;
“services” means anything other than goods or land;
“shares”—
(a) in relation to an undertaking with a share capital, means shares in the share capital of the
undertaking;
(b) in relation to an undertaking with capital but no share capital, means rights to share in the
capital of the undertaking; and
(c) in relation to an undertaking without capital, means interests—
(i) conferring a right to share in the profits, or the liability to contribute to the losses, of
the undertaking; or
(ii) giving rise to an obligation to contribute to the debts or expenses of the undertaking
in the event of a liquidation;
“sign” includes sign by means of an electronic signature;
"significant accounting transaction", in relation to a dormant company, means a transaction that
is required by section 638 to be entered in the company's accounting records;
"subsidiary” means a company of which another company is its holding company;
"subsidiary undertaking” (of another undertaking) means an undertaking of which the other
undertaking is its parent;
"traded company", means a company whose securities are admitted to trading on a securities
exchange or other regulated market operating in Kenya;
"turnover", in relation to a company, means the amounts derived from the provision of goods or
services, or goods and services, in the course of the company ordinary business, after deducting—
(a) trade discounts;
(b) value added tax; and
(c) any other taxes based on the amounts so derived;
“uncalled share capital”, in relation to a company, means so much means so much of the
company's share capital as is not called-up share capital of the company;
“under administration" has the same meaning as provided for in the laws related to insolvency;
8

tal as is not called-up share capital of the company;
“under administration" has the same meaning as provided for in the laws related to insolvency;
8

Companies Act (Cap.

Companies Act (Cap.

486) Kenya
“undertaking” means—
(a) a body corporate or partnership; or
(b) an unincorporated association carrying on a trade or business, with or without a view to
profit;
"undistributable reserves" (of a company) means those reserves of the company that comprise—
(a) its share premium account;
(b) its capital redemption reserve;
(c) the amount by which its accumulated, unrealised profits (so far as not previously utilised by
capitalisation) exceed its accumulated, unrealised losses (so far as not previously written off
in a reduction or reorganisation of capital duly made); and
(d) any other reserve that the company is prohibited from distributing by its articles;
“unlimited company” has the meaning given by section 8;
"virtual meeting" in relation to a company general meeting, means a meeting where all members
join and participate in the meeting through electronic means including video conference, audio
conference, web conference or such other electronic means;
“wholly-owned subsidiary company" (of another company) means a company that has no members
other than that other company and that other company's wholly owned subsidiaries (or persons
acting on behalf of that other company or its wholly-owned subsidiaries;
“working day" means any day between Monday and Friday, but does not include a public holiday.

of that other company or its wholly-owned subsidiaries;
“working day" means any day between Monday and Friday, but does not include a public holiday.

(2) In this Act, a reference to a company having a share capital is to a company that has power under its
constitution to issue shares. (3) In this Act, a reference to issued or allotted shares, or to issued or allotted share capital, includes
shares taken on the formation of the company by the subscribers to the company's memorandum. (4) For the purposes of this Act, shares in a company are allotted when a person acquires the
unconditional right to be included in the company's register of members in respect of the shares. (5) In the case of an undertaking not trading for profit, a reference in this Act to a profit and loss
account is a reference to an income and expenditure account, and a reference—
(a) to profit and loss; and
(b) in relation to a group financial statement—to a consolidated profit and loss account, is to be
construed accordingly. (6) The reference in paragraph (c) of the definition of "undistributable reserves" in subsection (1)
to capitalisation does not include a transfer of profits of the company to its capital redemption
reserve.

undistributable reserves" in subsection (1)
to capitalisation does not include a transfer of profits of the company to its capital redemption
reserve.

(7) In a provision of this Act in which a reference to the laws relating to insolvency occurs, the
reference includes, so far as relevant to a matter existing before the commencement of the
provision, a reference to the corresponding provision (if any) of the repealed Act. (8) The regulations may, for the purposes of this Act, explain and circumscribe the definitions of
"parent undertaking" and "subsidiary undertaking" in subsection (1) and otherwise supplement
those definitions. [Act No. 28 of 2017, s. 2, Act No. 1 of 2021, s. 7, Act No. 10 of 2023, Sch.]
9

rtaking" in subsection (1) and otherwise supplement
those definitions. [Act No. 28 of 2017, s. 2, Act No. 1 of 2021, s. 7, Act No. 10 of 2023, Sch.]
9

Companies Act (Cap. 486) Kenya
4. Provisions supplementing definition of “holding company” in section 3
(1) For the purposes of paragraph (a) of the definition of "holding company" in section 3(1), a company
controls the composition of another company's board of directors if it has power to appoint or
remove all, or a majority, of that other company's directors without any other person's consent. (2) For the purposes of subsection (1), a company has the power to make such an appointment if—
(a) without the exercise of the power in a person's favour by the company, the person cannot be
appointed as a director of that other company; or
(b) it necessarily follows from a person being a director or other officer of the company that the
person is appointed as a director of that other company. (3) In paragraph (c) of that definition, a reference to a company's issued share capital excludes any part
of it that carries no right to participate beyond a specified amount in a distribution of profits or
capital.

s issued share capital excludes any part
of it that carries no right to participate beyond a specified amount in a distribution of profits or
capital.

(4) For the purposes of that definition—
(a) if any share is held, or any power is exercisable, by a company in a fiduciary capacity, the
share or power is to be regarded as not being held or exercisable by the company; and
(b) subject to subsections (5) and (6), if any share is held, or any power is exercisable, by a
subsidiary of a company, or by a person as nominee for a company or such a subsidiary, the
share or power is to be regarded as being held or exercisable by the company. (5) For the purposes of that definition, any share in another company held, or any power in relation
to another company exercisable, by a person by virtue of a debenture of that other company, or
of a trust deed for securing an issue of such a debenture, is to be regarded as not being held or
exercisable by the person.

of that other company, or
of a trust deed for securing an issue of such a debenture, is to be regarded as not being held or
exercisable by the person.

(6) For the purposes of that definition, any share held, or any power exercisable, by a company or a
subsidiary of a company, or by a person as nominee for a company or such a subsidiary, is to be
regarded as not being held or exercisable by the body corporate or subsidiary if—
(a) the ordinary business of the company or subsidiary includes the lending of money; and
(b) the share or power is held or exercisable by way of security only for the purpose of a
transaction entered into in the ordinary course of that business. (7) In subsection (4)(b), a reference to a company or subsidiary excludes a company or subsidiary that is
concerned only in a fiduciary capacity. Part II – COMPANIES AND COMPANY FORMATION
Division 1 — Types of companies
5. Limited companies
For the purposes of this Act, a company is a limited company if it is a company limited by shares or by
guarantee. 6. Companies limited by shares
(1) For the purposes of this Act, a company is a company limited by shares if the liability of its
members is limited by the company's articles to any amount unpaid on the shares held by the
members. 10

pany limited by shares if the liability of its
members is limited by the company's articles to any amount unpaid on the shares held by the
members. 10

Companies Act (Cap. 486) Kenya
(2) For the purposes of subsection (1), the liability of the members of an existing company is taken
to be limited by the company's articles to any amount unpaid on the shares held by the members
if a condition of the memorandum of association of the company stating that the liability of the
members is limited is regarded as a provision of the articles by virtue of section 70. 7. Companies limited by guarantee
(1) For the purposes of this Act, a company is a company limited by guarantee if—
(a) it does not have a share capital;
(b) the liability of its members is limited by the company's articles to the amount that the
members undertake, by those articles, to contribute to the assets of the company in the event
of its liquidation; and
(c) its certificate of incorporate states that it is a company limited by guarantee. (2) Subsection (1) does not prohibit a company limited by guarantee from having a share capital if it
was formed and registered before the commencement of this section. 8.

es not prohibit a company limited by guarantee from having a share capital if it
was formed and registered before the commencement of this section. 8.

Unlimited companies
For the purposes of this Act, a company is an unlimited company if—
(a) there is no limit on the liability of its members; and
(b) its certificate of incorporation states that the liability of its members is unlimited. 9. Private companies
(1) For the purposes of this Act, a company is a private company if—
(a) its articles—
(i) restrict a member's right to transfer shares;
(ii) limit the number of members to fifty; and
(iii) prohibit invitations to the public to subscribe for shares or debentures of the
company;
(iv) requires the consent of all members to add a new member
(b) it is not a company limited by guarantee; and
(c) its certificate of incorporation states that it is a private company. (2) In subsection (1)(a)(ii), “member” excludes—
(a) a member who is an employee of the company; and
(b) a person who was a member while being an employee of the company and who continues to
be a member after ceasing to be such an employee. (3) For the purposes of this section, two or more persons who hold shares in a company jointly are
taken to be a single member. [Act No. 12 of 2019, sch.]
10.

the purposes of this section, two or more persons who hold shares in a company jointly are
taken to be a single member. [Act No. 12 of 2019, sch.]
10.

Public companies
For the purposes of this Act, a company is a public company if—
(a) its articles allow its members the right to transfer their shares in the company;
11

r the purposes of this Act, a company is a public company if—
(a) its articles allow its members the right to transfer their shares in the company;
11

Companies Act (Cap. 486) Kenya
(b) its articles do not prohibit invitations to the public to subscribe for shares or debentures of the
company; and
(c) its certificate of incorporation states that it is a public company. Division 2 — Formation and registration of companies
11. Method of forming company
(1) One or more persons who wish to form a company may—
(a) subscribe their names to a memorandum of association; and
(b) comply with the requirements of sections 13 to 16 with respect to registration. (2) A company formed for an unlawful purpose may not be registered. 12. Memorandum of association
(1) A memorandum of association is a memorandum stating that the subscribers—
(a) wish to form a company under this Act; and
(b) agree to become members of the company and, in the case of a company that is to have a
share capital, to take at least one share each. (2) A company may not be registered unless its memorandum of association is—
(a) in the form prescribed by the regulations; and
(b) authenticated by each subscriber. 13.

ot be registered unless its memorandum of association is—
(a) in the form prescribed by the regulations; and
(b) authenticated by each subscriber. 13.

Registration documents
(1) A person who wishes to register a company shall lodge with the Registrar—
(a) an application for registration of the company that complies with subsections (2) and (4);
(b) a memorandum of association of the company; and
(c) except as provided by section 21, a copy of the proposed articles of association. (2) An application for registration complies with this subsection if it states—
(a) the proposed name of the company;
(b) the proposed location of the registered office of the company;
(c) whether the liability of the members of the company is to be limited, and if so whether it is
to be limited by shares or by guarantee; and
(d) whether the company is to be a private or a public company. (3) If the application for registration of a company is submitted by an agent for the subscribers to the
memorandum of association, the agent shall include in the application the name and address of the
agent.

mitted by an agent for the subscribers to the
memorandum of association, the agent shall include in the application the name and address of the
agent.

(4) An application for registration complies with this subsection if it contains or is accompanied by—
(a) in the case of a company that is to have a share capital, a statement of capital and initial
shareholding in accordance with section 14;
(b) in the case of a company that is to be limited by guarantee, a statement of guarantee in
accordance with section 15;
12

ccordance with section 14;
(b) in the case of a company that is to be limited by guarantee, a statement of guarantee in
accordance with section 15;
12

Companies Act (Cap. 486) Kenya
(c) a statement of the company's proposed officers in accordance with section 16; and
(d) a statement of the particulars in respect of each beneficial owner of the proposed company in
accordance with section 16A of this Act. (5) In order to be registered, the articles of association of a company are required to—
(a) be contained in a single document;
(b) be printed;
(c) be divided into paragraphs numbered consecutively;
(d) be dated; and
(e) be signed by each subscriber to the articles. (6) A subscriber's signature is required to be attested by a witness, whose name, occupation and postal
address are required to be written or printed below the subscriber's signature. [Act No. 10 of 2023, Sch.]
14. Statement of capital and initial shareholdings
(1) If the company is to have a share capital, the applicants for registration shall ensure that the
requisite statement of capital and initial shareholding comply with subsections (2) and (3).

al, the applicants for registration shall ensure that the
requisite statement of capital and initial shareholding comply with subsections (2) and (3).

(2) The statement of capital and initial shareholding complies with this subsection if it states—
(a) the total number of shares of the company to be taken on formation by the subscribers to the
memorandum of association;
(b) the aggregate nominal value of those shares;
(c) for each class of shares—
(i) the particulars of the rights attached to the shares prescribed by the regulations for
the purposes of this subsection;
(ii) the total number of shares of that class; and
(iii) the aggregate nominal value of shares of that class; and
(d) the amount to be paid up and the amount (if any) to be unpaid on each share, whether on
account of the nominal value of the share or in the form of a premium.

nt to be paid up and the amount (if any) to be unpaid on each share, whether on
account of the nominal value of the share or in the form of a premium.

(3) The statement of capital and initial shareholding complies with this subsection if it—
(a) contains such information as may be prescribed for the purpose of identifying the
subscribers to the memorandum of association;
(aa) contains information as to whether any shareholder is a nominee and the particulars of their
nominator;
(b) states, with respect to each subscriber to the memorandum—
(i) the number, nominal value of each share and class of shares to be taken by the
subscriber on formation; and
(ii) the amount to be paid up and the amount, if any to be unpaid on each share, whether
on account of the nominal value of the share or in the form of a premium. (4) If a subscriber to the memorandum of association is to take shares of more than one class, the
information required under subsection (3)(b)(i) is required for each class. [Act No. 10 of 2023, Sch.]
13

s to take shares of more than one class, the
information required under subsection (3)(b)(i) is required for each class. [Act No. 10 of 2023, Sch.]
13

Companies Act (Cap. 486) Kenya
15. Statement of guarantee
(1) The applicant for registration of a company to be limited by guarantee shall ensure that the
requisite statement of guarantee contains the prescribed information to enable the subscribers to
the memorandum of association to be identified. (2) The applicant shall also ensure that the statement of guarantee states that each person who is a
member undertakes, if the company is liquidated while the person is a member or within twelve
months after the person ceases to be a member, to contribute to the assets of the company such
amount as may be required for—
(a) paying the debts and liabilities of the company contracted before the person ceases to be a
member;
(b) paying the costs, charges and expenses of liquidation; and
(c) adjusting the rights of the contributories among themselves. 16. Statement of proposed officers
(1) The applicant for registration shall ensure that the requisite statement of the company's proposed
officers complies with subsections (2) and (4).

(1) The applicant for registration shall ensure that the requisite statement of the company's proposed
officers complies with subsections (2) and (4).

(2) The statement complies with this subsection if it contains the required particulars of—
(a) the person who is, or persons who are, to be the first director or directors of the company;
(b) in the case of a company that is to be a public company, the person who is or the persons
who are to be the first secretary or joint secretaries of the company; and
(c) any person who is to be appointed as an authorised signatory of the company. (3) The required particulars are the particulars that will be required to be stated—
(a) in the case of a director, in the company's register of directors and register of directors'
residential addresses;
(b) in the case of a secretary of a public company, in the company's register of secretaries;
(c) in the case of a person appointed as an authorised signatory, in the company's register of
authorised signatories; and
(d) in the case of a nominee director, the fact that they are nominees and the particulars of their
nominator.

register of
authorised signatories; and
(d) in the case of a nominee director, the fact that they are nominees and the particulars of their
nominator.

(4) The statement of the company's proposed officers complies with this subsection if it contains a
consent by each of the persons named as a director, as secretary or as one of joint secretaries or as
an authorised signatory, to act in the relevant capacity. (5) If all the partners in a firm are to be joint secretaries, consent can be given by one partner on behalf
of all the partners. [Act No. 10 of 2023, Sch.]
16A. Statement of particulars of beneficial owners
(1) The applicant for registration shall ensure that the requisite statement of particulars of the
company's beneficial owners complies with subsection (2). (2) The statement of particulars of beneficial owners shall contain—
(a) the required particulars of anyone who is a beneficial owner; and
14

ion (2). (2) The statement of particulars of beneficial owners shall contain—
(a) the required particulars of anyone who is a beneficial owner; and
14

Companies Act (Cap. 486) Kenya
(b) any other matters that, on incorporation, shall be required to be entered in the company's
register of beneficial owners under this Act. [Act No. 10 of 2023, Sch.]
17. Registrar to register company if requirements of Act are complied with
If satisfied that an application for registration complies with the requirements of this Act relating to
registration, the Registrar shall register the company and allocate to it a unique identifying number. 18. Registrar to issue company with certificate of incorporation
(1) On the registration of a company in accordance with section 17, the Registrar shall issue to the
company a certificate of incorporation that complies with this section. (2) A certificate of incorporation complies with this section if it states—
(a) the name of the company and its unique identifying number;
(b) the date of the company's incorporation;
(c) whether the company's liability is limited or unlimited, and if it is limited, whether it is
limited by shares or by guarantee; and
(d) whether the company a private or a public one.

is limited or unlimited, and if it is limited, whether it is
limited by shares or by guarantee; and
(d) whether the company a private or a public one.

(3) The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's
official seal. (4) The certificate is conclusive evidence that the requirements of this Act relating to registration have
been complied with and that the company is duly registered under this Act. 19.

vidence that the requirements of this Act relating to registration have
been complied with and that the company is duly registered under this Act. 19.

Effect of registration
From the date of incorporation of a company—
(a) the subscribers to the memorandum, together with such other persons as may from time to time
become members of the company, become a body corporate by the name stated in the certificate of
incorporation;
(b) the company can do all of the things that an incorporated company can do;
(c) the registered office of the company is as stated in the application for registration;
(d) the status of the company is as stated in its certificate of incorporation;
(e) in the case of a company having a share capital, the subscribers to the memorandum of association
become holders of the shares specified in the statement of capital and initial shareholdings; and
(f) the persons named in the statement of proposed officers—
(i) as directors of the company;
(ii) in the case of a public company, as the secretary or as a joint secretary of the company; or
(iii) as an authorised signatory of the company, become holders of those offices. Part III – A COMPANY'S CONSTITUTION
Division 1 — Articles of Association
15

s an authorised signatory of the company, become holders of those offices. Part III – A COMPANY'S CONSTITUTION
Division 1 — Articles of Association
15

Companies Act (Cap. 486) Kenya
20. Regulation may prescribe model articles
(1) The regulations may prescribe model articles for companies. (2) Different versions of model articles may be prescribed for different descriptions of companies. (3) A company may adopt all or any of the provisions of a prescribed version of model articles. (4) An amendment to regulations prescribing a version of model articles does not affect a company
registered before the amendment took effect. 21. Default application of model articles
(1) On the formation of a limited company—
(a) if its articles are not registered; or
(b) if its articles are registered, in so far as they do not exclude or modify the relevant model
articles, the relevant model articles, so far as applicable, form part of the company's articles
in the same manner and to the same extent as if articles in the form of those articles had
been duly registered. (2) In subsection (1), "relevant model articles" means the model articles prescribed for a company of
that kind in force on the date the company is registered. 22. Amendment of articles
A company may amend its articles only by special resolution. 23.

f
that kind in force on the date the company is registered. 22. Amendment of articles
A company may amend its articles only by special resolution. 23.

Effect of amendment of articles on company’s members
(1) A member of a company is not bound by an amendment to the articles of a company after the date
on which the person became a member, if and so far as the amendment—
(a) requires the person to take or subscribe for more shares than the number held by the person
at the date on which the amendment is made; or
(b) in any way increases the person liability as at that date to contribute to the company's share
capital or otherwise to pay money to the company. (2) Subsection (1) does not apply if the member agrees in writing, either before or after the amendment
is made, to be bound by the amendment. 24. Amended articles to be sent to Registrar
(1) If a company amends its articles, the company shall lodge with the Registrar for registration a
copy of the articles as amended not later than fourteen days after the resolution containing the
amendment is passed. (2) This section does not require a company to set out in its articles any provisions of model articles
that—
(a) are applied by the articles; or
(b) apply because of section 2.

equire a company to set out in its articles any provisions of model articles
that—
(a) are applied by the articles; or
(b) apply because of section 2.

(3) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. 16

ficer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. 16

Companies Act (Cap. 486) Kenya
(4) If, after a company or any of its officers is convicted of an offence under subsection (3), the
company continues to fail to lodge an amended copy of its articles, the company, and each officer of
the company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. 25. Registrar’s notice to comply in case of failure with respect to amended articles
(1) On being satisfied that a company has failed to comply with any provision requiring it—
(a) to lodge with the Registrar a document making or evidencing an amendment in the
company's articles; or
(b) to lodge with the Registrar a copy of the company's articles as amended,
the Registrar may give notice to the company requiring it to comply. (2) The Registrar shall in such a notice—
(a) specify the date on which it is issued; and
(b) require the company to comply with the notice within twenty eight days from that date.

h a notice—
(a) specify the date on which it is issued; and
(b) require the company to comply with the notice within twenty eight days from that date.

(3) If a company fails to comply with a notice under subsection (2) within the required period, the
company, and each officer of the company who is in default, commit an offence and on conviction
are each liable to a fine not exceeding two hundred thousand shillings. (4) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with the notice, the company, and each officer of the company
who is in default, commit a further offence on each day on which the failure continues and on
conviction are each liable to a fine not exceeding twenty thousand shillings for each such offence. 26. Existing companies provisions of memorandum treated as provisions of articles
Provisions that immediately before the commencement of this Part were contained in a company's
memorandum of association but are not provisions of the kind referred to in section 12 become provisions
of the company's articles on that commencement. Division 2 — Resolutions and agreements affecting company's constitution
27.

tion 12 become provisions
of the company's articles on that commencement. Division 2 — Resolutions and agreements affecting company's constitution
27.

Copies of resolutions or agreements recorded by Registrar
(1) Within fourteen days after a resolution or agreement to which this section applies is passed or
made, the company concerned shall lodge with the Registrar for registration—
(a) a copy of the resolution or agreement; or
(b) in the case of a resolution or agreement that is not in writing, a written memorandum setting
out the terms of the resolution or agreement. (2) This section applies to the following kinds of resolutions and agreements—
(a) a special resolution;
(b) a resolution or agreement agreed to by all the members of a company that, if not so agreed
to, would not have been effective for its purpose unless passed as a special resolution;
(c) a resolution or agreement agreed to by all the members of a class of shareholders that, if
not so agreed to, would not have been effective for its purpose unless passed by a particular
majority or otherwise in a particular manner;
17

hat, if
not so agreed to, would not have been effective for its purpose unless passed by a particular
majority or otherwise in a particular manner;
17

Companies Act (Cap. 486) Kenya
(d) a resolution or agreement that effectively binds all members of a class of shareholders
though not agreed to by all those members;
(e) a resolution to give, vary, revoke or renew authority for the purposes of section 451;
(f) a resolution conferring, varying, revoking or renewing authority following market purchase
of a company's own shares;
(g) a resolution for voluntary liquidation;
(h) a resolution of the director of a private company that the company should be converted into
a public company; or
(i) a resolution passed regarding transfer of securities. (3) The Registrar shall record a resolution or agreement lodged under subsection (1). (4) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings.

officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings.

(5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to lodge the relevant copy or written memorandum, the company, and
each officer of the company who is in default, commit a further offence on each day on which the
failure continues and on conviction are each liable to a fine not exceeding twenty thousand shillings
for each such offence. (6) For the purposes of this section, a liquidator of the company is treated as an officer of the company. [Act No. 28 of 2017, s. 3.]
28. Statement of company’s objects
(1) Unless the articles of a company specifically restrict the objects of the company, its objects are
unrestricted. (2) If a company amends its articles so as to add, remove or alter a statement of the company's objects
—
(a) it shall lodge with the Registrar for registration a notice giving particulars of the
amendment;
(b) on receipt of the notice, the Registrar shall register it; and
(c) the amendment is not effective until the notice is recorded on the Register.

t;
(b) on receipt of the notice, the Registrar shall register it; and
(c) the amendment is not effective until the notice is recorded on the Register.

(3) An amendment to the company's objects does not affect rights or obligations of the company or
render defective legal proceedings by or against it. Division 3 — Supplementary provisions
29. Documents to be provided to members
(1) A company shall, on being requested to do so by a member of the company, send to the member the
following documents—
(a) an up-to-date copy of the articles of the company;
(b) a copy of any resolution or agreement relating to the company that has been recorded by the
Registrar under section 27;
(c) a copy of any court order under this Act that alters the company's constitution;
18

pany that has been recorded by the
Registrar under section 27;
(c) a copy of any court order under this Act that alters the company's constitution;
18

Companies Act (Cap. 486) Kenya
(d) a copy of any court order under Part XXXIV that sanctions a compromise or arrangement
involving the company or facilitating its reconstruction or amalgamation;
(e) copy of any court order under section 782 that alters the company's constitution;
(f) copy of the current certificate of incorporation of the company and of any past certificates of
incorporation;
(g) in the case of a company with a share capital, a current statement of the company's capital;
(h) the case of a company limited by guarantee, a copy of the statement of guarantee. (2) The statement of capital of the company required by subsection (1)(g) is a statement of—
(a) the total number of shares of the company;
(b) the aggregate nominal value of those shares;
(c) for each class of shares—
(i) the particulars of the rights attached to the shares prescribed by the regulations for
the purposes of this subsection;
(ii) the total number of shares of that class;
(iii) the aggregate nominal value of shares of that class; and
(d) the amount paid up and the amount (if any) unpaid on each share, whether on account of the
nominal value of the share or in the form of a premium.

(d) the amount paid up and the amount (if any) unpaid on each share, whether on account of the
nominal value of the share or in the form of a premium.

(3) A company is not required to comply with a request under subsection (1) unless the member meets
the costs of preparing and sending the documents. (4) If a company fails to comply with a request made under subsection (1), the company, and each
officer of the company who is in default, commit an offence and on conviction are each liable to a
fine not exceeding five hundred thousand shillings. (5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with the request or a further request made by the member
concerned, the company, and each officer of the company who is in default, commit a further
offence on each day on which the failure continues and on conviction are each liable to a fine not
exceeding fifty thousand shillings for each such offence. 30. Effect of company’s constitution
(1) A company's constitution binds the company and its members to the same extent as if the company
and its members had covenanted agreed with each other to observe the constitution.

ds the company and its members to the same extent as if the company
and its members had covenanted agreed with each other to observe the constitution.

(2) Money payable by a member to the company under its constitution is recoverable in a court of
competent jurisdiction as a debt due from the member to the company. 31. Right to participate is profits otherwise than a member is void
In the case of a company limited by guarantee, a provision in the articles of the company, or in a
resolution of the company, purporting to give a person a right to participate in the divisible profits of the
company otherwise than as a member is void. 32. Application to single member companies of enactment and rules of law
Any enactment or rule of law applicable to companies formed by two or more persons or having two or
more members applies with any necessary modification in relation to a company formed by one person or
having only one person as a member. 19

ng two or
more members applies with any necessary modification in relation to a company formed by one person or
having only one person as a member. 19

Companies Act (Cap. 486) Kenya
Part IV – CAPACITY OF COMPANY
33. Company’s capacity
The validity of an act or omission of a company may not be called into question on the ground of lack of
capacity because of a provision in the constitution of the company. 34. Power of directors to bind company
(1) In favour of a person dealing with a company in good faith, the power of the directors to bind
the company, or authorise others to do so, is free of any is limitation contained in the company's
constitution. (2) For purposes of subsection (1)—
(a) a person deals with a company if the person is a party to a transaction or other act to which
the company is a party; and
(b) a person dealing with a company—
(i) is not bound to enquire as to any limitation on the powers of the directors to bind the
company or to authorise others to do so;
(ii) is presumed to have acted in good faith unless the contrary is proved; and
(iii) is not to be regarded as having acted in bad faith only because the person knew that
a particular act is beyond the powers of the directors under the constitution of the
company.

ing acted in bad faith only because the person knew that
a particular act is beyond the powers of the directors under the constitution of the
company.

(3) The references in subsection (2) to limitations on the directors' powers under the company's
constitution include limitations deriving—
(a) from a resolution of the company or of any class of shareholders of the company; or
(b) from an agreement between the members of the company or of any class of shareholders of
the company. (4) This section does not affect a right of a member of the company to bring proceedings to restrain the
doing of an act that is beyond the powers of the directors, but no such proceedings lie in respect of
an act to be done in fulfilment of a legal obligation arising from a previous act of the company. (5) This section does not affect a liability incurred by the directors, or by any other person, because the
directors have exceeded their powers. (6) This section has effect subject to section 36. 35. Company contracts
(1) A contract may be made—
(a) by a company, in writing; or
(b) on behalf of a company, by a person acting under its authority, express or implied. (2) Any formalities required by law for a contract made by a natural person also apply, unless a contrary
intention appears, to a contract made by or on behalf of a company. [Act No.

law for a contract made by a natural person also apply, unless a contrary
intention appears, to a contract made by or on behalf of a company. [Act No.

1 of 2020, s. 29.]
20

1 of 2020, s. 29.]
20

Companies Act (Cap. 486) Kenya
36. Constitutional limitations: transactions involving directors or their associates
(1) This section applies to a transaction if or to the extent that its validity depends on section 34. (2) Nothing in this section precludes the operation of any other written law under which the
transaction can be questioned or any liability to the company may arise. (3) If—
(a) a company enters into such a transaction; and
(b) the parties to the transaction include —
(i) a director of the company or of its holding company; or
(ii) a person connected with any such director, the transaction is voidable at the instance
of the company. (4) Whether or not it is avoided, any such party to the transaction as is referred to in subsection (3)(b)
(i) or (ii), and any director of the company who authorised the transaction, is liable—
(a) to account to the company for any gain the director has made from the transaction (whether
directly or indirectly); and
(b) to indemnify the company for any loss or damage resulting from the transaction.

as made from the transaction (whether
directly or indirectly); and
(b) to indemnify the company for any loss or damage resulting from the transaction.

(5) The transaction ceases to be voidable if—
(a) restitution of any money or other asset which was the subject matter of the transaction is no
longer possible;
(b) the company is indemnified for any loss or damage resulting from the transaction;
(c) rights acquired in good faith for value and without actual notice of the directors' exceeding
their powers by a person who is not party to the transaction would be affected by the
avoidance; or
(d) the transaction is affirmed by the company. (6) A person other than a director of the company is not liable under subsection (4) if the person shows
that, at the time the transaction was entered into, the person did not know that the directors were
exceeding their powers. (7) Nothing in the preceding provisions of this section affects the rights of any party to the transaction
not within subsection (3)(b)(i) or (ii). (8) But the Court may, on the application of the company or any such party, make an order affirming,
severing or setting aside the transaction on such terms as appear to the Court to be just.

of the company or any such party, make an order affirming,
severing or setting aside the transaction on such terms as appear to the Court to be just.

(9) In this section—
(a) "transaction" includes any act; and
(b) the reference to a person connected with a director has the same meaning as in Part IX. 37. Execution of documents
(1) Deleted by Act No. 1 of 2020, s. 30. (2) A document is validly executed by a company if it is signed on behalf of the company—
(a) by two authorised signatories; or
(b) by a director of the company in the presence of a witness who attests the signature. 21

half of the company—
(a) by two authorised signatories; or
(b) by a director of the company in the presence of a witness who attests the signature. 21

Companies Act (Cap. 486) Kenya
(3) A document in favour of a purchaser is effectively executed by a company if it purports to be signed
in accordance with subsection (2). (4) For purpose of subsection (3), "purchaser" means a purchaser in good faith for valuable
consideration, and includes a lessee, mortgagee or other person who for valuable consideration
acquires an interest in property. (5) If a document is to be signed by a person on behalf of more than one company, it is not effective for
the purposes of this section unless the person signs it separately in each capacity. (6) A reference in this section to a document being, or purporting to be, signed by a director or
secretary is, if that office is held by a firm, to be read as a reference to its being, or purporting to be,
signed by a natural person authorised by the firm to sign on its behalf. (7) This section applies to a document that is, or purports to be, executed by a company in the name of,
or on behalf of, another person (whether or not that person is also a company). [Act No. 1 of 2020, s. 30.]
38. [Deleted by Act No. 1 of 2020, s. 31.]
39.

n behalf of, another person (whether or not that person is also a company). [Act No. 1 of 2020, s. 30.]
38. [Deleted by Act No. 1 of 2020, s. 31.]
39.

Execution of deeds by companies
(1) A document is validly executed by a company as a deed only if the document is—
(a) duly executed by the company; and
(b) delivered as a deed. (2) For the purposes of subsection (1)(b), a document is presumed to be delivered when it is executed,
unless a contrary intention is proved. 40. Execution of deeds or other documents by attorney
(1) A company may, in writing, authorise person, either generally or in respect of specified matters, as
its attorney to execute deeds or other documents on its behalf. (2) A deed or other document executed by a person authorised under subsection (1) has effect as if
executed by the company. 41. Authentication of documents
A document or proceedings requiring authentication by a company is sufficiently authenticated by a
signature of a person authorised by the company to act on its behalf. 42. [Deleted by Act No. 1 of 2020, s. 32.]
43. [Deleted by Act No. 1 of 2020, 33.]
44.

ure of a person authorised by the company to act on its behalf. 42. [Deleted by Act No. 1 of 2020, s. 32.]
43. [Deleted by Act No. 1 of 2020, 33.]
44.

Pre-incorporation contracts, deeds and obligations
(1) A contract that purports to be made by or on behalf of a company at a time when the company has
not been formed has effect, subject to any agreement to the contrary, as a contract made with the
person purporting to act for the company or as agent for it, and the person is personally liable on
the contract accordingly. (2) Subsection (1) applies to a deed as it applies to the making of a contract. 22

t, and the person is personally liable on
the contract accordingly. (2) Subsection (1) applies to a deed as it applies to the making of a contract. 22

Companies Act (Cap. 486) Kenya
45. Execution of bills of exchange and promissory notes by companies
A bill of exchange or promissory note is binding on a company if made, accepted or endorsed in the name
of, by or on behalf or on account, of the company by a person acting under its authority. 46. Company to have registered office
A company shall at all times ensure that it has a registered office to which all communication and notices
registered office may be addressed. 47. Company to notify change of address of registered office
(1) A company may change the address of its registered office by lodging with the Registrar for
registration a notice of the change. (2) The change of address takes effect only when it is registered by the Registrar. (3) A person is entitled to serve a document on the company at the previously registered address within
fourteen days after the new address is registered by the Registrar.

led to serve a document on the company at the previously registered address within
fourteen days after the new address is registered by the Registrar.

(4) In relation to a duty of a company—
(a) to keep available for inspection at its registered office any records; or
(b) to state the address of its registered office in any document,
a company that has given notice to the Registrar of a change in the address of its registered office
may act on the change as from such date, not more than fourteen days after the company is notified
that the Registrar has registered the change. (5) A company that unavoidably ceases to keep available for inspection at its registered office any
records in circumstances in which it was not practicable to give prior notice to the Registrar of a
change in the address of its registered office is not to be regarded as having failed to comply with its
duty to keep those records available for inspection at its registered office if it—
(a) makes the records available at other premises as soon as practicable; and
(b) gives notice accordingly to the Registrar of the change of the location of its registered office
within fourteen days after doing so. Part V – NAME OF COMPANY
Division 1 —General Requirements
48.

the change of the location of its registered office
within fourteen days after doing so. Part V – NAME OF COMPANY
Division 1 —General Requirements
48.

Reservation of name
(1) The Registrar may, on written application reserve a name pending registration of a company or
change of name by a company. (2) The reservation of a name under subsection (1) remains in force for a period of thirty days or such
extended period, not exceeding sixty days, as the Registrar may, for a special reason, allow, and
during that period of thirty days or that period as extended, no other company is entitled to be
registered by that name. 49. Prohibited names
(1) The Registrar may not register a company by a particular name if—
(a) the use of the name would constitute an offence;
23

me. 49. Prohibited names
(1) The Registrar may not register a company by a particular name if—
(a) the use of the name would constitute an offence;
23

Companies Act (Cap. 486) Kenya
(b) the name consists of abbreviations or initials not authorised by or under this Act; or
(c) the Registrar is, after taking into account the relevant criteria, of the opinion that the name
is offensive or undesirable. (2) For the purposes of subsection (1)(c), the relevant criteria are the criteria (if any) prescribed by the
regulations. 50. Name suggesting connection with the State or local or public authority
The approval of the Registrar is required for a company to be registered under this Act by a name that
would be likely to give the impression that the company is connected with—
(a) a State organ;
(b) a county government; or
(c) any public authority prescribed by the regulations. 51. Applicant to seek views of specified public officer or body if regulations so require
(1) If the regulations so require, an applicant for the Registrar's approval for the use of a specified
name, or a name of a specified description, shall seek the views of a specified public officer or body.

egistrar's approval for the use of a specified
name, or a name of a specified description, shall seek the views of a specified public officer or body.

(2) If an applicant for the use of a specified name, or a name of a specified description, is required to
seek the views of a specified public officer or public body, that officer or body may, in addition to
giving those views, veto the use of the name, but only on reasonable grounds and on providing the
applicant with a written statement setting out 0 those grounds. (3) In subsection (1), "specified" means specified in the regulations. 52. Regulations may permit or prohibit the use of certain characters, signs or symbols
(1) The regulations may—
(a) provide for the letters or other characters, signs or symbols, including accents and other
diacritical marks, and punctuation that may be used in the name of a company to be
registered under this Act; and
(b) specify a standard style or format for the name of a company for the purposes of registration. (2) The regulations may prohibit the use of specified characters, signs or symbols when appearing in
specified positions, in particular, at the beginning of a name. (3) The Registrar may not register a company by a 40 name that consists of or includes anything that is
not permitted in accordance with the regulations.

The Registrar may not register a company by a 40 name that consists of or includes anything that is
not permitted in accordance with the regulations.

Division 2— Indications of type of company, etc
53. Registration of public limited companies
A company that is both a limited company and a public company may only be registered with a name that
ends with the words "public limited company" or the abbreviation "plc". 54. Registration of private limited companies
A company that is both a limited company and private company may be registered only with a name that
ends with the word "limited" or the abbreviation "ltd."
24

that is both a limited company and private company may be registered only with a name that
ends with the word "limited" or the abbreviation "ltd."
24

Companies Act (Cap. 486) Kenya
55. Exemption from requirement to use of “limited”
The Cabinet Secretary may, by notice given to the company, exempt a private company from using the
word "limited" or "Itd" as required by section 54. 56. Inappropriate use of company type or legal form
(1) The regulations may prohibit the use in a company name of specified words, expressions or other
indications—
(a) that are associated with a particular type of company or kind of organisation; or
(b) that are similar to words, expressions or other indications associated with a particular type of
company or kind of organisation. (2) The regulations may prohibit the use of words, expressions or other indications—
(a) in a specified part, or otherwise than in a specified part, of the name of a company; or
(b) in conjunction with, or otherwise than in conjunction with, such other words or expressions
as may be specified. (3) The Registrar may not register a company by a name that consists of or includes words or
expressions prohibited by the regulations. Division 3 — Similarity to names of other companies
57.

any by a name that consists of or includes words or
expressions prohibited by the regulations. Division 3 — Similarity to names of other companies
57.

Name not to be the same a another in the index
(1) The Registrar shall not register a company under this Act by a name that is the same as another
name appearing in the index of company names. (2) The regulations may provide—
(a) that registration of a company by a name that would otherwise be prohibited under this
section be permitted —
(i) in specified circumstances; or
(ii) with a specified consent; and
(b) that, if those circumstances are existing or that consent is given at the time a company is
registered by a name, a subsequent change of circumstances or withdrawal of consent, does
not affect the registration. 58. Power to direct change of name in case of similarity to existing name
(1) The Registrar may direct a company to change its name if it has been registered by a name that is
the same as or, in the opinion of the Registrar, too similar to—
(a) a name appearing at the time of the registration in the Registrar's index of company names;
or
(b) a name that should have appeared in that index at that time.

pearing at the time of the registration in the Registrar's index of company names;
or
(b) a name that should have appeared in that index at that time.

(2) A direction under subsection (1) may be given only within twelve months after the date on which
the company concerned was registered or within such extended period as the Registrar may specify
in writing in a particular case. (3) In giving a direction under subsection (1), the Registrar shall specify the period within which the
company is required to comply with the direction. 25

giving a direction under subsection (1), the Registrar shall specify the period within which the
company is required to comply with the direction. 25

Companies Act (Cap. 486) Kenya
(4) The regulations may further provide—
(a) that no direction is to be given under this section in respect of a name—
(i) in specified circumstances; or
(ii) if specified consent is given; and
(b) that a subsequent change of circumstances or withdrawal of consent does not give rise to
grounds for a direction under this section. (5) If the company does not comply with the direction issued under subsection (1) within fourteen
days, the Registrar shall publish a notice in the Gazette to strike the name of the company off the
Register. (6) As soon as practicable after striking the name of the company off the Register, the Registrar shall
publish in the Gazette a notice indicating that the name of the company has been struck off the
register. (7) Upon publication of the notice under subsection (6), the company shall be deemed to have been
dissolved.

company has been struck off the
register. (7) Upon publication of the notice under subsection (6), the company shall be deemed to have been
dissolved.

(8) Despite subsection (7)—
(a) the liability, if any, of every officer and member of the company shall continue and may be
enforced as if the company had not been dissolved; and
(b) nothing in this section shall affect the power of the Court to liquidate a company the name of
which has been struck off the Register. [Act No. 28 of 2017, s. 4.]
59. Power to make regulations for purposes of sections 57 and 58
For the purposes of sections 57 and 58, the regulations may provide for either or both of the following. (a) matters that are to be disregarded in deciding whether or not names are the same or are too similar;
(b) words or expressions that are to be, or are not to be regarded as the same or too similar. Division 4 — Powers of Registrar to direct company to change its name in specified circumstances
60.

re not to be regarded as the same or too similar. Division 4 — Powers of Registrar to direct company to change its name in specified circumstances
60.

Power of Registrar to direct company to change its name because of misleading
information given for registration of company or because its name gives misleading
indication of company’s activities
(1) The Registrar may direct a company to change its name if of the opinion—
(a) that misleading information has been given for the purposes of a company's registration by
a particular name and that an undertaking or assurance has been given for that purpose and
has not been fulfilled; or
(b) that the name by which a company is registered gives an indication of the nature of its
activities that is so misleading as to be likely to cause harm to the public. (2) Any such direction is ineffective if it—
(a) is not given within five years after the company's registration by that name; and
(b) does not specify the period within which the company is to comply with it. 26

within five years after the company's registration by that name; and
(b) does not specify the period within which the company is to comply with it. 26

Companies Act (Cap. 486) Kenya
(3) The Registrar may, by a further direction, extend the period within which the company is required
to change its name, but shall ensure that any such direction is given before the end of the period for
the time being specified. (4) The company shall comply with the direction within twenty-one days after the date of the direction
or within such extended period as the Registrar may allow. (5) Subsection (4) does not have effect if the outcome of an application made to the Court under
subsection is pending. (6) If a company fails to comply with a direction given to it under this section, the company, and each
officer of the company who is in default, commits an offence and on conviction is liable to a fine not
exceeding two hundred thousand shillings. (7) If, after a company or any of its officers is convicted of an offence under subsection (6), the
company continues to fail to comply with the direction, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. 61.

each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. 61.

Company may apply to court for order to quash direction under section 60
(1) A company that is dissatisfied with a direction given to it under section 60 may apply to the Court
to quash the direction. (2) An application under subsection (1) is ineffective if not made within twenty-one days after the date
on which the direction is notified to the company. (3) On the hearing of an application made under subsection (1), the Court may either quash the
direction or confirm it. (4) If the direction is confirmed, the Court shall specify the period within which the company is
required to comply with the direction. Division 5— Changes of company names
62. Company may change the name
A company may change its name—
(a) by special resolution or as may be provided for by the articles of the company;
(b) by resolution of the directors acting in accordance with a direction by the Registrar under section
60;
(c) on the restoration of the company to the Register in accordance with Part XXXIII; or
(d) in any other circumstance prescribed by the regulations for the purpose of this subsection. 63.

to the Register in accordance with Part XXXIII; or
(d) in any other circumstance prescribed by the regulations for the purpose of this subsection. 63.

Change of name by special resolution
(1) Within fourteen days after a change of name has been agreed to by a company by special resolution,
the company shall lodge with the Registrar for registration a notice of change, together with a copy
of the resolution. (2) If a change of name by special resolution is conditional on the occurrence of an event, the company
shall, in the notice of change lodged with the Registrar—
(a) specify that the change is conditional; and
(b) state whether the event has occurred. 27

shall, in the notice of change lodged with the Registrar—
(a) specify that the change is conditional; and
(b) state whether the event has occurred. 27

Companies Act (Cap. 486) Kenya
(3) If the notice states that the event has not occurred, the Registrar may not register the change of
name until the event has occurred. (4) Within fourteen days after the event occurs, the company shall lodge with the Registrar for
registration a notice stating that it has occurred. (5) The Registrar is entitled to rely on the contents of a notice lodged under this section as sufficient
evidence of the matters stated in it. 64. Change of name by means provided for in articles of company
(1) Within fourteen days after a company changes its name by other means provided for in its articles,
it shall lodge with the Registrar for registration notice of the change, together with a statement that
the change has been made in accordance with the company's articles. (2) The Registrar may rely on the statement as sufficient evidence of the matters stated in it. 65.

en made in accordance with the company's articles. (2) The Registrar may rely on the statement as sufficient evidence of the matters stated in it. 65.

Change of name: registration and issue of certificate of change of name
(1) On receiving a notice of a change of company's name and on being
satisfied—
(a) that the new name complies with the requirements of this Act; and
(b) that the requirements of this Act and any relevant requirements of the articles of the
company, with respect to a change of name are complied with, the Registrar shall enter the
new name on the register in place of the former name. (2) As soon as practicable after registering the new name, the Registrar shall issue a certificate of
change of name to the company. 66. Effect of change of name
(1) A change of a company's name has effect from the date on which the certificate of change of name
is issued. (2) The change does not affect any rights or obligations of the company or invalidate any legal
proceedings by or against it. (3) Any legal proceedings that might have been continued or commenced against it by its former name
may be continued or started against it by its new name. Division 6— Requirement of company to disclose name
67.

ommenced against it by its former name
may be continued or started against it by its new name. Division 6— Requirement of company to disclose name
67.

Company to display its company name etc
(1) A company shall—
(a) display its name and other prescribed information in specified places;
(b) state prescribed information in prescribed kinds of the company's documents and
communications; and
(c) provide prescribed information on request to those with whom the company deals with in
the course of its business. (2) The regulations may prescribe the manner in which prescribed information is to be displayed,
stated or provided. (3) For the purposes of a requirement to disclose the name of a company, any variations between a
word or words are to be disregarded. 28

or provided. (3) For the purposes of a requirement to disclose the name of a company, any variations between a
word or words are to be disregarded. 28

Companies Act (Cap. 486) Kenya
(4) If a company contravenes subsection (1), the company, and each officer of the company who is in
default, commit an offence and on conviction are each liable to a fine not exceeding five hundred
thousand shillings. (5) A person who claims to have sustained financial loss as a result of a contravention by a company
of subsection (1) may bring civil proceedings against the company and, if in any such proceedings,
the person is able to substantiate the claim, the person is entitled to be awarded damages as
compensation for the loss. 68. Minor variations in form of name
(1) In relation to the name of a company, no account is to be taken of whether—
(a) upper or lower case characters or a combination of the two are used;
(b) diacritical marks or punctuation are present or absent; or
(c) the name is in the same format or style as is specified under section 52(1) for the purposes of
registration, so long as there is no real likelihood of names differing only in those respects
being taken to be different names.

for the purposes of
registration, so long as there is no real likelihood of names differing only in those respects
being taken to be different names.

(2) This section does not affect the operation of regulations referred to in section 52 (2) prohibiting
specified characters, diacritical marks or punctuation. Part VI – ALTERATION OF STATUS OF COMPANIES
Division 1 — Conversion of companies: overview
69. How companies may alter their status
A company can, in accordance with this Part, convert itself—
(a) from being a private company into being a public company;
(b) from being a public company into being a private company;
(c) from being a private limited company into being an unlimited company;
(d) from being an unlimited private company to a limited company; or
(e) from being a public company into being an unlimited private company. Division 2 — Conversion of private company into public company
70.

ompany; or
(e) from being a public company into being an unlimited private company. Division 2 — Conversion of private company into public company
70.

Conversion of private company to public company
(1) A private company, whether limited or unlimited, can convert itself into a public company limited
by shares if (but only if)—
(a) it passes a special resolution to that effect;
(b) the conditions specified in subsection (2) are satisfied; and
(c) an application for registration of the conversion is lodged with the Registrar in accordance
with section 74, together with the documents required by that section. (2) The conditions are—
(a) that the company has a share capital;
(b) that the requirements of section 71 are satisfied as regards its share capital;
29

) The conditions are—
(a) that the company has a share capital;
(b) that the requirements of section 71 are satisfied as regards its share capital;
29

Companies Act (Cap. 486) Kenya
(c) that the requirements of section 72 are satisfied as regards its net assets;
(d) if section 73 applies, that the requirements of that section are satisfied;
(e) that the company has not previously been converted itself into an unlimited company;
(f) that the company has made such changes to its name and to its articles as are necessary in
order for it to become a public company; and
(g) if the company is unlimited, that it has also made such changes to its articles as are
necessary in order for it to become a company limited by shares. 71.

e company is unlimited, that it has also made such changes to its articles as are
necessary in order for it to become a company limited by shares. 71.

Requirement as to share capital
(1) A company that has resolved to convert itself into a public company may lodge an application for
registration of the conversion only if the following requirements are satisfied—
(a) the nominal value of the company's allotted share capital are not less than the authorised
minimum;
(b) each of the company's allotted shares is be paid up at least as to one-quarter of the nominal
value of that share and the whole of any premium on it;
(c) if any shares in the company or any premium on them have been fully or partly paid up by an
undertaking given by a person that the person or another person should do work or perform
services (whether for the company or any other person)—the undertaking has performed or
otherwise discharged; and
(d) if shares have been allotted as fully or partly paid up as to their nominal value or any
premium on tem otherwise than in cash, and the consideration for the allotment consists of
or includes an undertaking to the company (other than one to which paragraph (c) applies),
either—
(i) the undertaking has been performed or otherwise discharged; or
(ii) a contract exists between the company and some other person under which the
undertaking is to be performed within five years after the date on which the special
resolution is passed.

mpany and some other person under which the
undertaking is to be performed within five years after the date on which the special
resolution is passed.

(2) For the purpose of determining whether the requirements of subsection (1)(b), (c) and (d) are
satisfied, shares allotted in accordance with an employees' share scheme are to be disregarded if
they would, but for this subsection, prevent the company from being converted to a public company
because the requirement of subsection (1)(b) could not be satisfied. (3) Shares disregarded under subsection (2) do not form part of the allotted share capital for the
purposes of subsection (1)(a). (4) The Registrar may not register the conversion of a private company into a public company if it
appears to the Registrar that—
(a) the company has resolved to reduce its share capital;
(b) the reduction—
(i) is made under section 407;
(ii) has been confirmed by an order of the Court under section 410; or
(iii) is supported by a solvency statement in accordance with section; and
(c) the effect of the reduction is, or will be, that the nominal value of the company's allotted
share capital is below the authorised minimum. 30

and
(c) the effect of the reduction is, or will be, that the nominal value of the company's allotted
share capital is below the authorised minimum. 30

Companies Act (Cap. 486) Kenya
72. Requirements as to net assets
(1) A private company that has resolved to convert itself into a public company may not apply to have
the conversion registered unless—
(a) a balance sheet prepared as at a date not more than seven months before the date on which
the application is lodged with the Registrar;
(b) an unqualified report by the company's auditor on that balance sheet; and
(c) a written statement by the company's auditor that in the auditor's opinion at the balance
sheet date the amount of the company's net assets was not less than the aggregate of its
called-up share capital and undistributable reserves. (2) The Registrar may refuse the application if, between the balance sheet date and the date on which
the application is lodged with the Registrar, the company's financial position is found to have
changed so that the amount of the company's net assets has become less than the aggregate of its
called-up share capital and undistributable reserves.

changed so that the amount of the company's net assets has become less than the aggregate of its
called-up share capital and undistributable reserves.

(3) In subsection (1)(b), “unqualified report" means—
(a) if the balance sheet was prepared for a financial year of the company—a report stating
without material qualification the auditor's opinion that the balance sheet has been properly
prepared in accordance with the requirements of this Act; or
(b) if the balance sheet was not prepared for a financial year of the company—a report stating
without material qualification the auditor's opinion that the balance sheet has been properly
prepared in accordance with the provisions of this Act that would have applied had it been
prepared for a financial year of the company. (4) For the purposes of an auditor's report on a balance sheet that was not prepared for a financial year
of the company, the provisions of this Act apply with such modifications as are necessary because of
that fact.

was not prepared for a financial year
of the company, the provisions of this Act apply with such modifications as are necessary because of
that fact.

(5) For the purposes of subsection (3), a qualification is material unless the auditor states in the
auditor's report that the matter giving rise to the qualification is not material for the purpose of
determining by reference to the company's balance sheet whether at the balance sheet date the
amount of the company's net assets was not less than the aggregate of its called-up share capital
and undistributable reserves. 73. Recent allotment of shares for non-cash consideration
(1) This section applies to shares that are allotted by a company during the period between the date
as at which the balance sheet required by section 72 is prepared and the passing of the resolution
converting the company into a public company if the shares are allotted as fully or partly paid up as
to their nominal value or any premium on them otherwise than in cash.

y into a public company if the shares are allotted as fully or partly paid up as
to their nominal value or any premium on them otherwise than in cash.

(2) The Registrar may not register the conversion of a private company into a public company, unless
the application for registration—
(a) an independent valuation of non-cash consideration has been conducted not more than six
months before an allotment of shares; or
(b) the allotment is in connection with—
(i) a share exchange; or
(ii) a proposed merger with one or more other companies. 31

allotment of shares; or
(b) the allotment is in connection with—
(i) a share exchange; or
(ii) a proposed merger with one or more other companies. 31

Companies Act (Cap. 486) Kenya
(3) An allotment is in connection with a share exchange for the purpose of subsection (2)(b) if—
(a) the shares are allotted in connection with an arrangement under which the whole or part of
the consideration for the shares allotted is provided by—
(i) the transfer to the company allotting the shares of shares, or shares of a particular
class, in another company; or
(ii) the cancellation of shares, or shares of a particular class, in another company; and
(b) the allotment is open to all the holders of the shares of the other company, or, if the
arrangement applies only to shares of a particular class, to all the holders of the company's
shares of that class, to take part in the arrangement in connection with which the shares are
allotted.

lar class, to all the holders of the company's
shares of that class, to take part in the arrangement in connection with which the shares are
allotted.

(4) In determining whether a person is a holder of shares for the purposes of subsection (3), the
following are to be disregarded—
(a) shares held by, or by a nominee of, the company allotting the shares;
(b) shares held by, or by a nominee of—
(i) the holding company of the company allotting the shares;
(ii) a subsidiary of the company allotting the shares; or
(iii) a subsidiary of the holding company of the company allotting the shares. (5) For the purposes of deciding whether an allotment is in connection with a share exchange, it does
not matter whether the arrangement in connection with which the shares are allotted involves
the issue to the company allotting the shares of shares, or shares of a particular class, in the other
company or companies. (6) A proposed merger between two or more companies exists for the purposes of this section if one of
the companies proposes to acquire all the assets and liabilities of the other or others in exchange
for the issue of its shares or other securities to shareholders of the other or others, whether or not
the issue is accompanied by a cash payment.

nge
for the issue of its shares or other securities to shareholders of the other or others, whether or not
the issue is accompanied by a cash payment.

(7) For the purposes of this section—
(a) "another company" or "other companies" includes a body corporate that is not a company
within the meaning of this Act;
(b) the consideration for an allotment does not include an amount standing to the credit of any
of the company's reserve accounts, or of its profit and loss account, that has been applied in
paying up (to any extent) any of the shares allotted or any premium on those shares; and
(c) "arrangement" means any agreement, scheme or arrangement, including an arrangement
sanctioned under this Act or under the law relating to insolvency. 74. Requirements for registration of conversion of private company
(1) The Registrar shall refuse an application for the registration of the conversion of a company into
public company if the application does not comply with subsection (2). (2) An application for the registration of the conversion of the company into a public company
complies with this subsection if it—
(a) contains—
(i) a statement of the company's new name after conversion; and
(ii) if the company does not have a secretary, a statement of the company's proposed
secretary that complies with section 75; and
32

r conversion; and
(ii) if the company does not have a secretary, a statement of the company's proposed
secretary that complies with section 75; and
32

Companies Act (Cap. 486) Kenya
(b) is accompanied by—
(i) a copy of the special resolution converting the company into a public company, unless
a copy has already been lodged with the Registrar;
(ii) a copy of the company’s articles as proposed to be amended;
(iii) a copy of the balance sheet and other documents referred to in section 72(1); and
(iv) if section 73 applies, a copy of the valuation report (if any) referred to in subsection
(2)(a) of that section. 75. Statement of proposed secretary
(1) The statement of the company's proposed secretary complies with this section only if—
(a) it contains the required particulars of the person who is or the persons who are to be the
secretary or joint secretaries of the company; and
(b) a consent by the person named as secretary, or each of the persons named as joint
secretaries, to act as such. (2) The required particulars are the particulars that would be required to be included in the company's
register of secretaries. (3) If all the partners in a firm are to be joint secretaries, the requisite consent can be given by one
partner on behalf of all of them. 76.

taries. (3) If all the partners in a firm are to be joint secretaries, the requisite consent can be given by one
partner on behalf of all of them. 76.

Registrar to issue certificate of incorporation on registration of conversion
(1) The Registrar shall register the conversion of a company into a public company if satisfied that the
registration of application for registration complies with the requirements of this Division. (2) If the company does not already have a unique identifying number, the Registrar shall allocate such
a number to the company. (3) The Registrar shall issue to the company a certificate of incorporation stating the company’s unique
identifying number and that the company is a public company. (4) The Registrar shall specify in the certificate of incorporation that the certificate is issued on
registration of the conversion and the date on which the certificate is issued. (5) The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's
official seal.

which the certificate is issued. (5) The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's
official seal.

(6) On the issue of the certificate of incorporation—
(a) the conversion of the company into a public company takes effect;
(b) the changes in the company's name and articles take effect; and
(c) if the application contained a statement complying with section 75, the person or persons
named in the statement as secretary or joint secretary of the company assume that office. (7) The certificate of incorporation is conclusive evidence that the requirements of this Act as to
conversion of the company into a public company have been complied with. Division 3— Conversion of public company into private company
33

is Act as to
conversion of the company into a public company have been complied with. Division 3— Conversion of public company into private company
33

Companies Act (Cap. 486) Kenya
77. Conversion of public company into private limited company
(1) A public company can convert itself into a private limited company if—
(a) a special resolution to that effect is passed;
(b) the conditions specified in subsection (2) are satisfied; and
(c) an application for registration of the conversion is lodged with the Registrar in accordance
with section 80. (2) The conditions are as follows—
(a) if no application under section 78 for cancellation of the resolution has been made—
(i) having regard to the number of members who consented to or voted in favour of the
resolution, no such application could be made; or
(ii) the period within which such an application could be made has expired;
(b) if such an application has been made—
(i) the application has been withdrawn; or
(ii) an order has been made confirming the resolution and a copy of that order has been
lodged with the Registrar;
(c) the company has made such changes to its name and to its articles as are necessary in order
for it to convert itself into a private company limited by shares. [Act No. 28 of 2017, s. 5.]
78.

name and to its articles as are necessary in order
for it to convert itself into a private company limited by shares. [Act No. 28 of 2017, s. 5.]
78.

Application to Court to cancel conversion resolution
(1) If a special resolution by a public company to convert itself into a private limited company has been
passed, an application to the Court for the cancellation of the resolution may be made—
(a) by the holders of not less in the aggregate than five per cent in nominal value of the
company's issued share capital or any class of the company's issued share capital,
disregarding any shares held by the company as treasury shares;
(b) if the company is not limited by shares, by not less than five per cent of its members; or
(c) by not less than fifty of the company's members,
but not by a person who has consented to or voted in favour of the resolution. (2) The Court may hear such an application only if it—
(a) is made within twenty eight days after the passing of the resolution; and
(b) is made on behalf of the persons entitled to make it by such one or more of their number as
they may appoint for the purpose. (3) On the hearing of the application, the Court shall make an order either cancelling or confirming the
resolution.

they may appoint for the purpose. (3) On the hearing of the application, the Court shall make an order either cancelling or confirming the
resolution.

(4) The Court may—
(a) make that order on such terms and conditions as it considers appropriate;
(b) if it considers it appropriate to do so, adjourn the proceedings in order that an arrangement
may be made to the satisfaction of the Court for the purchase of the interests of dissenting
members; and
34

proceedings in order that an arrangement
may be made to the satisfaction of the Court for the purchase of the interests of dissenting
members; and
34

Companies Act (Cap. 486) Kenya
(c) give such directions, and make such orders, as it thinks expedient for facilitating or carrying
into effect any such arrangement. (5) If the Court considers it appropriate to do so, it may, by further order—
(a) direct the purchase by the company of the shares of any of its members and provide for the
consequential reduction of the company’s capital; and
(b) make such alteration to the company's articles as may be required in consequence of that
direction. 79. Notices of application to Court and court order application or order to be given to
Registrar
(1) On making an application under section 78, the applicants, or the person making the application on
their behalf, shall immediately give notice to the Registrar. (2) Subsection (1) applies without affecting any provision of rules of the Court as to service of notice of
the application. (3) On being served with notice of any such application, the company shall immediately give notice to
the Registrar. (4) Within fourteen days after the Court makes an order on the application, or such extended period as
the Court directs, the company shall lodge with the Registrar a copy of the order.

Court makes an order on the application, or such extended period as
the Court directs, the company shall lodge with the Registrar a copy of the order.

(5) If a company fails to comply with subsection (4), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. (6) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to lodge a copy of the Court's order, and each officer of the company who
is in default, commit a further offence on each day on which the failure continues and on conviction
are each liable to a fine not exceeding twenty thousand shillings for each such offence. 80. Requirements for registration of conversion of public company into private company
The Registrar may not register the conversion of a public company as a private limited company unless the
application for registration—
(a) contains a statement of the company's new name on conversion; and
(b) is accompanied by—
(i) a copy of the resolution converting the company into a private limited company, unless a
copy has already been forwarded to the Registrar; and
(ii) a copy of the company’s articles as proposed to be amended. 81.

e limited company, unless a
copy has already been forwarded to the Registrar; and
(ii) a copy of the company’s articles as proposed to be amended. 81.

Registrar to issue certificate of incorporation on registration of conversion
(1) The Registrar shall register the conversion of a public company into a private limited company if
satisfied that the application for registration complies with the requirements of this Division. (2) If the company does not already have a unique identifying number, the Registrar shall allocate such
a number to the company. (3) The Registrar shall issue a certificate of incorporation stating the company's unique identifying
number and that the company is registered as a private limited company. (4) The Registrar shall specify in the certificate of incorporation that the certificate is issued on
registration of the conversion and the date on which the certificate is issued. 35

the certificate of incorporation that the certificate is issued on
registration of the conversion and the date on which the certificate is issued. 35

Companies Act (Cap. 486) Kenya
(5) The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's
official seal. (6) On the issue of the certificate of incorporation—
(a) the company becomes a private limited company; and
(b) the changes in the company's name and articles take effect. (7) The certificate of incorporation is conclusive evidence that the requirements of this Act as to
registration of the conversion have been complied with. Division 4— Conversion of private limited company into unlimited company
82. Registration of conversion of private limited company into unlimited company
(1) A private limited company may convert itself into an unlimited company if—
(a) all the members of the company have assented to its conversion;
(b) the company has not previously been registered as an unlimited company; and
(c) an application for registration of the conversion is lodged with the Registrar in accordance
with section 83.

istered as an unlimited company; and
(c) an application for registration of the conversion is lodged with the Registrar in accordance
with section 83.

(2) The company shall make such changes in its name and its articles—
(a) as are necessary in connection with its becoming an unlimited company; and
(b) if it is to have a share capital, as are necessary in connection with its becoming an unlimited
company having a share capital. (3) For the purposes of this section—
(a) a bankruptcy trustee in respect of the estate of a bankrupt member of the company is
entitled, to the exclusion of the member, to assent to the company's becoming unlimited;
and
(b) the executor or administrator of a deceased member of the company may assent on behalf of
the deceased. 83. Requirements for application for registration of conversion of company into unlimited
company
The Registrar may not register the conversion of a company as an unlimited company unless the
application for registration—
(a) contains a statement of the company's new name on conversion; and
(b) is accompanied by—
(i) the prescribed form of assent to the company's being registered as an unlimited company,
authenticated by or on behalf of all the members of the company; and
(ii) a copy of the company’s articles as proposed to be amended. 84.

ted company,
authenticated by or on behalf of all the members of the company; and
(ii) a copy of the company’s articles as proposed to be amended. 84.

Registrar to issue certificate of incorporation on registration of conversion
(1) The Registrar shall register the conversion of a private limited company into an unlimited company
if satisfied that the application for registration complies with the requirements of this Division. (2) If the company does not already have a unique identifying number, the Registrar shall allocate such
a number to the company. 36

of this Division. (2) If the company does not already have a unique identifying number, the Registrar shall allocate such
a number to the company. 36

Companies Act (Cap. 486) Kenya
(3) The Registrar shall issue a certificate of incorporation to the company stating the company's unique
identifying number and that the company is an unlimited company. (4) The Registrar shall specify in the certificate of incorporation that the certificate is issued on
registration of the conversion and the date on which the certificate is issued. (5) The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's
official seal. (6) On the issue of the certificate of incorporation—
(a) the company becomes an unlimited company; and
(b) the changes in the company's name and articles take effect. (7) The certificate of incorporation is conclusive evidence that the requirements of this Act as to
registration of the conversion have been complied with. Division 5 — Conversion of unlimited company into private limited company
85. Conversion of unlimited company into a private limited company
(1) An unlimited company may convert itself into a private limited company if (but only if) the
conditions specified in subsection (2) are complied with.

An unlimited company may convert itself into a private limited company if (but only if) the
conditions specified in subsection (2) are complied with.

(2) The conditions are that—
(a) a special resolution that it should be so converted has been passed that complies with
subsection (3);
(b) the company has not previously been registered as a private limited company;
(c) an application for registration of the conversion is lodged with the Registrar in accordance
with section 86; and
(d) the company has made such changes to its, name and to its articles as are necessary in
connection with its becoming a private company limited by shares. (3) A special resolution has no effect unless it states whether the company is to be limited by shares or
by guarantee. [Act No. 28 of 2017, s. 6.]
86.

3) A special resolution has no effect unless it states whether the company is to be limited by shares or
by guarantee. [Act No. 28 of 2017, s. 6.]
86.

Requirements for registration of unlimited company as private limited company
(1) The Registrar may not register the conversion of an unlimited company as a private limited
company unless the application for registration—
(a) contains a statement of the company's new name on registration of the conversion; and
(b) is accompanied by—
(i) a copy of the resolution converting the company into a private limited company,
unless a copy has already been forwarded to the Registrar;
(ii) if the company is to be limited by guarantee, a statement of guarantee that complies
with subsection (2); and
(iii) a copy of the company’s articles as proposed to be amended. (2) A statement of guarantee complies with this subsection if it states that each person who is a
member undertakes that, if the company is liquidated while the person is a member, or within one
37

subsection if it states that each person who is a
member undertakes that, if the company is liquidated while the person is a member, or within one
37

Companies Act (Cap. 486) Kenya
year after the person ceases to be a member, the person will contribute to the assets of the company
such amount as may be, required for—
(a) payment of the debts and liabilities of the company contracted before the person ceases to be
a member;
(b) payment of the costs, charges and expenses of liquidation; and
(c) adjustment of the rights of the contributories among themselves,
not exceeding a specified amount. 87. Registrar to issue certificate of incorporation on registration of conversion
(1) The Registrar shall register the conversion an unlimited company into a private limited company if
satisfied that the application for registration complies with the requirements of this Division. (2) If the company does not already have a unique identifying number, the Registrar shall allocate such
a number to the company. (3) The Registrar shall issue a certificate of incorporation stating the company's unique identifying
number and that the company is incorporated as a limited company.

shall issue a certificate of incorporation stating the company's unique identifying
number and that the company is incorporated as a limited company.

(4) The Registrar shall specify in the certificate of incorporation that the certificate is issued on
registration of the conversion and the date on which the certificate is so issued. (5) The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's
official seal. (6) On the issue of the certificate of incorporation—
(a) the company becomes a limited company; and
(b) the changes in the company's name and articles take effect. (7) The certificate of incorporation is conclusive evidence that the requirements of this Act as to
registration of the conversion have been complied with. 88. Statement of capital required if company already has share capital
(1) If, in the case of a company whose conversion has been registered under section 87, the company
has already allotted share capital, it shall, within fourteen days after the registration, lodge with the
Registrar a statement of capital that complies with subsection (3).

are capital, it shall, within fourteen days after the registration, lodge with the
Registrar a statement of capital that complies with subsection (3).

(2) Subsection (1) does not apply if the information that would be included in the statement has
already been included in a notice lodged with the Registrar in—
(a) a statement of capital and initial shareholdings; or
(b) a statement of capital contained in an annual return. (3) A statement of capital complies with this subsection if it states with respect to the company's share
capital on registration of the conversion—
(a) the total number of shares of the company;
(b) the aggregate nominal value of those shares;
(c) for each class of shares—
(i) the prescribed particulars (if any) of the rights attached to the shares;
(ii) the total number of shares of that class; and
(iii) the aggregate nominal value of shares of that class; and
38

he rights attached to the shares;
(ii) the total number of shares of that class; and
(iii) the aggregate nominal value of shares of that class; and
38

Companies Act (Cap. 486) Kenya
(d) the amount paid up and the amount (if any) unpaid on each share, whether on account of the
nominal value of the share or in the form of a premium. (4) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. (5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to lodge a statement of capital with the Registrar, the company, and each
officer of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. Division 6 — Conversion of public company into unlimited private company with share capital
89.

eding twenty thousand shillings for
each such offence. Division 6 — Conversion of public company into unlimited private company with share capital
89.

Conversion of public company into private and unlimited company
(1) A public company limited by shares may convert itself into an unlimited private company with a
share capital if—
(a) all the members of the company have assented to its being so converted;
(b) the condition specified in subsection (2) is satisfied; and
(c) an application for registration of the conversion is lodged with the Registrar in accordance
with section 90, together with the other documents required by that section. (2) The condition is that the company has not previously been registered as a limited company or as an
unlimited company. (3) The company shall make such changes—
(a) in its name; and
(b) in its articles,
as are necessary in connection with its becoming an unlimited private company. (4) For the purposes of this section—
(a) a bankruptcy trustee in respect of the estate of a bankrupt member of the company is
entitled, to the exclusion of the member, to assent to the company's conversion; and
(b) the executor or administrator of a deceased member of the company may assent on behalf of
the deceased. 90.

ssent to the company's conversion; and
(b) the executor or administrator of a deceased member of the company may assent on behalf of
the deceased. 90.

Registrar not to register conversion unless application for registration complies with
prescribed requirements
The Registrar shall not register the conversion of a public limited company into an unlimited private
company unless the application for registration—
(a) contains a statement of the company's new name on conversion; and
(b) is accompanied by—
(i) an assent to the company's conversion, authenticated by or on behalf of all the members of
the company; and
(ii) a copy of the company's articles as proposed to be amended. [Act No. 28 of 2017, s. 7.]
39

by or on behalf of all the members of
the company; and
(ii) a copy of the company's articles as proposed to be amended. [Act No. 28 of 2017, s. 7.]
39

Companies Act (Cap. 486) Kenya
91. Registrar to issue certificate of incorporation on registration of conversion
(1) The Registrar shall register the conversion of a public company into an unlimited private company
if satisfied that the application for registration complies with the requirements of this Division. (2) If the company does not already have a unique identifying number, the Registrar shall allocate such
a number to the company. (3) The Registrar shall issue a certificate of incorporation stating the company's unique identifying
number and that the company is incorporated as an unlimited private company. (4) The Registrar shall specify in the certificate of incorporation that the certificate is issued on
registration of the conversion and the date on which the certificate is so issued. (5) The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's
official seal. (6) On the issue of the certificate of incorporation—
(a) the company becomes an unlimited private company; and
(b) the changes in the company's name and articles take effect.

ertificate of incorporation—
(a) the company becomes an unlimited private company; and
(b) the changes in the company's name and articles take effect.

(7) The certificate of incorporation is conclusive evidence that the requirements of this Act as to
registration of the conversion have been complied with. 91A. Information sharing
The Registrar of Companies shall immediately upon the incorporation or registration of a company under
the Companies Act whose purpose or object is to undertake manufacturing business submit particulars
of the information on the company to the Kenya Bureau of Standards for purpose of section 5A of the
Standards Act. [Act No. 20 of 2024, s. 37]
Part VII – COMPANY MEMBERS
Division 1 — Members of company
92. How persons become members of company
(1) The subscribers to the memorandum and articles become members of the company on the
registration of the company. (2) As soon as practicable after the registration of the company, it shall enter in its register of members
the names and addresses of persons who subscribed to its memorandum and the date on which they
became members of the company. (3) Any other person who later agrees to become a member of a company becomes a member of the
company when the person's name is entered into the register of members. Division 2 — Register of members
93.

mber of a company becomes a member of the
company when the person's name is entered into the register of members. Division 2 — Register of members
93.

Company to keep register of members
(1) Every company shall keep a register of its members. 40

Company to keep register of members
(1) Every company shall keep a register of its members. 40

Companies Act (Cap. 486) Kenya
(2) A company shall enter in its register of members—
(a) the names and addresses of the members including information on whether the member is a
nominee shareholder;
(b) the date on which each person was registered as a member or a nominee shareholder; and
(c) deleted by Act No. 12 of 2019, Sch.;
(d) the date on which any person ceased to be a member or a nominee shareholder. (3) If a company has a share capital, the company shall enter in its register of members, along with the
name and address of each member, a statement of—
(a) the shares held by the member, distinguishing each share—
(i) by its number if the share has a number; and
(ii) if the company has more than one class of issued shares, by its class; and
(b) the amount paid or agreed to be considered as paid on the shares of the member. (4) If the shares of a company are held jointly, the company shall ensure that the name of each joint
holder is entered in its register of members.

r. (4) If the shares of a company are held jointly, the company shall ensure that the name of each joint
holder is entered in its register of members.

(5) If a company does not have a share capital but has more than one class of members, it shall enter in
its register of members, along with the names and address of each member, a statement of the class
to which the member belongs. (6) If a company purchases its own shares in circumstances in which section 526 applies—
(a) the applicable requirements of this section need not be complied with if the company cancels
all of the shares immediately after the purchase; and
(b) if the company does not cancel all of the shares immediately after the purchase, any share
that is so cancelled is to be disregarded for the purposes of this section. (7) Subject to subsection (6), if a company holds shares as treasury shares, the company shall ensure
that it is entered in its register of members as the member holding those shares. (8) A company shall lodge with the Registrar a copy of its register of members within thirty days after
completing its preparation. (9) A company other than a public limited company other than a public listed company shall lodge with
the Registrar a copy of any amendment to its register of members within fourteen days after making
the amendment.

blic listed company shall lodge with
the Registrar a copy of any amendment to its register of members within fourteen days after making
the amendment.

(10) If a company fails to comply with a requirement of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. (11) If, after a company or any of its officers is convicted of an offence under subsection (10), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. [Act No. 11 of 2017, Sch., Act No. 28 of 2017, s. 8, Act No. 12 of 2019, Sch, Act No. 10 of 2023, Sch.]
93A. Company to keep register of beneficial owners
(1) Every company shall keep a register of its beneficial owners. 41

Sch, Act No. 10 of 2023, Sch.]
93A. Company to keep register of beneficial owners
(1) Every company shall keep a register of its beneficial owners. 41

Companies Act (Cap. 486) Kenya
(2) A company shall enter in its register of beneficial owners, information relating to its beneficial
owners as prescribed in the regulations. (3) A company shall lodge with the Registrar a copy of its register of beneficial owners—
(a) in the case of a proposed company; when submitting documents as provided for under
section 13 of this Act; and
(b) in the case of existing companies, within sixty days of coming into force of this section. (4) The Registrar may, on the application of the company or for any other reason the Registrar thinks
fit, extend the period referred to in subsection (3)(b) for a period not exceeding thirty days. (5) A company, other than a public listed company, shall lodge with the Registrar a copy of any
amendment to its register of beneficial owners within fourteen days after making the amendment. (6) Notwithstanding the provisions of subsection (5), a public listed company shall lodge with the
Registrar a copy of any amendment to its register of beneficial owners within thirty days after
making the amendment.

ted company shall lodge with the
Registrar a copy of any amendment to its register of beneficial owners within thirty days after
making the amendment.

(7) Every company shall keep records of its beneficial owner’s information for at least ten years from
the date which a person ceases to be a beneficial owner. (8) If a company fails to comply with the requirements of subsection (5) or subsection (6), the
company, and each officer of the company in default is liable to pay to the Registrar, an
administrative penalty of two thousand shillings. (9) If the company continues to fail to comply with the requirement of subsection (8), the company,
and each officer of the company in default, is liable to pay to the Registrar a further administrative
penalty of one hundred shillings for each day of default. (10) If the company does not comply with subsection (3)(b), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.

officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.

(11) If, after a company or any of its officers is convicted of an offence under subsection (10), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. (12) Notwithstanding the provisions of subsection (10) and (11), the Registrar may give a direction to a
company that is in breach of subsection (3)(b) specifying—
(a) the statutory requirement of which the company is in breach;
(b) the action that the company is required to take;
(c) that the company has to comply with the direction within fourteen days; and
(d) the consequence provided for under section 894 for failure to comply with the direction by
the Registrar. [Act No. 12 of 2019, Sch., Act No. 10 of 2023, Sch.]
94.

nce provided for under section 894 for failure to comply with the direction by
the Registrar. [Act No. 12 of 2019, Sch., Act No. 10 of 2023, Sch.]
94.

Company to keep register of members of its registered office
(1) Except in so far as the regulations otherwise provide, a company shall ensure that its register of
members is—
(a) kept at its registered office;
(aa) if the register is prepared at another office of the company other than the registered office, a
copy of the register may be kept at that other office;
42

he register is prepared at another office of the company other than the registered office, a
copy of the register may be kept at that other office;
42

Companies Act (Cap. 486) Kenya
(ab) if the register is prepared by another person on behalf of the company, a copy of the register
may be kept at the office of that other person; and
(b) lodged with the Registrar. (2) If a company fails to comply with a subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings. [Act No. 28 of 2017, s. 9.]
95. Certain companies to keep index of members
(1) A company that has more than fifty members shall keep an index of the names of the members of
the company, unless the register of members is in such a form as to constitute in itself an index. (2) A company shall make any necessary alteration in the index within fourteen days after the date on
which any alteration is made in the register of members. (3) A company shall ensure that the index contains in respect of each member, a sufficient indication
to enable the account of that member in the register to be readily found.

e that the index contains in respect of each member, a sufficient indication
to enable the account of that member in the register to be readily found.

(4) Except in so far as the regulations otherwise provide, a company shall keep its index of the names
of members of the company at its registered office and shall, within twenty-eight days after
establishing it, lodge a copy with the Registrar. (5) If a company fails to comply with a requirement of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. (6) If, after a company or any of its officers is convicted of an offence under subsection (5), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence, on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. 96.

each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. 96.

Rights of persons to inspect register of members and require copies
(1) A public company shall keep its register of members and its index of members (if any) open for
inspection by—
(a) a member of the company without charge; and
(b) any other person on payment of the fee (if any) prescribed by the regulations for the
purposes of this section. (2) On being requested to do so by a person and on receipt of the prescribed fee (if any), a public
company shall issue to the person a copy of the company's register of members or such part of it as
the person specifies. (3) If required to do so by the company, a person seeking to inspect the company's register of
members, or a copy of the register or of any part of it, shall provide the company with the following
information—
(a) in the case of a natural person, the person's name and address;
(b) in the case of an organisation the name and address of the person responsible for making the
application on behalf of the organisation;
(c) the purpose for which the information is to be used; and
43

ss of the person responsible for making the
application on behalf of the organisation;
(c) the purpose for which the information is to be used; and
43

Companies Act (Cap. 486) Kenya
(d) whether the information will be disclosed to any other person, and if so—
(i) if the person is a natural person, the person's name and address;
(ii) if the person is an organisation, the name and address of the person responsible for
receiving the information on its behalf; and
(iii) the purpose for which the information is to be used by that person. 97. Consequences of company refusing inspection of its register or to provide copy of its
register of members
(1) Within five working days after receiving a request under section 96, a company shall either—
(a) comply with the request or decline it by giving sufficient reasons in writing; or
(b) apply to the Court. (2) If the company applies to the Court, it shall notify the person who made request and that person is
entitled to be heard. 98.

apply to the Court. (2) If the company applies to the Court, it shall notify the person who made request and that person is
entitled to be heard. 98.

Offence to refuse inspection of register of members or to fail to provide copy
(1) If a company—
(a) refuses to allow an inspection required under section 96; or
(b) fails to provide a copy required under that section,
otherwise than in accordance with an order of the Court, the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding seven hundred and fifty thousand shillings. (2) If, after a company or any of its officers is convicted of an offence under subsection (1), the
company continues to refuse to allow an inspection or to fail provide. the required copy, the
company, and each officer of the company who is in default, commit a further offence on each day
on which the failure continues and on conviction are each liable to a fine not exceeding seventy-five
thousand shillings for each such offence. 99. Register of members: offences in connection with request for or disclosure of
information
(1) A person who makes a request under section 96 that contains a statement that the person knows, or
has reason to suspect, is false or misleading in a material respect commits an offence.

section 96 that contains a statement that the person knows, or
has reason to suspect, is false or misleading in a material respect commits an offence.

(2) A person who has possession of information obtained by exercise of either of the rights conferred by
section 96—
(a) to do anything that results in the information being disclosed to another person; or
(b) to fail to do anything with the result that the information is disclosed to another person,
knowing, or having reason to suspect, that person may use the information for a purpose that is not
a proper purpose. (3) A person found guilty of an offence under this section is on conviction liable to a fine not exceeding
five hundred thousand shillings or imprisonment for a term not exceeding two years, or to both. 44

ion is on conviction liable to a fine not exceeding
five hundred thousand shillings or imprisonment for a term not exceeding two years, or to both. 44

Companies Act (Cap. 486) Kenya
100. Company to provide information as to state of register of members and index of
members’ names
(1) When a person inspects a company's register of members, or a company provides the person with a
copy of the register or any part of it, the company shall inform the person of the most recent date
(if any) on which amendments were made to the register and (if that is the case) that there were no
further amendments to be made. (2) When a person inspects a company's index of the names of its members, the company shall inform
the person whether any amendment has been made to the register of members that is not reflected
in the index. (3) If a company fails to provide the information required under subsection (1) or (2), the company, and
each officer of the company who is in default commit an offence and on conviction are each liable to
a fine not exceeding five hundred thousand shillings. 101. Removal of entries relating to former members
(1) A company may expunge from its register of members an entry relating to a person who was
formerly a member of the company after the expiry of ten years after the date on which the person
ceased to be a member.

relating to a person who was
formerly a member of the company after the expiry of ten years after the date on which the person
ceased to be a member.

(2) If a company expunges from its register of members an entry relating to a person who was formerly
a member of the company before the expiry of ten years after the date on which the person ceased
to be a member, the company, and each officer of the company who is in default, commit an offence
and on conviction are each liable to a fine not exceeding five hundred thousand shillings. 102. Single member companies
(1) If a limited company is formed under this Act with only one member, the Registrar shall enter in the
register of members of the company, the name and address of that member and a statement that
the company has only one member. (2) If the number of members of a limited company is reduced to one, the company shall enter in its
register of members—
(a) the name and address of the member;
(b) a statement that the company has only one member; and
(c) the date on which the company became a company having only one member.

ss of the member;
(b) a statement that the company has only one member; and
(c) the date on which the company became a company having only one member.

(3) If the membership of a limited company increases from one to two or more members, the company
shall enter in the register of members, of the company—
(a) the name and address of the person who was formerly the sole member;
(b) a statement that the company has ceased to have only one member; and
(c) the date on which the company ceased to be a single member company. (4) If a company fails to comply with subsection (2) or (3), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. (5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with the relevant subsection, the company, and each officer of
the company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence. 45

n each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence. 45

Companies Act (Cap. 486) Kenya
103. Power of Court to rectify register
(1) If—
(a) the name of any person is, without sufficient cause, entered in or omitted from the register
of members of a company; or
(b) the cessation of membership of a person who has ceased to be a member of the company has
not been entered in that register,
the person affected, or the company or any member of the company, may apply to the Court for
rectification of the register. (2) On hearing an application made under subsection (1), the Court shall either refuse the application
or order rectification of the register and payment by the company of any damages sustained by any
party affected by the error or is failure. (3) On hearing such an application, the Court may—
(a) decide any question relating to the title of a person who is a party to the application to
have the person's name entered in or omitted from the register, whether the question arises
between members or alleged members, or between members or alleged members on the one
hand and the company on the other hand; and
(b) generally decide any question that it considers should be decided in order to rectify the
register.

ne
hand and the company on the other hand; and
(b) generally decide any question that it considers should be decided in order to rectify the
register.

(4) In the case of a company required by this Act to lodge a list of its members with the Registrar, the
Court, when making an order for rectification of the register, shall by its order direct notice of the
rectification to be given to the Registrar, who shall on receipt of the notice make such adjustments
to the Register as the Registrar considers appropriate. 104. [Repealed by Act No. 10 of 2023, Sch.]
105. Register to be evidence
Until the contrary is proved, the register of members of a company is evidence of the matters required or
authorised to be included in it. 106. Time limit for claims arising from entry in register
(1) Liability incurred by a company—
(a) from making or deleting an entry in the register of members; or
(b) from failing to make or delete any such entry,
is not enforceable more than ten years after the date on which the entry was made or deleted, or the
failure first occurred. (2) Subsection (1) does not affect the application of a shorter period of limitation that would apply
apart from this section. Division 3 — Prohibition on subsidiary being member of its holding company
107.

shorter period of limitation that would apply
apart from this section. Division 3 — Prohibition on subsidiary being member of its holding company
107.

Interpretation: Division 3
(1) In relation to a company other than a company limited by shares, a reference in this Division to
shares is a reference to the interest of its members as such, whatever the form of that interest. 46

imited by shares, a reference in this Division to
shares is a reference to the interest of its members as such, whatever the form of that interest. 46

Companies Act (Cap. 486) Kenya
(2) If a nominee is acting on behalf of a subsidiary, a reference in this Division to a subsidiary includes
a reference to a nominee of the subsidiary. 108. Prohibition on subsidiary being a member of its holding company
(1) Except as provided in sections 109 and 110—
(a) a body corporate may not be a member of a company that is its holding company; and
(b) any allotment or transfer of shares in a company to its subsidiary is void. (2) An allotment of shares or other transaction that would, but for this section, have the effect of
making a body corporate a member of a company that is its holding company is void. 109. Subsidiary acting as executor, administrator or trustee
(1) The prohibition in section 108(1)(a) does not apply if the subsidiary is acting only in the capacity of
—
(a) executor or administrator; or
(b) trustee unless the subsidiary's holding company or any of its other subsidiaries is beneficially
interested under the trust.

or administrator; or
(b) trustee unless the subsidiary's holding company or any of its other subsidiaries is beneficially
interested under the trust.

(2) For the purpose of ascertaining whether the holding company or a subsidiary is beneficially
interested under a trust, the following are to be disregarded:
(a) an interest held only as security for the purposes of a transaction entered into by the holding
company or subsidiary in the ordinary course of business that includes the lending of money;
(b) an interest under section 110;
(c) an interest under section 111;
(d) rights that the company or subsidiary has in its capacity as trustee, including—
(i) a right to recover its expenses or to be remunerated out of the trust property; and
(ii) a right to be indemnified out of the trust property for a liability incurred because of an
act or omission in the performance of its duties as trustee. 110. Interest to be disregarded: residual interest under pension scheme or employees’
share scheme
(1) If shares in a company are held in trust for the purposes of a pension scheme or an employees' share
scheme, any residual interest that has not yet vested in possession. is to be disregarded for the
purposes of section 109.

heme or an employees' share
scheme, any residual interest that has not yet vested in possession. is to be disregarded for the
purposes of section 109.

(2) For purposes of this section, "residual interest" means a right of the company or subsidiary to
receive any of the trust property if—
(a) all the liabilities arising under the scheme have been satisfied or provided for;
(b) the company or subsidiary ceases to participate in the scheme; or
(c) the trust property at any time exceeds what is necessary for satisfying the liabilities arising
or expected to arise under the scheme. (3) In the subsection (2)—
(a) the reference to a right includes a right dependent on the exercise of a discretion vested by
the scheme in the trustee or another person; and
47

(a) the reference to a right includes a right dependent on the exercise of a discretion vested by
the scheme in the trustee or another person; and
47

Companies Act (Cap. 486) Kenya
(b) the reference to liabilities arising under a scheme includes liabilities that have resulted, or
may result, from the exercise of any such discretion. (4) For the purposes of this section, a residual interest vests in possession—
(a) for the purpose of subsection (2)(a), when the relevant liabilities have been satisfied or
provided for, whether or not the amount of the property receivable pursuant to the right is
ascertained; and
(b) for the purpose of subsection (2)(b) or (c), when the company or subsidiary becomes entitled
to require the trustee to transfer any of the property in accordance with the right. 111.

)(b) or (c), when the company or subsidiary becomes entitled
to require the trustee to transfer any of the property in accordance with the right. 111.

Employers' rights of recovery under pension scheme or employees' share scheme
(1) For purposes of section 110, if shares in a company are held in trust for the purposes of a pension
scheme or an employees' share scheme, of any charge security right or lien on, or set-off against,
any benefit or other right or interest under the scheme is to be disregarded for the purpose of
enabling the employer or former employer of a member of the scheme to obtain the discharge of a
monetary obligation due from the member to the employer or former employer. (2) In the case of a trust for the purposes of a pension scheme, any right—
(a) to receive from the trustee of the scheme; or
(b) as trustee of the scheme to retain, an amount that can be recovered or retained or otherwise
as reimbursement or partial reimbursement for any contributions equivalent to the
premiums paid in connection with the scheme is to be disregarded. (3) For the purpose of this section, a director of a company is to be regarded as an employee of the
company. [Act No. 13 of 2017, Sch.]
112.

egarded. (3) For the purpose of this section, a director of a company is to be regarded as an employee of the
company. [Act No. 13 of 2017, Sch.]
112.

Subsidiary acting as authorised dealer in securities
(1) The prohibition in section 108 does not apply if the shares are held by the subsidiary in the ordinary
course of its business as an intermediary. (2) For the purposes of subsection (1), a subsidiary carries on business as an intermediary if it—
(a) carries on a genuine business of dealing in securities;
(b) is a member of an approved securities exchange in Kenya or is otherwise approved or
supervised as a dealer in securities in Kenya; and
(c) does not carry on an excluded business. (3) For the purposes of subsection (2), the following are excluded businesses—
(a) a business that consists wholly or mainly in the making or managing of investments;
(b) a business that consists wholly or mainly of, or is carried on wholly or mainly for the
purposes of, providing services to persons who are associates of the person carrying on the
business;
(c) an insurance business;
(d) a business that involves managing or acting as trustee in relation to a pension scheme, or
that is carried on by the manager or trustee of such a scheme in connection with or for the
purposes of the scheme; and
48

ion to a pension scheme, or
that is carried on by the manager or trustee of such a scheme in connection with or for the
purposes of the scheme; and
48

Companies Act (Cap. 486) Kenya
(e) a business that consists of operating or acting as trustee in relation to a collective
investment scheme, or that is carried on by the manager or trustee of such a scheme in
connection with, and for the purposes of, the scheme. (4) In this section—
(a) "collective investment scheme" has the meaning given by section 2 of the Capital Markets Act
(Cap. 485A); and
(b) "insurance business" means business that involves effecting or carrying out of contracts of
insurance. 113.

e Capital Markets Act
(Cap. 485A); and
(b) "insurance business" means business that involves effecting or carrying out of contracts of
insurance. 113.

Protection of third parties in cases if subsidiary acting as dealer in securities
If—
(a) a subsidiary that is a dealer in securities has purportedly acquired shares in its holding company in
contravention of the prohibition in section 108; and
(b) a person acting in good faith has agreed, for value and without notice of the contravention, to
acquire shares in the holding company—
(i) from the subsidiary; or
(ii) from someone who has purportedly acquired the shares after their disposal by the subsidiary,
a transfer to that person of the, shares referred to in paragraph (a) has the same effect as
it would have had if their original acquisition by the subsidiary had not contravened the
prohibition. Part VIII – EXERCISE OF RIGHTS OF MEMBERS
114. Effect of provisions of articles relating to enjoyment or exercise of rights of members
(1) This section applies to a provision in the articles of a company that enables a member to nominate
another person or persons to enjoy or exercise all or any specified rights of the member in relation
to the company.

that enables a member to nominate
another person or persons to enjoy or exercise all or any specified rights of the member in relation
to the company.

(2) So far as is necessary to give effect to a provision of a company's articles to which this section
applies—
(a) anything required by or under this Act to be done by or in relation to a member of the
company is instead to be done; and
(b) anything authorised by or under this Act to be done by or in relation to a member of the
company may instead be done, by or in relation to the nominated person as if that person
were a member of the company. (3) This section applies to the following rights—
(a) the right to be sent a proposed written resolution;
(b) the right to require circulation of a written resolution;
(c) the right to require directors to call a general meeting;
(d) the right to receive notices of general meetings;
(e) the right to require circulation of a statement;
(f) the right to appoint a proxy to act at a meeting;
(g) the right to be sent a copy of the company's annual financial statement and reports; and
49

(f) the right to appoint a proxy to act at a meeting;
(g) the right to be sent a copy of the company's annual financial statement and reports; and
49

Companies Act (Cap. 486) Kenya
(h) if the company is a public company, the right to require the circulation of a resolution for the
annual general meeting of the company. (4) This section does not—
(a) confer rights enforceable against the company by anyone, other than the member; or
(b) affect the requirements for an effective transfer or other disposition of the whole or part of a
member's interest in the company. 115. Traded companies: nomination of persons to enjoy information rights
(1) A member of a company whose shares are admitted to trading on a regulated market and who holds
shares on behalf of another person may nominate a person to enjoy information rights. (2) The following are information rights for the purpose of subsection (1)—
(a) the right to receive a copy of all communications that the company sends to its members
generally or to any class of its members that includes the person making the nomination;
(b) the right to be sent copies of the company's annual financial statement and reports;
(c) the right to receive a hard copy version of a document or information provided in another
form.

company's annual financial statement and reports;
(c) the right to receive a hard copy version of a document or information provided in another
form.

(3) A company need not act on a nomination purporting to relate to certain information rights only. 116. Information rights: form in which copies to be provided
(1) If the person to be nominated under section 115 wishes to receive copies of documents or other
information in hard copy form, that person shall, before the nomination is made—
(a) request the person making the nomination to notify the company of that fact; and
(b) provide an address to which those copies may be sent. (2) If, having received a request under subsection (1), the person making the nomination—
(a) notifies the company that the nominated person wishes to receive documents and other
information in hard copy form; and
(b) provide an address to which such copies may be sent,
the company shall provide the nominated person with hard copy versions of the relevant documents
and other information. (3) If no notification is received or no address is provided, the nominated person is taken to have
agreed that documents or information may be sent or supplied to the person by means of a website.

s is provided, the nominated person is taken to have
agreed that documents or information may be sent or supplied to the person by means of a website.

(4) A nominated person may, by notice given to the company concerned—
(a) revoke the agreement taken to have been made under subsection (3); and
(b) require the company to provide the person with hard copy versions of the relevant
documents or information. (5) On receiving a notice under subsection (4), the company shall provide the nominated person with
hard copy versions of the relevant documents and other information. 50

otice under subsection (4), the company shall provide the nominated person with
hard copy versions of the relevant documents and other information. 50

Companies Act (Cap. 486) Kenya
117. Information on possible rights in relation to voting
(1) When a company sends a copy of a notice of a meeting to a person nominated under section 115, it
shall also send to that person a statement that—
(a) the nominated person may have a right under an agreement between the person and the
member by whom the person was nominated to be appointed, or to have someone else
appointed, as a proxy for the meeting; or
(b) if the nominated person has no such right or does not wish to exercise it, the person may
have a right under such an agreement to give instructions to the member as to the exercise of
voting rights. (2) Section 299 does not apply to the copy of the notice, and the company shall either—
(a) omit the notice required by that section; or
(b) include the notice but state that it does not apply to the nominated person. 118. Information rights and status of rights
(1) This section has effect as regards the rights conferred by a nomination under section 115. (2) Enjoyment by the nominated person of the rights conferred by the nomination is enforceable
against the company by the member as if they were rights conferred by the company's articles.

of the rights conferred by the nomination is enforceable
against the company by the member as if they were rights conferred by the company's articles.

(3) An enactment, or a provision of the company’s articles, having effect in relation to communications
with members has a corresponding effect (subject to any necessary modification) in relation to
communications with the nominated person. (4) In particular—
(a) if under an enactment, or any provision of the company’s articles, the members of a company
entitled to receive a document or information are determined as at a date or time before it is
sent or supplied, the company need not send or supply it to a nominated person—
(i) whose nomination was received by the company after that date or time; or
(ii) if that date or time occurs during a period of suspension of the nomination; and
(b) if under an enactment, or a provision of the company's articles, the right of a member to
receive a document or information depends on the company having a current address for the
member, the same applies to any person nominated by the member. (5) The rights conferred by the nomination—
(a) are in addition to the rights of the member; and
(b) do not affect any rights exercisable under section 114.

e rights conferred by the nomination—
(a) are in addition to the rights of the member; and
(b) do not affect any rights exercisable under section 114.

(6) A failure to give effect to the rights conferred by the nomination does not affect the validity of
anything done by or on behalf of the company. (7) A reference in this section to the rights conferred by the nomination is—
(a) the rights referred to in section 115; and
(b) if applicable, the rights conferred by sections 116(2) and 117. 119. Termination or suspension of nomination
(1) The nomination of a person under section 115 may be terminated at the request of the member or
of the nominated person. 51

uspension of nomination
(1) The nomination of a person under section 115 may be terminated at the request of the member or
of the nominated person. 51

Companies Act (Cap. 486) Kenya
(2) The nomination ceases to have effect on the occurrence in relation to the member or the nominated
person if—
(a) in the case of a natural person, the person dies or is adjudicated bankrupt; or
(b) in the case of a body corporate, the body is dissolved or an order is made for the liquidation
of the body otherwise than for the purposes of reconstruction. (3) In subsection (2)—
(a) the reference to bankruptcy includes the sequestration of a person's estate; and
(b) the reference to the making of an order for liquidation is to the making of such an order
under the law relating to insolvency, or any corresponding proceeding under the law of a
country or territory outside Kenya. (4) The effect of any nominations made by a member is suspended at any time when there are more
nominated persons than the member has shares in the company. (5) If—
(a) the member holds different classes of shares with different information rights; and
(b) there are more nominated persons than the member has shares conferring a particular right,
the effect of any nominations made by the member is suspended to the extent that they confer that
right.

ber has shares conferring a particular right,
the effect of any nominations made by the member is suspended to the extent that they confer that
right.

(6) If the company—
(a) requests a nominated person to specify whether the person wishes to retain information
rights; and
(b) does not receive a response within twenty eight days from and including the date on which
the company’s request was sent, the nomination ceases to have effect at the end of that
period. (7) Such a request may not be made of a person more than once in any twelve-month period. (8) Although the termination or suspension of a nomination means that the company is no longer
required to act on it, it does not prevent the company from continuing to do so, to such extent or
for such period as it considers appropriate. 120. Exercise of rights if shares held on behalf of others
(1) If a member holds shares in a company on behalf of more than one person—
(a) rights attached to the shares; and
(b) rights under any written law exercisable because of holding the shares,
need not all be exercised, and if exercised, need not all be exercised in the same way. (2) A member who exercises the rights referred to in subsection (1) but does not exercise all those
rights shall inform the company to what extent the member is exercising the rights.

ghts referred to in subsection (1) but does not exercise all those
rights shall inform the company to what extent the member is exercising the rights.

(3) A member who exercises the rights in different ways shall inform the company of the ways in which
the member is exercising the rights and to what extent the member is exercising the rights in each
way. (4) If a member exercises the rights in this section without informing the company that the member—
(a) is not exercising all the member's rights; or
52

) If a member exercises the rights in this section without informing the company that the member—
(a) is not exercising all the member's rights; or
52

Companies Act (Cap. 486) Kenya
(b) is exercising those rights in different ways, the company is entitled to assume that the
member is exercising all of those rights and is exercising them in the same way. 121. Exercise of rights if shares held on behalf of others: members’ requests
(1) This section applies to sections 289, 312 and 766.

in the same way. 121. Exercise of rights if shares held on behalf of others: members’ requests
(1) This section applies to sections 289, 312 and 766.

(2) A company is required to act under a section to which this section applies if it receives a request
that complies with the following conditions—
(a) it is made by at least one hundred persons;
(b) it is authenticated by all the persons making it;
(c) if any of those persons is not a member of the company, it is accompanied by a statement—
(i) specifying the full name and address of a person who is the member of the company
and holds shares on behalf of that person;
(ii) stating that the member is holding the shares on behalf of that person in the course of
a business;
(iii) specifying the number of shares in the company that the member holds on behalf of
that person;
(iv) specifying the total amount paid up on the shares;
(v) stating that the shares are not held on behalf of anyone else or, if they are, that the
other person or persons are not among the other persons making the request;
(vi) stating that some or all of the shares confer voting rights that are relevant for the
purposes of making a request under the relevant section; and
(vii) stating that the person has the right to instruct the member how to exercise the
rights;
(d) if any of those persons is a member of the company, it is accompanied by a statement that
the member—
(i) holds shares otherwise than on behalf of another person; or
(ii) holds shares on behalf of one or more other persons but those persons are not among
the other persons making the request;
(e) it is accompanied by such evidence as the company may reasonably require of the matters
referred to in paragraphs (c) and (d);
(f) the total amount of the sums paid up on—
(i) shares held as referred to in paragraph (c); and
(ii) shares held as referred to in paragraph (d), divided by the number of persons making
the request, is not less than ten thousand shillings;
(g) the request complies with any other requirements of the section.

he number of persons making
the request, is not less than ten thousand shillings;
(g) the request complies with any other requirements of the section.

Part IX – COMPANY DIRECTORS
Division 1 — Interpretation for purposes of this Part
53

Part IX – COMPANY DIRECTORS
Division 1 — Interpretation for purposes of this Part
53

Companies Act (Cap. 486) Kenya
122.

Companies Act (Cap. 486) Kenya
122.

Persons who are connected with a director for purposes of this Part
(1) For the purposes of this Part, a person is connected with a director of a company if the person is—
(a) a member of the director's family as defined in section 123;
(b) a body corporate with which the director is connected as defined in section 124;
(c) a person acting as trustee of a trust—
(i) the beneficiaries of which include the director or a person who because of paragraph
(a) or (b) is connected with the person; or
(ii) the terms of which confer a power on the trustees that may be exercised for the
benefit of the director or any such person, other than a trust for the purposes of an
employees' share scheme or a pension scheme;
(d) a person acting as a partner—
(i) of the director; or
(ii) of a person who, because of paragraph (a), (b) or (c), is connected with that director;
or
(e) a firm that is a legal person under the law by which it is governed and in which—
(i) the director is a partner;
(ii) a partner is a person who, because of paragraph (a), (b) or (c) is connected with the
director; or
(iii) a partner is a firm in which the director is a partner or in which there is a partner who,
because of paragraph (a), (b) or (c), is connected with the director.

is a firm in which the director is a partner or in which there is a partner who,
because of paragraph (a), (b) or (c), is connected with the director.

(2) A reference in this Part to a person connected with a director of a company does not include a
person who is himself or herself a director of the company. 123. Members of a director’s family
For the purposes of this Part, a person is member of a director's family if the person is—
(a) the director's spouse;
(b) a child or step-child of the director;
(c) a child or step-child of the director's spouse who lives with the director and has not reached
eighteen years of age;
(d) a parent of the director;
(e) a brother or sister of the director;
(f) a brother or sister of the spouse of the director;
(g) a grandchild of the director; or
(h) a spouse of any of the persons specified in paragraphs (b), (e), (f) and (g). [Act No. 28 of 2017, s. 10.]
54

(g) a grandchild of the director; or
(h) a spouse of any of the persons specified in paragraphs (b), (e), (f) and (g). [Act No. 28 of 2017, s. 10.]
54

Companies Act (Cap. 486) Kenya
124. When a director connected with a body corporate for purposes of this Part
(1) In this Part, a director is connected with a body corporate if, but only if, the director and the
persons connected with the director together—
(a) are interested in shares comprised in the equity share capital of the body corporate of a
nominal value equal to at least twenty percent of that share capital; or
(b) are entitled to exercise or control the exercise of more than twenty percent of the voting
power at any general meeting of that body. (2) The rules set out in the First Schedule apply for the purposes of this section. (3) A reference in this section to voting power the exercise of which is controlled by a director includes
voting power whose exercise is controlled by a body corporate controlled by the director. (4) Shares in a company held as treasury shares, and any voting rights attached to those shares, are to
be disregarded for the purposes of this section.

) Shares in a company held as treasury shares, and any voting rights attached to those shares, are to
be disregarded for the purposes of this section.

(5) To avoid circularity in the application of section 122—
(a) a body corporate with which a director is connected is not, for the purposes of this section,
connected with the director unless it is also connected with the director because of
subsection (1)(c) or (d) of that section; and
(b) a trustee of a trust the beneficiaries of which include (or may include) a body corporate
with which a director is connected is not, for the purposes of this section, connected with a,
director only because of that fact. 125.

body corporate
with which a director is connected is not, for the purposes of this section, connected with a,
director only because of that fact. 125.

When a director is to be regarded as controlling a body corporate for purposes of this
Part
(1) For the purposes of this Part, a director of a company is taken to control a body corporate if, but
only if—
(a) the director or any person connected with the director—
(i) has an interest in any part of the equity share capital of that body; or
(ii) is entitled to exercise or control the exercise of any part of the voting power at any
general meeting of that body; and
(b) the director, the persons connected with the director and the other directors of that
company, together—
(i) are interested in more than fifty percent of that share capital; or
(ii) are entitled to exercise or control the exercise of more than fifty percent of that voting
power. (2) The rules set out in the First Schedule (references to interest in shares or debentures) apply for the
purposes of this section. (3) A reference in this section to voting power the exercise of which is controlled by a director includes
voting power whose exercise is controlled by a body corporate controlled by the director.

r the exercise of which is controlled by a director includes
voting power whose exercise is controlled by a body corporate controlled by the director.

(4) Shares in a company held as treasury shares, and any voting rights attached to those shares, are to
be disregarded for the purposes of this section. 55

hares in a company held as treasury shares, and any voting rights attached to those shares, are to
be disregarded for the purposes of this section. 55

Companies Act (Cap. 486) Kenya
(5) To avoid circularity in the application of section 122—
(a) a body corporate with which a director is connected is not, for the purposes of this section,
connected with the director unless it is also connected with the director because of
subsection (1)(c) or (d) of that section (connection as trustee or partner);; and
(b) a trustee of a trust the beneficiaries of which include (or may include) a body corporate
with which a director is connected is not, for the purposes of this section, connected with a,
director only because of that fact. 126. When bodies corporate are to be treated as being associated for purposes of this Part
For the purposes of this Part—
(a) bodies corporate are associated if one is a subsidiary of the other or both are subsidiaries of the
same body corporate; and
(b) companies are associated if one is a subsidiary of the other or both are subsidiaries of the same
body corporate. 127.

he
same body corporate; and
(b) companies are associated if one is a subsidiary of the other or both are subsidiaries of the same
body corporate. 127.

References to company’s constitution
A reference in this Part to a company’s constitution includes—
(a) any resolution or other decision made in accordance with the constitution; and
(b) any decision by the members of the company, or a class of members, that is, because of any
enactment or rule of law, treated as equivalent to a decision by the company. Division 2 — Appointment and removal of directors under this Part
128. Company required to have directors
(1) A private company is required to have at least one director. (2) A public company is required to have at least two directors. 129. Company required to have at least one natural person as a director
(1) A company is required to have at least one director who is a natural person. (2) Subsection (1) is complied with if the office of director is held by a natural person as a corporation
sole or otherwise by holding a specified office. 130. Direction requiring company to make appointment
(1) On forming the opinion that a company is in breach of section 128 or 129, the Registrar may give
the company a direction in accordance with subsection (2).

rming the opinion that a company is in breach of section 128 or 129, the Registrar may give
the company a direction in accordance with subsection (2).

(2) A direction is in accordance with this subsection if it specifies—
(a) the statutory requirement of which the company appears to be in breach;
(b) the action that the company is required to take in order to comply with the direction;
(c) the period within which the company is required to comply with the direction; and
(d) the consequences of the company failing to comply with the direction. (3) The period referred to in subsection (2)(c) may not be shorter than one month, or longer than three
months, after the date on which the direction is given. 56

od referred to in subsection (2)(c) may not be shorter than one month, or longer than three
months, after the date on which the direction is given. 56

Companies Act (Cap. 486) Kenya
(4) A company that is in breach of section 128 or 129 shall comply with the direction given by the
Registrar is by—
(a) making the necessary appointment or appointments; and
(b) giving notice of the appointment under section 138,
before the end of the period specified in the direction. (5) If the company has already made the necessary appointment or appointments, it shall comply with
the direction by giving notice of the appointment under section 138 before the end of the period
specified in the direction. (6) If a company fails to comply with a direction given under this section, the company, and each
officer of the company who is in default, commit an offence and on conviction are each liable to a
fine not exceeding five hundred thousand shillings. (7) If, after a company or any of its officers is convicted of an offence under subsection (6), the
company continues to fail to comply with the direction, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence. 131.

each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence. 131.

Minimum age for director
(1) A person who has not reached eighteen years of age may not be appointed to be a director of a
company. (2) An appointment made in contravention of subsection (1) is void. 132. Appointment of director of public company
(1) A public company shall ensure that at a general meeting of the company a motion for the
appointment of two or more persons as directors of the company by a single resolution is moved
only if a resolution that it should be so moved has first been agreed to by the meeting without any
vote being cast against it. (2) A resolution moved in contravention of subsection (1) is void, whether or not any objection to its
being so moved was made at the relevant time. (3) If such a resolution is passed, any provision of the company's constitution for the automatic
reappointment of retiring directors in default of another appointment does not apply. (4) For the purposes of this section, a motion for approving a person's appointment, or for nominating
a person for appointment, is taken to be a motion for the person's appointment. 133.

a motion for approving a person's appointment, or for nominating
a person for appointment, is taken to be a motion for the person's appointment. 133.

Validity of acts of directors
(1) The acts of a director are valid even if it is later discovered that—
(a) the appointment of the director was defective; or
(b) the director—
(i) was disqualified from holding office;
(ii) had ceased to hold office; or
(iii) was not entitled to vote on the relevant matter. (2) The acts of a director are valid even if the resolution for director's appointment is void under
section 132. 57

d to vote on the relevant matter. (2) The acts of a director are valid even if the resolution for director's appointment is void under
section 132. 57

Companies Act (Cap. 486) Kenya
134. Company to keep register of directors
(1) Every company shall keep a register of its directors. (2) A company shall ensure that its register of directors complies with sections 135 and 136. (3) A company shall keep its register of directors open for inspection at its registered office or at some
other place prescribed or authorised by the regulations. (4) A company shall ensure that its register of directors is kept open during its ordinary hours of
business for inspection by—
(a) any member of the company without charge; and
(b) any other person on payment of a fee (if any) not exceeding the amount prescribed for the
purposes of this subsection. (5) If a company refuses to allow a person to inspect the register, that person may apply to the Court
for an order under subsection (6).

subsection. (5) If a company refuses to allow a person to inspect the register, that person may apply to the Court
for an order under subsection (6).

(6) If, on the hearing of an application made under subsection (5), the Court is satisfied that the
company's refusal was without justification, it shall make an order directing the company to allow
the applicant or the applicant's representative to inspect the company's register and, if it does so, it
may make a further order directing the company to pay the applicant's costs in the matter. (7) If a company fails to comply with a requirement of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding one million shillings. (8) If, after a company or any of its officers is convicted of an offence under subsection (7), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding one hundred thousand shillings
for each such offence. 135.

ay on which the failure
continues and on conviction are each liable to a fine not exceeding one hundred thousand shillings
for each such offence. 135.

Particulars of directors to be registered: natural persons
(1) A company's register of directors is required to contain the following particulars in respect of a
director who is a natural person—
(a) the person's name and any former name;
(b) a service address;
(c) the country or state (or part of Kenya) in which the person is usually resident;
(d) the person's nationality;
(e) the person's business or occupation (if any);
(f) the person's date of birth;
(g) the person's other company directorships, if any. (2) For the purposes of this section—
(a) "name" means a person's forename and surname; and
(b) "former name" means a name by which the natural person was formerly known for business
purposes. (3) If a person is or was formerly known by more than one such name, each of them has to be stated. 58

erson was formerly known for business
purposes. (3) If a person is or was formerly known by more than one such name, each of them has to be stated. 58

Companies Act (Cap. 486) Kenya
(4) It is not necessary for the register of directors to contain particulars of a former name if the former
name—
(a) was changed or disused before the person attained the age of eighteen years; or
(b) has been changed or disused for twenty years or more. (5) A person's service address may be stated to be "The company's registered office". [Act No. 28 of 2017, s. 11.]
136. Particulars of directors to be registered: corporate directors
If a director of a company is a body corporate, a company’s register of directors is required to contain the
following particulars in respect of the body—
(a) the body's corporate name;
(b) the registered or principal office of the body;
(c) particulars of—
(i) the legal form of the body and the law by which it is governed; and
(ii) if applicable, the register in which it is entered (including details of the country or territory)
and its registration number in that register. 137. Company to keep register of directors’ residential addresses
(1) Every company shall keep a register of directors' residential addresses that contains the usual
residential address of each of the company's directors.

very company shall keep a register of directors' residential addresses that contains the usual
residential address of each of the company's directors.

(2) If a director's usual residential address is the same as the director's service address (as stated in the
company's register of directors), the register of directors', residential addresses need only contain
an entry to that effect. (3) Subsection (2) does not apply if the director's service address is stated to be "The company's
registered office". (4) If a company fails to comply with subsection (1), the company, and each officer of the company who
is in default, commit and offence and on conviction is liable to a fine not exceeding five hundred
thousand shillings. (5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with subsection (1), the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings, for each such
offence. (6) This section applies only to directors who, are natural persons, not if the director is a body
corporate. 138.

d shillings, for each such
offence. (6) This section applies only to directors who, are natural persons, not if the director is a body
corporate. 138.

Duty of company to notify Registrar of changes of directors and directors’ addresses
(1) Within fourteen days after—
(a) a person is appointed or ceases to hold appointment as a director of a company; or
(b) any change occurs in the particulars contained in a company's register of directors or its
register of directors' residential addresses, the company shall give notice to the Registrar of
the appointment, cessation of appointment or change of particulars and of the date on which
it occurred. 59

pany shall give notice to the Registrar of
the appointment, cessation of appointment or change of particulars and of the date on which
it occurred. 59

Companies Act (Cap. 486) Kenya
(2) The company shall—
(a) include in a notice of the appointment of a new director of the company a statement of the
particulars of that director that are required to be included in the company's register of
directors and its register of directors' residential addresses; and
(b) attach to or enclose with the notice a written consent by that director to act in that capacity. (3) If a company fails to comply with subsection (1) or (2), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding two hundred thousand shillings. (4) If, after a company or any of its officers is convicted of an offence under subsection (3), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. 138A. Register of nominee directors
(1) Every company shall keep a register of nominee directors at its registered office.

ings for
each such offence. 138A. Register of nominee directors
(1) Every company shall keep a register of nominee directors at its registered office.

(2) A company shall enter in its register of nominee directors—
(a) the name and address of the nominee director;
(b) the date on which the person became a nominee director; and
(c) the name and address of the nominee director’s nominator. (3) Every company registered before the coming into effect of this provision shall lodge with the
Registrar, a copy of its register of nominee directors within sixty days of coming into effect of this
provision. (4) A company shall lodge with the Registrar, a copy of any amendment to its register of nominee
directors within fourteen days after making the amendment. (5) The register of nominee directors shall not be open to inspection by membersof the public. (6) If a company fails to comply with a requirement under subsection (3) or subsection (4), the
company, and each officer of the company in default is liable to pay to the Registrar, an
administrative penalty of two thousand shillings. (7) This section shall apply to foreign companies registered in Part XXXVII of this Act. [Act No. 10 of 2023, Sch.]
139.

ty of two thousand shillings. (7) This section shall apply to foreign companies registered in Part XXXVII of this Act. [Act No. 10 of 2023, Sch.]
139.

Resolution to remove directors from office
(1) A company may, by ordinary resolution at a meeting, remove a director before the end of the
director's period of office, despite anything to the contrary in any agreement between the company
and the director. (2) However, a special notice is required for a resolution to remove a director under this section or
to appoint a person to replace the director so removed at the meeting at which the director is
removed. (3) A person appointed to replace a director who is removed under this section is, for the purpose of
determining the time at which the person is to retire from office, taken to have become a director
on the day on which the director in whose place the person is appointed was last appointed as a
director. 60

m office, taken to have become a director
on the day on which the director in whose place the person is appointed was last appointed as a
director. 60

Companies Act (Cap. 486) Kenya
(4) A vacancy created by the removal of a director under this section, if not filled at the meeting at
which the director is removed, can be filled as a casual vacancy. (5) A person who ceases to be a director continues to be subject to the duty—
(a) to avoid conflicts of interest with regard to the exploitation of any property, information or
opportunity that the person became aware of while a director; and
(b) not to accept benefits from third parties with regard to things done or omitted to be done by
that person before ceasing to be a director
(6) This section does not—
(a) deprive a person removed under it of compensation or damages payable in respect of the
termination of the person's appointment as director; or
(b) limit any power to remove a director that may exist apart from this section. Division 3 — Directors’ duties
140. Scope and nature of general duties
(1) The general duties specified in this Division are owed by a director of a company to the company.

’ duties
140. Scope and nature of general duties
(1) The general duties specified in this Division are owed by a director of a company to the company.

(2) A person who ceases to be a director continues to be subject to—
(a) the duty in section 146 with respect to the exploitation of any property, information or
opportunity of which the person became aware while a director; and
(b) the duty in section 147 with respect to things done or omitted by the person before ceasing
to be a director,
and to that extent those duties apply to a former director as they do to a director. (3) The general duties of directors are based on common law rules and equitable principles that apply
in relation to directors and have effect in place of those rules and principles with respect to the
duties owed to a company by a director. (4) The general duties of directors are to be interpreted and applied in the same way as common law
rules or equitable principles, and those interpreting and applying those rules and principles are
required to have regard to the corresponding common law rules and equitable principles. 141. Director’s right to protest against removal
(1) On receipt of notice of a motion for a resolution to remove a director under section 139, the
company shall send a copy of the notice to the director concerned.

of notice of a motion for a resolution to remove a director under section 139, the
company shall send a copy of the notice to the director concerned.

(2) The director, whether or not a member of the company may be heard on the discussion of the
motion at the meeting. (3) Subsection (4) applies when notice is given of a proposed resolution to remove a director under
section 139. (4) Within twenty-one days after the notice is given, the director may make, with respect to the motion
representations in writing to the company and request that the members of the company be
notified of the director's representations. (5) On receipt of any such a request, the company shall, unless the representations are received by it
too late for it to do so—
(a) in any notice of the resolution given to members of the company, state the fact of the
representations having been made; and
61

e for it to do so—
(a) in any notice of the resolution given to members of the company, state the fact of the
representations having been made; and
61

Companies Act (Cap. 486) Kenya
(b) send a copy of the representations to every member of the company to whom notice of the
meeting is sent, whether before or after receipt of the representations by the company. (6) If a copy of the representations is not sent as required by subsection (5) because the representations
were received too late or because of the company's default, the director may orally require the
representations to be read out at the meeting. (7) If the company or a person affected claims that the representations made by the director contain
defamatory matter, the company or the person may apply to the Court for an order under
subsection (9). (8) The director is entitled to be served with a copy of such an application and to be heard at the
hearing of the application by the Court. (9) On the hearing of such an application, the Court shall, if satisfied that the representations of the
director contain defamatory matter, make an order that they need not be sent out to the company's
members and need not be read out at the meeting, but if not so satisfied, it shall dismiss the
application.

they need not be sent out to the company's
members and need not be read out at the meeting, but if not so satisfied, it shall dismiss the
application.

(10) If the Court has made an order under subsection (9)—
(a) copies of the director's representations need not be sent out to the company's members; and
(b) those representations need not be read out at the meeting. 142. Duty of director to act within powers
A director of a company shall—
(a) act in accordance with the constitution of the company; and
(b) only exercise powers for the purposes for which they are conferred. 143.

ny shall—
(a) act in accordance with the constitution of the company; and
(b) only exercise powers for the purposes for which they are conferred. 143.

Duty of director to promote the success of the company
(1) A director of a company shall act in the way in which the director considers, in good faith, would
promote the success of the company for the benefit of its members as a whole, and in so doing the
director shall have regard to—
(a) the long term consequences of any decision of the directors;
(b) the interests of the employees of the company;
(c) the need to foster the company's business relationships with suppliers, customers and
others;
(d) the impact of the operations of the company on the community and the environment;
(e) the desirability of the company to maintain a reputation for high standards of business
conduct; and
(f) the need to act fairly as between the directors and the members of the company. (2) If, or to the extent that, the purposes of the company consist of or include purposes other than the
benefit of its members, subsection (1) has effect as if the reference to promoting the success of the
company for the benefit of its members were to achieving those purposes.

subsection (1) has effect as if the reference to promoting the success of the
company for the benefit of its members were to achieving those purposes.

(3) The duty imposed by this section has effect subject to any law requiring directors, in certain
circumstances, to consider or act in the interests of creditors of the company. 144. Duty of director to exercise independent judgement
(1) A director of a company shall exercise independent judgment. 62

creditors of the company. 144. Duty of director to exercise independent judgement
(1) A director of a company shall exercise independent judgment. 62

Companies Act (Cap. 486) Kenya
(2) The duty under subsection (1) is not infringed by the director acting—
(a) in accordance with an agreement duly entered into by the company that restricts the future
exercise of discretion by its directors; or
(b) in a way authorised by the constitution of the company. 145. Duty of director to exercise reasonable care, skill and diligence
In performing the functions of a director, a director of a company shall exercise the same care, skill and
diligence that would be exercisable by a reasonably diligent person with—
(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying
out the functions performed by the director in relation to the company; and
(b) the general knowledge, skill and experience that the director has. 146. Duty of director to avoid conflicts of interest
(1) A director of a company shall avoid a situation in which the director has, or can have, a direct or
indirect interest that conflicts, or may conflict, with the interests of the company.

a situation in which the director has, or can have, a direct or
indirect interest that conflicts, or may conflict, with the interests of the company.

(2) Subsection (1) applies in particular to the exploitation of—
(a) any property;
(b) confidential information of the company;
(c) the director's position in the company; or
(d) opportunities in or for the company:
Provided that it does not matter whether the company could take advantage of the property,
confidential information or opportunity. (3) The duty of a director under subsection (1) is not infringed—
(a) deleted by Act No. 28 of 2017, s. 12(b);
(b) if the matter has been authorised by the other directors. (4) An authorisation under subsection (3)(b) may, in the case of a private company, be given by the
directors by the matter concerned being proposed to and authorised by them, so long as nothing in
the company's constitution invalidates the giving of such an authorisation. (5) An authorization under subsection (3)(b) may in the case of a public company be given by—
(a) a majority of members of the board of directors who do not have a personal interest; or
(b) a majority of the votes of members who do not have a personal interest, in the case of a
transaction valued at an amount that is ten percent or more of the value of the assets of the
company.

not have a personal interest, in the case of a
transaction valued at an amount that is ten percent or more of the value of the assets of the
company.

(6) An authorisation given under subsection (3)(b) is effective only if—
(a) any requirement relating to the quorum at the meeting at which the matter is considered is
satisfied without counting the director concerned or any other interested director; and
(b) the matter was agreed to without that director or any other interested director voting. (7) Any reference in this section to a conflict of interest includes references to a conflict of interest and
duty and to a conflict of duties. 63

ng. (7) Any reference in this section to a conflict of interest includes references to a conflict of interest and
duty and to a conflict of duties. 63

Companies Act (Cap. 486) Kenya
(8) A director or member referred to in this section has a personal interest if the director or member or
their family member—
(a) is a party to the transaction or has material financial interest in the transaction; or
(b) has material financial interest in the transaction that could be expected to affect their
judgment adversely to the company. (9) An arrangement entered into by a company in contravention of this section and any transaction
entered into in accordance with the arrangement, whether by the company or any other person, is
voidable at the instance of the company, unless—
(a) restitution of any money or other asset that was the subject matter of the arrangement or
transaction is no longer possible;
(b) the company has been indemnified in accordance with this section by other persons for the
loss or damage suffered by it; or
(c) rights acquired in good faith, for value and without actual notice of the contravention by
a person who is not a party to the arrangement or transaction would be affected by the
avoidance.

ue and without actual notice of the contravention by
a person who is not a party to the arrangement or transaction would be affected by the
avoidance.

(10) Whether or not the arrangement or any such transaction has been avoided, each of the persons
specified in subsection (11) is liable-—
(a) to account to the company for any gain that the person has made (directly or indirectly) as a
result of the arrangement or transaction; and
(b) jointly and severally with any other person so liable under this section, to indemnify the
company for any loss or damage resulting from the arrangement or transaction. (11) The persons liable under subsection (10) are—
(a) any director of the company or of its holding company with whom the company entered into
the arrangement in contravention of this section;
(b) any person with whom the company entered into the arrangement in contravention of this
section who is connected with a director of the company or of its holding company;
(c) the director of the company, or of its holding company, with whom any such person is
connected; and
(d) any other director of the company who authorised the arrangement or a transaction entered
into in accordance with such an arrangement.

nected; and
(d) any other director of the company who authorised the arrangement or a transaction entered
into in accordance with such an arrangement.

(12) A director who contravenes this section commits an offence and is liable on conviction to
disqualification for a period not exceeding five years. [Act No. 28 of 2017, s. 12.]
147. Duty not to accept benefits from third parties
(1) A person who is a director of a company shall not accept a benefit from a third party if the benefit
attributable—
(a) to the fact that the person is a director of the company; or
(b) to any act or omission of the person as a director. (2) Benefits received by a director from a person by whom his or her services (as a director or otherwise)
are provided to the company are not regarded as conferred by a third party. (3) Deleted by Act No. 28 of 2017, s. 13. 64

(as a director or otherwise)
are provided to the company are not regarded as conferred by a third party. (3) Deleted by Act No. 28 of 2017, s. 13. 64

Companies Act (Cap. 486) Kenya
(4) A reference in this section to a conflict of interest includes a conflict of interest and duty and a
conflict of duties. (5) A person who contravenes subsection (1) commits an offence and is liable on conviction to a fine
not exceeding one million shillings. (6) On the conviction of a person for an offence under subsection (2), the benefit or its equivalent
accepted by the person under subsection (1) is forfeited to the company. (7) In this section, "third party" means a person other than the company, an associated body corporate
or a person acting on behalf of the company or an associated body corporate. [Act No. 28 of 2017, s. 13.]
148. Civil consequences of breach of general duties
(1) The consequences of breach (or threatened breach) of the general duties of directors set out in this
Division are the same as would apply if the corresponding common law rule or equitable principle
applied. (2) Those duties (with the exception of the duty set out in section 145) are enforceable in the same way
as any other fiduciary duty owed to a company by its directors. 149.

the exception of the duty set out in section 145) are enforceable in the same way
as any other fiduciary duty owed to a company by its directors. 149.

Cases within more than one of the general duties
Except as otherwise provided, more than one of the general duties may apply to a director in any given
case. 150. Consent, approval or authorisation by members
(1) If—
(a) section 146 is complied with by authorisation by the directors; or
(b) section 151 is complied with, the transaction or arrangement is not liable to be set aside
because of any common law rule or equitable principle requiring the consent or approval of
the members of the company. (2) Subsection (1) does not affect the operation of any enactment, or provision of the company's
constitution, that requires any such consent or approval. (3) The application of the general duties to a director is not affected by the fact that the case also falls
within Division 5, except that if that Division applies and—
(a) approval is given under that Division; or
(b) the matter is one as to which it is provided that approval is not needed, it is not necessary
also for the director to comply with section 146 or 147. (4) Compliance by a director with the general duties does not remove the need for approval under any
applicable provision of Division 5.

n 146 or 147. (4) Compliance by a director with the general duties does not remove the need for approval under any
applicable provision of Division 5.

(5) The general duties applicable to directors—
(a) have effect subject to any rule of law enabling the company to give authority, specifically or
generally, for anything to be done (or omitted) by the directors, or any of them, that would
otherwise be a breach of duty; and
(b) if the company's articles contain provisions for dealing with conflicts of interest — are not
infringed by anything done or omitted to be done by the directors (or by any of them) in
accordance with those provisions. 65

ts of interest — are not
infringed by anything done or omitted to be done by the directors (or by any of them) in
accordance with those provisions. 65

Companies Act (Cap. 486) Kenya
(6) Except as provided by this section, the general duties of directors have effect (except as otherwise
provided or the context otherwise requires) irrespective of any other enactment or rule of law. Division 4 — Declaration of interest in existing transaction or arrangement
151. Duty to declare interest in proposed or existing transaction or arrangement
(1) If a director of a company is in any way, directly or indirectly, interested in a proposed transaction
or arrangement with the company, or in a transaction or arrangement that the company has already
entered into, the director shall declare the nature, and extent of that interest—
(a) to the other directors; and
(b) if the company is a public company, to the members of the company within seventy-two
hours.

tent of that interest—
(a) to the other directors; and
(b) if the company is a public company, to the members of the company within seventy-two
hours.

(2) If, in the case of a public company, a proposed transaction or arrangement with the company, or
a transaction or arrangement that the company has already entered into, is for an amount, or for
goods or services valued at an amount, that is ten percent or more of the value of the assets of the
company, the declaration shall also be disclose to the members of the company either—
(a) at a general meeting of the company; or
(b) by notice given to the members, in accordance with section 152. (3) A declaration is not effective for the purpose of subsection (2) unless the valuation of the goods or
services and the valuation of the assets of the company are certified by the company's external and
independent auditors as being the true market value of those goods or services and those assets. (4) If a declaration of interest under this section, is inaccurate or incomplete, the director shall make a
further declaration. (5) A director shall make a declaration required by this section before the company enters into the
transaction or arrangement concerned.

declaration. (5) A director shall make a declaration required by this section before the company enters into the
transaction or arrangement concerned.

(6) This section does not require a director to make a declaration of an interest if the director—
(a) is not aware of the interest; or
(b) is not aware of the transaction or arrangement to which the interest relates. (7) For the purpose of subsection (6), a director is taken to be aware of matters of which the director
ought reasonably to be aware. (8) A director need not declare an interest under this section—
(a) if it cannot reasonably be regarded as likely to give rise to a conflict of interest;
(b) if, or to the extent that, the other directors are already aware of it, and for this purpose the
other directors are treated as being aware of anything which they ought reasonably to be
aware; or
(c) if, or to the extent that, it concerns terms of the director's service contract that have been or
are to be considered—
(i) by a meeting of the directors; or
(ii) by a committee of the directors appointed for the purpose under the constitution of
the company. (9) For the purpose of subsection (8)(b), the other directors are treated as being aware of anything of
which they ought reasonably to be aware. 66

y. (9) For the purpose of subsection (8)(b), the other directors are treated as being aware of anything of
which they ought reasonably to be aware. 66

Companies Act (Cap. 486) Kenya
(10) A director who contravenes this section commits an offence and is liable on conviction to a fine not
exceeding one million shillings. [Act No. 28 of 2017, s. 14, Act No. 18 of 2018, sch. ]
152. Director to make declaration by notice in writing
(1) A director who is required to make a declaration of interest shall give a notice to the other directors. (2) The director may give the notice in hard copy form or, if the recipient has agreed to receive it in
electronic form, in an agreed electronic form. (3) A notice required by subsection (1) may be given—
(a) by hand or by post; or
(b) if the recipient has agreed to receive such notices by electronic means, by the agreed
electronic means. (4) If a director declares an interest by notice given in accordance with this section—
(a) the making of the declaration forms part of the proceedings at the next meeting of the
directors after the notice is given; and
(b) section 210 applies as if the declaration had been made at that meeting. 153.

at the next meeting of the
directors after the notice is given; and
(b) section 210 applies as if the declaration had been made at that meeting. 153.

General notice to be regarded as sufficient declaration
(1) A general notice given in accordance with this section is a sufficient declaration of interest in
relation to the matters to which it relates. (2) A general notice is a notice given to the directors of a company that the director giving the notice—
(a) has an interest as a member, officer, employee or otherwise in a specified body corporate or
firm and is to be regarded as interested in any transaction or arrangement that may, after the
date of the notice, be made with that body corporate or firm; or
(b) is connected with a specified person, other than a body corporate, and is to be regarded as
interested in any transaction or arrangement that may, after the date of the notice, be made
with that person
(3) A general notice is not effective unless it states the nature and extent of the director's interest in
the body corporate or firm or the nature of the director's connection with the person.

s it states the nature and extent of the director's interest in
the body corporate or firm or the nature of the director's connection with the person.

(4) A general notice is not effective unless—
(a) it is given at a meeting of the directors;
(b) the director takes reasonable steps to ensure that the notice is brought to the attention of
the directors and read aloud at the next meeting of the directors after it is given; or
(c) the board of directors notifies the members in the next meeting of the action to be taken. [Act No. 28 of 2017, s. 15.]
154. Declaration of interest in case of company with sole director
(1) If a declaration of interest under section 151 is required of a sole director of a company that is
required to have more than one director—
(a) the company shall record the declaration in writing;
(b) the making of the declaration forms part of the proceedings at the next meeting of the
directors after the notice is given; and
67

ion in writing;
(b) the making of the declaration forms part of the proceedings at the next meeting of the
directors after the notice is given; and
67

Companies Act (Cap. 486) Kenya
(c) section 210 applies as if the declaration had been made at that meeting. (2) This section does not affect the operation of section 193. Division 5 — Transactions with directors requiring approval of members
155. Definition of credit transaction for purposes of Division 5
(1) In this Division, "credit transaction" means a transaction under which one party (a creditor)—
(a) supplies any goods under a hire-purchase agreement, a conditional sale agreement or
retention of title agreement;
(b) leases or hires goods in return for periodical payments;
(c) otherwise disposes supplies goods or services on the terms that payment (whether in a lump
sum or by means of periodical payments or otherwise) is to be deferred;
(d) sells land on terms under which the buyer will mortgage the land to the seller or a third
person;
(e) leases land; or
(f) otherwise disposes of land on the terms that payment (whether in a lump sum or by means of
periodical payments or otherwise) is to be deferred.

or
(f) otherwise disposes of land on the terms that payment (whether in a lump sum or by means of
periodical payments or otherwise) is to be deferred.

(2) In subsection (1), a reference to the person for whose benefit a credit transaction is entered into
is to the person to whom goods, land or services are supplied, sold, leased, hired or otherwise
disposed of under the transaction. (3) In subsection (1) and (2)—
(a) "conditional sale agreement" means a contract or agreement under which a buyer takes
possession of goods but the title to the goods and the right to repossess them remains with
the seller until the buyer has paid the full purchase price for the goods; and
(b) "services" means anything other than goods or land. 156. Meaning of "quasi-loan" and related expressions
(1) For the purposes of this Division, a quasi-loan is a transaction under which one party (a creditor)—
(a) agrees to pay, or pays otherwise than in accordance with an agreement, an amount for
another person (a borrower); or
(b) agrees to reimburse, or reimburses otherwise than in accordance with an, agreement,
expenditure incurred by another party for another person (also.

b) agrees to reimburse, or reimburses otherwise than in accordance with an, agreement,
expenditure incurred by another party for another person (also.

a borrower)—
(i) on terms that the borrower, or a third person on the borrower's behalf, will reimburse
the creditor; or
(ii) in circumstances giving rise to a liability on the borrower to reimburse the creditor. (2) A reference in subsection (1) to the person to whom a quasi-loan is made is a reference to the
borrower
(3) The liabilities of the borrower under a quasi-loan include the liabilities of any person who has
agreed to reimburse the creditor on behalf of the borrower. 68

lities of the borrower under a quasi-loan include the liabilities of any person who has
agreed to reimburse the creditor on behalf of the borrower. 68

Companies Act (Cap. 486) Kenya
157. Director’s long-term service contracts: requirement of members’ approval
(1) This section applies to a contract under which the employment of a person as a director of company
is guaranteed—
(a) with the company; or
(b) if the person is the director of a holding company, within the group that comprises the
company and its subsidiaries,
for a period exceeding, or that could exceed, two years. (2) A company may not enter into such a contract unless it has been approved—
(a) by resolution of the members of the company; and
(b) in the case of a director of a holding company, by a resolution of the members of that
company.

) by resolution of the members of the company; and
(b) in the case of a director of a holding company, by a resolution of the members of that
company.

(3) The guaranteed term of a director's employment is—
(a) the period (if any) during which the director’s employment—
(i) is to continue, or could be continued, otherwise than at the instance of the company,
whether under the original contract or under a new contract entered into under it; and
(ii) cannot be terminated by the company by notice, or can be so terminated only in
specified circumstances; or
(b) in the case of employment that can be terminated by the company by notice — the period of
notice required to be given,
or, in the case of employment having a period within paragraph (a) and a period within paragraph
(b), the aggregate of those periods. (4) If, more than six months before the end of the guaranteed term of a director's employment, the
company enters into a further service contract, otherwise than in accordance with a right conferred,
by or under the original contract, on the other party to it, this section applies as if there were added
to the guaranteed term of the new contract the unexpired period of the guaranteed term of the
original contract.

ection applies as if there were added
to the guaranteed term of the new contract the unexpired period of the guaranteed term of the
original contract.

(5) A resolution approving a contract to which this section applies may not be passed unless a
memorandum setting out the proposed contract is made available to members—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to member; or
(b) in the case of a resolution at a meeting, by being made available for inspection by members
of the company both—
(i) at the company's registered office for not less than fourteen days ending with the date
of the meeting; and
(ii) at the meeting itself. (6) An approval is not required to be given under this section by the members of a body corporate that
—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate. (7) In this section, "employment" means any employment under a director's service contract. 69

is a wholly-owned subsidiary of another body corporate. (7) In this section, "employment" means any employment under a director's service contract. 69

Companies Act (Cap. 486) Kenya
(8) If a company agrees to a provision in the contract in contravention of this section—
(a) the contract is void to the extent of the contravention; and
(b) the contract is taken to include a term entitling the company to terminate it at any time by
giving reasonable notice. 158. Substantial property transactions: requirement of members’ approval
(1) A company may not enter into an arrangement under which—
(a) a director of the company or of its holding company, or a person connected with such a
director, acquires or is to acquire from the company (directly or indirectly) a substantial non-
cash asset; or
(b) the company acquires or is to acquire a substantial non-cash asset (directly or indirectly)
from such a director or a person so connected, unless the arrangement has been approved
by a resolution of the members of the company or is conditional on such an approval being
obtained.

onnected, unless the arrangement has been approved
by a resolution of the members of the company or is conditional on such an approval being
obtained.

(2) If the director or connected person is a director of the company's holding company or is a person
connected with such a director, the arrangement also needs to have been approved by a resolution
of the members of the holding company or be conditional on such an approval being obtained. (3) A company is not subject to a liability only because it has failed to obtain an approval required by
this section. (4) An approval is not required to be obtained under this section from the members of a body corporate
—
(a) that is not a company registered under this Act; or
(b) that is a wholly-owned subsidiary of another body corporate. (5) For the purposes of this section—
(a) an arrangement involving more than one non-cash asset; or
(b) an arrangement that is one of a series involving non-cash assets, is to be treated as if it
involved a non-cash asset of a value equal to the aggregate value of all the non-cash assets
involved in the arrangement, or the series.

ated as if it
involved a non-cash asset of a value equal to the aggregate value of all the non-cash assets
involved in the arrangement, or the series.

(6) This section does not apply to a transaction so far as it relates—
(a) to anything to which a director of a company is entitled under the director’s service contract;
or
(b) to payment for loss of office as defined in section 180. (7) For the purpose of this section, an asset is a substantial non-cash asset if its value—
(a) exceeds ten per cent of the company’s asset value and is more than five million shillings; or
(b) exceeds ten million shillings. (8) For the purpose of subsection (7), a company's asset value at any time is—
(a) the value of the company's net assets determined by reference to its most recent statutory
financial statement; or
(b) if no such statement has been prepared—the amount of the company's called-up share
capital. 70

o its most recent statutory
financial statement; or
(b) if no such statement has been prepared—the amount of the company's called-up share
capital. 70

Companies Act (Cap. 486) Kenya
(9) For the purpose of subsection (8)—
(a) a company's statutory financial statement is its annual financial statement as prepared in
accordance with Part XXV; and
(b) its most recent statutory financial statement is that in relation to which the time for sending
it to members is most recent. (10) Whether a non-cash asset is substantial for the purposes of this section is to be determined as at
the time when relevant arrangement is entered into. 159. Exception for transactions with members or other group companies
An approval is not required to be obtained under section 158—
(a) for a transaction between a company and a person as a member of the company; or
(b) for a transaction between—
(i) a holding company and its wholly-owned subsidiary; or
(ii) two wholly-owned subsidiaries of the same holding company. 160. Exception in case of company in liquidation or under administration
(1) This section applies to a company—
(a) that is in liquidation, unless the liquidation is a members' voluntary liquidation; or
(b) that is under administration.

ion applies to a company—
(a) that is in liquidation, unless the liquidation is a members' voluntary liquidation; or
(b) that is under administration.

(2) An approval is not required to be obtained under section 158—
(a) from the members of a company to which this section applies; or
(b) for an arrangement entered into by a company to which this section applies. 161. Exception for transactions on recognised investment exchange
(1) An approval is not required to be obtained under section 158 for a transaction on an approved
securities exchange that is effected by a director, or a person connected with the director, through
the agency of a person who, in relation to the transaction, acts as an independent broker. (2) For the purposes of this section, "independent broker" means a person who, independently of the
director or any person connected with the director, selects the person with whom the transaction is
to be effected. 162.

son who, independently of the
director or any person connected with the director, selects the person with whom the transaction is
to be effected. 162.

Property transactions: civil consequences of contravening section 159
(1) An arrangement entered into by a company in contravention of section 158 and any transaction
entered into in accordance with the arrangement (whether by the company or any other person) is
voidable at the instance of the company, unless—
(a) restitution of any money or other asset that was the subject matter of the arrangement or
transaction is no longer possible;
(b) the company has been indemnified in accordance with this section by other persons for the
loss or damage suffered by it; or
(c) rights acquired in good faith, for value and without actual notice of the contravention by
a person who is not a party to the arrangement or transaction would be affected by the
avoidance. 71

and without actual notice of the contravention by
a person who is not a party to the arrangement or transaction would be affected by the
avoidance. 71

Companies Act (Cap. 486) Kenya
(2) Whether or not the arrangement or any such transaction has been avoided, each of the persons
specified in subsection (3) is liable—
(a) to account to the company for any gain that the person has made (directly or indirectly) as a
result of the arrangement or transaction; and
(b) jointly and severally with any other person so liable under this section, to indemnify the
company for any loss or damage resulting from the arrangement or transaction. (3) The persons so liable are—
(a) any director of the company or of its holding company with whom the company entered into
the arrangement in contravention of section 158;
(b) any person with whom the company entered into the arrangement in contravention of that
section who is connected with a director of the company or of its holding company;
(c) the director of the company, or of its holding company, with whom any such person is
connected; and
(d) any other director of the company who authorised the arrangement, or a transaction entered
into in accordance with such an arrangement. (4) Subsections (2) and (3) are subject to subsections (5) and (6).

arrangement, or a transaction entered
into in accordance with such an arrangement. (4) Subsections (2) and (3) are subject to subsections (5) and (6).

(5) A director of a company, or of its holding company, is not, in relation to an arrangement entered
into by the company in contravention of section 158 with a person connected with the director,
liable because of subsection (3)(c) if the director shows that all reasonable steps were taken by the
director to ensure that the company did not contravene that section. (6) Deleted by Act No. 28 of 2017, s. 16(a). (7) Deleted by Act No. 28 of 2017, s. 16(b). (8) This section does not preclude the operation of any other enactment or rule of law under which the
arrangement or transaction could be questioned, or any liability to the company could arise. [Act No. 28 of 2017, s. 16.]
163.

of law under which the
arrangement or transaction could be questioned, or any liability to the company could arise. [Act No. 28 of 2017, s. 16.]
163.

Property transactions: effect of subsequent affirmation
(1) If a transaction or arrangement is entered into by a company in contravention of section 158 but
within a reasonable period, it is affirmed—
(a) in the case of a contravention of subsection (1) of that section, by resolution of the members
of the company; and
(b) in the case of a contravention of subsection (2) of that section, by resolution of the members
of the holding company, the transaction or arrangement can no longer be avoided under
section 162. (2) A period that exceeds three months is not a reasonable period for the purposes of subsection (1). 164. Loans to directors to be approved by members
(1) A company may not—
(a) make a loan to a director of the company or of its member, holding company; or
(b) give a guarantee or provide security in connection with a loan made by any person to such
a director, unless the transaction has been approved by a resolution of the members of the
company. 72

nnection with a loan made by any person to such
a director, unless the transaction has been approved by a resolution of the members of the
company. 72

Companies Act (Cap. 486) Kenya
(2) If the director is a director of the company's holding company, the transaction also needs to have
been approved by a resolution of the members of the holding company. (3) A resolution approving a transaction to which this section applies can be passed only if a
memorandum setting out the matters referred to in subsection (4) is made available to members—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to the member; or
(b) in the case of a resolution at a meeting, by being made available for inspection by members
of the company both—
(i) at the company's registered office for not less than fourteen days ending with the day
before the date of the meeting; and
(ii) at the meeting itself. (4) The matters to be disclosed are—
(a) the nature of the transaction;
(b) the amount of the loan and the purpose for which it is required; and
(c) the extent of the company's liability under any transaction connected with the loan.

unt of the loan and the purpose for which it is required; and
(c) the extent of the company's liability under any transaction connected with the loan.

(5) An approval is not required to be obtained under this section from the members of a body corporate
—
(a) that is not a company registered under this Act; or
(b) that is a wholly-owned subsidiary of another body corporate. 165. Quasi-loans to directors: requirement of members' approval
(1) This section applies to a company that is—
(a) a public company; or
(b) a company associated with a public company. (2) A company to which this section applies may not—
(a) make a quasi-loan to a director of the company or of its holding company; or
(b) give a guarantee or provide security in connection with a quasi-loan made by any person to
such a director, unless the transaction has been approved by a resolution of the members of
the company. (3) If the director is a director of the company's holding company, the transaction also needs to have
been approved by a resolution of the members of the holding company.

s a director of the company's holding company, the transaction also needs to have
been approved by a resolution of the members of the holding company.

(4) A resolution approving a transaction referred to in subsection (2) can be passed only if a
memorandum is setting out the matters referred to in subsection (5) is made available to members
—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to the member; or
(b) in the case of a resolution at a meeting, by being made available for inspection by members
of the company both—
(i) at the company's registered office for not less than fourteen days ending with the date
of the meeting; and
(ii) at the meeting itself. 73

y both—
(i) at the company's registered office for not less than fourteen days ending with the date
of the meeting; and
(ii) at the meeting itself. 73

Companies Act (Cap. 486) Kenya
(5) The matters to be disclosed are—
(a) the nature of the transaction;
(b) the amount of the quasi-loan and the purpose for which it is required; and
(c) the extent of the company's liability under any transaction connected with the quasi-loan. (6) An approval is not required to be obtained under this section from the members of a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate. 166. Loans or quasi-loans to persons connected with directors: requirement of members’
approval
(1) This section applies to a company that is—
(a) a public company; or
(b) a company associated with a public company. (2) A company to which this section applies may not—
(a) make a loan or quasi-loan to a person connected with a director of the company or of its
holding company; or
(b) give a guarantee or provide security in connection with a loan or quasi-loan made by any
person to a person connected with such a director, unless the transaction has been approved
by a resolution of the members of the company.

made by any
person to a person connected with such a director, unless the transaction has been approved
by a resolution of the members of the company.

(3) If the connected person is a person connected with a director of the company's holding company,
the transaction also needs to have been approved by a resolution of the members of the holding
company. (4) A resolution approving a transaction to which this section applies can be passed only if a
memorandum setting out the matters referred to in subsection (5) is made available to members—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to the member; and
(b) in the case of a resolution at a meeting, by being made available for inspection by members
of the company both—
(i) at the company's registered office for not less than fourteen days ending with the day
before the date of the meeting; and
(ii) at the meeting itself. (5) The matters to be disclosed are—
(a) the nature of the transaction;
(b) the amount of the loan or quasi-loan and the purpose for which it is required; and
(c) the extent of the company's liability under any transaction connected with the loan or quasi-
loan.

and the purpose for which it is required; and
(c) the extent of the company's liability under any transaction connected with the loan or quasi-
loan.

(6) An approval is not required to be obtained under this section from the members of a body corporate
that—
(a) is not a company registered under this Act; or
74

val is not required to be obtained under this section from the members of a body corporate
that—
(a) is not a company registered under this Act; or
74

Companies Act (Cap. 486) Kenya
(b) is a wholly-owned subsidiary of another body corporate. 167. Credit transactions: requirement of members' approval
(1) This section applies to a company that is—
(a) a public company; or
(b) a company associated with a public company. (2) A company to which this section applies may not—
(a) enter into a credit transaction as creditor for the benefit of a director of the company or of its
holding company; and a person connected with such a director; or
(b) a transaction involving the giving of a guarantee or the provision of security in connection
with a credit transaction entered into by a person for the benefit of such a director, or
a person connected with such a director, unless the transaction has been approved by a
resolution of the members of the company. (3) If the director or connected person is a director of its holding company or a person connected with
such a director, the transaction also needs to have been approved by a resolution of the members of
the holding company.

ny or a person connected with
such a director, the transaction also needs to have been approved by a resolution of the members of
the holding company.

(4) A resolution approving a transaction to which this section applies can be passed only if a
memorandum setting out the matters referred to in subsection (5) is made available to members—
(a) in the case of a written resolution — by being sent or submitted to every eligible member at
or before the time at which the proposed resolution is sent or submitted to him;
(b) in the case of a resolution at a meeting, by being made available for inspection by members
of the company both—
(i) at the company's registered office for not less than fourteen days ending with the day
before the date of the meeting; and
(ii) at the meeting itself. (5) The matters to be disclosed are—
(a) the nature of the transaction;
(b) the value of the credit transaction and the purpose for which the land, goods or services sold
or otherwise disposed of, leased, hired or supplied under the credit transaction are required;
and
(c) the extent of the company's liability under any transaction connected with the credit
transaction.

under the credit transaction are required;
and
(c) the extent of the company's liability under any transaction connected with the credit
transaction.

(6) An approval is not required to be obtained under this section from the members of a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate. 168. Related arrangements: requirement of members’ approval
(1) A company may not—
(a) participate in an arrangement under which—
(i) another person enters into a transaction that, if it had been entered into by the
company, would have required approval under this Act; and
75

ch—
(i) another person enters into a transaction that, if it had been entered into by the
company, would have required approval under this Act; and
75

Companies Act (Cap. 486) Kenya
(ii) that person, in accordance with the arrangement, obtains a benefit from the company
or a body corporate associated with it; and
(b) arrange for the assignment to it, or assumption by it, of any rights, obligations or liabilities
under a transaction that, if it had been entered into by the company, would have required
such an approval, unless the arrangement has been approved by a resolution of the members
of the company. (2) If the director or connected person for whom the transaction is entered into is a director of its
holding company or a person connected with such a director, the arrangement also needs to have
been approved by a resolution of the members of the holding company.

ny or a person connected with such a director, the arrangement also needs to have
been approved by a resolution of the members of the holding company.

(3) A resolution approving an arrangement to which this section applies can be passed only if a
memorandum setting out the matters referred to in subsection (4) is made available to members—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to him;
(b) in the case of a resolution at a meeting, by being made available for inspection by members
of the company both—
(i) at the company's registered office for not less than fourteen days ending with the day
before the date of the meeting; and
(ii) at the meeting itself. (4) The matters to be disclosed are—
(a) the matters that would have to be disclosed if the company were seeking approval of the
transaction to which the arrangement relates;
(b) the nature of the arrangement; and
(c) the extent of the company's liability under the arrangement or any transaction connected
with it. (5) An approval is not required to be obtained under this section from the members of a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate.

m the members of a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate.

(6) In determining for the purposes of this section whether a transaction is one that would have
required approval under section 164, 165, 166 or 167 if it had been entered into by the company, the
transaction is taken to have been entered into on the date of the arrangement. 169. Exceptions for expenditure on company business
(1) An approval is not required under section 164, 165, 166 or 167 for anything done by a company—
(a) to provide a director of the company or of its holding company, or a person connected with
any such director, with funds to meet expenditure incurred or to be incurred by the director
—
(i) for the purposes of the company; and
(ii) for the purpose of enabling the director properly to perform the director's duties as an
officer of the company; and
(b) to enable any such person to avoid incurring such expenditure. 76

ctor properly to perform the director's duties as an
officer of the company; and
(b) to enable any such person to avoid incurring such expenditure. 76

Companies Act (Cap. 486) Kenya
(2) This section does not authorise a company to enter into a transaction if the aggregate of—
(a) the value of the transaction; and
(b) the value of any other relevant transactions or arrangements,
exceeds ten million shillings. 170. Exception for expenditure on defending proceedings etc
(1) An approval is not required under section 164, 165, 166 or 167 for anything done by a company—
(a) to provide a director of the company or of its holding company with funds to meet
expenditure incurred or to be incurred by the director—
(i) in defending any criminal or civil proceedings in connection with any alleged
negligence, default, breach of duty or breach of trust by the director in relation to the
company or an associated company; and
(ii) in connection with an application for relief; or
(b) to enable any such director to avoid incurring such expenditure, if it is done on the terms
prescribed by subsection (2).

plication for relief; or
(b) to enable any such director to avoid incurring such expenditure, if it is done on the terms
prescribed by subsection (2).

(2) The terms prescribed are—
(a) that the loan is to be repaid, or any liability of the company incurred under any transaction
connected with the thing done is to be discharged, if—
(i) the director is convicted in the proceedings;
(ii) judgment is given against the director in the proceedings; and
(iii) the Court refuses to grant the director relief on the application; and
(b) that it is to be so repaid or discharged not later than—
(i) the date on which the conviction becomes final;
(ii) the date on which the judgment becomes final; or
(iii) the date on which the refusal of relief becomes final. (3) The reference in subsection (1)(a)(ii) to an application for relief is to an application for relief under
—
(a) section 426 (3) and (4) in the case of acquisition of shares by an innocent nominee; or
(b) section 1005 in the case of honest and reasonable conduct. 171.

on 426 (3) and (4) in the case of acquisition of shares by an innocent nominee; or
(b) section 1005 in the case of honest and reasonable conduct. 171.

Exception for expenditure in connection with regulatory action or investigation
An approval is not required under section 164, 165, 166 or 167 for anything done by a company—
(a) to provide a director of the company or of its holding company with funds to meet expenditure
incurred or to be incurred by the director in defending himself—
(i) in an investigation by a regulatory authority; and
(ii) against action proposed to be taken by a regulatory authority, in connection with any alleged
negligence, default, breach of duty or breach of trust by the director in relation to the
company or an associated company; and
(b) to enable any such director to avoid incurring such expenditure. 77

trust by the director in relation to the
company or an associated company; and
(b) to enable any such director to avoid incurring such expenditure. 77

Companies Act (Cap. 486) Kenya
172. Exceptions for minor and business transactions
(1) An approval is not required under section 164, 165 or 166 for a company to make a loan or quasi-
loan, or to give a guarantee or provide security in connection with a loan or quasi-loan, if the
aggregate of—
(a) the value of the transaction; and
(b) the value of any other relevant transactions or arrangements, does not exceed one million
shillings. (2) An approval is not required under section 167 for a company to enter into a credit transaction, or to
give a guarantee or provide security in connection with a credit transaction, if the aggregate of—
(a) the value of the transaction, that is, of the credit transaction, guarantee or security; and
(b) the value of any other relevant transactions or arrangements, does not exceed seven million
five hundred thousand shillings.

ntee or security; and
(b) the value of any other relevant transactions or arrangements, does not exceed seven million
five hundred thousand shillings.

(3) An approval is not required under section 167 for a company to enter into a credit transaction, or to
give a guarantee or provide security in connection with a credit transaction, if—
(a) the transaction is entered into by the company in the ordinary course of the company's
business; and
(b) the value of the transaction is not greater, and the terms on which it is entered into are not
more favourable, than it is reasonable to expect the company would have offered to, or in
respect of, a person of the same financial standing but unconnected with the company. 173. Exceptions for intra-group transactions
(1) An approval is not required under section 164, 165 or 166 for—
(a) the making of a loan or quasi-loan to an associated body corporate; and
(b) the giving of a guarantee or provision of security in connection with a loan or quasi-loan
made to an associated body corporate.

dy corporate; and
(b) the giving of a guarantee or provision of security in connection with a loan or quasi-loan
made to an associated body corporate.

(2) An approval is not required under section 167—
(a) to enter into a credit transaction as creditor for the benefit of an associated body corporate;
and
(b) to give a guarantee or provide security in connection with a credit transaction entered into
by any person for the benefit of an associated body corporate. 174. Exceptions for money-lending companies
(1) An approval is not required under section 164, 165 or 166 for the making of a loan or quasi-loan,
or the giving of a guarantee or provision of security in connection with a loan or quasi-loan, by a
money-lending company if—
(a) the transaction, that is, the loan, quasi-loan, guarantee or security, is entered into by the
company in the ordinary course of the company's business; and
(b) the value of the transaction is not greater, and its terms are not more favourable, than it
is reasonable to expect the company would have offered to a person of the same financial
standing but unconnected with the company.

avourable, than it
is reasonable to expect the company would have offered to a person of the same financial
standing but unconnected with the company.

(2) A company is a money lending company for the purpose of subsection (1) if its ordinary business
comprises or includes making loans or quasi-loans, or giving guarantees or providing security in
connection with loans or quasi-loans. 78

ary business
comprises or includes making loans or quasi-loans, or giving guarantees or providing security in
connection with loans or quasi-loans. 78

Companies Act (Cap. 486) Kenya
(3) The condition specified in subsection (1)(b) does not of itself prevent a company from making a
home loan—
(a) to a director of the company or of its holding company; and
(b) to an employee of the company, if the company normally makes loans of that description
to its employees and the terms of the loan are no more favourable than those on which it
normally makes such loans. (4) For the purposes of subsection (3), "home loan" means—
(a) a loan made for the purpose of facilitating the purchase, for use as the only or main
residence of the person to whom the loan is made, of the whole or part of any dwelling-
house together with any land to be occupied and enjoyed with it;
(b) a loan made for the purpose of improving a dwelling-house or part of a dwelling-house so
used or any land occupied and enjoyed with it; and
(c) a loan made in substitution for a loan made for the purpose of paragraph (a) or (b). 175. Other relevant transactions or arrangements
(1) This section has effect for determining what are "other relevant transactions or arrangements" for
the purposes of an exception to section 164, 165, 166 or 167.

on has effect for determining what are "other relevant transactions or arrangements" for
the purposes of an exception to section 164, 165, 166 or 167.

(2) In subsections (3) to (6), "the relevant exception" means the exception for the purposes of which
that exception is to be determined. (3) Other relevant transactions or arrangements are those previously entered into, or entered into
at the same time as the transaction or arrangement in relation to which the conditions set out in
subsections (4) to (6) are satisfied. (4) If the transaction or arrangement is entered into—
(a) for a director of the company entering into it; and
(b) for a person connected with such a director, the conditions are that the transaction or
arrangement was entered into for that director, or a person connected with the director,
because of the relevant exception by that company or by any of its subsidiaries. (5) If the transaction or arrangement is entered into—
(a) for a director of the holding company of the company that enters into it; and
(b) for a person connected with such a director, the conditions are that the transaction or
arrangement was (or is) entered into for that director, or a person connected with the
director, because of the relevant exception by that company or by any of its subsidiaries.

ered into for that director, or a person connected with the
director, because of the relevant exception by that company or by any of its subsidiaries.

(6) A transaction or arrangement entered into by a company that at the time it was entered into—
(a) was a subsidiary of the company entering into the transaction or arrangement; and
(b) was a subsidiary of that company's holding company, is not a relevant transaction or
arrangement if, at the time the question arises whether the relevant transaction or
arrangement is within a relevant exception, it is no longer such a subsidiary. 176. The value of transactions and arrangements
(1) For the purposes of this Division—
(a) the value of a transaction or arrangement is to be determined in accordance with subsections
(2) to (7); and
79

For the purposes of this Division—
(a) the value of a transaction or arrangement is to be determined in accordance with subsections
(2) to (7); and
79

Companies Act (Cap. 486) Kenya
(b) the value of any other relevant transaction or arrangement is taken to be the value so
determined reduced by the amount (if any) by which the liabilities of the person for whom
the transaction or arrangement was made have been reduced. (2) The value of a loan is the amount of its principal. (3) The value of a quasi-loan is the amount, or maximum amount, that the person to whom the quasi-
loan is made is liable to reimburse the creditor. (4) The value of a credit transaction is the price that it is reasonable to expect could be obtained for the
goods, services or land to which the transaction relates if they had been supplied (at the time the
transaction is entered into) in the ordinary course of business and on the same terms (apart from
price) as they have been supplied, or are to be supplied under the relevant transaction. (5) The value of a guarantee or security is the amount guaranteed or secured. (6) The value of an arrangement to which section 169 applies is the value of the transaction to which
the arrangement relates.

guaranteed or secured. (6) The value of an arrangement to which section 169 applies is the value of the transaction to which
the arrangement relates.

(7) If, for whatever reason, the value of a transaction or arrangement is not capable of being expressed
as a specific amount of money, its value is taken to exceed five million shillings. 177. The person for whom a transaction or arrangement is entered into
For the purposes of this Division, the person for whom a transaction or arrangement is entered into is—
(a) in the case of a loan or quasi-loan, the person to whom it is made;
(b) in the case of a credit transaction, the person to whom goods, land or services are supplied, sold,
hired, leased or otherwise disposed of under the transaction;
(c) in the case of a guarantee or security, the person for whom the transaction is made in connection
with which the guarantee or security is entered into; and
(d) in the case of an arrangement within section 168, the person for whom the transaction is made to
which the arrangement relates. 178. Loans etc: civil consequences for contravention
(1) This section applies to a transaction or arrangement entered into by a company in contravention of
section 164, 165, 166 or 167.

for contravention
(1) This section applies to a transaction or arrangement entered into by a company in contravention of
section 164, 165, 166 or 167.

(2) A transaction or arrangement to which this section applies is voidable on the initiative of the
company, unless—
(a) restitution of any money or other asset that was the subject-matter of the transaction or
arrangement is no longer possible;
(b) the company has been indemnified for any loss or damage resulting from the transaction or
arrangement; and
(c) rights acquired in good faith, for value and without actual notice of the contravention by
a person who is not a party to the transaction or arrangement would be affected by the
avoidance. (3) Whether or not the transaction or arrangement has been avoided, each of the persons specified in
subsection (4)—
(a) is liable to account to the company for any gain that the person has made directly or
indirectly by the transaction or arrangement; and
(b) is jointly and severally liable with any other person so liable under this section, to indemnify
the company for any loss or damage resulting from the transaction or arrangement. 80

with any other person so liable under this section, to indemnify
the company for any loss or damage resulting from the transaction or arrangement. 80

Companies Act (Cap. 486) Kenya
(4) The persons so liable are as follows—
(a) any director of the company or of its holding company with whom the company entered into
the transaction or arrangement in contravention of section 164, 165, 166 or 168;
(b) any person with whom the company entered into the transaction or arrangement in
contravention of any of those sections who is connected with a director of the company or of
its holding company;
(c) the director of the company or its holding company with whom any such person is
connected;
(d) any other director of the company who authorised the transaction or arrangement. (5) Subsections (3) and (4) are subject to subsections (6) and (8). (6) If a company has entered into a transaction with a person connected with a director of the
company, or with a director of its holding company, in contravention of section 166, 167 or 168, the
director is not liable because of subsection (4)(c) if the director establishes that all practicable steps
were taken to secure the company's compliance with the section concerned. (7) Subsection (8) applies to—
(a) a person referred to in subsection (4)(b); and
(b) a director referred to in subsection (4)(d).

section concerned. (7) Subsection (8) applies to—
(a) a person referred to in subsection (4)(b); and
(b) a director referred to in subsection (4)(d).

(8) A person to whom this subsection applies is not liable because of subsection(4) if the person
establishes that, at the time the transaction or arrangement was entered into, the person was not
aware, and had no reason to be aware, of the circumstances that constituted the contravention. (9) This section does not preclude the operation of any other enactment or rule of law as a result
of which a transaction or arrangement to which this section applies could be questioned, or a
company involved in the transaction or arrangement could become liable. 179. Loans etc: effect of subsequent affirmation
If a transaction or arrangement is entered into by a company in contravention of section 164, 165, 166, 167
or 168 but, within a reasonable period, it is ratified—
(a) in the case of a contravention of the requirement for a resolution of the members of the company,
by a resolution of the members of the company; and
(b) in the case of a contravention of the requirement for a resolution of the members of the company's
holding company, by a resolution of the members of the holding company,
the transaction or arrangement can no longer be avoided under section 178.

y's
holding company, by a resolution of the members of the holding company,
the transaction or arrangement can no longer be avoided under section 178.

Division 6 — Payments for loss of office
180. Payment for loss of office
(1) In this Division, "payment for loss of office" means a payment made to a director or past director of
a company—
(a) as compensation for loss of office as a director of the company;
(b) as compensation for loss, while a director of the company or in connection with ceasing to
hold office as such, of—
(i) any other office or employment in connection with the management of the affairs of
the company; and
81

on with ceasing to
hold office as such, of—
(i) any other office or employment in connection with the management of the affairs of
the company; and
81

Companies Act (Cap. 486) Kenya
(ii) any office or employment in connection with the management of the affairs of a
subsidiary undertaking of the company;
(c) as consideration in connection with the director's retirement from office as such; or
(d) as consideration for or in connection with the director's retirement or ceasing to hold office
as such, from—
(i) any other office or employment in connection with the management of the affairs of
the company; and
(ii) any office (as director or otherwise) or employment in connection with the
management of the affairs of any subsidiary undertaking of the company. (2) In this Division—
(a) a reference to compensation and consideration include benefits otherwise than in cash; and
(b) a reference to a payment has a corresponding meaning. (3) For the purposes of this Division—
(a) a payment to a person connected with a director; or
(b) a payment to any person at the direction of, or for the benefit of, a director or a person
connected with the director, is taken to be a payment to the director.

o any person at the direction of, or for the benefit of, a director or a person
connected with the director, is taken to be a payment to the director.

(4) A reference in this Division to a payment by a person includes a payment by another person at the
direction of, or on behalf of, the first-mentioned person. 181. Amounts taken to be payments for loss of office
(1) This section applies if, in connection with a transfer of the kind referred to in section 183 or 184, a
director of the company—
(a) is to cease to hold office; and
(b) is to cease to be the holder—
(i) of any other office or employment in connection with the management of the affairs
of the company; and
(ii) of any office or employment in connection with the management of the affairs of any
subsidiary undertaking of the company. (2) If in connection with any such transfer—
(a) the price to be paid to the director for shares in the company held by the director is in excess
of the price that could at the time have been obtained by other holders of similar shares; and
(b) any valuable consideration is given to the director by a person other than the company, the
excess, or the money value of the consideration, is taken for the purposes of those sections to
be a payment for loss of office. 182.

the company, the
excess, or the money value of the consideration, is taken for the purposes of those sections to
be a payment for loss of office. 182.

Members’ approval required for payment by company
(1) A company may not make a payment for loss of office to a director of the company unless the
payment has been approved by a resolution of the members of the company. (2) A company may not make a payment for loss of office to a director of its holding company unless
the payment has been approved by a resolution of the members of the company and each of the
companies that are associated with it. 82

g company unless
the payment has been approved by a resolution of the members of the company and each of the
companies that are associated with it. 82

Companies Act (Cap. 486) Kenya
(3) A resolution approving a payment to which this section applies can be passed only if a
memorandum setting out particulars of the proposed payment (including the amount) is made
available to the members of the company whose approval is sought—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to the director;
(b) in the case of a resolution at a meeting, by being made available for inspection by the
members both—
(i) at the company's registered office for not less than fourteen days ending with the date
of the meeting; and
(ii) at the meeting itself. (4) An approval is not required to be obtained under this section from the members of a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate. 183.

members of a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate. 183.

Members’ approval required for payment in connection with transfer of undertaking
etc
(1) A person may not make a payment for loss of office to a director of a company in connection with
the transfer of the whole or any part of the undertaking or property of the company unless the
payment has been approved by a resolution of the members of the company. (2) A person may not make a payment for loss of office to a director of a company in connection with
the transfer of the whole or any part of the undertaking or property of a subsidiary of the company,
unless the payment has been approved by a resolution of the members of each of the companies.

undertaking or property of a subsidiary of the company,
unless the payment has been approved by a resolution of the members of each of the companies.

(3) A resolution approving a payment to which this section applies can be passed only if a
memorandum setting out particulars of the proposed payment (including is its amount) is made
available to the members of the company whose approval is sought—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to the director;
(b) in the case of a resolution at a meeting, by being made available for inspection by the
members both—
(i) at the company's registered office for not less than fourteen days ending with the day
before the date of the meeting; and
(ii) at the meeting itself. (4) An approval is not required to be obtained under this section from the members of a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate.

m the members of a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate.

(5) A payment made in accordance with an arrangement—
(a) entered into as part of the agreement for the relevant transfer, or within one year before or
two years after the date on which that agreement is entered into; and
(b) to which the company whose undertaking or property is transferred, or any person to whom
the transfer is made, is privy, is presumed, except in so far as the contrary is shown, to be a
payment to which this section applies. 83

rson to whom
the transfer is made, is privy, is presumed, except in so far as the contrary is shown, to be a
payment to which this section applies. 83

Companies Act (Cap. 486) Kenya
184. Members’ approval required for payment in connection with share transfer
(1) A person may not make a payment for loss of office to a director of a company in connection with a
transfer of shares in the company, or in a subsidiary of the company, resulting from a takeover bid,
unless the payment has been approved by a resolution of the relevant shareholders. (2) The relevant shareholders are the holders of the shares to which the bid relates and any holders of
shares of the same class as any of those shares.

) The relevant shareholders are the holders of the shares to which the bid relates and any holders of
shares of the same class as any of those shares.

(3) A resolution approving a payment to which this section applies can be passed only if a
memorandum setting out particulars of the proposed payment (including its amount) is made
available to the members of the company whose approval is sought—
(a) in the case of a written resolution—by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to the director;
(b) in the case of a resolution at a meeting —by being made available for inspection by the
members both—
(i) at the company's registered office for not less than fourteen days ending with the day
before the date of the meeting; and
(ii) at the meeting itself. (4) Neither the person making the offer, nor any associate of that person, is entitled to vote on the
resolution, but—
(a) if the resolution is proposed as a written resolution, they are entitled (if they would
otherwise be so entitled) to be sent a copy of it; and
(b) at any meeting to consider the resolution they are entitled, if they would otherwise be so
entitled, to be given notice of the meeting, to attend and speak and if present, either in
person or by proxy, to count towards the quorum.

wise be so
entitled, to be given notice of the meeting, to attend and speak and if present, either in
person or by proxy, to count towards the quorum.

(5) If at a meeting to consider the resolution a quorum is not present, and after the meeting has been
adjourned to a later date a quorum is again not present, the payment is, for the purposes of this
section, taken to have been approved. (6) An approval is not required to be obtained under this section from shareholders in a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate. (7) A payment made in accordance with an arrangement—
(a) entered into as part of the agreement for the relevant transfer and within one year before or
two years after the date that agreement is entered into; and
(b) to which the company whose shares are the subject of the bid, or any person to whom the
transfer is made, is privy, is presumed, except in so far as the contrary is shown, to be a
payment to which this section applies
185. Exception for payments in discharge of legal obligations etc
(1) An approval is not required under section 182, 183 or 184 for a payment made in good faith—
(a) in discharge of an existing legal obligation;
(b) as damages for breach of such an obligation;
84

82, 183 or 184 for a payment made in good faith—
(a) in discharge of an existing legal obligation;
(b) as damages for breach of such an obligation;
84

Companies Act (Cap. 486) Kenya
(c) in settling or compromising any claim arising in connection with the termination of a
person's office or employment; or
(d) as a pension for past services. (2) In relation to a payment referred to in section 182, an existing legal obligation is an obligation of
the company, or any body corporate associated with it, that was not entered into in connection
with, or in consequence of, the event giving rise to the payment for loss of office. (3) In relation to a payment to which either section 183 or 184 applies, an existing legal obligation is
an obligation of the person making the payment that was not entered into for the purposes of, in
connection with or in consequence of, the relevant transfer. (4) In the case of a payment—
(a) to which both sections 182 and section 183 apply; or
(b) to which both sections 182 and section 184 apply, subsection (2) applies and not subsection
(3). (5) A payment part of which is within subsection (1) applies and part of which is not is to be treated as
if the parts were separate payments. 186.

). (5) A payment part of which is within subsection (1) applies and part of which is not is to be treated as
if the parts were separate payments. 186.

Exception for small payments
(1) An approval is not required under section 182, 183 or 184 if—
(a) the relevant payment is made by the company or any of its subsidiaries; and
(b) the amount or value of the payment, together with the amount or value of any other relevant
payments, does not exceed thirty thousand shillings. (2) For the purpose of subsection (1), "other relevant payments" are payments for loss of office in
relation to which the relevant conditions are satisfied. (3) If the payment is one to which section 182 applies, the relevant conditions are that the other
payment was or is paid—
(a) by the company making the relevant payment or any of its subsidiaries;
(b) to the director to whom that payment is made; and
(c) in connection with the same event
(4) If the payment is one to which section 183 or 184 applies, the conditions are that the other payment
was, or is, paid in connection with the same transfer—
(a) to the director to whom the relevant payment was made; and
(b) by the company making that payment or any of its subsidiaries. 187.

same transfer—
(a) to the director to whom the relevant payment was made; and
(b) by the company making that payment or any of its subsidiaries. 187.

Payments made without approval: civil consequences
(1) If a payment is made in contravention of section 182—
(a) the payment is held by the recipient on trust for the company making the payment; and
(b) any director who authorised the payment is jointly and severally liable to indemnify the
company that made the payment for any loss resulting from it. (2) If a payment is made in contravention of section 183, the payment is held by the recipient on trust
for the company whose undertaking or property is or is proposed to be transferred. 85

on of section 183, the payment is held by the recipient on trust
for the company whose undertaking or property is or is proposed to be transferred. 85

Companies Act (Cap. 486) Kenya
(3) If a payment is made in contravention of section 184—
(a) the payment is held by the recipient on trust for persons who have sold their shares as a
result of the offer made; and
(b) the expenses incurred by the recipient in distributing the amount of the payment among
those persons are to be borne by the director and not retained out of that amount. (4) If a payment contravenes both sections 182 and 183, subsection (2) applies instead of subsection
(1). (5) If a payment contravenes both sections 182 and 184, subsection (3) applies instead of subsection
(1), unless the Court directs otherwise. 188. Approval by written resolution: accidental failure to send memorandum
(1) If—
(a) approval under this Division is sought by written resolution; and
(b) a memorandum is required under this Division to be sent or submitted to every eligible
member before the resolution is passed, an accidental failure to send or submit the
memorandum to one or more members is to be disregarded for the purpose of determining
whether the requirement has been satisfied. (2) Subsection (1) has effect subject to the company's articles. 189.

arded for the purpose of determining
whether the requirement has been satisfied. (2) Subsection (1) has effect subject to the company's articles. 189.

What happens if approval is required under more than one provision
(1) An approval may be required under more than one section of this Division. (2) If an approval is required under more than one section of this Division, the company shall comply
with each applicable section. (3) Subsection (2) does not require a separate resolution for the purposes of each provision. (4) If a company fails to comply with subsection (2), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings. Division 7 — Requirements with respect to directors' service contracts
190. Directors’ service contracts
(1) For the purposes of this Division, a contract is a director's service contract if it is a contract under
which—
(a) a director of a company undertakes personally to perform services (as director or otherwise)
for the company, or for a subsidiary of the company; or
(b) services (as director or otherwise) that a director of a company undertakes personally
to perform are made available by a third party to the company, or to a subsidiary of the
company.

) that a director of a company undertakes personally
to perform are made available by a third party to the company, or to a subsidiary of the
company.

(2) The provisions of this Part relating to directors' service contracts apply to the terms of a person's
appointment as a director of a company and are not restricted to contracts for the performance of
services outside the scope of the ordinary duties of a director. 86

a director of a company and are not restricted to contracts for the performance of
services outside the scope of the ordinary duties of a director. 86

Companies Act (Cap. 486) Kenya
191. Company to keep copy of contract or memorandum of terms available for inspection
(1) A company shall keep available for inspection—
(a) a copy of each director's service contract with the company or with a subsidiary of the
company; or
(b) if the contract is not in writing – a written memorandum setting out the terms of the
contract. (2) Except in so far as the regulations otherwise provide, the company shall keep the copy of the service
contract or the memorandum available for inspection at the company's registered office. (3) The company shall retain the copy of the service contract or the memorandum for not less than one
year from the date of termination or expiry of the relevant contract and shall keep it available for
inspection during that period. (4) If a company fails to comply with a requirement of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding two hundred thousand shillings.

officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding two hundred thousand shillings.

(5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. (6) This section applies to a variation of a director's service contract as it applies to the original
contract. 192. Right of member to inspect and to obtain copy of memorandum
(1) This section applies to a company that is required to keep a copy of a director's service contract, or a
memorandum setting out the terms of the contract, available in accordance with section 191. (2) A company to which this section applies shall, on being requested to do so by a member of the
company, make the copy of the service contract, or the memorandum, available for inspection by
the member without charge.

to do so by a member of the
company, make the copy of the service contract, or the memorandum, available for inspection by
the member without charge.

(3) A company to which this section applies shall, within seven days after being requested to do so
by a member of the company, provide the member with a copy of the relevant service contract or
memorandum, subject to payment of the prescribed fee if any. (4) If the company fails without reasonable excuse to comply with a request made under subsection (2)
or (3), the company, and each officer of the company who is in default, commit an offence and on
conviction are each liable to a fine not exceeding five hundred thousand shillings. (5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with the relevant request, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence.

e on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence.

(6) If a company refuses to allow an inspection as requested under subsection (2), or to provide a copy
of the service contract or memorandum requested under subsection (3), the Court may, on the
application of a person affected by the refusal, make an order compelling the company to allow an
immediate inspection of the service contract or memorandum, or to provide that person 40 with a
copy of it. Division 8— Contracts with sole directors
87

mediate inspection of the service contract or memorandum, or to provide that person 40 with a
copy of it. Division 8— Contracts with sole directors
87

Companies Act (Cap. 486) Kenya
193. Contract with sole member who is also a director
(1) If—
(a) a limited company having only one member enters into a contract with the sole member;
(b) the sole member is also a director of the company; and
(c) the contract is not entered into in the ordinary course of the company's business. the
company shall, unless the contract is in writing, ensure that the contract complies with
subsection (2). (2) A contract complies with this subsection if the terms are either—
(a) set out in a written memorandum; or
(b) recorded in the minutes of the first meeting of the directors of the company following the
making of the contract. (3) If a company fails to comply with this section, the company and the director commit an offence and
on conviction are each liable to a fine not exceeding two hundred thousand shillings. (4) Failure to comply with this section in relation to a contract does not affect the validity of the
contract. (5) This section does not affect the operation of any other enactment or rule of law applying to
contracts between a company and a director of the company. Division 9 — Directors' liabilities
194.

of any other enactment or rule of law applying to
contracts between a company and a director of the company. Division 9 — Directors' liabilities
194.

Provisions protecting directors from liability
(1) This section applies to the following provisions—
(a) a provision of a company's constitution;
(b) a provision of any contract, scheme or arrangement to which the company or a related
company is a party;
(c) a provision of any other document of a class prescribed by the regulations for the purposes of
this section. (2) A provision that purports to exempt a director of a company, to any extent, from any liability that
would otherwise attach to the director in connection with any negligence, default, breach of duty or
breach of trust in relation to the company is void. (3) A provision by which a company provides (directly or indirectly) an indemnity for a director of the
company, or of an associated company, against a liability attaching to the director in connection
with any negligence, default, breach of duty or breach of trust in relation to the company concerned
is void, except as permitted under this Act. 195.

with any negligence, default, breach of duty or breach of trust in relation to the company concerned
is void, except as permitted under this Act. 195.

Provision of insurance not prevented
Section 194(3) does not prevent a company from purchasing and maintaining insurance against any
liability specified in that subsection for a director of the company or a director of an associated company. 196. Qualifying third party indemnity provision not affected
(1) Section 194(3) does not apply to a qualifying third party indemnity provision. 88

ny. 196. Qualifying third party indemnity provision not affected
(1) Section 194(3) does not apply to a qualifying third party indemnity provision. 88

Companies Act (Cap. 486) Kenya
(2) In this section, "third party indemnity provision", in relation to a director, means provision for
indemnity against liability incurred by the director to a person other than the company or an
associated company. (3) A third party indemnity provision is void to the extent that it provides an indemnity against—
(a) a liability of the director to pay—
(i) a fine imposed in criminal proceedings; or
(ii) an amount payable to a regulatory authority as a penalty in respect of non-
compliance with a requirement of a regulatory nature; or
(b) a liability incurred by the director—
(i) in defending criminal proceedings in which the director is convicted; or
(ii) in defending civil proceedings brought by the company, or an associated company, in
which judgment is given against the director. (4) The reference in subsection (3)(b) to a conviction or judgment is a reference to the final decision in
the proceedings.

iven against the director. (4) The reference in subsection (3)(b) to a conviction or judgment is a reference to the final decision in
the proceedings.

(5) For purpose of subsection (4)—
(a) a conviction or judgment becomes final—
(i) if not appealed against, at the end of the period for bringing an appeal; or
(ii) if appealed against, at the time when the appeal, or any further appeal, is disposed of;
and
(b) an appeal is disposed of—
(i) if it is determined and the period for bringing any further appeal has ended; and
(ii) if it is abandoned or otherwise ceases to have effect. 197. Directors to disclose qualifying indemnity provision in directors’ report
(1) In this section, "qualifying indemnity provision" means—
(a) a qualifying third party indemnity provision; and
(b) a qualifying pension scheme indemnity provision. (2) If, when a directors' report is approved, a qualifying indemnity provision (whether made by the
company or otherwise) has effect for the benefit of one or more directors of the company, the
directors shall state in the report that the provision has effect.

otherwise) has effect for the benefit of one or more directors of the company, the
directors shall state in the report that the provision has effect.

(3) If, at any time during the financial year to which a directors' report relates, a qualifying indemnity
provision had effect for the benefit of one or more persons who were then directors of the company,
the directors shall state in the report that the provision had effect at that time. (4) If, when a directors' report is approved, a qualifying indemnity provision made by the company has
effect for the benefit of one or more directors of an associated company, the directors shall state in
the report that the provision has effect. (5) If, at any time during the financial year to which a directors' report relates, a qualifying indemnity
provision had effect for the benefit of one or more persons who were then directors of an associated
company, the directors shall state in the report that the provision had effect at that time. 89

more persons who were then directors of an associated
company, the directors shall state in the report that the provision had effect at that time. 89

Companies Act (Cap. 486) Kenya
198. Copy of qualifying indemnity provision to be available for inspection
(1) This section has effect if a qualifying indemnity provision is made for a director of a company and—
(a) applies to the company (whether the provision is made by the company or by an associated
company); and
(b) if the provision is made by an associated company, also applies to that company. (2) Except in so far as the regulations otherwise provide, the company, or each of the companies
concerned, shall keep available for inspection at its registered office—
(a) a copy of the qualifying indemnity provision; or
(b) if the provision is not in writing, a written memorandum setting out its terms. (3) A company to which this section applies shall retain the copy or memorandum for at least one
year from the date of termination or expiry of the relevant provision and shall keep it available for
inspection during that period. (4) If a company fails to comply with subsection (2) or (3), the company, and each officer of the
company who is in default commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.

officer of the
company who is in default commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.

(5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with the requirement referred to in subsection (2) or (3), the
company, and each officer of the company who is in default, commit a further offence on each
day on which the failure continues and on conviction are each liable to a fine not exceeding fifty
thousand shillings for each such offence. (6) This section applies to a variation of a qualifying indemnity provision as it applies to the original
provision. 199. Right of member to inspect and request copy of qualifying indemnity provision
(1) This section applies to a company that is required to keep available for inspection a copy of a
qualifying indemnity provision or memorandum in accordance with section 198. (2) A company to which this section applies shall, on being requested to do so by a member of
the company, allow the member to inspect a copy of the qualifying indemnity provision or
memorandum without charge.

requested to do so by a member of
the company, allow the member to inspect a copy of the qualifying indemnity provision or
memorandum without charge.

(3) A company to which this section applies shall, within seven days after being requested to do so by a
member of the company, provide the member with a copy of the qualifying indemnity provision or
the memorandum, subject to payment of the prescribed fee (if any). (4) If a company fails to comply with subsection (1) or (2), the company, and every officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. (5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with the relevant request, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence.

e on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence.

(6) If a company refuses to allow an inspection as requested under subsection (2), or to provide a copy
of a qualifying indemnity provision or memorandum as requested under subsection (3), the Court
may, on the application of a person affected by the refusal, make an order compelling the company
to allow an immediate inspection of the copy or memorandum, or to provide that person with a
copy of it. 90

usal, make an order compelling the company
to allow an immediate inspection of the copy or memorandum, or to provide that person with a
copy of it. 90

Companies Act (Cap. 486) Kenya
Division 10 — Protection of information relating to directors
200. Interpretation: Division 10
(1) The purpose of this Division is to protect—
(a) information about a director's usual residential address; and
(b) the information that the director's service address is the director's usual residential address. (2) In this Division—
"director" includes a former director but does not include a director who is not a natural person;
“protected information" is information of the kind referred to in subsection (1). (3) Information does not cease to be protected information only because a person ceases to be a
director of the company. 201. Protected information: restriction on use or disclosure by company
(1) A company shall not use or disclose protected information about any of its directors, except—
(a) for communicating with the director concerned;
(b) in order to comply with any requirement of this Act concerning particulars to be lodged with
the Registrar for registration; or
(c) in accordance with section 204. (2) Subsection (1) does not prohibit protected information relating to a director from being used or
disclosed with the consent of the director.

204. (2) Subsection (1) does not prohibit protected information relating to a director from being used or
disclosed with the consent of the director.

202. Protected information: restriction on use or disclosure by Registrar
(1) The Registrar shall omit protected information from the material on the register that is available for
inspection if—
(a) it is contained in a document lodged with the Registrar in which the information is required
to be stated; and
(b) in the case of a document having more than one part, it is contained in a part of the
document in which the information is required to be stated. (2) The Registrar is not obliged—
(a) to check other documents, or other parts of the document, to ensure the absence of
protected information; or
(b) to omit from the material that is available for public inspection anything registered before
this Division came into force. (3) The Registrar may not use or disclose protected information except as permitted by section 203 or
in accordance with section 204. 203. Permitted use or disclosure by the Registrar
(1) The Registrar may use protected information relating to a director for communicating with the
director. (2) The Registrar may disclose protected information—
(a) to a prescribed public authority; or
91

g to a director for communicating with the
director. (2) The Registrar may disclose protected information—
(a) to a prescribed public authority; or
91

Companies Act (Cap. 486) Kenya
(b) to a credit reference agency. (3) The Regulations may—
(a) specify conditions for the disclosure of protected information in accordance with this
section;
(b) provide for fees to be charged. (4) The regulations may also require the Registrar, on application, to refrain from disclosing protected
information relating to a director to a credit reference agency. (5) Regulations under subsection (4) may specify—
(a) who may make such an application;
(b) the grounds on which an application can be made;
(c) the information to be included in and documents to accompany an application; and
(d) how an application is to be determined. (6) Regulations made for subsection (5)(d) may in particular—
(a) confer a discretion on the Registrar; and
(b) provide for a question to be referred to a person other than the Registrar for the purposes of
determining the application.

on the Registrar; and
(b) provide for a question to be referred to a person other than the Registrar for the purposes of
determining the application.

(7) In this section—
“credit reference agency" means a person carrying on a business that comprises or includes the
provision of information relevant to the financial standing of natural persons, being information
collected by the agency for that 40 purpose; and
"public authority" includes any person or body that has functions of a public nature. 204. Disclosure under Court order
(1) The Court may make an order for the disclosure of protected information by the company or by the
Registrar if—
(a) there is evidence that service of documents at a service address other than the director's
usual residential address is not effective to bring them to the notice of the director; or
(b) it is necessary or expedient for the information to be provided in connection with the
enforcement of an order or decree of the Court,
and the Court is otherwise satisfied that it is appropriate to make the order. (2) The Court may make an order for disclosure by the Registrar only if the company—
(a) does not have the director's usual residential address; or
(b) has been dissolved. (3) The order is required to specify the persons to whom, and purposes for which, disclosure is
authorised.

ential address; or
(b) has been dissolved. (3) The order is required to specify the persons to whom, and purposes for which, disclosure is
authorised.

(4) Any of the following persons may make an application for an order under this section:
(a) a liquidator of the company;
(b) a creditor or member of the company;
(c) any other person appearing to the Court to have a sufficient interest in the matter concerned. 92

ompany;
(b) a creditor or member of the company;
(c) any other person appearing to the Court to have a sufficient interest in the matter concerned. 92

Companies Act (Cap. 486) Kenya
205. Circumstances in which Registrar may place address on the public record
(1) The Registrar may place a director's usual residential address on the public record if—
(a) communications sent by the Registrar to the director and requiring a response within a
specified period remain unanswered; or
(b) there is evidence that service of documents at a service address provided instead of the
director's usual residential address is not effective to bring them to the notice of the director. (2) The Registrar shall give notice of the proposal to place a director's usual residential address on the
public record—
(a) to the director; and
(b) to every company of which the Registrar has been notified that the person is a director. (3) The Registrar shall in the notice—
(a) state the grounds on which it is proposed to place the director's usual residential address on
the public record; and
(b) specify a period within which representations may be made to the Registrar before that is
done.

sual residential address on
the public record; and
(b) specify a period within which representations may be made to the Registrar before that is
done.

(4) The Registrar shall ensure that the notice is sent to the director at the director's usual residential
address, unless it appears to the Registrar that service at that address may be ineffective to bring it
to the person's notice, in which case it may be sent to any service address provided instead of that
address. (5) The Registrar shall take account of any representations received within the specified period. (6) For the purposes of this section, the period specified is to be a period not less that fifteen days and
not more than thirty days after the relevant communication is sent to the director. 206. Placing the director’s address on the public record
(1) On deciding in accordance with section 205 that a director's usual residential address is to be placed
on the public record, the Registrar shall proceed as if notice of a change of registered particulars
had been given—
(a) stating that address as the director's service address; and
(b) stating that the director's usual residential address is the same as the director's service
address. (2) The Registrar shall give notice of having done so—
(a) to the director; and
(b) to the company.

ess is the same as the director's service
address. (2) The Registrar shall give notice of having done so—
(a) to the director; and
(b) to the company.

(3) On receipt of the notice, the company shall—
(a) enter the director's usual residential address in its register of directors as the director's
service address; and
(b) state in its register of directors' residential addresses that the directors’ usual residential
address is the same as the director's service address. (4) A company that has been notified by a director of a more recent address as the director's usual
residential address shall—
(a) enter that address in its register of directors as the director's service address; and
93

dress as the director's usual
residential address shall—
(a) enter that address in its register of directors as the director's service address; and
93

Companies Act (Cap. 486) Kenya
(b) lodge with the Registrar for registration a notice of the director's new residential address. (5) If a company fails to comply with subsection (3) or (4), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. (6) A director whose usual residential address has been placed on the public record by the Registrar
under this section may not register a service address other than the director's usual residential
address for a period of five years from the date of the Registrar's decision. Division 11 — Supplementary provisions
207. Ratification of acts of directors
(1) A decision of a company to ratify the conduct of a director amounting to negligence, default,
breach of duty or breach of trust in relation to the company can be taken only by the members. However, unless the company's articles require unanimity or a higher majority, such a decision can
be approved by an ordinary resolution of the members.

wever, unless the company's articles require unanimity or a higher majority, such a decision can
be approved by an ordinary resolution of the members.

(2) A resolution to ratify the conduct of a director of a company is passed at a meeting of the members
only if the required majority is obtained after disregarding the votes (if any) cast in favour of the
resolution by the director, and by any member connected with the director. (3) Subsection (2) does not prevent the director or any such member from—
(a) attending the meeting at which the decision is considered; and
(b) being counted as part of the quorum for the meeting and taking part in its proceedings. (4) If the resolution is proposed as a written resolution, neither the director (if a member of the
company) nor any member who is connected with the director is eligible to vote on the resolution. (5) For the purposes of this section—
(a) "conduct" includes acts and omissions;
(b) "director" includes a former director; and
(c) in section 122, subsection (3) does not apply.

section—
(a) "conduct" includes acts and omissions;
(b) "director" includes a former director; and
(c) in section 122, subsection (3) does not apply.

(6) This section does not affect—
(a) the validity of a decision taken by unanimous consent of the members of the company; and
(b) any power of the directors to agree not to sue, or to settle or release a claim made by them on
behalf of the company; or
(c) the operation of any other enactment or rule of law imposing additional requirements for
valid ratification or of any rule of law as to acts that are incapable of being ratified by the
company. 208. Power to make provision for employees on cessation or transfer of business
(1) The powers of the directors of a company include a power to provide for the benefit of persons
employed or formerly employed by the company, or any of subsidiary of the company, in connection
with the cessation, or the transfer to any person, of the whole or part of the undertaking of the
company or that subsidiary. (2) The power referred to in subsection (1) is exercisable despite the general duty imposed by section
143 on a director to promote the success of the company. 94

r referred to in subsection (1) is exercisable despite the general duty imposed by section
143 on a director to promote the success of the company. 94

Companies Act (Cap. 486) Kenya
(3) The power conferred by subsection (1) may be exercised only if approved by—
(a) an ordinary resolution of the company or, if the company's articles require a higher majority
or unanimity, a resolution passed by that majority or unanimously; or
(b) a resolution of the directors authorised by the articles of a company. 209. Limitations on the exercise of the power to make provision for employees
(1) A resolution of the directors under section 208(3) is not sufficient authority for payments to or for
the benefit of directors, or former directors. (2) The power conferred by section 208(1) is subject to compliance with any other requirement
specified by the company's articles. (3) Any payment under section 208 is void unless it is made—
(a) before the liquidation of the company has commenced; and
(b) out of profits of the company that are available for the payment of dividends. 210. Minutes of directors’ meetings
(1) A company shall ensure that minutes of all proceedings at meetings of its directors are recorded. (2) A company shall keep the minutes of each meeting of its directors' for at least seven years from the
date of the meeting.

directors are recorded. (2) A company shall keep the minutes of each meeting of its directors' for at least seven years from the
date of the meeting.

(3) If a company fails to comply with subsection (1) or (2), the company, and each director of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. (4) If a prosecution for an offence under subsection (3) is brought, every person who was a director
at the time the meeting was held is taken to be a director of the company for the purposes of the
prosecution and disposal of the offence, even if the person is no longer a director of the company. [Act No. 28 of 2017, s. 17.]
211. Minutes taken to be evidence of proceedings at meeting of company until contrary
proved
(1) Minutes of a meeting of the directors recorded in accordance with section 210 are, if authenticated
by the person presiding at the meeting or by the person presiding at the next directors' meeting,
evidence of the proceedings of the meeting. (2) If minutes of a meeting are recorded in accordance with section 210—
(a) the meeting is presumed to have been duly held and convened;
(b) all proceedings at the meeting are presumed to have duly taken place; and
(c) all appointments at the meeting are presumed to have been validly made. 212.

proceedings at the meeting are presumed to have duly taken place; and
(c) all appointments at the meeting are presumed to have been validly made. 212.

Transactions under foreign law
For the purposes of this Part, it does not matter whether the law that, apart from this Act, governs an
arrangement or transaction is the law or part of the law of Kenya. Part X – DISQUALIFICATION OF DIRECTORS
Division 1 —Introductory provision
95

rns an
arrangement or transaction is the law or part of the law of Kenya. Part X – DISQUALIFICATION OF DIRECTORS
Division 1 —Introductory provision
95

Companies Act (Cap. 486) Kenya
213. Interpretation: Part X
In this Part, unless the context otherwise requires "disqualification order" means a disqualification order
made under this Part or insolvency related laws or any other enactment prescribed by the regulations for
the purposes of this section. Division 2 —Disqualification orders and disqualification undertakings
214. Effect of order disqualifying person from being a director or secretary
(1) If a court makes a disqualification order against a person, the person is, unless the court gives leave
to the contrary, disqualified from—
(a) being or acting as a director or secretary of a company;
(b) being or acting as a liquidator, provisional liquidator or administrator of a company;
(c) being or acting as a supervisor of a voluntary arrangement approved by a company; or
(d) in any way, whether directly or indirectly, being concerned in the promotion, formation or
management of a company, for such period as may be specified in the order. (2) A period of disqualification specified in a disqualification order begins at the end of twenty-one
days from and including the date of the order, unless the relevant court otherwise orders.

in a disqualification order begins at the end of twenty-one
days from and including the date of the order, unless the relevant court otherwise orders.

(3) If a disqualification order is made against a person who is already subject to another such order,
or to a disqualification undertaking, the periods specified in those orders or in the order and the
undertaking run concurrently. (4) A disqualification order may be made on grounds that are or include matters other than criminal
convictions, whether or not the person in respect of whom it is to be made may be criminally liable
in respect of those matters. 215. Disqualification on conviction for offence
(1) On convicting a person of an offence relating to the promotion, formation, management,
liquidation or administration of a company, the court may make a disqualification order against the
person. (2) The maximum period of disqualification that can be imposed in a disqualification order made under
this section is—
(a) if the disqualification order is made by a magistrate's court, five years; and
(b) in any other case, fifteen years. (3) In this section, "court" includes a magistrate's court. (4) The application of this section is not limited to offences under this Act. 216.

years. (3) In this section, "court" includes a magistrate's court. (4) The application of this section is not limited to offences under this Act. 216.

Disqualification for fraud or breach of duty committed while company in liquidation
or under administration
(1) This section applies to holders of the following offices of, or in relation to, a company:
(a) an officer of the company;
(b) a liquidator or provisional liquidator of the company;
(c) if the company is under administration — the administrator,
96

officer of the company;
(b) a liquidator or provisional liquidator of the company;
(c) if the company is under administration — the administrator,
96

Companies Act (Cap. 486) Kenya
(2) A court may make a disqualification order against a person who holds or formerly held an office to
which this section applies if, while the company was under administration or in liquidation, it is
satisfied that the person has, been found guilty of—
(a) fraud in relation to the company; or
(b) any breach of duty as the holder of such an office. (3) The maximum period that can be imposed in a disqualification order made under this section is
fifteen years
217. Disqualification on conviction of offence involving failure to lodge returns or other
documents with Registrar
(1) This section applies to offences of which a person is convicted in consequence of a failure to comply
with any provision of this Act or the insolvency related laws requiring—
(a) a return, financial statement or other document to be lodged with, or sent to; or
(b) a matter to be notified to, the Registrar, whether the failure is by the person or any company
of which the person is an officer.

, or sent to; or
(b) a matter to be notified to, the Registrar, whether the failure is by the person or any company
of which the person is an officer.

(2) If a person is convicted of an offence to which this section applies, the convicting court may make
a disqualification order against the person if, during the five years ending with the date of the
conviction, the person has been convicted of no fewer than three such offences. (3) The offences referred to in subsection (2) may include the one of which the person is convicted
and any other offence to which this section applies of which the person is convicted on the same
occasion. (4) The maximum period that can be imposed in a disqualification order made under this section is five
years. 218.

is convicted on the same
occasion. (4) The maximum period that can be imposed in a disqualification order made under this section is five
years. 218.

Duty of court to disqualify unfit directors and secretaries of insolvent companies
(1) A court shall make a disqualification order against a person if satisfied, on an application made to it
under section 219—
(a) that the person is or has been a director or secretary of a company that has at any time
become insolvent whether while the person was a director or secretary or subsequently; and
(b) that the conduct of the person as a director or secretary of that company either taken alone
or taken together with the person's conduct as a director or secretary of any other company
or companies makes the person unfit to take part in the management of a company.

the person's conduct as a director or secretary of any other company
or companies makes the person unfit to take part in the management of a company.

(2) If a court is required to determine whether a person's conduct as a director or secretary of any
particular company or companies makes the person unfit to be concerned in the management of
a company, the Court shall, in relation to the director's conduct as a director or secretary of that
company, or each of those companies, have regard in particular—
(a) to the matters referred to in Part 1 of the Second Schedule; and
(b) if the company has become insolvent, to the matters referred to in Part 2 of that Schedule,
and references in that Schedule to the director or secretary and the company are to be read
accordingly. (3) For the purposes of this section , a company becomes insolvent if—
(a) the company is placed in liquidation at a time when its assets are insufficient for the
payment of its debts and other liabilities and the expenses of the liquidation; or
(b) the company is under administration. 97

re insufficient for the
payment of its debts and other liabilities and the expenses of the liquidation; or
(b) the company is under administration. 97

Companies Act (Cap. 486) Kenya
(4) A reference in this section to the conduct of a person as a director or secretary of a company or
companies include, if that company or any of those companies has become insolvent, the conduct
of that person in relation to any matter connected with or arising out of the insolvency of that
company. (5) The maximum period that can be imposed in a disqualification order made under this section is
fifteen years and the minimum period is two years. 219. Applications to court under section 219
(1) If the Attorney-General is satisfied that it would be in the public interest for a disqualification order
under section 218 to be made against a person—
(a) the Attorney-General; or
(b) if the Attorney-General so directs in the case of a person who is or has been a director or
secretary of a company that is being liquidated by the Court—the Official Receiver, may make
an application to a court for such an order.

director or
secretary of a company that is being liquidated by the Court—the Official Receiver, may make
an application to a court for such an order.

(2) Except with the leave of the relevant court, an application for the making of an order under section
218 of a disqualification order against a person may not be made after the expiry of two years
from and including the day on which the company of which the person is or has been a director or
secretary became insolvent. (3) If satisfied that the conditions referred to in section 218(1) are complied with in relation to a person
who has offered to enter into a disqualification undertaking, the Attorney-General may accept the
undertaking if of the view that it would be in the public interest to do so, instead of applying, or
proceeding with an application, for a disqualification order. (4) Subsections (5) to (7) apply to the following office holders:
(a) in the case of a company that is being liquidated by the Court—the Official Receiver;
(b) in the case of a company that is being liquidated otherwise that by the Court—the liquidator;
(c) in the case of a company that is under administration —the administrator.

any that is being liquidated otherwise that by the Court—the liquidator;
(c) in the case of a company that is under administration —the administrator.

(5) If an office holder is satisfied that the conditions specified in section 218(1) are complied with in
relation to a person who is or has been a director or secretary of the company concerned, the office-
holder shall immediately report the matter to the Attorney-General. (6) The Attorney-General or the Official Receiver may request an office holder or former office holder—
(a) to provide the Attorney-General or Official Receiver with such information with respect to
the conduct of a person as a director or secretary of the company; and
(b) to produce and permit inspection of such records relevant to the conduct of the person as a
director or secretary, as the Attorney-General or the Official Receiver may reasonably require
for the purpose of determining whether to make an application under subsection (1). (7) As soon as practicable after receiving a request under subsection (6), an office holder or former
office holder shall comply with the request so far as it is possible to do so.

er receiving a request under subsection (6), an office holder or former
office holder shall comply with the request so far as it is possible to do so.

(8) An officer holder or former office holder who, without reasonable excuse, fails to comply with
subsection (5) or (6) commits an offence and on conviction is liable to a fine not exceeding two
hundred thousand shillings. 98

, fails to comply with
subsection (5) or (6) commits an offence and on conviction is liable to a fine not exceeding two
hundred thousand shillings. 98

Companies Act (Cap. 486) Kenya
220. Disqualification undertakings
(1) In the circumstances specified in section 218, the Attorney-General may accept a disqualification
undertaking by any person that, for a period specified in the undertaking, the person—
(a) will not, without the leave of a court of competent jurisdiction—
(i) act or accept an appointment as a director or secretary of a company; or
(ii) in any way (whether directly or indirectly) be concerned in the promotion, formation
or management of a company; and
(b) will not act as a liquidator, provisional liquidator or administrator of a company. (2) The maximum period that may be specified in a disqualification undertaking is fifteen years and the
minimum period that may be so specified is two years. (3) If a disqualification undertaking by a person who is already subject to such an undertaking or to a
disqualification order is accepted, the periods specified in those undertakings or the undertaking
and the order run concurrently.

undertaking or to a
disqualification order is accepted, the periods specified in those undertakings or the undertaking
and the order run concurrently.

(4) In determining whether to accept a disqualification undertaking by any person, the Attorney-
General may take account of matters other than criminal convictions even if the person may be
criminally liable in respect of those matters. 221. Disqualification after investigation of company
(1) If, as result of a report of an investigation conducted under Part XXX, the Attorney-General
considers that it would be in the public interest for a disqualification order to be made against a
person who is or has been a director or secretary of any company, the Attorney-General may apply
to the Court for a disqualification order to be made against that person. (2) The court may make a disqualification order against a person if, on an application under this
section, it is satisfied that the person's conduct in relation to the company makes that person unfit
to take part in the management of a company. (3) The maximum period that can be imposed in a disqualification order made under this section is
fifteen years.

part in the management of a company. (3) The maximum period that can be imposed in a disqualification order made under this section is
fifteen years.

(4) If, in consequence of such an investigation—
(a) the Attorney-General is of the opinion that the conduct of a person in relation to a company
of which the person is or has been a director or secretary makes the person unfit to be
concerned in the management of a company; and
(b) the person has offered to provide a disqualification undertaking, the Attorney-General may,
instead of applying, or proceeding with an application, for a disqualification order, accept the
undertaking if of the view that it would be in the public interest to do so. 222. Variation of disqualification undertaking
(1) The relevant court may, on the application of a person who is subject to a disqualification
undertaking—
(a) reduce the period for which the undertaking is to be in force; and
(b) provide for it to cease to be in force. (2) On the hearing of an application under subsection (1), the Attorney-General shall appear and draw
the attention of the Court to any matters that appear to the Attorney-General to be relevant, and
may personally give evidence or call witnesses. 99

w
the attention of the Court to any matters that appear to the Attorney-General to be relevant, and
may personally give evidence or call witnesses. 99

Companies Act (Cap. 486) Kenya
(3) In this section, “relevant court” means a court to which, if the Attorney-General had applied for
a disqualification order under the relevant section at the time when the disqualification order
under the relevant section at the time when the disqualification undertaking was provided, the
application could have been made. 223. Offence for undischarged bankrupts to act as director or secretary of company
(1) A person who, except with the leave of a court—
(a) acts as a director or secretary of a company; and
(b) directly or indirectly participates in its promotion, formation or management, while an
undischarged bankrupt commits an offence
(2) A court may not give leave under subsection (1) unless notice of intention to apply for it has been
served on the Official Receiver. (3) If of the opinion that it would be contrary to the public interest for the application to be granted,
the Official Receiver shall attend the hearing of the application and oppose it.

be contrary to the public interest for the application to be granted,
the Official Receiver shall attend the hearing of the application and oppose it.

(4) A person found guilty of offence under subsection (1) is liable on conviction to a fine not exceeding
five hundred thousand shillings or to imprisonment for a term not exceeding two years, or to both. 224. Personal liability for company’s debts if person acts while disqualified
(1) For the purposes of this section, a person is personally responsible for all the relevant debts of a
company if at any time—
(a) the person is concerned in the management of the company in contravention of a
disqualification order or of section 223; or
(b) as a person who is involved in the management of the company, the person acts or is
willing to act on instructions given without the leave of the Court by another person whom
the person knows at that time to be the subject of a disqualification order or to be an
undischarged bankrupt. (2) A person who is personally liable under this section for the relevant debts of a company is jointly
and severally liable in respect of those debts with the company and any other person who, whether
under this section or otherwise, is so liable.

intly
and severally liable in respect of those debts with the company and any other person who, whether
under this section or otherwise, is so liable.

(3) For the purposes of this section, the relevant debts of a company are—
(a) in relation to a person who is personally responsible under subsection (1)(a), such debts and
other liabilities of the company as are incurred at a time when that person was involved in
the management of the company; and
(b) in relation to a person who is personally responsible under subsection (1)(b), such debts and
other liabilities of the company as were incurred at a time when that person was acting or
was willing to act on instructions given as referred to in that paragraph. (4) For the purposes of this section, a person is involved in the management of a company if the person
—
(a) is a director or secretary of the company; or
(b) is concerned, whether directly or indirectly, or participates, in the management of the
company. (5) For the purposes of this section, a person who, as a person involved in the management of a
company, has, without the leave of the Court, at any time acted on instructions given by another
person -whom the person knew at that time to be the subject of a disqualification order or to be an
100

ny time acted on instructions given by another
person -whom the person knew at that time to be the subject of a disqualification order or to be an
100

Companies Act (Cap. 486) Kenya
undischarged bankrupt is presumed, unless the contrary is shown, to have been willing at any time
afterwards to act on any instructions given by that other person. 225. Application for leave under an order or undertaking
(1) A person may make an application to the Court for a disqualification order only if the person has
given the person against whom the order is sought a notice of intention to apply for such an order. (2) At the hearing of the application, the person against whom a disqualification order is sought is
entitled to appear as respondent to the application. (3) An application to a court for a disqualification order may be made by the Attorney-General, the
Registrar, the Official Receiver, the liquidator or any past or present member or creditor of any
company in relation to which that person has committed or is alleged to have committed an offence
or other default. (4) On the hearing of an application made by the Attorney-General, the Registrar, the Official Receiver
the liquidator, the applicant shall appear and draw the attention of the Court to any matters that
appear to be relevant, and may give evidence or call witnesses. 226.

he applicant shall appear and draw the attention of the Court to any matters that
appear to be relevant, and may give evidence or call witnesses. 226.

Application for leave under an order or undertaking
(1) If a person is subject to a disqualification order made by the Court, an application for leave for the
purposes of section 214(1) may be made only to the Court. (2) If—
(a) a person is subject to a disqualification order made under section 215 by a court other than
the Court; and
(b) a person is subject to a disqualification order made under section 217, an application for
leave for the purposes of section 214(1) may be made only to the court that convicted the
person of the relevant offence or, if the person was convicted of more than one such offence,
of any of those offences. (3) If a person is subject to a disqualification undertaking, any application for leave for the purposes
of section 222(1) may be made only to a court to which, if the Attorney-General had applied for
a disqualification order under the relevant section at that time, the application could have been
made.

which, if the Attorney-General had applied for
a disqualification order under the relevant section at that time, the application could have been
made.

(4) If a person is subject—
(a) to two or more disqualification orders or undertakings; or
(b) to one or more disqualification orders and to one or more disqualification undertakings, an
application for leave for the purposes of section 214(1) or 222(1) may be made only to a court
to which any such application relating to the latest order to be made, or undertaking to be
accepted, could be made. (5) On the hearing of an application for leave for the purposes of section 214(1) or 222(1), the Attorney-
General shall appear and draw the attention of the court to any matters that appear to the
Attorney-General to be relevant, and may personally give evidence or call witnesses. 227. Register of disqualification orders and disqualification undertakings
(1) The Registrar shall establish and maintain a register of disqualification orders and disqualification
undertakings in which the Registrar shall enter all particulars, provided in accordance with
subsection (2) or (3). (2) Whenever a court—
(a) makes a disqualification order;
101

egistrar shall enter all particulars, provided in accordance with
subsection (2) or (3). (2) Whenever a court—
(a) makes a disqualification order;
101

Companies Act (Cap. 486) Kenya
(b) takes action in consequence of which such an order is varied or is cancelled; or
(c) grants leave for a person who is subject to such an order to do anything that the order would
otherwise prohibit or restrict the person from doing, the prescribed officer of the court
shall, within fourteen days after the order is made, the action is taken or leave is granted,
lodge with the Registrar for registration under this section a copy of the order or written
particulars of the action or leave. (3) As soon as practicable after accepting a disqualification undertaking, the Attorney-General shall
lodge with the Registrar a copy of the undertaking for registration under this section. (4) On becoming aware that a disqualification order or disqualification undertaking particulars of
which are entered in the register has been cancelled or otherwise ceased to be in force, the Registrar
shall delete the entry from the register and all particulars relating to it that have been lodged with
the Registrar under subsection (2) or (3).

trar
shall delete the entry from the register and all particulars relating to it that have been lodged with
the Registrar under subsection (2) or (3).

(5) The Registrar shall keep the register required by this section open for inspection by members of the
public on payment of the prescribed fee (if any). (6) In this section, "prescribed officer", in relation to a court, means the registrar of the court or,
if the court does not have a registrar, the clerk or other officer of the court responsible for the
administration of the court's day-to-day business. 228. Offence to breach of disqualification order or undertaking
A person who, while subject to a disqualification order or disqualification undertaking, contravenes the
order or undertaking commits an offence and on conviction liable to a fine not exceeding one million
shillings or to imprisonment for a term not exceeding five years, or to both. 229. Disqualified person may apply to the Court for permission to act in way that would
otherwise breach disqualification
(1) A person who is disqualified under this Part may apply to the Court for permission to act in a way
that would otherwise be a breach of the disqualification.

on who is disqualified under this Part may apply to the Court for permission to act in a way
that would otherwise be a breach of the disqualification.

(2) The Attorney-General is entitled to appear or be represented at the hearing of an application made
under subsection (1) and to give evidence or call witnesses at the hearing of such an application. 230. Statements from persons who are disqualified
(1) The regulations may require a statement or notice lodged with the Registrar under section 16, 135
or 248 that relates (wholly or partly) to a person who is a person subject to a disqualification order
or disqualification undertaking from being a director or secretary of a company to be accompanied
by an additional statement. (2) The additional statement is a statement that the person has obtained permission from a court,
on an application under regulations made for the purpose of section 229, to act as a director or
secretary of a company. 231. Statements to be made public
(1) A statement that is lodged with the Registrar in accordance with regulations made for the purpose
of section 230 is to be treated as a record relating to a company for the purposes of the Register.

n accordance with regulations made for the purpose
of section 230 is to be treated as a record relating to a company for the purposes of the Register.

(2) The regulations may prescribe the circumstances in which such a statement is to be, or may be—
(a) withheld from public inspection; or
(b) removed from the Register. 102

prescribe the circumstances in which such a statement is to be, or may be—
(a) withheld from public inspection; or
(b) removed from the Register. 102

Companies Act (Cap. 486) Kenya
(3) The regulations may require such a statement not to be withheld from public inspection or removed
from the Register unless the person to whom it relates provides such information, and satisfies such
other conditions, as may be specified by the regulations. 232. Offence relating to statement
A person who—
(a) fails to comply with a requirement to lodge a statement with regulations made for the purpose of
section 230; or
(b) lodges with the Registrar such a statement that the person knows, or who ought reasonably to
know, is false or misleading in a material respect, commits an offence and is liable on conviction to
a fine not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding
two years, or to both. Division 3 - Foreign restrictions
233.

ot exceeding five hundred thousand shillings or to imprisonment for a term not exceeding
two years, or to both. Division 3 - Foreign restrictions
233.

Persons who are subject to foreign restrictions
(1) For the purposes of this Division, a person is subject to foreign restrictions if, under the law of a
country or territory outside Kenya, the person—
(a) is, because of misconduct, incompetence or mental or physical incapacity—
(i) disqualified to any extent from acting in connection with the affairs of a company; or
(ii) required to obtain permission from a court or regulatory authority, or satisfy any other
condition or requirement, before acting in connection with the affairs of a company;
or
(b) has, because of misconduct, incompetence or mental or physical incapacity, given
undertakings to a court or other authority of a country or territory outside Kenya—
(i) not to act in connection with the affairs of a company; or
(ii) restricting the extent to which, or the way in which, the person may act in connection
with the affairs of a company. (2) For the purposes of subsection (1), acting in connection with the affairs of a company includes—
(a) being a director of the company; or
(b) being concerned or taking part in the promotion, formation or management of the company.

company includes—
(a) being a director of the company; or
(b) being concerned or taking part in the promotion, formation or management of the company.

(3) In this section—
(a) "company" means a company incorporated or formed under the law of the country or
territory outside Kenya; and
(b) in relation to such a company, "director" means the holder of an office corresponding to that
of director of a Kenyan company. 234. Disqualification of persons who are subject to foreign restrictions
(1) A person who is subject to foreign restrictions is disqualified from—
(a) being a director or secretary of a Kenyan company; or
(b) in any way, whether directly or indirectly, being concerned in the promotion, formation or
management of a Kenyan company. 103

Kenyan company; or
(b) in any way, whether directly or indirectly, being concerned in the promotion, formation or
management of a Kenyan company. 103

Companies Act (Cap. 486) Kenya
(2) A person ceases to be disqualified under subsection (1) on ceasing to be subject to foreign
restrictions. 235. Persons subject to foreign restrictions to be personally liable for debts of company
(1) A person who—
(a) is a director or secretary of a company registered in Kenya; and
(b) is involved in the management of a Kenyan company, is personally responsible for all debts
and other liabilities of the company incurred during a time when the person is subject to
foreign restrictions. (2) A person who is personally responsible for all debts and liabilities of a company under this section
is jointly and severally liable in respect of those debts and liabilities with—
(a) the company; and
(b) any other person who, whether because of this section or otherwise, is so liable. (3) For the purposes of this section, a person is involved in the management of a company if the person
directly or indirectly participates in the management of the company.

this section, a person is involved in the management of a company if the person
directly or indirectly participates in the management of the company.

(4) The regulations may provide for different cases under this section and, in particular, may
distinguish between cases by reference to all or any of the following factors:
(a) the conduct on the basis of which the person became subject to foreign restrictions;
(b) the nature of the foreign restrictions;
(c) the country or territory under whose law the foreign restrictions were imposed. 236. Registrar to establish and maintain Register of foreign restrictions
(1) The Registrar shall establish and maintain a register of foreign restrictions in which the Registrar
shall enter particulars of foreign restrictions relating to a persons who is or may become a director
or secretary of a Kenyan company or a local representative of a registered foreign company. (2) On becoming aware that a person is or may be a person who is or may become a director or
secretary of a Kenyan company or a local representative of a registered foreign company, the
Registrar shall enter in the register particulars of, and of the foreign restrictions relating to, the
person.

ve of a registered foreign company, the
Registrar shall enter in the register particulars of, and of the foreign restrictions relating to, the
person.

(3) On becoming aware that foreign restrictions recorded in the register in respect of a person have
ceased to apply to the person, the Registrar shall cancel the entry and all particulars relating to it. (4) The Registrar shall keep the register required by this section open for inspection by members of the
public on payment of the prescribed fee (if any). Division 4 — Supplementary provision
237. Admissibility in evidence of statements
(1) In any legal proceedings (whether or not under this Act), any statement made in compliance or
purported compliance with a requirement imposed by or under this Part or the Fourth Schedule, or
by or under any regulations made for the purposes of this Part, are admissible in evidence against
any person making or concurring in making the statement. (2) However, in criminal proceedings in which any such person is charged with an offence to which this
subsection applies—
(a) no evidence relating to the statement may be adduced; and
104

n which any such person is charged with an offence to which this
subsection applies—
(a) no evidence relating to the statement may be adduced; and
104

Companies Act (Cap. 486) Kenya
(b) no question relating to it may be asked, by or on behalf of the prosecution, unless evidence
relating to it is adduced, or a question relating to it is asked, in the proceedings by or on
behalf of that person. (3) Subsection (2) applies to any offence other than—
(a) an offence (if any) that is created by the regulations for the purposes of this section; or
(b) an offence under—
(i) section 107 of the Penal Code (Cap. 63) (perjury and subornation of perjury); or
(ii) section 114 of that Code (false swearing). Part XI – DERIVATIVE ACTIONS
238. Interpretation: Part XI
(1) In this Part, "derivative claim" means proceedings by a member of a company—
(a) in respect of a cause of action vested in the company; and
(b) seeking relief on behalf of the company. (2) A derivative claim may be brought only—
(a) under this Part; or
(b) in accordance with an order of the Court in proceedings for protection of members against
unfair prejudice brought under this Act.

r this Part; or
(b) in accordance with an order of the Court in proceedings for protection of members against
unfair prejudice brought under this Act.

(3) A derivative claim under this Part may be brought only in respect of a cause of action arising from
an actual or proposed act or omission involving negligence, default, breach of duty or breach of
trust by a director of the company. (4) A derivative claim may be brought against the director or another person, or both. (5) It is immaterial whether the cause of action arose before or after the person seeking to bring or
continue the derivative claim became a member of the company. (6) For the purposes of this Part—
(a) "director" includes a former director;
(b) a reference to a member of a company includes a person who is not a member but to whom
shares in the company have been transferred or transmitted by operation of law. 239. Application for permission to continue derivative claim
(1) In order to continue a derivative claim brought under this Part by a member, the member has to
apply to the Court for permission to continue it.

m
(1) In order to continue a derivative claim brought under this Part by a member, the member has to
apply to the Court for permission to continue it.

(2) If satisfied that the application and the evidence adduced by the applicant in support of it do not
disclose a case for giving permission, the Court—
(a) shall dismiss the application; and
(b) may make any consequential order it considers appropriate. (3) If the application is not dismissed under subsection (2), the Court—
(a) may give directions as to the evidence to be provided by the company; and
(b) may adjourn the proceedings to enable the evidence to be obtained. 105

) may give directions as to the evidence to be provided by the company; and
(b) may adjourn the proceedings to enable the evidence to be obtained. 105

Companies Act (Cap. 486) Kenya
(4) On hearing the application, the Court may—
(a) give permission to continue the claim on such terms as it considers appropriate;
(b) refuse permission and dismiss the claim; or
(c) adjourn the proceedings on the application and give such directions as it considers
appropriate. 240. Application to Court for permission to continue claim as a derivative claim: how
disposed of
(1) If—
(a) a company has brought a claim; and
(b) the cause of action on which the claim is based could be pursued as a derivative claim under
this Part, a member of the company may apply to the Court for permission to continue the
claim as a derivative claim on the ground specified in subsection (2). (2) The ground is that—
(a) the manner in which the company commenced or continued the claim amounts to an abuse
of the process of the Court;
(b) the company has failed to prosecute the claim diligently; and
(c) it is appropriate for the member to continue the claim as a derivative claim.

t;
(b) the company has failed to prosecute the claim diligently; and
(c) it is appropriate for the member to continue the claim as a derivative claim.

(3) If satisfied that the application and the evidence adduced by the applicant in support of it do not
disclose a case for giving permission, the Court—
(a) shall dismiss the application; and
(b) may make any consequential order that it considers appropriate. (4) If the application is not dismissed under subsection (3), the Court—
(a) may give directions as to the evidence to be provided by the company; and
(b) may adjourn the proceedings to enable the evidence to be obtained. (5) On hearing the application, the Court may—
(a) give permission to continue the claim as a derivative claim on such terms as it considers
appropriate;
(b) refuse permission and dismiss the application; or
(c) adjourn the proceedings on the application and give such directions as it considers
appropriate. 241.

e permission and dismiss the application; or
(c) adjourn the proceedings on the application and give such directions as it considers
appropriate. 241.

Application for permission to continue claim as a derivative action
(1) If a member of a company applies for permission under section 239 or 240, the Court shall refuse
permission if satisfied—
(a) that a person acting in accordance with section 144 would not seek to continue the claim;
(b) if the cause of action arises from an act or omission that is yet to occur, that the act or
omission has been authorised by the company; or
106

m;
(b) if the cause of action arises from an act or omission that is yet to occur, that the act or
omission has been authorised by the company; or
106

Companies Act (Cap. 486) Kenya
(c) if the cause of action arises from an act or omission that has already occurred, that the act or
omission—
(i) was authorised by the company before it occurred; or
(ii) has been ratified by the company since it occurred.

occurred, that the act or
omission—
(i) was authorised by the company before it occurred; or
(ii) has been ratified by the company since it occurred.

(2) In considering whether to give permission, the Court shall take into account the following
considerations:
(a) whether the member is acting in good faith in seeking to continue the claim;
(b) the importance that a person acting in accordance with section 143 would attach to
continuing it;
(c) if the cause of action results from an act or omission that is yet to occur, whether the act or
omission could be, and in the circumstances would be likely to be—
(i) authorised by the company before it occurs; or
(ii) ratified by the company after it occurs;
(d) if the cause of action arises from an act or omission that has already occurred, whether
the act or omission could be, and in the circumstances would be likely to be, ratified by the
company;
(e) whether the company has decided not to pursue the claim;
(f) whether the act or omission in respect of which the claim is brought gives rise to a cause of
action that the member could pursue in the member's own right rather than on behalf of the
company.

hich the claim is brought gives rise to a cause of
action that the member could pursue in the member's own right rather than on behalf of the
company.

(3) In deciding whether to give permission, the Court shall have particular regard to any evidence
before it as to the views of members of the company who have no personal interest (direct or
indirect) in the matter. 242. Application for permission to continue derivative claim brought by another member
(1) If a derivative claim—
(a) has been brought by a member of a company;
(b) was brought by a company and is continued by a member of the company as a derivative
claim; or
(c) has been continued by a member of the company as a derivative claim, another member of
the company may apply to the Court for permission to continue a derivative claim to which
this section applies on the ground specified in subsection (2). (2) The ground is that—
(a) the manner in which the proceedings have been commenced or continued by the claimant
amounts to an abuse of the process of the Court;
(b) the claimant has failed to prosecute the claim diligently; and
(c) it is appropriate for the applicant to continue the claim as a derivative claim.

b) the claimant has failed to prosecute the claim diligently; and
(c) it is appropriate for the applicant to continue the claim as a derivative claim.

(3) If it appears to the Court that the application and the evidence provided by the applicant in support
of it does not disclose a case for giving permission or leave, the Court—
(a) shall dismiss the application; and
(b) may make any consequential order that it considers appropriate. 107

giving permission or leave, the Court—
(a) shall dismiss the application; and
(b) may make any consequential order that it considers appropriate. 107

Companies Act (Cap. 486) Kenya
(4) If the application is not dismissed under subsection (3), the Court—
(a) may give directions as to the evidence to be provided by the company; and
(b) may adjourn the proceedings to enable the evidence to be obtained. (5) On hearing the application, the Court may—
(a) give permission to continue the claim on such terms as it considers appropriate;
(b) refuse permission and dismiss the application; and
(c) adjourn the proceedings on the application and give such directions as it considers
appropriate. Part XII – COMPANY SECRETARIES
243. Private company not required to have secretary
(1) A private company is required to have a secretary only if it has a paid up capital of five million
shillings or more.

t required to have secretary
(1) A private company is required to have a secretary only if it has a paid up capital of five million
shillings or more.

(2) If a private company does not have a secretary—
(a) anything authorised or required to be given or sent to, or served on, the company by being
given or sent to, or served on its secretary —
(i) may be given or sent to, or served on, the company itself; and
(ii) if addressed to the secretary, is taken to be treated as addressed to the company; and
(b) anything else required or authorised to be done by the secretary of the company may be done
by—
(i) a director; or
(ii) a person authorised generally or specifically for that purpose by the directors. 243A. Companies electing to have a company secretary or a contact person
(1) A private company with a paid-up capital of less than five million shillings or a company limited by
guarantee may appoint a company secretary.

on
(1) A private company with a paid-up capital of less than five million shillings or a company limited by
guarantee may appoint a company secretary.

(2) A private company or company limited by guarantee not having a company secretary or a resident
director shall be required to—
(a) appoint a contact person who shall be a natural person with a permanent residence in Kenya;
and
(b) in the case of a company registered before the coming into effect of this provision, lodge a
notice with the Registrar of the said appointment, within sixty days of coming into force of
this provision. (3) The company shall lodge with the Registrar for registration a notice of the appointment of the
contact person, specifying the person’s and residential address and such other particulars (if any) as
are prescribed for the purposes of this section. (4) The contact person shall—
(a) keep a copy of the record relating to directorship, shareholding, beneficial ownership and
any other information required to be kept by the company under the Act; and
(b) make the copies available to competent authorities and the Registrar. 108

other information required to be kept by the company under the Act; and
(b) make the copies available to competent authorities and the Registrar. 108

Companies Act (Cap. 486) Kenya
(5) A contact person who fails to comply with the provisions of subsection (4) commits an offence and
on conviction is liable to a fine not exceeding five hundred thousand shillings. (6) Within fourteen days after a person who is the contact person of a registered company has—
(a) died, resigned or otherwise ceased to be the contact person, the company shall lodge with
the Registrar for registration a notice to the effect that the person has ceased to be a contact
person of the company in Kenya and that a new contact person has been appointed in their
place; or
(b) changed his or her residential address in Kenya, the company shall lodge with the Registrar
for registration a notice giving details of the change. (7) If the company does not comply with subsection (2), the company, and each officer of the company
who is in default, commits an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings.

fficer of the company
who is in default, commits an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings.

(8) If, after a company or any of its officers is convicted of an offence under subsection (7), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. (9) Notwithstanding the provisions of subsection (7) and (8), the Registrar may give directions to a
company that is in breach of subsection (2) and (6) specifying—
(a) the statutory requirement of which the company is in breach;
(b) the action that the company is required to take;
(c) that the company has to comply with the direction within fourteen days; and
(d) the consequences of failing to comply with the direction. [Act No. 10 of 2023, Sch.]
244. Public company required to have secretary
Every public company is required to have at least one secretary. 245. Direction requiring public company to appoint secretary
(1) If satisfied that a public company is failing to comply with section 244, the Registrar may give the
company a direction under this section.

etary
(1) If satisfied that a public company is failing to comply with section 244, the Registrar may give the
company a direction under this section.

(2) The Registrar shall state in the direction that the company appears to be failing to comply with
section 244 and—
(a) what the company is required to do in order to comply with the direction;
(b) the period within which it is to comply; and
(c) the consequence of failing to comply with the direction. (3) The period specified under subsection (2)(b) may not be less than one month or more than three
months after the date the direction is given. (4) Unless the company is in fact complying with section 244, the company shall comply with the
direction by—
(a) making the necessary appointment; and
(b) giving notice of the appointment under section 249, before the end of the period specified in
the direction. 109

ng the necessary appointment; and
(b) giving notice of the appointment under section 249, before the end of the period specified in
the direction. 109

Companies Act (Cap. 486) Kenya
(5) If the company has already made the necessary appointment, it shall comply with the direction by
giving notice of the appointment under section 249 before the end of the period specified in the
direction. (6) If a company fails to comply with a direction given to it under this section, the company, and each
officer of the company who is in default, commit an offence and on conviction are each liable to a
fine not exceeding five hundred thousand shillings. (7) If, after a company or any of its officers is convicted of an offence under subsection (6), the
company continues to fail to comply with the direction, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence. [Act No. 11 of 2017, Sch., Act No. 28 of 2017, s. 18.]
246.

on are each liable to a fine not exceeding fifty thousand shillings for each such
offence. [Act No. 11 of 2017, Sch., Act No. 28 of 2017, s. 18.]
246.

Qualifications of secretaries of public companies
(1) The directors of a public company shall take all reasonable steps to ensure that the secretary or
each joint secretary of the company—
(a) is a person who has the requisite knowledge and experience to discharge the functions of a
secretary of the company; and
(b) is the holder of a practising certificate issued under the Certified Public Secretaries of Kenya
Act. (2) A director of a public company who fails to comply with subsection (1) commits an offence and on
conviction is liable to a fine not exceeding two hundred thousand shillings. [Act No. 28 of 2017, s. 19.]
247. Discharge of functions if office vacant or secretary unable to act
If, in the case of a public company, the office of secretary is vacant, or for any other reason there is no
secretary capable of acting, anything required or authorised to be done by or to the secretary can be done
—
(a) by or to an assistant or deputy secretary (if any); or
(b) if there is no assistant or deputy secretary or no person capable of acting by or to any person
authorised generally or specifically for the purpose by the directors. 248.

ant or deputy secretary or no person capable of acting by or to any person
authorised generally or specifically for the purpose by the directors. 248.

Duty to keep register of secretaries
(1) A public company shall keep a register of its secretaries. (2) The company shall ensure that its register of secretaries—
(a) contains the required particulars of the person who is, or persons who are, the secretary or
joint secretaries of the company; and
(b) except in so far as the regulations otherwise provide, is kept available for inspection at the
registered office of the company. (3) The company shall ensure that its register of secretaries is kept open for the inspection by—
(a) any member of the company without charge; and
(b) any other person on payment of the prescribed fee (if any). 110

kept open for the inspection by—
(a) any member of the company without charge; and
(b) any other person on payment of the prescribed fee (if any). 110

Companies Act (Cap. 486) Kenya
(4) If a company fails to comply with a requirement of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable on conviction
to a fine not exceeding five hundred thousand shillings. (5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with the requirement, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence. 249. Duty to notify Registrar of change of secretary or joint secretary
(1) A public company shall, within fourteen days after—
(a) a person is appointed to be its secretary or one of its joint secretaries;
(b) ceases to be appointed as such; or
(c) any change occurs in the particulars contained in its register of secretaries,
lodge with the Registrar for registration a notice of the appointment, cessation of appointment or
change and of the date on which it occurred.

aries,
lodge with the Registrar for registration a notice of the appointment, cessation of appointment or
change and of the date on which it occurred.

(2) A public company shall ensure that a notice that a person has been appointed as a secretary, or
a joint secretary, of the company is accompanied by a written consent by the person to act as
secretary or joint secretary. (3) If a public company fails to comply with a requirement of this section, the company, and each
officer of the company who is in default commit an offence and on conviction are each liable to a
fine not exceeding two hundred thousand shillings. (4) If, after a company or any of its officers is convicted of an offence under subsection (3), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. 250.

ach day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. 250.

What particulars of secretaries are required to be registered: natural persons
(1) If the secretary of a public company is a natural person, the company shall ensure that its register
of secretaries contains the following particulars:
(a) the name and any former name of the secretary; and
(b) the address of the secretary. (2) A public company's register of secretaries is not required to contain particulars of a person's former
name if—
(a) the person's former name was changed or disused before the person reached eighteen years
of age; or
(b) the person's name has been changed or disused for twenty years or more. (3) The address required to be stated in the register under subsection (1) is a service address, which
may be the registered office of the company. 111

3) The address required to be stated in the register under subsection (1) is a service address, which
may be the registered office of the company. 111

Companies Act (Cap. 486) Kenya
251. What particulars of secretaries are required to be registered: corporate secretaries and
firms
(1) If the secretary of a public company is a company or a firm, the company shall ensure that its
register of secretaries contains the following particulars—
(a) the name of the company or the firm;
(b) the registered or principal office of the company or the firm;
(c) the legal form of the company or firm and the law by which it is governed; and
(d) in the case of a company or a firm that is incorporated, register in which it is recorded
(including the place where the register is kept) and its registration number in the register. (2) If all the partners in a firm are joint secretaries, it is sufficient to state the particulars that would be
required if the firm were a legal person and the firm had been appointed secretary. (3) The regulations may provide for the addition or removal of particulars required to be contained in a
public company's register of secretaries. 252.

3) The regulations may provide for the addition or removal of particulars required to be contained in a
public company's register of secretaries. 252.

Offence to include misleading, false or deceptive particulars in register of secretaries
A person who knowingly or recklessly authorises or permits the inclusion of misleading, false or deceptive
particulars in a register of secretaries commits an offence and is liable on conviction to imprisonment for a
term not exceeding two years or a fine not exceeding one million shillings, or to both. 253. Offence to fail to keep register of secretaries
(1) If a public company fails to comply with a requirement of section 250 or 251, the company, and
each officer of the company who is in default, commit an offence and on conviction are each liable
to a fine not exceeding two hundred thousand shillings. (2) If, after a company or any of its officers is convicted of an offence under subsection (2), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. 254.

ach day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. 254.

Acts done by person in dual capacity
A provision requiring or authorising a thing to be done by or to a director and the secretary of a public
company is not satisfied by its being done by or to the same person acting both as director and as, or in
place of, the secretary. Part XIII – RESOLUTIONS AND MEETINGS
Division 1 — General provisions about company resolutions
255. Requirements for passing company resolutions
(1) A resolution of the members, or of a class of members of a private company may be passed either—
(a) as a written resolution; or
(b) at a meeting of the members. (2) A resolution of the members or of a class of members of a public company may be passed only at a
meeting of the members. 112

eting of the members. (2) A resolution of the members or of a class of members of a public company may be passed only at a
meeting of the members. 112

Companies Act (Cap. 486) Kenya
256. Requirements for passing an ordinary resolution of a company
(1) A resolution is an ordinary resolution of the members (or of a class of members) of a company if it is
passed by a simple majority. (2) A written resolution is passed by a simple majority if it is passed by members representing a simple
majority of the total voting rights of eligible members. (3) A resolution passed at a meeting on a show of hands is passed by a simple majority if it is passed by
a simple majority of—
(a) the members who, being entitled to do so, vote in person on the resolution; and
(b) the persons who vote on the resolution as duly appointed proxies of members entitled to
vote on it. (4) A resolution passed on a poll taken at a meeting is passed by a simple majority if it is passed by
members representing a simple majority of the total voting rights of members who, being entitled
to do so, vote in person or by proxy. (5) Anything that may be done by ordinary resolution may also be done by special resolution if the
company's so provide. 257.

e in person or by proxy. (5) Anything that may be done by ordinary resolution may also be done by special resolution if the
company's so provide. 257.

Requirements for the passing of special resolution
(1) A resolution is a special resolution of the members (or of a class of members) of a company if it
passed by a majority of not less than seventy-five percent. (2) A written resolution is passed by a majority of not less than seventy-five percent if it is passed
by members representing not less than seventy-five percent of the total voting rights of eligible
members (see Division 2). (3) If a resolution of a private company is passed as a written resolution—
(a) the resolution is not a special resolution unless it stated that it was proposed as a special
resolution; and
(b) if the resolution so stated, it may only be passed as a special resolution. (4) A resolution passed at a meeting on a show of hands is passed by a majority of not less than
seventy-five percent if it is passed by not less than seventy-five percent of—
(a) the members who, being entitled to do so, vote in person on the resolution; and
(b) the persons who vote on the resolution as duly appointed proxies of members entitled to
vote on it.

o do so, vote in person on the resolution; and
(b) the persons who vote on the resolution as duly appointed proxies of members entitled to
vote on it.

(5) A resolution passed on a poll taken at a meeting is passed by a majority of not less than seventy-five
percent if it is passed by members representing not less than seventy-five percent of the total voting
rights of the members who (being entitled to do so) vote in person or by proxy on the resolution. (6) If a resolution is passed at a meeting, the resolution is a special resolution only if the notice of the
meeting—
(a) included the text of the resolution; and
(b) specified an intention to propose the resolution as a special resolution,
but if the notice of the meeting specified such an intention, the resolution may be passed only as a
special resolution. 113

as a special resolution,
but if the notice of the meeting specified such an intention, the resolution may be passed only as a
special resolution. 113

Companies Act (Cap. 486) Kenya
258. General rules for voting on company resolutions
(1) When a vote on a written resolution put to the members of a company is taken, then—
(a) if the company has a share capital, each member has one vote for each share, or each one
hundred shillings of stock, held by the member; and
(b) if the company does not have a share capital, each member has one vote. (2) When a vote on a resolution is to be taken by the members of a company at a meeting on a show of
hands—
(a) each member present in person has one vote; and
(b) each proxy present who has been duly appointed by a member entitled to vote on the
resolution has one vote. (3) When a vote on a resolution is to be taken by the members of a company by a poll—
(a) if the company has a share capital, each member present in person, or each proxy present
who has been duly appointed by a member, has one vote for each share, or each one hundred
shillings of stock, held by the member; and
(b) if the company does not have a share capital, each member present in person, or each proxy
present who has been duly appointed by a member, has one vote.

the company does not have a share capital, each member present in person, or each proxy
present who has been duly appointed by a member, has one vote.

(4) This section has effect subject to provisions of the company's articles to the contrary. (5) If the number of votes for and against a proposal are equal, the Members shall refer to the
Memorandum and Articles of Association or the Shareholders' Agreement. [Act No. 18 of 2018, sch. ]
259. Specific requirements for voting on company resolutions
(1) If a member entitled to vote on a resolution has appointed one proxy only, and the company’s
articles provide that the proxy has fewer votes in a vote on a resolution on a show of hands taken at
a meeting than the member would have if the member were present in person—
(a) the provision of the articles on the number of votes the proxy has on a show of hands is void;
and
(b) the proxy has the same number of votes on a show of hands as the member who appointed
the proxy would have if the member were present at the meeting. (2) If a member entitled to vote on a resolution has appointed more than one proxy, subsection (1)
applies as if the references to the proxy were references to the proxies taken together. 260.

lution has appointed more than one proxy, subsection (1)
applies as if the references to the proxy were references to the proxies taken together. 260.

Votes of joint holders of shares
(1) If two or more persons hold a share jointly, only the vote of the senior holder who votes and any
proxies duly authorised by that holder are eligible for counting by the company. (2) For the purposes of this section, the senior holder of a share is determined by the order in which the
names of the joint holders appear in the register of members. (3) Subsections (1) and (2) have effect subject to Provisions of the company's articles to the contrary. 261. Effect of provision in company’s articles as to admissibility of votes
If a person who was not entitled to vote on a resolution of a company purports to vote on the resolution
and the company's articles provide that objections to the entitlement of the person to vote are to be
114

a company purports to vote on the resolution
and the company's articles provide that objections to the entitlement of the person to vote are to be
114

Companies Act (Cap. 486) Kenya
determined in accordance with a procedure specified in those articles, the person's vote is nonetheless
valid if—
(a) no objection to the person's entitlement to vote is made in accordance with the procedure; or
(b) one or more objections to the person's entitlement to vote is made in accordance with the
procedure, but the objection is rejected in compliance with the procedure. Division 2 — Written resolutions
262. Written resolutions of private companies
(1) For the purpose of this Division, a resolution is a written resolution of a private company if it is
proposed and passed by the company in accordance with this Division. (2) The following may not be passed as a written resolution—
(a) a resolution under section 139 removing a director from office before the end of the director's
period of office; or
(b) a resolution under section 739 removing an auditor before, the end of the auditor's term of
office. (3) Either the directors or members of a company may propose a resolution as a written resolution. (4) A written resolution has effect as if passed—
(a) by the company in a general meeting; or
(b) by a meeting of a class of members of the company.

. (4) A written resolution has effect as if passed—
(a) by the company in a general meeting; or
(b) by a meeting of a class of members of the company.

263. Who is entitled to vote on a written resolution
(1) In relation to a resolution proposed as a written resolution of a private company, the eligible
members are the members who would have been entitled to vote on the resolution on the
circulation date of the resolution. (2) If the persons entitled to vote on a written resolution change during the course of the day that is
the circulation date of the resolution, the eligible members are the persons entitled to vote on the
resolution at the time 40 when the first copy of the resolution was sent or delivered to members for
their agreement. 264. Circulation date for written resolutions
A reference in this Part to the circulation date of a written resolution is to the date on which copies of
the written resolution are sent or delivered to members or, if copies are sent or delivered to members on
different days, to the first of those days. 265. Circulation of written resolutions proposed by directors
(1) This section applies to a resolution proposed as a written resolution by the directors of the
company.

f written resolutions proposed by directors
(1) This section applies to a resolution proposed as a written resolution by the directors of the
company.

(2) The company shall send or deliver a copy of a written resolution of the directors of the company to
every eligible member—
(a) by sending copies at the same time, so far as it is reasonably practicable, to all eligible
members in hard copy form, in electronic form or by means of a website; or
115

the same time, so far as it is reasonably practicable, to all eligible
members in hard copy form, in electronic form or by means of a website; or
115

Companies Act (Cap. 486) Kenya
(b) if it is possible to do so without undue delay, by delivering the same copy to each eligible
member in turn, or different copies to each of a number of eligible members in turn,
or by sending copies to some members in accordance with paragraph (a) and submitting a copy or
copies to other members in accordance with paragraph (b). (3) The company shall attach to, or enclose with, the copy of the written resolution a statement
informing the member—
(a) how to signify agreement to the resolution; and
(b) of the date by which the resolution is required to be passed if it is not to lapse. (4) The validity of the written resolution, if passed, is not affected by a failure to comply with this
section. (5) If a requirement of this section is not complied with, the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings.

officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings.

(6) If, after a company or any of its officers is convicted of an offence under subsection (5), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. 266. Right of members to require circulation of written resolution
(1) The members of a private company may require the company to circulate a resolution that may
properly be moved and is proposed to be moved as a written resolution. (2) A resolution may properly be moved as a written resolution unless—
(a) it would, if passed, be void (whether because of inconsistency with a written 'law or the
company's constitution or otherwise);
(b) it defames a person; or
(c) it is frivolous or vexatious. (3) If the members require a company to circulate a resolution, the members may require the company
to circulate with it a statement of not more than one thousand, words on the subject matter of the
resolution.

on, the members may require the company
to circulate with it a statement of not more than one thousand, words on the subject matter of the
resolution.

(4) A company is required to circulate the resolution and any accompanying statement as soon as
practicable after it has received requests to do so from members representing not less than the
requisite percentage of the total voting rights of all members entitled to vote on the resolution. (5) The "requisite percentage" is five per cent or, if a lower percentage is specified for this purpose in
the articles of the company, that percentage. (6) A request made under subsection (3) is not effective unless—
(a) it is in hard copy form or in electronic form;
(b) it identifies the resolution and any accompanying statement; and
(c) it is authenticated by the person or persons making it. 116

electronic form;
(b) it identifies the resolution and any accompanying statement; and
(c) it is authenticated by the person or persons making it. 116

Companies Act (Cap. 486) Kenya
267. Circulation of written resolution proposed by members
(1) A company that is required under section 266 to circulate a resolution shall, subject to section
268, or an application not to circulate a members' statement, send to every eligible member of the
company—
(a) a copy of the resolution; and
(b) a copy of any accompanying statement. (2) The requirement under subsection (1) is subject to sections 268 and 269. (3) The company shall send or deliver a written resolution to every eligible member—
(a) by sending copies at the same time so far as reasonably practicable to every eligible member
in hard copy form, in electronic form or by posting the resolution on the website of the
company;
(b) if it is possible to do so without undue delay—by delivering the same copy to each eligible
member in turn or different copies to each of a number of eligible members in turn; or
(c) by sending copies to some members in accordance with paragraph (a) and delivering a copy
or copies to other members in accordance with paragraph (b).

by sending copies to some members in accordance with paragraph (a) and delivering a copy
or copies to other members in accordance with paragraph (b).

(4) The company shall send or deliver the copies of the written resolution or, if copies are sent or
delivered to members on different days, the first of those copies not more than twenty-one days
after it receives a request to circulate the resolution. (5) The company shall attach to, or enclose with, the copy of the resolution that is sent or delivered to
members under this section information specifying—
(a) how they are to signify their agreement (or disagreement) with the resolution; and
(b) the deadline, for passing the resolution if it is not to lapse. (6) The validity of the resolution, if passed, is not affected by a failure to comply with this section. (7) If a company fails to comply with a requirement of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. 268. Requisitioning members to meet expenses of circulation
(1) The members who requested the circulation of the resolution shall meet the cost of circulating the
resolution unless the company otherwise resolves.

) The members who requested the circulation of the resolution shall meet the cost of circulating the
resolution unless the company otherwise resolves.

(2) Unless the company has previously so resolved, it is not bound to comply with section 267 unless
there is deposited with or tendered to the company an amount reasonably sufficient to meet the
expenses of the company in circulating the resolution. 269. Application not to circulate members’ statement
(1) A company is not required to circulate a members’ statement under section 268 if, on an
application by the company or another person who claims to be dissatisfied, the Court is satisfied
that the rights conferred by section 266 and that section are being abused. (2) The Court may order the members who requested the circulation of the statement to pay the whole
or part of the company's costs on such an application, even if they are not parties to the application. 117

culation of the statement to pay the whole
or part of the company's costs on such an application, even if they are not parties to the application. 117

Companies Act (Cap. 486) Kenya
270. Procedure for signifying agreement to written resolution
(1) A member signifies agreement to a proposed written resolution when the company receives from
that member, or from someone acting on the members’s behalf, an authenticated document—
(a) identifying the resolution to which the agreement or the document relates; and
(b) indicating agreement to the resolution. (2) To be effective, the authenticated document is to be delivered or sent to the company in hard copy
form or in electronic form. (3) The agreement of a member to a written resolution may not be revoked after it has been signified. (4) A written resolution is passed when the required majority of eligible members have signified their
agreement to the written resolution. 271. Deadline for agreeing to written resolution
(1) A proposed written resolution lapses if it is not passed before—
(a) the deadline specified for this purpose in the company's articles; or
(b) if no deadline is specified the expiry of twenty eight days from and including the circulation
date. (2) The agreement of a member to a written resolution is void if signified after the deadline or the
expiry of that period.

ding the circulation
date. (2) The agreement of a member to a written resolution is void if signified after the deadline or the
expiry of that period.

272. Sending documents relating to written resolutions by electronic means
If a company has given an electronic address in a document containing, or enclosed with or attached to, a
proposed written resolution, any document or information relating to that resolution may be validly sent
by electronic means to that address, subject to any conditions or limitations specified in the document. 273. Publication of written resolution on website
If a company sends to a person by means of a website—
(a) a written resolution; or
(b) a statement relating to a written resolution, the resolution or statement is not validly sent unless
the resolution is available on the website throughout the period from and including the circulation
date and ending on the date on which the resolution lapses under this Division. 274. Relationship between this Division and provisions of company's articles
A provision of the articles of a private company is void to the extent that it would have the effect that a
resolution that is required by or otherwise provided for in an enactment could not be proposed and passed
as a written resolution.

e the effect that a
resolution that is required by or otherwise provided for in an enactment could not be proposed and passed
as a written resolution.

Division 3 —Procedure for convening and holding company general meetings
Subdivision 1 —Convening of general meetings and passing resolutions
275. Resolutions at general meetings
A resolution of members of a company is validly passed at a general meeting if—
(a) notice of the meeting and of the resolution is given; and
118

ings
A resolution of members of a company is validly passed at a general meeting if—
(a) notice of the meeting and of the resolution is given; and
118

Companies Act (Cap. 486) Kenya
(b) the meeting is held and conducted,
in accordance with this Act and the company's articles. 275A. Annual general meeting
(1) Every company shall convene a general meeting once a year. (2) Subsection (1) does not apply to single member companies. (3) The Registrar may, on the application of the company or for any other reason the Registrar thinks
fit, extend the period referred to in subsection (1) even if, as a result, the period is extended beyond
the calendar year. (4) A company that fails to comply with this section commits an offence and is liable to a fine not
exceeding one hundred thousand shillings. [Act No. 12 of 2019, Sch.]
276. Power of directors to convene general meetings
The directors of a company may convene a general meeting of the company. 277. Right of members to require directors to convene general meeting
(1) The members of a company may require the directors to convene a general meeting of the company.

rs to require directors to convene general meeting
(1) The members of a company may require the directors to convene a general meeting of the company.

(2) The directors are required to convene a general meeting as soon as practicable after the company
has received requests to do so from—
(a) members representing at least the required percentage of such of the paid-up capital of the
company as carries the right of voting at general meetings of the company; or
(b) in the case of a company not having a share capital, members who represent at least the
required percentage of the total voting rights of all the members having a right to vote at
general meetings. (3) The required percentage for the purpose of subsection (2) is ten percent, except as provided by
subsection (4). (4) In the case of a private company, the required percentage is five percent if—
(a) more than twelve months has elapsed since the end of the last general meeting convened in
accordance with a requirement under this section; or
(b) in relation to which members had, in accordance with an enactment or the company's
articles, exercised a right to require the circulation of a resolution in respect of the meeting
at their request.

with an enactment or the company's
articles, exercised a right to require the circulation of a resolution in respect of the meeting
at their request.

(5) A request for the directors to convene a general meeting is only effective if it states the general
nature of the business to be dealt with at the meeting. However, such a request may include the text
of a resolution that is proposed to be put to the meeting. (6) A resolution may not be moved at a general meeting if—
(a) it would, if passed, be void because of inconsistency with any written law or the constitution
of the company or otherwise;
(b) it defames a person; or
(c) it is frivolous or vexatious. 119

inconsistency with any written law or the constitution
of the company or otherwise;
(b) it defames a person; or
(c) it is frivolous or vexatious. 119

Companies Act (Cap. 486) Kenya
(7) A request for the directors to convene a general meeting is not effective unless it is—
(a) in hard copy form or in electronic form; and
(b) authenticated by the person or persons making it. 278. Directors’ duty to convene general meeting required by members
(1) If requested to convene a general meeting of the company, the directors shall —
(a) do so within twenty-one days from the date on which request was made; and
(b) hold the meeting on a date not more than twenty eight days after the date of the notice
convening the meeting. (2) If such a request includes a resolution intended to be moved at the meeting, the directors shall
include in the notice of the meeting a copy of the proposed resolution. (3) The business that may be dealt with at the meeting includes a resolution of which notice is given in
accordance with this section. (4) If the resolution is to be proposed as a special resolution, the directors are taken not to have duly
convened the meeting if they do not give the required notice of the resolution in accordance with
this section
279.

rectors are taken not to have duly
convened the meeting if they do not give the required notice of the resolution in accordance with
this section
279.

Power of members to convene general meeting at the expense of the company
(1) If, after having been required to convene a general meeting under section 277, the directors
fail to do as required by section 278, the members who requested the meeting, or any of them
representing more than one half of the total voting rights of all them, may convene a general
meeting. (2) If the requests received by the company included the text of a resolution intended to be moved at
the meeting, the members concerned shall include in the notice convening the meeting the text of
the intended resolution. (3) The members concerned shall ensure that the meeting is convened for a date not more than three
months after the date on which the directors were requested to convene a meeting. (4) The members concerned shall convene the meeting, as nearly as practicable, in the manner in
which meetings are required to be convened by directors of the company. (5) The business that may be dealt with at the meeting includes a resolution of which notice is given in
accordance with this section.

of the company. (5) The business that may be dealt with at the meeting includes a resolution of which notice is given in
accordance with this section.

(6) The company shall reimburse the members concerned for all reasonable expenses incurred by them
because the directors failed to convene a meeting as required by section 278. (7) The company shall deduct from the remuneration payable to the directors who were in default the
amount of expenses reimbursed to members under subsection (6). 280. Power of Court to order general meeting to be convened
(1) This section applies if for any reason it is impracticable—
(a) to convene a meeting of a company in any manner in which meetings of that company may
be convened; or
(b) to conduct the meeting in the manner required by the articles of the company or this Act. (2) The Court may, either on its own initiative, or on the application—
(a) of a director of the company; or
120

articles of the company or this Act. (2) The Court may, either on its own initiative, or on the application—
(a) of a director of the company; or
120

Companies Act (Cap. 486) Kenya
(b) of a member of the company who would be entitled to vote at the meeting,
make an order requiring a meeting to be convened, held and conducted in any manner the Court
considers appropriate. (3) If an order is made under subsection (2), the Court may give such ancillary or consequential
directions as it considers appropriate. (4) Directions given by the Court under subsection (3) may include a direction that one member of the
company present at the meeting be regarded as constituting a quorum. (5) A meeting convened, held and conducted in accordance with an order under this section is taken for
all purposes to be a meeting of the company properly convened held and conducted. 281. Amount of notice to be given for general meetings
(1) In convening a general meeting (other than an adjourned meeting), a private company shall give a
least twenty-one days’ notice. (2) In convening a general meeting, a public company shall give—
(a) in the case of its annual general meeting, at least twenty-one days' notice to members; or
(b) in the case of any other meeting, at least fourteen days notice to members.

nnual general meeting, at least twenty-one days' notice to members; or
(b) in the case of any other meeting, at least fourteen days notice to members.

(3) The company's articles may require a longer period of notice than that specified in subsection (1) or
(2). (4) A general meeting may be convened by shorter notice than that otherwise required if it is agreed by
the members. (5) The shorter notice referred to in subsection (4) is valid only if it is agreed to by the required
majority of members. (6) For the purpose of subsection (5), the required majority of members is a majority of members who,
having a right to attend and vote at a general meeting—
(a) together hold not less than the requisite percentage in nominal value of the shares giving a
right to attend and vote at the meeting; or
(b) in the case of a company that does not have a share capital, together represent not less than
the requisite percentage of the total voting rights at that meeting of all the members. (7) The requisite percentage for the purpose of subsection (6) is—
(a) in the case of a private company, ninety per cent or such higher percentage, not exceeding
ninety-five per cent, as may be specified in the company's articles; or
(b) in the case of a public company, ninety-five percent.

ntage, not exceeding
ninety-five per cent, as may be specified in the company's articles; or
(b) in the case of a public company, ninety-five percent.

(8) The proceedings of a meeting that do not comply with the requirements of this section are void. [Act No. 18 of 2018, sch. ]
282. Manner in which notice of general meeting to be given
A company shall give notice of a general meeting—
(a) in hard copy form;
(b) in electronic form;
(c) by means of a website; or
(d) partly by one such means and partly by one or more of the other such means. 121

d copy form;
(b) in electronic form;
(c) by means of a website; or
(d) partly by one such means and partly by one or more of the other such means. 121

Companies Act (Cap. 486) Kenya
283. Publication of notice of general meeting on company's website
(1) Notice of a general meeting that is given by a company by means of a website is not effective unless
it is complies with this section. (2) In notifying its members of the presence on a website of a notice convening a general meeting, a
company shall—
(a) state that it concerns a notice of a company meeting;
(b) specify the place, date and time of the meeting;
(ba) in the case of a hybrid or virtual meeting, specify the means of joining and participating in
the meeting; and
(c) in the case of a public company, state whether the meeting will be an annual general
meeting. (3) The company shall ensure that the notice of the general meeting is available on the website
throughout the period from and including the date of that notification and ending with the
conclusion of the meeting. [Act No. 1 of 2021, s. 8.]
284. Persons entitled to receive notice of general meetings
(1) A company shall send a notice of a general meeting of the company to—
(a) each member of the company; and
(b) each director.

e of general meetings
(1) A company shall send a notice of a general meeting of the company to—
(a) each member of the company; and
(b) each director.

(2) In subsection (1), the reference to a member includes any person who is entitled to a share in
consequence of the death or bankruptcy of a member, if the company has been notified of their
entitlement. (3) In subsection (2), the reference to the bankruptcy of a member includes the sequestration of the
estate of a member. (4) This section has effect subject to—
(a) any written law; and
(b) any provision of the company's articles to the contrary. 285. Contents of notices of general meetings
In giving notice of a general meeting, a company shall specify—
(a) the time and date of the meeting;
(b) the place of the meeting;
(ba) in the case of a hybrid or virtual meeting, specify the means of joining and participating in the
meeting; and
(c) the general nature of the business to be dealt with at the meeting. [Act No. 1 of 2021, s. 9.]
122

f joining and participating in the
meeting; and
(c) the general nature of the business to be dealt with at the meeting. [Act No. 1 of 2021, s. 9.]
122

Companies Act (Cap. 486) Kenya
286. Offence for company to fail to comply with section 281, 282, 283, 284 or 285
(1) If a company fails to comply with a requirement of section 281(1) or (2), 282, 283(2) or (3), 284(1)
or 285, the company, and each officer of the company who is in default, commit an offence and on
conviction are each liable to a fine not exceeding five hundred thousand shillings. (2) If, after a company or any of its officers is convicted of an offence under subsection (1), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. 287. Resolution requiring special notice
(1) If a provision of this Act requires a special notice of a resolution to be given, the resolution is not
effective unless notice of the intention to move it has been given to the company at least twenty-
eight days before the meeting at which it is moved.

effective unless notice of the intention to move it has been given to the company at least twenty-
eight days before the meeting at which it is moved.

(2) The company shall, if practicable, give its members notice of any such resolution in the same
manner and at the same time as it gives notice of the meeting. (3) If it is not practicable to give that notice, the company shall give its members notice of the
resolution at least fourteen days before the meeting—
(a) by advertisement in a newspaper having a wide circulation in the area in which the company
carries on business; or
(b) in any other manner allowed by the company's articles. (4) If, after notice of the intention to move such a resolution has been given to the company, a
meeting is called for a date twenty eight days or less after the notice has been given, the notice is
nevertheless taken to have been effectively given even though it was not given within the required
period. 288. Accidental failure to give notice of resolution or general meeting
(1) If a company gives notice of—
(a) a general meeting; or
(b) a resolution intended to be moved at a general meeting, an accidental failure to give notice
to one or more persons is to be disregarded for the purpose of determining whether notice of
the meeting or resolution has been duly given.

ive notice
to one or more persons is to be disregarded for the purpose of determining whether notice of
the meeting or resolution has been duly given.

(2) With the exception of a notice given under section 275, 279 or 312, subsection (1) has effect subject
to any provision of the company's articles. 289. Power of members to require circulation of statements
(1) The members of a company may require the company to circulate, to members of the company
entitled to receive notice of a general meeting a statement of not more than one thousand words
with respect to—
(a) a matter referred to in a proposed resolution to be dealt with at that meeting; or
(b) in the case of a quoted company, a new item to be put in the agenda of the general nature of
business to be dealt with at the meeting. (c) other business to be dealt with at that meeting. 123

em to be put in the agenda of the general nature of
business to be dealt with at the meeting. (c) other business to be dealt with at that meeting. 123

Companies Act (Cap. 486) Kenya
(2) A company is required to circulate a statement once it has received requests to do so from—
(a) members representing at least five percent of the total voting rights of all the members who
have a relevant right to vote; or
(b) at least one hundred members who have a relevant right to vote and hold shares in the
company on which there has been paid up an average sum, per member, of at least one
thousand shillings. (c) in the case of subsection (1)(b), by members representing at least five percent of the paid up
capital of the company. (3) In subsection (2), "relevant right to vote" means—
(a) in relation to a statement with respect to a matter referred to in a proposed resolution, a
right to vote on that resolution at the meeting to which the requests relate; and
(b) in relation to any other statement, a right to vote at the meeting to which the requests
relate.

at the meeting to which the requests relate; and
(b) in relation to any other statement, a right to vote at the meeting to which the requests
relate.

(4) A request under subsection (2) is effective only if it—
(a) is in hard copy form or in electronic form,
(b) identifies the statement to be circulated;
(c) is authenticated by the person or persons making it; and
(d) is received by the company at least seven days before the meeting to which it relates. [Act No. 1 of 2020, 34.]
290. Duty of company to circulate members’ statements
(1) A company that, in accordance with section 289, is required by its members to circulate a statement
shall send to each of its members who is entitled to receive notice of the meeting a copy of the
statement—
(a) in the same manner as the notice of the meeting; and
(b) at the same time as, or as soon as reasonably practicable after, it has given notice of the
meeting. (2) Subsection (1) has effect subject to section 291(2) and section 292. (3) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. 291.

cer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. 291.

Who is liable to meet cost of circulating members’ statements
(1) The members who requested the statement to be circulated need not pay the expense incurred by
the company in complying with section 290 if—
(a) the meeting to which the requests relate is an annual general meeting of a public company;
and
(b) the company receives requests sufficient to require the company to circulate the statement
before the end of the financial year preceding the meeting. (2) If subsection (1) does not apply, then—
(a) unless the company resolves otherwise, the members who requested the statement to be
circulated are liable to meet the expenses of the company in complying with section 290; and
124

erwise, the members who requested the statement to be
circulated are liable to meet the expenses of the company in complying with section 290; and
124

Companies Act (Cap. 486) Kenya
(b) unless the company has previously resolved not to circulate statements to its members as
required by section 289, it is bound to comply with section 290 only if, not later than seven
days before the meeting, an amount reasonably sufficient to meet its expenses in doing so is
deposited or tendered to it. Subdivision 2— Procedure at company general meetings
292. Quorum for general meetings
(1) In the case of a company limited by shares or guarantee and having only one member, one
qualifying person present at a meeting constitutes a quorum. (2) In any other case, (subject to the articles of the company) two qualifying persons present at a
meeting are a quorum, unless—
(a) each is a qualifying person only because the person is authorised under section 297 to
act as the representative of a body corporate in relation to the meeting, and they are
representatives of the same body corporate; or
(b) each is a qualifying person only because the person is appointed as proxy of a member in
relation to the meeting, and they are proxies of the same member. 293.

qualifying person only because the person is appointed as proxy of a member in
relation to the meeting, and they are proxies of the same member. 293.

Members present may elect person to preside at general meeting
(1) The members present at a general meeting of the company may, by ordinary resolution, elect one of
the members to preside at the meeting. (2) Subsection (1) is subject to a provision of the company's articles that states who may or may not be
chairperson or preside at a general meeting of the company. 294. Person presiding at general meeting may declare result of voting on a show of hands
(1) On a vote on a resolution at a meeting with a show of hands, the person presiding at the meeting
may declare that the resolution—
(a) has or has not been passed; or
(b) has passed with a particular majority
(2) Such a declaration is conclusive evidence of the result of the voting without proof of the number or
proportion of the votes recorded in favour of or against the resolution. (3) An entry in respect of such a declaration in the minutes of the meeting recorded in accordance with
section 292 is also conclusive evidence of that fact without further proof. (4) This section does not have effect if a poll is demanded for passing the resolution and the demand is
not subsequently withdrawn. 295.

rther proof. (4) This section does not have effect if a poll is demanded for passing the resolution and the demand is
not subsequently withdrawn. 295.

Right of members to demand a poll at general meeting
(1) A provision of a company’s articles is void to the extent that it would have the effect of excluding
the right to demand a poll at a general meeting on a resolution other than one for—
(a) electing the member who is to preside at the meeting; or
(b) adjourning the meeting. (2) Except as provided by subsection (1), a provision of a company's articles is void to the extent that it
would have the effect of making ineffective a demand for a poll on a resolution made—
(a) by no fewer than five members having the right to vote on the resolution;
125

fect of making ineffective a demand for a poll on a resolution made—
(a) by no fewer than five members having the right to vote on the resolution;
125

Companies Act (Cap. 486) Kenya
(b) by a member or members representing no less than ten percent of the total voting rights of
all the members having the right to vote on the resolution; or
(c) by a member or members holding shares in the company conferring a right to vote on the
resolution, being shares on which an aggregate amount has been paid up equal to not less
than ten percent of the total amount paid up on all the shares conferring that right. 296. Member not obliged to use all votes when voting on a poll at general meeting
A member who is entitled to cast two or more votes at a poll taken at a general meeting of a company is
not obliged to use all of those votes or to cast them all in the same way. 297. Representation of bodies corporate at general meetings
(1) If a body corporate is a member of a company, it may, by resolution of its directors or other
governing body, authorise a person or persons to act as its representative or representatives at a
meeting of the company.

n of its directors or other
governing body, authorise a person or persons to act as its representative or representatives at a
meeting of the company.

(2) If the body corporate authorises only one person to act as its representative at a meeting of the
company, that person is entitled to exercise the same powers on behalf of the body as the body
could exercise if it were a natural person who is a member of the company. (3) If the body corporate authorises two or more persons to act as its representatives at a meeting of
the company, any one of them is entitled to exercise the same powers on behalf of the body as the
body could exercise if it were a natural person who is a member of the company. (4) If the body corporate authorises two or more persons to act as its representatives at a meeting of
the company and more than one of them purports to exercise a power under subsection (3)—
(a) they purport to exercise the power in the same way, power is taken to be exercised in that
way; and
(b) if they do not purport to exercise the power in the same way, power is taken not to be
exercised. Subdivision 3 — Use of proxies at company general meetings
298.

not purport to exercise the power in the same way, power is taken not to be
exercised. Subdivision 3 — Use of proxies at company general meetings
298.

Right of members to appoint proxies
(1) A member of a company is entitled to appoint another person as the member’s proxy to exercise all
or any of the member’s rights to attend and to speak and vote at a meeting of the company. (2) A member of a company that has a share capital may appoint more than one proxy for a meeting
provided each proxy is appointed to exercise the rights attached to a different share or different
shares held by the member. 299. Notice of general meeting to contain statement of rights of members to appoint
proxies
(1) In every notice convening a meeting of a company, the company shall include a prominently
displayed statement informing the member of—
(a) the member's rights under section 298; and
(b) any more extensive rights conferred by the company's articles to appoint more than one
proxy. (2) Failure to comply with this section does not affect the validity of the meeting or of anything done at
the meeting. 126

point more than one
proxy. (2) Failure to comply with this section does not affect the validity of the meeting or of anything done at
the meeting. 126

Companies Act (Cap. 486) Kenya
(3) If a company fails to comply with this section in relation to a meeting of a company, the company,
and each officer of the company who is in default, commit an offence, and on conviction are each
liable to a fine not exceeding five hundred thousand shillings. 300. Company sponsored invitations to appoint proxies
(1) If, for the purposes of a meeting, invitations are issued at the expense of the company to members
to appoint as a proxy a specified person, or a number of specified persons, the company shall issue
the invitations to all members entitled to vote at the meeting. (2) A company complies with subsection (1) if—
(a) there is issued to a member, at the member's request, a form of appointment naming the
proxy, or a list of persons willing to act as proxy; and
(b) the form or list is available on request to all members entitled to vote at the meeting. (3) If a company fails to comply with subsection (1) in relation to a meeting of a company, the
company, and each officer of the company who is in default, commit an offence, and on conviction
are each liable to a fine not exceeding five hundred thousand shillings. 301.

r of the company who is in default, commit an offence, and on conviction
are each liable to a fine not exceeding five hundred thousand shillings. 301.

Notice of appointment of proxy to be given to company
(1) This section applies to—
(a) the appointment of a proxy; and
(b) any document necessary to show the validity of, or otherwise relating to, the appointment of
a proxy. (2) A provision of the company's articles is void to the extent that it would have the effect of requiring
any such appointment or document to be received by the company or another person earlier than
whichever of the following periods is applicable—
(a) in the case of a meeting or adjourned meeting, forty-eight hours before the time for holding
the meeting or adjourned meeting;
(b) in the case of a poll taken more than forty-eight hours after it was demanded, twenty-four
hours before the time appointed for the taking of the poll;
(c) in the case of a poll taken not more than forty-eight hours after it was demanded, the time at
which it was demanded. (3) In calculating the periods referred to in subsection (2), a day or part of a day that is not a working
day is to be disregarded. 302. Proxy can be elected to preside at general meeting
(1) A proxy may be elected to preside at a general meeting by a resolution of the company passed at the
meeting.

elected to preside at general meeting
(1) A proxy may be elected to preside at a general meeting by a resolution of the company passed at the
meeting.

(2) Subsection (1) is subject to any provision of the company's articles that states who may or who may
not be chairperson. 303. Right of proxy to demand a poll at general meeting
(1) The appointment of a proxy to vote on a matter at a meeting of a company authorises the proxy to
demand, or join in demanding, a poll on that matter. 127

appointment of a proxy to vote on a matter at a meeting of a company authorises the proxy to
demand, or join in demanding, a poll on that matter. 127

Companies Act (Cap. 486) Kenya
(2) In applying section 295 to a proxy of a member of a company—
(a) for the purpose of subsection (2)(a) of that section, a demand by a proxy counts as a demand
by the member;
(b) for the purpose of subsection (2)(b) of that section, a demand by the proxy counts as a
demand by the member representing the voting rights that the proxy is authorised to
exercise; and
(c) for the purposes of subsection (2)(c), a demand by the proxy counts as a demand by the
member holding the shares to which those rights are attached. 304. Notice to be given to company of termination of proxy’s authority
(1) A member of a company who has appointed a person to act as a proxy of the member may terminate
the appointment by notice. (2) The termination of the appointment of a person to act as proxy does not affect—
(a) whether the person counts in deciding whether there is a quorum at a meeting of the
company;
(b) the validity of anything that the person does in presiding at the meeting; or
(c) the validity of a poll demanded by the person at the meeting,
unless the company has received notice of the termination before the start of the meeting.

e validity of a poll demanded by the person at the meeting,
unless the company has received notice of the termination before the start of the meeting.

(3) The termination of the authority of a person to act as proxy does not affect the validity of a vote
given by that person unless the company receives notice of the termination—
(a) before the start of the meeting or adjourned meeting at which the vote is cast; or
(b) in the case of a poll taken more than forty-eight hours after it is demanded, before the time
fixed for taking the poll. (4) If the company's articles require or permit members to give notice of termination to a person other
than the company, this section has effect as if the references in this section to a company included
references to that person. (5) Subject to subsection (6), subsections (2) and (3) have effect subject to any provision of the
company's articles that has the effect of requiring notice of termination to be received by the
company or another person at a time earlier than that specified in those subsections.

effect of requiring notice of termination to be received by the
company or another person at a time earlier than that specified in those subsections.

(6) A provision of the company's articles is void to the extent that it would have the effect of requiring
notice of termination to be received by the company or another person earlier than whichever of the
following periods is applicable:
(a) in the case of a meeting or adjourned meeting, forty-eight hours before the time for holding
the meeting or adjourned meeting;
(b) in the case of a poll taken more than forty-eight hours after it was demanded, twenty four
hours before the time appointed for the taking of the poll;
(c) in the case of a poll taken not more than forty-eight hours after it was demanded, the time at
which it was demanded. (7) In calculating the periods referred to in subsections (3)(b) and (6), no account is to be taken of any
part of a day that is not a working day. [Act No. 28 of 2017, s. 20.]
128

referred to in subsections (3)(b) and (6), no account is to be taken of any
part of a day that is not a working day. [Act No. 28 of 2017, s. 20.]
128

Companies Act (Cap. 486) Kenya
305. Articles may confer more extensive rights on members and proxies
Sections 298 to 304 do not prevent a company’s articles from conferring more extensive rights on members
or proxies than those conferred by those sections. Subdivision 4 – Other matters relating to company general meetings
306. Resolutions passed at adjourned general meeting
If a resolution is passed at an adjourned general meeting of a company, the resolution is for all purposes
to be treated as having been passed on the date on which it was in fact passed, and may not be treated as
having been passed on an earlier date. 307. Sending to members documents relating to general meetings in electronic form
(1) If a company has given an electronic address in a notice convening a general meeting, any
document or information relating to proceedings at the meeting can be sent by electronic means to
that address subject to the conditions or limitations (if any) specified in the notice.

proceedings at the meeting can be sent by electronic means to
that address subject to the conditions or limitations (if any) specified in the notice.

(2) If a company has given an electronic address—
(a) in a document of proxy sent out by the company in relation to the meeting; or
(b) in an invitation to appoint a proxy issued by the company in relation to the meeting, any
document or information relating to proxies for that meeting can be sent by electronic
means to that address, subject to any conditions or limitations specified in the notice. (3) In subsection (2), documents relating to proxies include—
(a) the appointment of a proxy for a meeting;
(b) any document necessary to establish the validity of the appointment of a proxy; and
(c) a notice terminating the appointment of a proxy. Division 4 — Application of Division 3 to meetings of classes of members of companies
308. Application of Division 3 to meetings of holders of classes of shares
(1) Subject to subsection (2) and (3), Division 3 applies, with necessary modifications, to a meeting of
holders of a class of shares of a company as it applies to a general meeting of the company. (2) Sections 277 to 280 do not apply to a meeting of holders of a class of shares.

res of a company as it applies to a general meeting of the company. (2) Sections 277 to 280 do not apply to a meeting of holders of a class of shares.

(3) In addition to the sections specified in subsection (2), sections 292 and 295 do not apply to a
meeting convened to pass a resolution to vary rights attached to a class of shares. (4) The quorum for a meeting referred to in subsection (3) is—
(a) for a meeting other than an adjourned meeting, at least two persons who are present and
holding at least one-third in nominal value of the issued shares of the relevant class; and
(b) for an adjourned meeting, one person who is present and holding shares of the relevant
class. (5) For the purpose of subsection (4), a person who is present as a holder of one or more proxies is
taken to hold only the shares in respect of which those proxies are authorised to exercise voting
rights. (6) At such a meeting, a holder of shares of the relevant class may demand a poll if present at the
meeting. 129

authorised to exercise voting
rights. (6) At such a meeting, a holder of shares of the relevant class may demand a poll if present at the
meeting. 129

Companies Act (Cap. 486) Kenya
(7) For the purposes of this section—
(a) any amendment of a provision contained in a company's articles for the variation of the
rights attached to a class of shares, or the insertion of any such provision into the articles, is
itself taken to be a variation of those rights; and
(b) a reference to the variation of rights attached to a class of shares includes a reference to the
abrogation of those rights.

of those rights; and
(b) a reference to the variation of rights attached to a class of shares includes a reference to the
abrogation of those rights.

(8) Notwithstanding any other provision of this Act, the holders of any class of shares shall be entitled
to vote as a group on any variation of the rights of that class if the variation—
(a) increases or decreases the number of authorized shares of such class;
(b) changes any of the rights or preferences of the shares of the class;
(c) creates a right of the holders of any other shares to exchange or convert their shares into
shares of the type or class held by the class;
(d) changes the shares held by the group into a different number of shares or into shares of
another class;
(e) creates a new class of shares that—
(i) has rights or preferences superior or substantially equal to those of the class;
(ii) increases the rights and preferences of any class of shares having rights and references
substantially equal to or superior to those of such class; or
(iii) increases the rights and preferences of any class of shares having rights and
preferences subordinate to those of such class if such an increase would then make
them substantially equal or superior to those of such class;
(f) limits or denies the existing pre-emptive rights of the shares of such class;
(g) cancels or otherwise affects accumulated dividends on the shares of such class;
(h) limits or denies the voting rights of such class; or
(i) otherwise changes the rights or preferences of the shares held by such class so as to affect
them adversely.

s the voting rights of such class; or
(i) otherwise changes the rights or preferences of the shares held by such class so as to affect
them adversely.

[Act No. 28 of 2017, s. 21.]
309. Application of Division to meetings of classes of members of company having no share
capital
(1) Subject to subsection (2) and (3), Division 3 applies, with necessary modifications, to a meeting
of holders of a class of members of a company having no share capital as it applies to a general
meeting of the company. (2) Sections 277 to 280 do not apply to a meeting of class of members of a company having no share
capital. (3) In addition to the sections specified in subsection (2), sections 292 and 295 do not apply to a
meeting convened to pass a resolution to vary rights of a class of members of a company having no
share capital. (4) The quorum for a meeting referred to in subsection (3) is—
(a) for a meeting other than an adjourned meeting, at least two members of the class present in
person or by proxy who together represent at least one-third of the voting rights of the class;
and
130

, at least two members of the class present in
person or by proxy who together represent at least one-third of the voting rights of the class;
and
130

Companies Act (Cap. 486) Kenya
(b) for an adjourned meeting, one member of the class present in person or by proxy. (5) At such a meeting, any member present in person or by proxy may demand a poll. (6) For the purposes of this section—
(a) any amendment of a provision contained in a company's articles for the variation of the
rights of a class of members, or the insertion of any such provision into the articles, is itself
taken to be a variation of those rights; and
(b) a reference to the variation of rights of a class of members includes a reference to the
abrogation of those rights. Division 5 — Additional requirements for general meetings of public companies
310. Public companies: annual general meeting
(1) Every public company shall hold a general meeting as its annual general meeting within six months
from and including the day following its accounting reference date in each year, whether or not it
holds other meetings during that period.

six months
from and including the day following its accounting reference date in each year, whether or not it
holds other meetings during that period.

(2) A company that fails to comply with subsection (1) as a result of giving notice under section 634—
(a) specifying a new accounting reference date; and
(b) stating that the current accounting reference period or the previous accounting reference
period is to be shortened,
is nonetheless taken to have complied with that subsection if it holds a general meeting as its
annual general meeting within three months after giving that notice. (3) If a public company fails to comply with subsection (1), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding one million shillings. (4) If, after a company or any of its officers is convicted of an offence under subsection (3), the
company continues to fail to comply with the requirement to hold its annual general meeting,
the company, and each officer of the company who is in default, commit a further offence on each
day on which the failure continues and on conviction are each liable to a fine not exceeding one
hundred thousand shillings for each such offence. 311.

ay on which the failure continues and on conviction are each liable to a fine not exceeding one
hundred thousand shillings for each such offence. 311.

Public companies: notice of annual general meeting
(1) A public company shall state in the notice convening an annual general meeting of the company
that the meeting is an annual general meeting. (2) An annual general meeting may be convened by shorter notice than that required by section 281(2)
or by the company's articles, if all the members entitled to attend and vote at the meeting agree to
the shorter notice. (3) If a public company fails to comply with subsection (1), the company, and each officer of the
company who is in default commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. 312. Public companies: members’ power to require circulation of resolutions for annual
general meeting
(1) The members of a public company may require the company to give to members of the company
who are entitled to receive notice of the next annual general meeting a notice of a resolution that is
proposed to be moved at that meeting. 131

mpany
who are entitled to receive notice of the next annual general meeting a notice of a resolution that is
proposed to be moved at that meeting. 131

Companies Act (Cap. 486) Kenya
(2) A public company is not required to give notice of a resolution if—
(a) it would, if passed, be void (whether because of inconsistency with this Act or any other
written law or the company's constitution or otherwise);
(b) it defames a person; or
(c) it is frivolous or vexatious. (3) A company is required to give notice of a resolution once it has received requests that it do so from
—
(a) members representing at least five percent of the total voting rights of all the members who
have a right to vote on the resolution at the annual general meeting to which the requests
relate; or
(b) at least one hundred members who have a right to vote on the resolution at the annual
general meeting to which the requests relate and hold shares in the company on which there
has been paid up an average sum, per member, of at least ten thousand shillings.

ich the requests relate and hold shares in the company on which there
has been paid up an average sum, per member, of at least ten thousand shillings.

(4) A request is effective for the purpose of this section only if—
(a) it is in hard copy form or in electronic form;
(b) identifies the resolution of which notice is to be given;
(c) is authenticated by the person or persons making it; and
(d) is received by the company not later than—
(i) six weeks before the annual general meeting to which the request relate; or
(ii) if later, the time at which notice is given of that meeting. (5) If a public company fails to comply with subsection (3), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. 313. Public companies; company’s duty to circulate members’ resolutions for annual
general meetings
(1) A company that is required under section 312 to give notice of a resolution shall send a copy of the
resolution to each member of the company entitled to receive notice of the annual general meeting
—
(a) in the same manner as notice of the meeting; and
(b) at the same time as, or as soon as reasonably practicable after, it gives notice of the meeting. (2) Subsection (1) has effect subject to section 314(2).

the same time as, or as soon as reasonably practicable after, it gives notice of the meeting. (2) Subsection (1) has effect subject to section 314(2).

(3) The business which may be dealt with at an annual general meeting includes a resolution of which
notice is given in accordance with this section. (4) If a public company fails to comply with subsection (1), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. 132

cer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. 132

Companies Act (Cap. 486) Kenya
314. Public companies: expenses of circulating members’ resolutions for annual general
meeting
(1) The members who requested the circulation of the resolution need not pay the expenses of the
company in complying with section 313 if requests sufficient to require the company to circulate it
are received before the end of the financial year preceding the meeting. (2) If subsection (1) does not apply, then—
(a) unless the company otherwise resolves, the members who requested the circulation of the
resolution shall pay the expenses of the company in complying with section 313; and
(b) unless the company has previously so resolved, it is not bound to comply with section 313
unless not later than—
(i) six weeks before the annual general meeting to which the request relates; or
(ii) if later, the time at which the notice is given of that meeting, an amount reasonably
sufficient to meet its expenses in complying with that section is deposited with or
tendered to it. 315.

s given of that meeting, an amount reasonably
sufficient to meet its expenses in complying with that section is deposited with or
tendered to it. 315.

Results of poll to be made available on website
(1) If a poll is taken at a general meeting of a general meeting of a quoted company, the company shall
ensure that the following information is made available on a website—
(a) the date of the meeting;
(b) the text of the resolution or a description of the subject matter of the poll;
(c) the number of votes cast in favour of the resolution;
(d) the number of votes cast against the resolution. (2) Section 316 applies to this section. (3) Failure to comply with subsection (1) or a requirement of section 316 does not affect the validity of
—
(a) the poll; or
(b) the resolution or other business (if passed or agreed to) to which the poll relates. (4) If a quoted company fails to comply with subsection (1), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. 316. Requirements as to website availability
(1) A quoted company shall make the information referred to in section 315 (1) available on a website
that—
(a) is maintained by or on behalf of the company; and
(b) identifies the company.

ormation referred to in section 315 (1) available on a website
that—
(a) is maintained by or on behalf of the company; and
(b) identifies the company.

(2) The company shall not make access to the information on the website, and the ability to obtain a
hard copy of the information from the website, conditional on the payment of a fee or compliance
with any other requirement. 133

e ability to obtain a
hard copy of the information from the website, conditional on the payment of a fee or compliance
with any other requirement. 133

Companies Act (Cap. 486) Kenya
(3) The company shall ensure that the information referred to in subsection (3) is—
(a) made available as soon as reasonably practicable after the date of the meeting at which the
poll was taken; and
(b) kept continuously available on a website that complies with subsection (1) for not less than
two years from and including the date on which it is first made available on the website. (4) A failure to make information available on a website continuously during the two years specified in
subsection (3)(b) is to be disregarded if—
(a) the information is made available on the website for part of that period; and
(b) the failure is wholly attributable to circumstances that it would not be reasonable to expect
the company to have prevented or avoided. (5) If a quoted company fails to comply with a requirement of this section, the company, and each
officer of the company who is in default, commit an offence and on conviction are each liable to a
fine not exceeding five hundred thousand shillings.

officer of the company who is in default, commit an offence and on conviction are each liable to a
fine not exceeding five hundred thousand shillings.

(6) If, after a quoted company or any of its officers is convicted of an offence under subsection (5),
the company continues to fail to comply with the requirement concerned, the company, and each
officer of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. Division 6 — Records relating to resolutions and company meetings
317. Records of resolutions and meetings, etc. (1) Every company shall keep records comprising—
(a) copies of all resolutions of members passed otherwise than at general meetings;
(b) minutes of all proceedings of general meetings; and
(c) details provided to the company in accordance with section 319. (2) The company shall keep the records for at least ten years from the date of the relevant resolution,
meeting or decision. (3) If a company fails to comply with subsection (1) or (2), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.

officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.

(4) If, after a company or any of its officers is convicted of an offence under subsection (3), the
company continues to fail to comply with subsection (1), the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence. 318. Records as evidence of resolutions, etc. (1) This section applies to the records kept in accordance with section 317. (2) The record of a resolution passed otherwise than at a general meeting, if purporting to be signed by
a director of the company or by the company secretary, is evidence of the passing of the resolution. (3) If a record of a written resolution of a private company exists, the requirements of this Act with
respect to the passing of the resolution are presumed to be complied with unless the contrary is
proved. 134

exists, the requirements of this Act with
respect to the passing of the resolution are presumed to be complied with unless the contrary is
proved. 134

Companies Act (Cap. 486) Kenya
(4) The minutes of proceedings of a general meeting, if purporting to be signed by the person presiding
at that meeting or by the person presiding at the next general meeting, are evidence of the
proceedings at the meeting. (5) If a record of proceedings of a general meeting of a company exists, then, until the contrary is
proved—
(a) the meeting is presumed to have been duly held and convened;
(b) all proceedings at the meeting are presumed to have duly taken place; and
(c) all appointments at the meeting are presumed to be valid. 319. Records of decisions by sole member
(1) This section applies to a company that is limited by shares or by guarantee and has only one
member. (2) If a company to which this section applies takes a decision that—
(a) can be taken by the company at a general meeting; and
(b) has effect as if agreed by the company at a general meeting, the member of the company
shall, unless the decision is in the form of a written resolution, provide the company with
details of the decision. (3) Failure to comply with this section does not affect the validity of a decision referred to in
subsection (2).

ompany with
details of the decision. (3) Failure to comply with this section does not affect the validity of a decision referred to in
subsection (2).

(4) A member of a company to which this section applies who, without reasonable excuse, fails to
comply with subsection (2) commits an offence and on conviction is liable to a fine not exceeding
five hundred thousand shillings. 320. Inspection of records of resolutions and meetings
(1) This section applies—
(a) to a company that is required to keep records in accordance with section 317; and
(b) to those records. (2) Except in so far as the regulations otherwise provide, a company to which this section applies shall
keep its records available for inspection at its registered office. (3) The company shall, on being requested to do so by a member of the company, make the records
available for inspection by the member without charge. (4) If a member of the company requests the company to provide the member with a specified record,
the company shall comply with the request within seven days after receiving the request, subject to
payment of the prescribed fee (if any).

ed record,
the company shall comply with the request within seven days after receiving the request, subject to
payment of the prescribed fee (if any).

(5) If the company fails without reasonable excuse to comply with—
(a) subsection (2); or
(b) a request made under subsection (3) or (4), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding
five hundred thousand shillings. (6) If, after a company or any of its officers is convicted of an offence under subsection (5), the
company continues to fail to comply with subsection (2), or with the relevant request, the company,
and each officer of the company who is in default, commit a further offence on each day on which
135

n (2), or with the relevant request, the company,
and each officer of the company who is in default, commit a further offence on each day on which
135

Companies Act (Cap. 486) Kenya
the failure continues and on conviction are each liable to a fine not exceeding fifty thousand
shillings for each such offence. (7) If a company refuses to allow an inspection as requested under subsection (3), or to provide a copy
of a record requested under subsection (4), the Court may, on the application of a person affected
by the refusal, make an order compelling the company to allow an immediate inspection of the
records, or to provide that person with a copy of the requested record. 321. Records of resolutions and meetings of class of members
This Division applies, with necessary modification, in relation to resolutions and meetings of—
(a) holders of a class of shares; and
(b) in the case of a company without a share capital, a class of members, as it applies in relation to
resolutions of members generally and to general meetings. Part XIV – SHARE CAPITAL OF COMPANY
Division 1 —Shares and share capital of a company
322. Shares no longer capable of being converted into stock
(1) The shares of a company may not be converted into stock. (2) An attempt to convert a company's shares into stock has no effect. 323.

ed into stock
(1) The shares of a company may not be converted into stock. (2) An attempt to convert a company's shares into stock has no effect. 323.

Nature of shares
The shares or other interest of a member in a company are personal property and are not in the nature of
real estate. 324. Nominal value of shares
(1) Shares in a limited company having a share capital are each required to have a fixed nominal value. (2) Shares in a limited company having a share capital are required to be denominated in shillings. (3) An allotment of shares that does not comply with subsection (1) or (2) is void. (4) If, at the commencement of this section, an existing company's capital consists of stock, the
amount of stock is converted to shares of one shilling each. (5) If a company purports to allot shares in contravention of this section, the company, and each officer
of the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. 325. Shares to be numbered
(1) Except as provided by subsections (2) and (3), a company that has a share capital shall ensure that
each of its shares is distinguished by an appropriate distinguishing number.

ections (2) and (3), a company that has a share capital shall ensure that
each of its shares is distinguished by an appropriate distinguishing number.

(2) If all of the issued shares in a company are fully paid up and rank equally for all purposes, they do
not require distinguishing numbers so long as they remain fully paid up. (3) If all of the issued shares of a particular class in a company are fully paid up and rank equally for all
purposes, those shares do not require distinguishing numbers so long as they remain fully paid up
and rank equally for all purposes with all other shares of the same class that are currently issued
and fully paid up. 136

s they remain fully paid up
and rank equally for all purposes with all other shares of the same class that are currently issued
and fully paid up. 136

Companies Act (Cap. 486) Kenya
(4) If a company allots shares that do not comply with subsection (1), the company, and each officer
of the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. 326. Transferability of shares
The shares and any other interests of a member in a company are transferable in accordance with the
company’s articles. Division 2 — Allotment of shares: general provisions
327. Exercise by directors of power to allot shares, etc. (1) The directors of a company shall not exercise a power of the company—
(a) to allot shares in the company; or
(b) to grant rights to subscribe for, or to convert any security into, shares in the company, except
in accordance with section 328 or 329. (2) Subsection (1) does not apply—
(a) to the allotment of shares under a share scheme of an employee; or
(b) to the grant of a right to subscribe for, or to convert any security into, shares so allotted.

t of shares under a share scheme of an employee; or
(b) to the grant of a right to subscribe for, or to convert any security into, shares so allotted.

(3) If this section applies in relation to the grant of a right to subscribe for, or to convert a security into,
shares, it does not apply in relation to the allotment of shares in accordance with that right. (4) A director who—
(a) is knowingly a party to a contravention of subsection (1); or
(b) authorises a contravention of that subsection, commits an offence and on conviction is liable
to a fine not exceeding five hundred thousand shillings. (5) Nothing in this section affects the validity of an allotment or other transaction. 328. Power of directors to allot shares etc: private company with only one class of shares
If a private company has only one class of shares, the directors may exercise any power of the company—
(a) to allot shares of that class; or
(b) to grant rights to subscribe for or to convert any security into such shares, except to the extent that
they are prohibited from doing so by the company's articles. [Act No. 28 of 2017, s. 22.]
329.

ny security into such shares, except to the extent that
they are prohibited from doing so by the company's articles. [Act No. 28 of 2017, s. 22.]
329.

Power of directors to allot shares etc: authorisation by company
(1) The directors of a company may exercise a power of the company to—
(a) allot shares in the company; or
(b) grant rights to subscribe for or to convert any security into shares in the company, only if
they are authorised to do so by a resolution of the company. (2) An authorisation under subsection (1) may be given for a particular exercise of the power or for its
exercise generally. 137

ution of the company. (2) An authorisation under subsection (1) may be given for a particular exercise of the power or for its
exercise generally. 137

Companies Act (Cap. 486) Kenya
(3) An authorisation under subsection (1) is not effective unless it—
(a) states the maximum amount of shares that may be allotted under it; and
(b) specifies the date on which it will expire, which may not be more than five years from—
(i) in the case of authorisation contained in the company's articles at the time of its
original incorporation, the date of that incorporation; or
(ii) in any other case, the date on which the authorising resolution is passed. (4) An authorisation may—
(a) be renewed or further renewed by resolution of the company for a further period not
exceeding five years; and
(b) be revoked or varied at any time by resolution of the company. (5) A resolution renewing an authorisation is not effective unless—
(a) states or restates the maximum amount of shares that may be allotted under the
authorisation or, the amount remaining to be allotted under it; and
(b) specifies the date on which the renewed authorisation will expire.

d under the
authorisation or, the amount remaining to be allotted under it; and
(b) specifies the date on which the renewed authorisation will expire.

(6) In relation to rights to subscribe for or to convert a security into shares in the company, a reference
in this section to the maximum amount of shares that may be allotted under the authorisation is to
the maximum number of shares that may be allotted under the rights. (7) The directors may allot shares, or grant rights to subscribe for or to convert any security into shares,
after an authorisation has expired if—
(a) the shares are allotted, or the rights are granted, in accordance with an offer or agreement
made by the company before the authorisation expired; and
(b) the authorisation allowed the company to make an offer or agreement that would or might
require shares to be allotted, or rights to be granted, after the authorisation had expired. (8) A resolution of a company to give, vary, revoke or renew an authorisation may be by an ordinary
resolution. (9) If a resolution under subsection (8) purports to amend the articles of a company, the resolution is
effective only if it is a special resolution. [Act No. 28 of 2017, s. 23, Act No. 12 of 2019, Sch.]
330.

the articles of a company, the resolution is
effective only if it is a special resolution. [Act No. 28 of 2017, s. 23, Act No. 12 of 2019, Sch.]
330.

General prohibition of commissions, discounts and allowances
(1) Except as permitted by section 331, a company shall not apply any of its shares or capital money,
either directly or indirectly, in payment of any commission, discount or allowance to any person in
consideration of the person—
(a) subscribing or agreeing to subscribe, whether absolutely or conditionally, for shares in the
company; or
(b) procuring or agreeing to procure subscriptions, whether absolutely or conditional, for shares
in the company. (2) For the purpose of subsection (1), it is does not matter how the shares or money are so applied. (3) Nothing in this section affects the payment of brokerage the payment of which was previously
lawful. 138

r how the shares or money are so applied. (3) Nothing in this section affects the payment of brokerage the payment of which was previously
lawful. 138

Companies Act (Cap. 486) Kenya
(4) If a company contravenes subsection (1), the company, and each officer of the company who is in
default, commit an offence and on conviction are each liable to a fine not exceeding five hundred
thousand shillings. (5) An application of shares or capital money in contravention of subsection (1) is void. 331. Permitted commission
A company may pay a commission to a person in consideration of the person—
(a) subscribing or agreeing to subscribe whether 40 absolutely or conditionally for shares in the
company; or
(b) procuring or agreeing to procure subscriptions, whether absolute or conditional, for shares in the
company.

tionally for shares in the
company; or
(b) procuring or agreeing to procure subscriptions, whether absolute or conditional, for shares in the
company.

(c) subscribing or agreeing to subscribe (either absolutely or conditionally) for shares in the company;
or
(d) procuring or agreeing to procure subscriptions (either absolute or conditional) for any such shares,
but only if the conditions specified are satisfied;
(e) the payment of the commission is authorised by the company's articles; and
(f) the commission paid or agreed to be paid does not exceed—
(i) ten percent of the price at which the shares are issued; or
(ii) the amount or rate authorised by the articles,
whichever is the less. 332. Registration of allotment
(1) A company shall register an allotment of shares as soon as practicable and in any event within two
months after the date of the allotment. (2) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings.

officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings.

(3) If, after a company or any of its officers is convicted of an offence under subsection (2), the
company continues to fail to register the allotment of shares, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such
offence. 333. Return of allotment by limited company
(1) Within one month after making an allotment of shares, a limited company shall lodge with the
Registrar for registration a return of the allotment. (2) The company shall ensure that the return—
(a) contains the information prescribed by the regulations; and
(b) is accompanied by a statement of capital. (3) The company shall specify in the statement of capital as at the date to which the return is made up
—
(a) the total number of shares of the company;
139

e company shall specify in the statement of capital as at the date to which the return is made up
—
(a) the total number of shares of the company;
139

Companies Act (Cap. 486) Kenya
(b) the aggregate nominal value of those shares;
(c) for each class of shares—
(i) the particulars prescribed by the regulations of the rights attached to the shares;
(ii) the total number of shares of that class; and
(iii) the aggregate nominal value of shares of that class; and
(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the
nominal value of the share or in the form of a premium). 334. Return of allotment by unlimited company allotting new class of shares
(1) An unlimited company that allots shares of a class with rights that are not in all respects uniform
with shares previously allotted shall, within one month after making such an allotment, lodge with
the Registrar for registration a return of the allotment. (2) The company shall ensure that the return specifies the particulars of the rights attached to the
shares prescribed by the regulations for the purposes of this subsection.

sure that the return specifies the particulars of the rights attached to the
shares prescribed by the regulations for the purposes of this subsection.

(3) For the purposes of this section, shares are not to be regarded as different from previously allotted
shares only because they do not carry the same rights to dividends as the previously allotted shares
so long as they were allotted during the twelve months immediately following the allotment of the
previously issued shares. 335. Offence for company to fail to lodge return of allotment for registration
(1) If a company fails to lodge a return of allotment as required by section 333 or 334, the company,
and each officer of the company who is in default, commit an offence and on conviction are each
liable to a fine not exceeding two hundred thousand shillings. (2) If, after a company or any of its officers is convicted of an offence under subsection (1), the
company continues to fail to lodge the relevant return for registration, the company, and each
officer of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. 336.

ach day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. 336.

Provisions about allotment not applicable to shares taken on formation
The provisions of this Part on allotment do not apply to the taking of shares by the subscribers to the
memorandum on the formation of the company. Division 3 — Allotment of equity securities: existing shareholders' right of pre-emption
337. Interpretation: Division 3
In this Division, a reference to the allotment of equity securities includes—
(a) the grant of a right to subscribe for, or to convert any securities into, ordinary shares in the
company; and
(b) the sale of ordinary shares in the company that immediately before the sale are held by the
company as treasury shares. 140

es in the
company; and
(b) the sale of ordinary shares in the company that immediately before the sale are held by the
company as treasury shares. 140

Companies Act (Cap. 486) Kenya
338. Existing shareholders’ right of pre-emption
(1) A company shall not allot equity securities to a person on any terms unless—
(a) the company has made an offer to each person who holds ordinary shares in the company to
allot to the person on the same or more favourable terms, a proportion of those securities
that is as nearly as practicable equal to the proportion in nominal value held by the person of
the ordinary share capital of the company; and
(b) the period during which any such offer may be accepted has expired or the company has
received notice of the acceptance or refusal of every offer so made. (2) If a company has offered to allot securities to a holder of ordinary shares, the conditions specified in
subsection (1)(b) is not contravened by the allotment of the securities to that holder or to anyone in
whose favour that holder has renounced the right to their allotment. (3) If subsection (1) applies in relation to the grant of such a right, it does not apply in relation to the
allotment of shares under that right.

nt. (3) If subsection (1) applies in relation to the grant of such a right, it does not apply in relation to the
allotment of shares under that right.

(4) Shares held by the company as treasury shares are to be disregarded for the purposes of this
section, so that—
(a) the company is not treated as a person who holds ordinary shares; and
(b) the shares are not treated as forming part of the ordinary share capital of the company. (5) This section is subject to sections 341 to 344, 345, 346 to 348 and section 353. 339. Communication of pre-emption offers to shareholders
(1) This section has effect as to the manner in which offers required by section 338 are to be made to
holders of the shares of a company. (2) An offer made under section 338 may be made in hard copy or electronic form. (3) The offer is effective only if it states that the offer may be accepted within a period of not less than
twenty-one days and that the offer will not be withdrawn before the end of that period. (4) The period may not be less than twenty-one days beginning—
(a) in the case of an offer made in hard copy form, with the date on which the offer is sent or
supplied;
(b) in the case of an offer made in electronic form, with the date on which the offer is sent; or
(c) in the case of an offer made by publication in the Gazette, with the date of publication.

ronic form, with the date on which the offer is sent; or
(c) in the case of an offer made by publication in the Gazette, with the date of publication.

(5) The regulations may—
(a) reduce the period specified in subsection (4), but not to less than fourteen days; or
(b) increase that period. 340. Liability of company and officers in case of contravention
(1) If a company contravenes section 338 or 339, the company and each officer of the company who is
in default, are jointly and severally liable to compensate any person to whom an offer should have
been made in accordance with those sections for any loss, damage or expenses that the person has
sustained or incurred because of the contravention. 141

en made in accordance with those sections for any loss, damage or expenses that the person has
sustained or incurred because of the contravention. 141

Companies Act (Cap. 486) Kenya
(2) Proceedings to recover any such loss, damage, costs or expenses may not be commenced after the
end of three years—
(a) from the date on which the return of allotment was lodged with the Registrar for
registration; or
(b) if equity securities other than shares are granted, from the date of the grant. 341. Exception to pre-emption right; issue for non-cash consideration
Section 338(l) does not apply in relation to the allotment of bonus shares. 342. Exception to preemption right: securities held under employees' share scheme
Section 338(1) does not apply to a particular allotment of equity securities if these are, or are to be, wholly
or partly paid up otherwise than in cash
343. Exception to preemption right: securities held under employees' share scheme
Section 338 does not apply to the allotment of securities that would, apart from any renunciation or
assignment of the right to their allotment, be held under an employees' share scheme. 344. [Repealed by Act No. 28 of 2017, s. 24.]
345.

nunciation or
assignment of the right to their allotment, be held under an employees' share scheme. 344. [Repealed by Act No. 28 of 2017, s. 24.]
345.

Exclusion of pre-emption right: articles conferring corresponding right
(1) This section applies when, in a case in which section 338 would otherwise apply—
(a) a company's articles contain provision prohibiting the company from allotting ordinary
shares of a particular class unless it has complied with the condition that it makes such an
offer as is described in section 338(1) to each person who holds ordinary shares of that class;
and
(b) in accordance with that provision—
(i) the company makes an offer to allot shares to such a holder; and
(ii) the holder, or anyone in whose favour the holder has renounced the right to their
allotment, accepts the offer. (2) In that case, section 338 does not apply to the allotment of those shares and the company may allot
them accordingly. (3) Section 339 applies in relation to offers made in accordance with the pre-emption provision of the
company's articles, subject to section 344.

ly. (3) Section 339 applies in relation to offers made in accordance with the pre-emption provision of the
company's articles, subject to section 344.

(4) If there is a contravention of the pre-emption provision of the company's articles, the company,
and every officer of it who knowingly authorised or permitted the contravention, are jointly and
severally liable to compensate any person to whom an offer should have been made under the
provision for any loss, damage, costs or expenses which the person has sustained or incurred
because of the contravention. (5) Proceedings to recover any such loss, damage, costs or expenses may not be commenced after the
expiration of three years—
(a) from the lodgement with the Registrar of the return of allotment; or
(b) if equity securities other than shares are granted, from the date of the grant of the securities. 142

the Registrar of the return of allotment; or
(b) if equity securities other than shares are granted, from the date of the grant of the securities. 142

Companies Act (Cap. 486) Kenya
346. Disapplication of pre-emption rights: private company with only one class of shares
(1) The articles of a private company that has only one class of shares, or a resolution passed by the
company, may confer on the directors of the company power to allot equity securities of that class
as if section 339—
(a) did not apply to the allotment; or
(b) applied to the allotment with such modifications as the directors may determine. (2) If the directors make an allotment under subsection (1), the provisions of this Part relating to
existing shareholders' pre-emption rights have effect accordingly. 347. Disapplication of pre-emption rights: directors acting under general authorisation
(1) If the directors of a company are generally authorised for the purposes of section 329, they may
be given power by the articles, or by a special resolution of the company, to allot equity securities
pursuant to that authorisation as if section 338—
(a) did not apply to the allotment; or
(b) applied to the allotment with such modifications as the directors may determine. (2) If the directors make an allotment under this section, this Division has effect accordingly.

th such modifications as the directors may determine. (2) If the directors make an allotment under this section, this Division has effect accordingly.

(3) The power conferred by this section ceases to have effect when the authorisation to which it relates
—
(a) is revoked; or
(b) would if not renewed expire. (4) If the authorisation is renewed the power may also be renewed, for a period not longer than that for
which the authorisation is renewed, by a special resolution of the company. (5) Even though the power conferred by this section has expired, the directors may allot equity
securities in accordance with an offer or agreement previously made by the company if the power
enabled the company to make an offer or agreement that would or might require equity securities to
be allotted after it expired. 348. Disapplication of pre-emption rights by special resolution
(1) If the directors of a company are authorised for the purposes of section 329 (whether generally or
otherwise), the company may by special resolution resolve that section 338—
(a) does not apply to a specified allotment of equity securities to be made in accordance with
that authorisation; or
(b) applies to such an allotment with such modifications as may be specified in the resolution. (2) If such a resolution is passed, this section has effect accordingly.

h an allotment with such modifications as may be specified in the resolution. (2) If such a resolution is passed, this section has effect accordingly.

(3) A special resolution under this section ceases to have effect when the authorisation to which it
relates—
(a) is revoked; or
(b) would if not renewed expire. (4) However, if the authorisation is renewed, the resolution may also be renewed by a special resolution
of the company for a period not longer than that for which the authorisation is renewed. 143

he resolution may also be renewed by a special resolution
of the company for a period not longer than that for which the authorisation is renewed. 143

Companies Act (Cap. 486) Kenya
(5) The directors may, even though such a resolution has expired, allot equity securities in accordance
with an offer or agreement previously made by the company if the resolution enabled the company
to make an offer or agreement that would or might require equity securities to be allotted after it
expired. (6) A special resolution under this section, or a special resolution to renew such a resolution, may not
be proposed unless—
(a) it is recommended by the directors; and
(b) the directors have complied with the following provisions. (7) Before such a resolution is proposed, the directors shall make a written statement setting out—
(a) their reasons for making the recommendation;
(b) the amount to be paid to the company in respect of the equity securities to be allotted; and
(c) the directors' justification of that amount.

ion;
(b) the amount to be paid to the company in respect of the equity securities to be allotted; and
(c) the directors' justification of that amount.

(8) The directors shall ensure that their statement is—
(a) if the resolution is proposed as a written resolution, sent or submitted to every eligible
member at or before the time at which the proposed resolution is sent or submitted to him;
or
(b) if the resolution is proposed at a general meeting, circulated to the members entitled to
notice of the meeting with that notice. (9) If the directors fail to comply with subsection (7) or (8), each of the directors who is in default
commits and offence and on conviction is liable to a fine not exceeding five hundred thousand
shillings. 349. Disqualification of pre-emption rights: sale of treasury shares
(1) This section applies in relation to a sale of shares that is an allotment of equity securities because
of section 337(b). (2) The directors of a company may be given power by the articles, or by a special resolution of the
company, to allot equity securities as if section 338—
(a) did not apply to the allotment; or
(b) applied to the allotment with such modifications as the directors may determine. (3) Subsections (2) and (5) of section 347 apply in that case as they apply to a case to which subsection
(1) of that section applies.

may determine. (3) Subsections (2) and (5) of section 347 apply in that case as they apply to a case to which subsection
(1) of that section applies.

(4) The company may by special resolution resolve that section 348—
(a) do not apply to a specified allotment of securities; or
(b) apply to the allotment with such modifications as may be specified in the resolution. (5) Subsections (2) and (4) to (8) of section 348 apply in that case as they apply to a case to which
subsection (1) of that section applies. 350. References to holder of shares in relation to offer
(1) In relation to an offer to allot securities required by section 338, a reference, however expressed, to
the holder of shares of any description is to whoever was the holder of shares of that description at
the close of business on a date to be specified in the offer. 144

res of any description is to whoever was the holder of shares of that description at
the close of business on a date to be specified in the offer. 144

Companies Act (Cap. 486) Kenya
(2) A specified date is not effective unless it is within the period of twenty-eight days immediately
before the date of the offer. 351. Provisions about pre-emption not applicable to shares taken on formation
The provisions of this Division relating to shareholders’ pre-emption rights do not apply to the taking of
shares by the subscribers to the memorandum on the formation of the company. 352. Saving for other restrictions on offer or allotment
(1) This Division does not limit the application of any other written law under which a company is
prohibited (whether generally or in specified circumstances) from offering or allotting equity
securities to a person. (2) If a company cannot because a written law offer or allot equity securities to a holder of ordinary
shares of the company, those shares are to be disregarded for the purposes of section 338, so that—
(a) the person is not taken to be a person who holds ordinary shares; and
(b) the shares are not to be regarded as forming part of the ordinary share capital of the
company. 353.

to be a person who holds ordinary shares; and
(b) the shares are not to be regarded as forming part of the ordinary share capital of the
company. 353.

Saving for certain older pre-emption requirements
(1) This Division does not apply to an allotment of equity securities of a public company that are
subject to a pre-emption requirement in relation to which the repealed Act applied immediately
before the commencement of this Division. (2) A pre-emption requirement to which the repealed Act applied in respect of a private company
immediately before the commencement of this Division has effect, so long as the company remains
a private company, as if it were contained in the company's articles. (3) A pre-emption requirement to which the repealed Act applied immediately before the
commencement of this Division is, for the purposes of this Division, taken to be included in the
company's articles. Division 4 — Public companies: allotment where issue not fully subscribed
354.

poses of this Division, taken to be included in the
company's articles. Division 4 — Public companies: allotment where issue not fully subscribed
354.

Public companies: allotment if issue not fully subscribed
(1) A public company shall not allot shares of the company offered for public subscription unless—
(a) the issue is subscribed for in full; or
(b) the offer is made on terms that the shares subscribed for may be allotted—
(i) in any event; or
(ii) if specified conditions are made and those conditions are satisfied. (2) If shares are prohibited from being allotted by subsection (1) and forty days have elapsed since
the offer was first made, the company shall, without delay but without interest, repay all money
received from applicants for shares. (3) If any of the money is not repaid within forty-eight days after the offer was first made, the directors
of the company are jointly and severally liable to repay it, with interest at the prescribed rate from
the end of the forty-eighth day. (4) A director who proves that the default in the repayment of the money was not due to the director's
misconduct or negligence is not liable under subsection (3). 145

o proves that the default in the repayment of the money was not due to the director's
misconduct or negligence is not liable under subsection (3). 145

Companies Act (Cap. 486) Kenya
(5) This section applies in the case of shares offered as wholly or partly payable otherwise than in cash
as it applies in the case of shares offered for subscription. In that case—
(a) a reference in subsection (1) to subscription is modified accordingly;
(b) a reference in subsections (2) and (3) to the repayment of money received from applicants for
shares includes—
(i) the return of any other consideration so received (including, if the case so requires,
the release of the applicant from any undertaking); or
(ii) if it is not reasonably practicable to return the consideration, payment of money equal
to its value at the time it was so received; and
(c) a reference to interest applies accordingly. (6) Any condition requiring or binding an applicant for shares to waive compliance with any
requirement of this section is void. 355. Public companies: effect of irregular allotment if issue not fully subscribed
(1) If an allotment of shares is made to an applicant in contravention of section 354, the applicant has
a right to avoid the allotment at any time within one month after the date of the allotment, but not
later.

avention of section 354, the applicant has
a right to avoid the allotment at any time within one month after the date of the allotment, but not
later.

(2) An allotment made in contravention of section 356 is voidable even if the company is in liquidation
or under administration. (3) If section 354 is contravened with respect to an allotment, each director of the company who
is in default is liable to compensate the company and the allottee respectively for any loss,
damages or expenses that the company or allottee may have sustained or incurred because of the
contravention. (4) Proceedings to recover any such loss, damages or expenses may not be brought more than three
years after the date of the allotment. Division 5 — Payment for shares
356. Shares not to be allotted at a discount
(1) A company shall not allot its shares at a discount. (2) If shares are allotted in contravention of subsection (1), the allottee is liable to pay the company an
amount equal to the amount of the discount, with interest at the appropriate rate. 357. Provision for different amounts to be paid on shares
A company may, if authorised to do so by its articles, pay dividends in proportion to the amount paid up
on each share. 358.

unts to be paid on shares
A company may, if authorised to do so by its articles, pay dividends in proportion to the amount paid up
on each share. 358.

General rule as to means of payment
Shares allotted by a company, and any premium on them, may be paid up in money or in money's worth
(including goodwill and know-how). 146

s of payment
Shares allotted by a company, and any premium on them, may be paid up in money or in money's worth
(including goodwill and know-how). 146

Companies Act (Cap. 486) Kenya
359. Meaning of payment in cash
For the purposes of this Act, a share in a company is paid up, as to its nominal value or any premium
on it, in cash, or allotted for cash, if the consideration received for the payment or allotment is a cash
consideration. (2) In subsection (1), “cash consideration” means—
(a) cash received by the company;
(b) a cheque received by the company in good faith that the directors have no reason for
suspecting will not be paid;
(c) a release of a liability of the company for a liquidated sum;
(d) an undertaking to pay cash to the company at a future date; or
(e) payment by any other means giving rise to a present or future entitlement of the company
or a person acting on the company's behalf to a payment, or credit equivalent to payment, in
cash. (3) The regulations may provide that particular means of payment specified in the regulations are to be
40 regarded as being included in subsection (2)(e).

he regulations may provide that particular means of payment specified in the regulations are to be
40 regarded as being included in subsection (2)(e).

(4) In relation to the allotment or payment up of shares in a company—
(a) the payment of cash to a person other than the company; or
(b) an undertaking to pay cash to a person other than the company, counts as consideration
other than cash. (5) Subsection (4) does not apply to or in relation to those sections of this Part relating to the
allotment of equity securities and to the existing shareholders' right of preemption. (6) For the purpose of determining whether a share is or is to be allotted for cash, or paid up in cash,
cash includes foreign currency. 360. Public companies: shares taken by subscribers of memorandum
(1) A subscriber to the memorandum of a public company who takes shares of the company as a result
of an undertaking given in the memorandum shall pay for the shares, and any premium on the
shares, in cash. (2) A subscriber to the memorandum of a public company who fails to pay for shares of the company, or
any premium on the shares, otherwise than in accordance with subsection (1), commits an offence
and on conviction is liable to a fine not exceeding two hundred thousand shillings. 361.

se than in accordance with subsection (1), commits an offence
and on conviction is liable to a fine not exceeding two hundred thousand shillings. 361.

Public companies: not to accept undertaking for work or services
(1) A public company shall not accept at any time, in payment up of its shares or any premium on
them, an undertaking given by a person that the person or another person should work or perform
services for the company or any other person. (2) If a public company accepts such an undertaking in payment for its shares or any premium on them,
the holder of the shares when they or the premium are treated as paid up in whole or in part by the
undertaking is liable—
(a) to pay the company in respect of those shares an amount equal to their nominal value,
together with the whole of any premium or, if the case so requires, such proportion of that
amount as is, treated as paid up by the undertaking; and
(b) to pay interest at the appropriate rate on the amount payable under paragraph (a). 147

at
amount as is, treated as paid up by the undertaking; and
(b) to pay interest at the appropriate rate on the amount payable under paragraph (a). 147

Companies Act (Cap. 486) Kenya
(3) The reference in subsection (2) to the holder of shares includes a person who has an unconditional
right—
(a) to be included in the company's register of members in respect of those shares; or
(b) to have a document of transfer of them executed in the person's favour. 362. Public companies: shares to be at least one quarter paid up
(1) A public company shall not allot a share except as paid up at least as to one-quarter of its nominal
value and the whole of any premium on it. (2) Subsection (1) does not apply to shares allotted under share scheme of an employee. (3) If a company allots a share in contravention of this section—
(a) the share is to be treated as if one-quarter of its nominal value, together with the whole of
any premium on it, had been received; and
(b) the allottee is liable to pay the company the minimum amount that should have been
received in respect of the share under subsection (1) (less the value of any consideration
actually applied in payment up, to any extent, of the share and any premium on it), with
interest at the appropriate rate.

value of any consideration
actually applied in payment up, to any extent, of the share and any premium on it), with
interest at the appropriate rate.

(4) Subsection (3) does not apply to the allotment of bonus shares, unless the allottee knew or ought to
have known the shares were allotted in contravention of this section. 363. Public companies: payment by long-term undertaking
(1) A public company shall not allot shares as fully or partly paid up as to their nominal value or any
premium on them otherwise than in cash if the consideration for the allotment is or includes
an undertaking that is to be, or could be, performed more than five years after the date of the
allotment. (2) If a company allots shares in contravention of subsection (1), the allottee is liable to pay the
company an amount equal to the aggregate of their nominal value and the whole of any premium
or (if the case so requires) so much of that aggregate as is treated as paid up by the 40 undertaking,
with interest at the appropriate rate. (3) Even if a contract for the allotment of shares does not contravene subsection (1), a variation of
the contract is void if it has the effect that the contract would have contravened that subsection if
the terms of the contract as varied had been its original terms.

void if it has the effect that the contract would have contravened that subsection if
the terms of the contract as varied had been its original terms.

If in the case of a company that has
converted itself into a public company, this subsection applies also to the variation by the company
of the terms of a contract entered into before' the registration of the conversion by the Registrar. (4) If—
(a) a public company allots shares for a consideration which consists of or includes in
accordance with subsection (1) an undertaking that is to be performed within five years of
the allotment; and
(b) the undertaking is not performed within the period allowed by the contract for the allotment
of the shares, the allottee is liable to pay the company, at the end of the period so allowed,
an amount equal to the aggregate of the nominal value of the shares and the whole of any
premium or, if the case so requires, so much of that aggregate as is treated as paid up by the
undertaking, together with interest at the appropriate rate. (5) A reference in this section to a contract for the allotment of shares includes an ancillary contract
relating to payment in respect of the shares. 148

A reference in this section to a contract for the allotment of shares includes an ancillary contract
relating to payment in respect of the shares. 148

Companies Act (Cap. 486) Kenya
364. Liability of subsequent holders of shares
(1) Except as provided by subsection (2), a person who becomes a holder of shares in respect of which—
(a) there has been a contravention of a provision of this Division; and
(b) because of that contravention another person is liable to pay an amount under the provision
contravened, is also liable to pay the amount (jointly and severally with the other person so
liable). (2) A person otherwise liable under subsection (1) is exempted from that liability if either the person—
(a) was, at the time of the purchase of the shares, a purchaser for value who did not have actual
notice of the contravention; or
(b) derived title to the shares (directly or indirectly) from a person who became a holder of them
after the contravention and was not liable under subsection (1). (3) A reference in this section to a holder of shares in a company includes a person who has an
unconditional right—
(a) to be included in the company's register of members in respect of those shares; or
(b) to have a document of transfer of the shares executed in the person's favour.

in the company's register of members in respect of those shares; or
(b) to have a document of transfer of the shares executed in the person's favour.

(4) This section applies in relation to a failure to carry out a term of a contract as referred to in section
363(4) as it applies in relation to a contravention of a provision of this Division. 365. Power of the Court to grant relief
(1) This section applies in relation to liability under section 360(2), 362(3) or (4) or 366 as it applies in
relation to a contravention of those sections. (2) A person who—
(a) is subject to any such liability to a company in relation to payment in respect of shares in the
company; or
(b) is subject to any such liability to a company because of an undertaking given to it in, or in
connection with, payment for shares in the company, may apply to the Court to be exempted
in whole or in part from the liability.

iven to it in, or in
connection with, payment for shares in the company, may apply to the Court to be exempted
in whole or in part from the liability.

(3) In the case of a liability within subsection (2)(a), the Court may exempt the applicant from the
liability only if, and to the extent that, it appears to the Court just and equitable to do so having
regard to—
(a) whether the applicant has paid, or is liable to pay, any amount in respect of—
(i) any other liability arising in relation to those shares under any provision of this
Division or Division 6; or
(ii) any liability arising because of any undertaking given in or in connection with
payment for those shares;
(b) whether any person other than the applicant has paid or is likely to pay, whether in
accordance with any order of the Court or otherwise, any such amount;
(c) whether the applicant or any other person—
(i) has performed in whole or in part, or is likely so to perform any such undertaking; or
(ii) has done or is likely to do any other thing in payment or part payment for the shares. 149

t, or is likely so to perform any such undertaking; or
(ii) has done or is likely to do any other thing in payment or part payment for the shares. 149

Companies Act (Cap. 486) Kenya
(4) In the case of a liability within subsection (2)(b), the Court may exempt the applicant from the
liability only if and to the extent that it appears to the Court just and equitable to do so having
regard to—
(a) whether the applicant has paid or is liable to pay any amount in respect of liability arising in
relation to the shares under any provision of this Division or Division 6;
(b) whether any person other than the applicant has paid or is likely to pay (whether in
accordance with any order of the Court or otherwise) any such amount.

her any person other than the applicant has paid or is likely to pay (whether in
accordance with any order of the Court or otherwise) any such amount.

(5) In determining whether the applicant should be exempted wholly or partly from any liability, the
Court shall give effect to the following overriding principles-
(a) a company that has allotted shares should receive money or money's worth at least equal in
value to the aggregate of the nominal value of those shares and the whole of any premium
or, if the case so requires, so much of that aggregate as is treated as paid up;
(b) subject to paragraph (a), if a company would, if the Court did not grant the exemption, have
more than one remedy against a particular person, it should be for the company to decide
which remedy it wishes to pursue.

t grant the exemption, have
more than one remedy against a particular person, it should be for the company to decide
which remedy it wishes to pursue.

(6) If a person brings proceedings against another person for a contribution in respect of liability to a
company arising under any provision of this Division or Division 6 and it appears to the Court that
the other person is liable to make such a contribution, the Court may (if and to the extent that it
appears to it just and equitable to do so having regard to the respective culpability for the liability
to the company of the other person and the person bringing the proceedings)—
(a) exempt the other person wholly or partly from liability to make such a contribution; or
(b) order the other person to make a larger contribution than that which, but for this subsection,
that person would be liable to make. 366. Offences involving contravention of section 358, 363, 364 and 365
If a company contravenes a provision of section 356, 361, 362 or 362, the company, and each officer of the
company who is in default, commits an offence and on conviction are each liable to a fine not exceeding
one million shillings. 367.

ach officer of the
company who is in default, commits an offence and on conviction are each liable to a fine not exceeding
one million shillings. 367.

Meaning of “appropriate rate of interest” for purpose of this Division
(1) For the purpose of this Division, the appropriate rate of interest is—
(a) five percent; or
(b) if some other rate is fixed under subsection (2), that rate of interest. (2) The Cabinet Secretary may, by order published in the Gazette, vary the rate specified in subsection
(1)(a) or fixed under subsection (1)(b). Division 6 — Public companies: independent valuation of non-cash consideration
368. Restrictions on public company allocating shares for non-cash consideration
(1) A public company shall not allot shares as fully or partly paid up (as to their nominal value or any
premium on them) otherwise than in cash unless—
(a) the consideration for the allotment has been independently valued in accordance with the
provisions of this Division;
(b) the valuer's report has been made to the company during the six months immediately
preceding the allotment of the shares; and
150

f this Division;
(b) the valuer's report has been made to the company during the six months immediately
preceding the allotment of the shares; and
150

Companies Act (Cap. 486) Kenya
(c) a copy of the report has been sent to the proposed allottee. (2) For the purpose of subsection (1), the application of an amount standing to the credit of—
(a) any of a company's reserve accounts; or
(b) its profit and loss account, in paying up (to any extent) shares allotted to members of
the company; or premiums on shares so allotted, does not count as consideration for the
allotment, and that subsection does not apply in that case. (3) If a company allots shares in contravention of subsection (1) and either—
(a) the allottee has not received the valuer's report required to be sent to the allottee; or
(b) there has been some other contravention of the requirements of this section or section 371
that the allottee knew or ought to have known amounted to a contravention, the allottee
is liable to pay the company an amount equal to the aggregate of the nominal value of the
shares and the whole of any premium (or, if the case so requires, so much of that aggregate
as is treated as paid up by the consideration), with interest at the appropriate rate. (4) This section has effect subject to sections 369 and 370. 369.

is treated as paid up by the consideration), with interest at the appropriate rate. (4) This section has effect subject to sections 369 and 370. 369.

Exception to valuation requirement: arrangement with another company
(1) Section 368 does not apply to the allotment of shares by a company in connection with an
arrangement for the allotment of shares in the company on terms that the whole or part of the
consideration for the shares allotted is to be provided—
(a) by the transfer to the company; or
(b) by the cancellation, of all or some of the shares (or of all or some of the shares of a particular
class) in another company. (2) It does not matter whether the arrangement provides for the issue to the allotting company of
shares (or shares of a particular class) in the other company. (3) This section applies to an arrangement only if, under the arrangement—
(a) all the holders of the shares in the other company; or
(b) if the arrangement applies only to shares of a particular class, all the holders of shares of
that class, can take part in the arrangement.

ny; or
(b) if the arrangement applies only to shares of a particular class, all the holders of shares of
that class, can take part in the arrangement.

(4) In determining whether this section applies to an arrangement, the following are to be disregarded:
(a) shares held by or by a nominee of the allotting company;
(b) shares held by or by a nominee of a company that is related to that company;
(c) shares held as treasury shares by the other company. (5) In this section—
(a) "arrangement" means an agreement, scheme or arrangement, including an arrangement
sanctioned in accordance with—
(i) Part XXXIV; or
(ii) a prescribed provision of laws relating to insolvency; and
(b) "company", except in relation to the allotting, includes a body corporate of any kind. 151

rescribed provision of laws relating to insolvency; and
(b) "company", except in relation to the allotting, includes a body corporate of any kind. 151

Companies Act (Cap. 486) Kenya
370. Exception to valuation requirement: merger
(1) Section 368 does not apply to the allotment of shares by a company in connection with a proposed
merger with another company. (2) For the purpose of subsection (1), a proposed merger exists when one company proposes to acquire
all the assets and liabilities of another company in exchange for the issue of shares or other
securities of the acquiring company to shareholders of the other company (with or without any cash
payment to those shareholders). (3) In this section, "another company" or "other company" includes a body corporate of any kind. 371. Non-cash consideration for shares: requirements as to valuation and report
(1) Part XLI applies to the valuation and report required by section 368.

. Non-cash consideration for shares: requirements as to valuation and report
(1) Part XLI applies to the valuation and report required by section 368.

(2) The valuer shall specify in the report—
(a) the nominal value of the shares to be wholly or partly paid for by the relevant consideration;
(b) the amount of any premium that is payable on the shares;
(c) the description of the consideration and, in relation to so much of the consideration as the
value has personally valued—
(i) a description of that part of the consideration;
(ii) the method used to value it; and
(iii) the date of the valuation; and
(d) the extent to which the nominal value of the shares and any premium are to be treated as
paid up—
(i) by the consideration; and
(ii) in cash.

and
(d) the extent to which the nominal value of the shares and any premium are to be treated as
paid up—
(i) by the consideration; and
(ii) in cash.

(3) The valuer shall include in, or attach to or enclose with, the report a note—
(a) in the case of a valuation made by a person other than personally, that it appeared to the
valuer reasonable to arrange for it to be so made or to accept a valuation so made;
(b) whoever made the valuation, that the method of valuation was reasonable in all the
circumstances;
(c) that it appears to the valuer that there has been no material change in the value of the
relevant consideration since the valuation; and
(d) that, on the basis of the valuation, the value of that consideration, together with any cash
by which the nominal value of the shares or any premium payable on them is to be paid up,
is not less than so much of the aggregate of the nominal value and the whole of any such
premium as is treated as paid up by the consideration and any such cash.

than so much of the aggregate of the nominal value and the whole of any such
premium as is treated as paid up by the consideration and any such cash.

(4) If the consideration to be valued is accepted partly in payment up of the nominal value of the
shares and any premium and partly for some other consideration given by the company, section 368
and subsections (1) to (3) of this section apply as if references to the consideration accepted by the
company included the proportion of that consideration that is properly attributable to the payment
up of that value and any premium. (5) In such a case—
(a) the valuer shall carry out, or arrange for, such other valuations as will enable the valuer to
determine that proportion; and
152

In such a case—
(a) the valuer shall carry out, or arrange for, such other valuations as will enable the valuer to
determine that proportion; and
152

Companies Act (Cap. 486) Kenya
(b) the valuer shall prepare a report that states what valuations have been made under this
subsection and also the reason for; and method and date of, any such valuation and any
other matters that could be relevant to that determination. 372. Copy of report to be lodged with Registrar
(1) A company to which a report is made under section 368 as to the value of any consideration
for which, or partly for which, it proposes to allot shares shall lodge a copy of the report to the
Registrar for registration. (2) The company shall lodge the copy at the same time as it lodges the return of the allotment of those
shares under section 333. (3) If a company fails to lodge a copy of a report with the Registrar as required by subsections (1) and
(2), the company, and each officer of the company who is in default, commit an offence and on
conviction are each liable to a fine not exceeding two hundred thousand shillings.

officer of the company who is in default, commit an offence and on
conviction are each liable to a fine not exceeding two hundred thousand shillings.

(4) If, after a company or any of its officers is convicted of an offence under subsection (3), the
company continues to fail to lodge the requisite copy of the report, the company, and each officer of
the company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. (5) If a company has failed to lodge with the Registrar a copy of a report as required by subsections (1)
and (2), the company or any of its officers may apply to the Court for relief. (6) If, on the hearing of an application made under subsection (5), the Court is satisfied—
(a) that the omission to lodge the copy was accidental or due to inadvertence; or
(b) that it is just and equitable to grant relief, it may make an order extending the time for
delivery of the copy for such period as it considers appropriate. 373.

just and equitable to grant relief, it may make an order extending the time for
delivery of the copy for such period as it considers appropriate. 373.

Public company: agreement for transfer of non-cash asset in initial period
(1) A public company formed as such shall not enter into an agreement—
(a) with a person who is a subscriber to the company's memorandum;
(b) for the transfer by the person to the company or another, before the end of the company's
initial period; and
(c) under which the consideration for the transfer to be given by the company is at the time of
the agreement equal in value to one-tenth or more of the company's issued share capital,
unless the relevant conditions have been complied with. (2) For the purpose of subsection (1), a company's initial period is the period of two years from and
including the date on which the company is issued with a certificate under section 516. (3) For the purpose of subsection (1), the conditions are those specified in sections 374 and 376. (4) This section does not apply if—
(a) it is part of the company's ordinary business to acquire; or arrange for other persons to
acquire, assets of a particular description; and
(b) the agreement is entered into by the company in the ordinary course of that business.

persons to
acquire, assets of a particular description; and
(b) the agreement is entered into by the company in the ordinary course of that business.

(5) This section does not apply to an agreement entered into by the company under the supervision of
the Court or of an officer authorised by the Court for the purpose. 153

not apply to an agreement entered into by the company under the supervision of
the Court or of an officer authorised by the Court for the purpose. 153

Companies Act (Cap. 486) Kenya
374. Agreement for transfer of non-cash asset: requirement of independent valuation
(1) The following conditions are conditions that are required to be complied with for the purpose of
section 373—
(a) that the consideration to be received by the company, and any consideration other than cash
to be given by the company, has been independently valued in accordance with this Division;
(b) that the valuer's report has been made to the company during the six months immediately
preceding the date of the agreement;
(c) that a copy of the report has been sent to the other party to the proposed agreement not later
than the date on which copies are required to be circulated to members under section 376(3). (2) The reference in subsection (1)(a) to the consideration to be received by the company is to the asset
to be transferred—
(a) to the company; or
(b) to another person in circumstances that are beneficial to the company. (3) The reference in subsection (1)(c) to the other party to the proposed agreement is to the person
referred to in section 374(1)(a).

to the company. (3) The reference in subsection (1)(c) to the other party to the proposed agreement is to the person
referred to in section 374(1)(a).

(4) If the person has received a copy of the report under section 377 in the person's capacity as a
member of the company, it is not necessary to send another copy under this section. (5) This section does not affect a requirement to value any consideration for purposes of section 368. 375. Agreement for transfer of non-cash asset: requirements as to valuation and report
(1) Part XLI applies to the valuation and report required by section 374. (2) In the report, the valuer shall specify—
(a) the consideration to be received by the company, describing the relevant asset (specifying
the amount to be received in cash) and the consideration to be given by the company
(specifying the amount to be given in cash); and
(b) the method and date of valuation. (3) If the valuation was made by a person other than the valuer, the valuer shall include in or attach to
the report a note that it appeared to the valuer reasonable to arrange for the report to be so made or
to accept a valuation made by that person.

h to
the report a note that it appeared to the valuer reasonable to arrange for the report to be so made or
to accept a valuation made by that person.

(4) Irrespective of whether the report was made by the valuer or by some other person, the valuer
shall include in, or attach to, the report a statement to the effect that the method of valuation was
reasonable in all the circumstances. (5) The valuer shall also include in, or attach to, the report—
(a) a statement that it appears to the valuer that there has been no material change in the value
of the relevant consideration since the valuation; and
(b) a statement that, on the basis of the valuation, the value of the consideration to be received
by the company is not less than the value of the consideration to be given by it. (6) A reference in section 374 or this section to consideration given for the transfer of an asset includes
consideration given partly for its transfer. (7) For the purposes of subsection (5)—
(a) the value of any consideration partly so given is to be taken as the proportion of the
consideration properly attributable to its transfer;
154

)—
(a) the value of any consideration partly so given is to be taken as the proportion of the
consideration properly attributable to its transfer;
154

Companies Act (Cap. 486) Kenya
(b) the valuer shall carry out, or arrange to be carried out, such valuations of any other thing
that will enable the valuer to determine that proportion; and
(c) the valuer shall state in the report what valuations have been made for that purpose and also
the reason for, and method and date of, any such valuation and any other matters that may
be relevant to that determination. 376. Agreement for transfer of non-cash asset: requirement of approval by members
(1) The following conditions are further conditions that are required to be complied with for the
purpose of section 374—
(a) that the terms of the agreement have been approved by an ordinary resolution of the
company;
(b) that the requirements of subsection (3) relating to the circulation to members of copies of
the valuer's report under section 377 have been complied with;
(c) that a copy of the proposed resolution has been sent to the other party to the proposed
agreement. (2) The reference in subsection (1)(c) to the other party to the proposed agreement is to the person
referred to in section 374(1)(a).

osed
agreement. (2) The reference in subsection (1)(c) to the other party to the proposed agreement is to the person
referred to in section 374(1)(a).

(3) The requirements relating to the circulation of copies of a valuer's report are as follows—
(a) if the resolution was proposed as a written resolution, that copies of the valuer's report have
been sent or submitted to every eligible member at or before the time at which the proposed
resolution was sent or submitted to the member;
(b) if the resolution was proposed at a general meeting, that copies of the valuer's report have
been circulated to the members entitled to notice of the meeting not later than the date on
which notice of the meeting was given. 377. Copy of resolution to be lodged with Registrar
(1) Within fourteen days after a company passes a resolution with respect to the transfer of a non-cash
asset, the company shall lodge with the Registrar for registration a copy of the resolution, together
with a copy of the relevant valuer’s report. (2) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings.

officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings.

(3) If, after the company or any of its officers is convicted of an offence under subsection (1), the
company continues to fail to lodge with the Registrar the documents referred to in that section,
the company, and each officer of the company who is in default, commit a further office on each
day on which the failure continues and on conviction are each liable to a fine not exceeding twenty
thousand shillings for each such offence. 378. Modification of provisions in relation to company whose conversion into a public
company has been registered
Sections 373 to 377 apply with the following modifications in relation to a company whose conversion into
a public company has been registered by the Registrar—
(a) the reference in section 373(1)(a) to a person who is a subscriber to the company's memorandum is
a reference to a person who is a member of the company on the date of registration;
(b) the reference in section 373(2) to the date of the company being issued with a trading certificate
under section 516 is a reference to the date of registration. 155

in section 373(2) to the date of the company being issued with a trading certificate
under section 516 is a reference to the date of registration. 155

Companies Act (Cap. 486) Kenya
379. Agreement for transfer of non-cash inset; effect of contravention
(1) If a public company enters into an agreement in contravention of section 373 and either—
(a) the other party to the agreement has not received the valuer's report required to be sent to
that party; or
(b) there has been some other contravention of the requirements of this Division that the
other party to the agreement knew or ought to have known amounted to a contravention. the company is entitled to recover from that person any consideration given by it under
the agreement; or an amount equal to the value of the consideration at the time of the
agreement. (2) Such an agreement, to the extent that it is not carried out, is void.

amount equal to the value of the consideration at the time of the
agreement. (2) Such an agreement, to the extent that it is not carried out, is void.

(3) If such an agreement is or includes an agreement for the allotment of shares in the company, then—
(a) whether or not the agreement also contravenes section 368, this section does not apply to it
in so far as it is for the allotment of shares; and
(b) the allottee is liable to pay the company an amount equal to the aggregate of the nominal
value of the shares and the whole of any premium (or, if the case so requires, so much of that
aggregate as is treated as paid up by the consideration), with interest at the appropriate rate. 380. Liability of subsequent holders of shares
(1) If a person becomes a holder of shares in respect of which—
(a) section 368 has been contravened; and
(b) because of that contravention another person is liable to pay an amount under the provision
contravened, that person is also liable to pay that amount (jointly and severally with any
other person so liable), unless the person is exempted from liability under subsection (4).

liable to pay that amount (jointly and severally with any
other person so liable), unless the person is exempted from liability under subsection (4).

(2) If a company enters into an agreement in contravention of section 374 and—
(a) the agreement is or includes an agreement for the allotment of shares in the company;
(b) a person becomes a holder of shares allotted under the agreement; and
(c) because of the agreement and the allotment under it, another person is liable to pay an
amount under section 380(1), the person who becomes the holder of the shares is also liable
to pay that amount (jointly and severally with any other person so liable), unless the person
is exempted from liability under subsection (4). (3) Subsection (2) applies whether or not the agreement also contravenes section 368. (4) A person otherwise liable under subsection (1) or (2) is exempted from that liability if either—
(a) the person is a purchaser for value and, at the time of the purchase, the person did not have
actual notice of the contravention concerned; or
(b) the person derived title to the shares (directly or indirectly) from a person who became a
holder of them after the contravention and was not liable under subsection (1) or (2).

the shares (directly or indirectly) from a person who became a
holder of them after the contravention and was not liable under subsection (1) or (2).

(5) A reference in this section to a holder, in relation to shares in a company, includes a person who has
an unconditional right—
(a) to be included in the company's register of members in respect of those shares; or
(b) to have a transfer of the shares executed in the person's favour. 156

included in the company's register of members in respect of those shares; or
(b) to have a transfer of the shares executed in the person's favour. 156

Companies Act (Cap. 486) Kenya
381. Power of Court to grant relief
(1) A person who—
(a) is liable to a company under a provision of this Division make a payment for shares in the
company; or
(b) is liable to a company because of an undertaking given to it in; or in connection with, a
payment for shares in the company, may apply to the Court to be exempted from the liability
(either wholly or in part).

t in; or in connection with, a
payment for shares in the company, may apply to the Court to be exempted from the liability
(either wholly or in part).

(2) In the case of a liability within subsection (1)(a), the Court may exempt the applicant from the
liability only if, and to the extent that, it appears to the Court just and equitable to do so having
regard to—
(a) whether the applicant has paid; or is liable to pay, any amount in respect of—
(i) any other liability arising in relation to those shares under a provision of this Division
or Division 5; or
(ii) any liability arising because of any undertaking given in or in connection with
payment for those shares;
(b) whether any person other than the applicant has paid or is likely to pay (whether in
accordance with an order of the Court or otherwise) any such amount;
(c) whether the applicant or any other person—
(i) has performed, or is likely so to perform, any such undertaking in whole or in part; or
(ii) has done or is likely to do any other thing in payment or part payment for the shares.

o to perform, any such undertaking in whole or in part; or
(ii) has done or is likely to do any other thing in payment or part payment for the shares.

(3) In the case of a liability within subsection (1)(b), the Court may exempt the applicant from the
liability only if and to the extent that it appears to the Court just and equitable to do so having
regard to—
(a) whether the applicant has paid or is liable to pay any amount in respect of liability arising in
relation to the shares under a provision of this Division or Division 5; and
(b) whether any person other than the applicant has paid or is likely to pay (whether in
accordance with any order of the Court or otherwise) any such amount.

her any person other than the applicant has paid or is likely to pay (whether in
accordance with any order of the Court or otherwise) any such amount.

(4) In determining whether it should exempt the applicant in whole or in part from any liability, the
Court shall have regard to the following overriding principles—
(a) that a company that has allotted shares should receive money or money’s worth at least
equal in value to the aggregate of the nominal value of those shares and the whole of any
premium or, if the case so requires, so much of that aggregate as is treated as paid up;
(b) subject to paragraph (a), that if such a company would, if the Court did not grant the
exemption, have more than one remedy against a particular person, it should be for the
company to decide which remedy it should remain entitled to pursue. (5) Subsection (6) applies if—
(a) a person brings proceedings against another person for a contribution in respect of liability
to a company arising under a provision of this Division or Division 5; and
(b) it appears to the Court that the contributor is liable to make such a contribution. 157

sing under a provision of this Division or Division 5; and
(b) it appears to the Court that the contributor is liable to make such a contribution. 157

Companies Act (Cap. 486) Kenya
(6) When this subsection applies, the Court may, if and to the extent that it appears to it, just and
equitable to do so having regard to the respective culpability (in respect of the liability to the
company) of the contributor and the person bringing the proceedings—
(a) exempt the contributor in whole or in part from liability to make such a contribution; or
(b) order the contributor to make a larger contribution than, but for this subsection, the person
would be liable to make. (7) If a person is liable to a company under section 380(1), the Court may, on application, exempt
the person in whole or in part from that liability if and to the extent that it appears to the Court
to be just and equitable to do so having regard to any benefit accruing to the company because
of anything done by the person towards the carrying out of the agreement mentioned in that
subsection. 382. Offence to contravene section 368 or 373
If a company contravenes section 368 or 373, the company, and each officer of the company who is in
default, commit an offence and on conviction are each liable to a fine not exceeding five hundred thousand
shillings. 383.

er of the company who is in
default, commit an offence and on conviction are each liable to a fine not exceeding five hundred thousand
shillings. 383.

Enforceability of undertakings to do work, etc. (1) An undertaking given by any person, in or in connection with payment for shares in a company,
to do work or perform services or to do any other thing, if it is enforceable by the company apart
from this Division, is so enforceable by the company apart from this Division, is so enforceable even
though a provision of this Division or Division 5 has been contravened in relation to it. (2) Subsection (1) does not prevent the Court from granting relief under section 381. 384. What is the appropriate rate of interest for the purposes of this Division? (1) For the purposes of this Division the “appropriate rate” of interest is—
(a) five percent per year; or
(b) if some other rate is specified by order made under subsection (2), that other rate. (2) The Cabinet Secretary may, by order published in the Gazette, specify a rate for the purpose of
subsection (1)(b) and may from to time, by a similar order so published, substitute another rate for
the rate currently specified. Division 7 — Share premiums
385.

)(b) and may from to time, by a similar order so published, substitute another rate for
the rate currently specified. Division 7 — Share premiums
385.

Interpretation: Division 7
(1) In this Division—
“arrangement” includes any agreement or scheme, and in particular includes an arrangement
approved in accordance with—
(a) Part XXXIV; or
(b) any provision of laws relating to insolvency prescribed by the regulations for the purposes of
this Division;
“company", except in relation to an issuing company, includes any kind of body corporate;
“equity shares", means shares comprised in a company's equity share capital; and "non-equity
shares" means shares (of any class) that are not so comprised;
158

hares", means shares comprised in a company's equity share capital; and "non-equity
shares" means shares (of any class) that are not so comprised;
158

Companies Act (Cap. 486) Kenya
“holding company", in relation to an issuing company, the company of which the issuing company
is a subsidiary;
“issuing company", means a company that issues shares as referred to in section 387(1);
“share premium account", in relation to a company, means the account established by the company
under section 386;
“transferor company", in relation to an issuing company, means the company whose non-cash
assets are transferred to the issuing company as referred to in section 387(1). (2) In this Division—
(a) a reference (however expressed) to the acquisition by a company of shares in another
company includes the acquisition of shares by a nominee of that company;
(b) a reference to the issue or allotment of shares to, or the transfer of shares to or by, a
company, includes the issue or allotment or transfer of shares to or by, a nominee of that
company; and
(c) a reference to the transfer of shares in a company includes the transfer of a right to be
included in the company's register of members in respect of those shares. 386.

transfer of shares in a company includes the transfer of a right to be
included in the company's register of members in respect of those shares. 386.

Company’s share premium account and application of share premiums
(1) If a company issues shares at a premium (whether for cash or otherwise), the company shall—
(a) if it has not already done so, establish an account to be called the share premium account;
and
(b) transfer to that account an amount equal to the aggregate amount or value of the premiums
on those shares. (2) If, on issuing shares, a company has transferred an amount to its share premium account, it may
use the amount to write off—
(a) the expenses of the issue of those shares; and
(b) any commission paid on the issue of those shares. (3) The company may use its share premium account to pay up new shares that are to be allotted to
members as fully paid bonus shares. (4) Subject to subsections (2) and (3), the provisions of this Act relating to the reduction of a company's
share capital apply as if the company's share premium account were part of its paid up share capital. (5) This section has effect subject to sections 387, 388 and 390.

ly as if the company's share premium account were part of its paid up share capital. (5) This section has effect subject to sections 387, 388 and 390.

(6) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings. 387. Relief from requirements as to share premiums: Group reconstruction relief
(1) This section applies if an issuing company that is a wholly-owned subsidiary of a holding company
allots shares—
(a) to the holding company; or
(b) to another wholly-owned subsidiary of the holding company,
in consideration for the transfer to the issuing company of non-cash assets of a company that is a
member of the group of companies that comprises the holding company and all its wholly-owned
subsidiaries. 159

non-cash assets of a company that is a
member of the group of companies that comprises the holding company and all its wholly-owned
subsidiaries. 159

Companies Act (Cap. 486) Kenya
(2) If the shares in the issuing company allotted in consideration for the transfer are issued at a
premium, the issuing company is not required by section 386 to transfer any amount in excess of
the minimum premium value to the share premium account. (3) For the purpose of (2), the minimum premium value is the amount (if any) by which the base value
of the consideration for the shares allotted exceeds the aggregate nominal value of the shares. (4) The base value of the consideration for the shares allotted is the amount by which the base value of
the assets transferred exceeds the base value of any liabilities of the transferor company assumed by
the issuing company as."^ part of the consideration for the assets transferred.

the base value of any liabilities of the transferor company assumed by
the issuing company as."^ part of the consideration for the assets transferred.

(5) For the purposes of this section—
(a) the base value of assets transferred is taken to be—
(i) the cost of those assets to the transferor company; or
(ii) if less, the amount at which those assets are stated in the transferor company's
accounting records immediately before the transfer; and
(b) the base value of the liabilities assumed is taken to be the amount at which those liabilities
are stated in the transferor company's accounting records immediately before the transfer. 388. Merger relief
(1) This section applies if an issuing company acquires at least a ninety percent equity holding in
another company under an arrangement providing for the allotment of equity shares in the issuing
company on terms that the consideration for the shares allotted is to be provided—
(a) by the issue or transfer to the issuing company of equity shares in the other company; or
(b) by the cancellation of any such shares not held by the issuing company.

transfer to the issuing company of equity shares in the other company; or
(b) by the cancellation of any such shares not held by the issuing company.

(2) If, in a case to which this section applies, the equity shares in the issuing company allotted under
the arrangement in consideration for the acquisition or cancellation of equity shares in the other
company are issued at a premium, section 386 does not apply to the premiums on those shares. (3) If the arrangement also provides for the allotment of shares in the issuing company on terms that
the consideration for those shares is to be provided—
(a) by the issue or transfer to the issuing company of non-equity shares in the other company;
or
(b) by the cancellation of any such shares not held by the issuing company,
relief under subsection (2) extends to shares (if any) in the issuing company allotted on those terms
under the arrangement. (4) This section does not apply to a case to which section 387 applies. 389. Merger relief: meaning of ninety percent equity holding
(1) This section applies for the purpose of determining whether a company has, for the purposes
of section 388, acquired at least a ninety percent equity holding in another company under an
arrangement referred to in subsection (1) of that section.

section 388, acquired at least a ninety percent equity holding in another company under an
arrangement referred to in subsection (1) of that section.

(2) For the purpose referred to in subsection (1), a company acquires at least a ninety percent equity
holding in another company if, as a result of an acquisition or a cancellation of equity shares in
another company (under an arrangement referred to in section 388(1), it holds equity shares in the
other company of an aggregate amount equal to ninety percent or more of the nominal value of the
other company's equity share capital. 160

ares in the
other company of an aggregate amount equal to ninety percent or more of the nominal value of the
other company's equity share capital. 160

Companies Act (Cap. 486) Kenya
(3) For the purpose of subsection (2)—
(a) it does not matter whether any of the shares were acquired under the arrangement; and
(b) shares in the other company held by the acquiring company as treasury shares are to be
disregarded in determining the nominal value of the other company's share capital. (4) If the equity share capital of the other company is divided into different classes of shares, the
acquiring company is taken to have acquired at least a ninety percent equity holding in the other
company only if the requirements of subsection (2) are satisfied in relation to each of those classes
of shares taken separately. (5) For the purposes of this section, shares held by—
(a) a company that is the acquiring company's holding company or subsidiary;
(b) a subsidiary of the acquiring company’s holding company; or
(c) its or their nominees,
are taken to be held by the acquiring company. 390.

idiary;
(b) a subsidiary of the acquiring company’s holding company; or
(c) its or their nominees,
are taken to be held by the acquiring company. 390.

Power to make further provision by regulations for the purposes of this Division
The regulations may prescribe provisions for either or both of the following—
(a) for relieving companies from the requirements of section 386 in relation to premiums other than
cash premiums;
(b) for restricting or otherwise modifying any relief from those requirements provided by this Division. 391. Relief may be reflected in company’s balance sheet
If an amount that corresponds to the amount representing the premiums, or part of the premiums, on
shares issued by a company that, as a result of relief (if any) under this Division, is not included in the
company’s share premium account, the amount can also be disregarded in determining the amount at
which shares or other consideration provided for the shares issued is to be included in the company’s
balance sheet. Division 8 — Classes of shares and variation of classes
392. Classes of shares
(1) For the purposes of this Act, shares are of one class if the rights attached to them are in all respects
uniform.

f classes
392. Classes of shares
(1) For the purposes of this Act, shares are of one class if the rights attached to them are in all respects
uniform.

(2) For purposes of subsection (1), the rights attached to shares are not to be regarded as different
only because they do not carry the same rights to dividends during the twelve months immediately
following their allotment. 393. Variation of class rights: companies having a share capital
(1) This section is concerned with the variation of the rights attached to a class of shares in a company
having a share capital. (2) Rights attached to a class of a company’s shares may be varied only—
(a) deleted by Act No. 28 of 2017, s. 25(a);
(b) if the holders of shares of that class consent to the variation in accordance with this section. (3) Subsection (2) does not affect any other restrictions varying the rights. 161

that class consent to the variation in accordance with this section. (3) Subsection (2) does not affect any other restrictions varying the rights. 161

Companies Act (Cap. 486) Kenya
(4) The consent required for the purpose of this section to be given by the holders of a class of a
company's shares is—
(a) consent in writing from the holders o at least three-quarters in nominal value of the issued
shares of that class (excluding any shares held as treasury shares); or
(b) a special resolution passed at a separate general meeting of the holders of that classes
sanctioning the variation. (5) An amendment of a provision contained in a company's articles for the variation of the rights
attached to a class of shares, or the insertion of any such provision into the articles, is itself a
variation of those rights for the purpose of this section. (6) In this section, and (except when the context otherwise requires) in any provision of a company’s
articles for the variation of the rights attached to a class of shares, a reference to the variation of
those rights includes a reference to their abrogation. [Act No. 28 of 2017, s. 25.]
394. Variation of class rights: companies without a share capital
(1) This section is concerned with the variation of the rights of a class of members of a company that
does not have a share capital.

a share capital
(1) This section is concerned with the variation of the rights of a class of members of a company that
does not have a share capital.

(2) Rights of a class of members may be varied only—
(a) in accordance with the provisions of the company's articles providing for the variation of
those rights; or
(b) where the company's articles contain no such provision, if the members of that class consent
to the variation in accordance with this section. (3) Subsection (2) does not affect any other restriction varying the rights. (4) The consent required for the purposes of this section by the members of a class is—
(a) consent in writing from at least three-quarters of the members of the class; or
(b) a special resolution passed at a separate general meeting of the members of that class
sanctioning the variation. (5) An amendment of a provision contained in a company's articles for the variation of the rights of
a class of members, or the insertion of any such provision into the articles, is itself a variation of
those rights for the purposes of this section. (6) In this section, and (except when the context otherwise requires) in any provision in a company's
articles for the variation of the rights of a class of members, a reference to the variation of those
rights includes a reference to their abrogation. 395.

les for the variation of the rights of a class of members, a reference to the variation of those
rights includes a reference to their abrogation. 395.

Section 393 and 394 not to affect powers of Court under certain provisions
Neither section 393 nor section 394 affects the powers of the Court under section 78, Part XXIX or XXXIV. 396. Right to object to variation: companies having a share capital
(1) This section applies if the rights attached to any class of shares in a company are varied under
section 393. (2) The holders of not less in the aggregate than fifteen percent of the issued shares of the relevant
class (being persons who did not consent to or vote in favour of the resolution for the variation)
may apply to the Court to have the variation cancelled. 162

eing persons who did not consent to or vote in favour of the resolution for the variation)
may apply to the Court to have the variation cancelled. 162

Companies Act (Cap. 486) Kenya
(3) For the purpose of subsection (2), any of the company's share capital held as treasury shares is
disregarded. (4) If such an application is made, the variation has no effect unless and until it is confirmed by the
Court. (5) An application to the Court can be made only within twenty-one days after the date on which the
consent was given or the resolution was passed, or within such extended period as the Court may in
special circumstances allow. (6) An application to the Court may be made by all of the shareholders entitled to make the application
or on their behalf by such one or more of their number as they may appoint in writing for the
purpose. (7) If, at the hearing of the application, the Court shall, if satisfied that the variation would unfairly
prejudice the shareholders of the class represented by the applicant, disallow the variation, but, if it
is not so satisfied, it shall confirm it.

rly
prejudice the shareholders of the class represented by the applicant, disallow the variation, but, if it
is not so satisfied, it shall confirm it.

(8) The applicant and any other persons who apply to the Court to be heard and appear to the Court to
be interested in the application are entitled to be heard at the is hearing of the application and to
have their representations taken into consideration at the hearing. (9) The decision of the Court on any such application is final. (10) A reference in this section to the variation of the rights of holders of a class of shares includes a
reference to their abrogation. 397. Right to object to variation: companies having a share capital
(1) This section applies if the rights of any class of members of a company are varied under section 394. (2) Members comprising not less than fifteen percent of the members of the relevant class (being
persons who did not consent to or vote in favour of the resolution for the variation) may apply to
the Court to have the variation cancelled. (3) If such an application is made, the variation has no effect unless and until it is confirmed by the
Court.

Court to have the variation cancelled. (3) If such an application is made, the variation has no effect unless and until it is confirmed by the
Court.

(4) An application to the Court can be made only within twenty-one days after the date on which the
consent was given or the resolution was passed, or within such extended period as the Court may in
special circumstances allow. (5) An application to the Court may be made by all of the members entitled to make the application or
on their behalf by such one or more of their number as they may appoint in writing for the purpose. (6) If, at the hearing of the application, the Court shall, if satisfied that the variation would unfairly
prejudice the members of the class represented by the applicant, disallow the variation, but, if it is
not so satisfied, it shall confirm it. (7) The applicant and any other persons who apply to the Court to be heard and appear to the Court
to be interested in the application are entitled to be heard at the hearing of the application and to
have their representations taken into consideration at the hearing. (8) The decision of the Court on any such application is final. (9) A reference in this section to the variation of the rights of a class of members includes a reference
to their abrogation. 398.

lication is final. (9) A reference in this section to the variation of the rights of a class of members includes a reference
to their abrogation. 398.

Copy of Court order to be lodged with Registrar
(1) Within fourteen days after the making of an order by the Court on an application under section 396
or 397, the company concerned shall lodge a copy of the order with the Registrar for registration. 163

y the Court on an application under section 396
or 397, the company concerned shall lodge a copy of the order with the Registrar for registration. 163

Companies Act (Cap. 486) Kenya
(2) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. (3) If, after a company or any of its officers is convicted of an offence under subsection (2), the
company continues to fail to lodge the requisite copy, the company, and each officer of the company
who is in default, commit a further offence on each day on which the failure continues and on
conviction are each liable to a fine not exceeding twenty thousand shillings for each such offence. 399. Notice of name or other designation of class of shares
(1) If a company assigns a name or other designation, or a new name or other designation, to any class
or description of its shares, it shall, within fourteen days after doing so, lodge with the Registrar a
notice giving particulars of the name or designation so assigned.

ts shares, it shall, within fourteen days after doing so, lodge with the Registrar a
notice giving particulars of the name or designation so assigned.

(2) If a company fails to comply with subsection (1), the company, and each officer of the company who
is in default, commit an offence and on conviction are each 40 liable to a fine not exceeding two
hundred thousand shillings. (3) If, after a company or any of its officers is convicted of an offence under subsection (2), the
company continues to fail to lodge the requisite notice, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. 400. Notice of particulars of variation of rights attached to shares to be lodged with
Registrar
(1) If the rights attached to shares of a company are varied, the company shall, within fourteen days
after the date on which the variation is made, lodge with the Registrar for registration a notice
giving particulars of the variation. (2) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings.

officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings.

(3) If, after a company or any of its officers is convicted of an offence under subsection (2), the
company continues to fail to lodge the requisite notice, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. 401. Notice of new class of members to be lodged with Registrar
(1) If a company not having a share capital creates a new class of members, the company shall,
within fourteen days after the date on which the new class is created, lodge with the Registrar for
registration a notice containing particulars of the rights attached to that class. (2) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings.

officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings.

(3) If, after a company or any of its officers is convicted of an offence under subsection (2), the
company continues to fail to lodge the requisite notice, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. 164

each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. 164

Companies Act (Cap. 486) Kenya
402. Notice of name or other designation of class of members to be lodged with Registrar
(1) If a company not having a share capital assigns a name or other designation, or a new name
or other designation, to any class of its members, it shall, within fourteen days after doing so,
lodge with the Registrar for registration a notice giving particulars of the name or designation so
assigned. (2) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. (3) If, after a company or any of its officers is convicted of an offence under subsection (2), the
company continues to fail to lodge the requisite notice, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. 403.

ach day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. 403.

Notice of particulars of variation of class rights
(1) If the rights of any class of members of a company not having a share capital are varied, the
company shall, within fourteen days after the date on which the variation is made, lodge with the
Registrar for registration a notice containing particulars of the variation. (2) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. (3) If, after a company or any of its officers is convicted of an offence under subsection (2), the
company continues to fail to lodge the requisite notice, the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues
and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such
offence. Part XV – REORGANISATION OF COMPANY'S SHARE CAPITAL
Division 1 —Alteration and consolidation of share capital
404.

nd shillings for each such
offence. Part XV – REORGANISATION OF COMPANY'S SHARE CAPITAL
Division 1 —Alteration and consolidation of share capital
404.

Alteration of share capital of limited company
(1) A limited company having a share capital may alter its share capital only—
(a) by increasing its share capital by allotting new shares; or
(b) reducing its share capital in accordance with this Part. (2) Such a company may subdivide or consolidate all or any of its share capital in accordance with
section 405. 405. Sub-division or consolidation of shores
(1) A limited company having a share capital may—
(a) subdivide its shares, or any of them, into shares of a smaller nominal amount than its
existing shares; or
(b) consolidate and divide all or any of its share capital into shares of a larger nominal amount
than its existing shares. 165

ts
existing shares; or
(b) consolidate and divide all or any of its share capital into shares of a larger nominal amount
than its existing shares. 165

Companies Act (Cap. 486) Kenya
(2) When subdividing, consolidating or dividing its shares, a company shall ensure that the proportion
between the amount paid and the amount if any unpaid on each resulting share is the same as it
was in the case of the share from which that share is derived. (3) A company may exercise a power conferred by this section only if its members have passed an
ordinary resolution authorising it to do so. (4) A resolution under subsection (3) may authorise a company—
(a) to exercise more than one of the powers conferred by this section;
(b) to exercise a power on more than one occasion; or
(c) to exercise a power at a specified time or in specified circumstances. (5) The company's articles may exclude or restrict the exercise of any power conferred by this section. (6) If a company contravenes any of the provisions of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding one million shillings. 406.

each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding one million shillings. 406.

Notice to Registrar of sub-division or consolidation
(1) Within one month after subdividing, consolidating or dividing its shares, a company shall lodge
with the Registrar for registration a notice specifying the shares that are affected, and accompanied
by a statement of capital that complies with subsection (2). (2) A statement of capital complies with this subsection if it states with respect to the company's share
capital immediately following the exercise of the power—
(a) the total number of shares of the company;
(b) the aggregate nominal value of those shares;
(c) for each class of shares—
(i) the particulars of the rights attached to the shares prescribed by the regulations for
the purposes of this subsection;
(ii) the total number of shares of that class; and
(iii) the aggregate nominal value of shares of that class; and
(d) the amount paid up and the amount if any unpaid on each share whether on account of the
nominal value of the share or as a premium.

hat class; and
(d) the amount paid up and the amount if any unpaid on each share whether on account of the
nominal value of the share or as a premium.

(3) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred and fifty thousand shillings. (4) If, after a company or any of its officers is convicted of an offence under subsection (3), the
company continues to fail to lodge with the Registrar any of the documents required by subsection
(1) or (2), the company, and each officer of the company who is in default, commits a further offence
on each day on which the failure continues and on conviction are each liable to a fine not exceeding
twenty-five thousand shillings for each such offence. Division 2 — Reduction of share capital
407. Special resolution for reduction of share capital
(1) A limited company that has a share capital may reduce its share capital by special resolution. (2) A special resolution under subsection (1) takes effect as provided by section 411(3). 166

ital may reduce its share capital by special resolution. (2) A special resolution under subsection (1) takes effect as provided by section 411(3). 166

Companies Act (Cap. 486) Kenya
(3) A company may reduce its share capital under this section in any way. (4) In particular, a company may—
(a) extinguish or reduce the liability on any of its shares in respect of share capital not paid up;
or
(b) either with or without extinguishing or reducing liability on any of its shares—
(i) cancel any paid-up share capital that is lost or unrepresented by available assets; or
(ii) repay any paid-up share capital in excess of the company's requirements. 408. Application to Court for confirming order
(1) As soon as practicable a company has passed a resolution for reducing its share capital, it shall
apply to the Court for an order confirming the reduction. (2) If the proposed reduction of capital involves either—
(a) diminution of liability in respect of unpaid share capital; or
(b) the payment to a shareholder of any paid-up share capital, section 409 (creditors entitled to
object to reduction) applies unless the Court directs otherwise.

ent to a shareholder of any paid-up share capital, section 409 (creditors entitled to
object to reduction) applies unless the Court directs otherwise.

(3) The Court may, if having regard to any special circumstances of the case it considers it appropriate
to do so, direct that section 409 is not to apply in relation to a specified class or specified classes of
creditors. (4) The Court may direct that section 409 is to apply in any other case. 409. Creditors entitled to object to reduction
(1) When this section applies, each creditor of the company who, at the date fixed by the Court, is
entitled to a debt or claim that, if that date were the commencement of the liquidation of the
company would be admissible in proof against the company, is entitled to object to the reduction of
capital. (2) The Court is required to settle a list of creditors entitled to object and for that purpose it—
(a) shall ascertain, as far as possible without requiring an application from any of the creditors,
the names of those creditors and the nature and amount of their debts or claims; and
(b) may publish notices fixing a day or days within which creditors whose names are not entered
on the list-
(i) can claim to have their names so entered; or
(ii) are to be excluded from the right to object.

creditors whose names are not entered
on the list-
(i) can claim to have their names so entered; or
(ii) are to be excluded from the right to object.

(3) If a creditor entered on the list whose debt or claim has not been not discharged, or has been
established but not terminated, does not consent to the reduction, the Court may, if it considers it
appropriate to do so, dispense with the consent of that creditor on the company securing payment
of the debt or claim. (4) For the purpose of subsection (4), the company shall secure the debt or claim by appropriating (as
the Court may direct)—
(a) if the company admits the full amount of the debt or claim (or, although not admitting it, is
willing to provide for it) — the full amount of the debt or claim; or
(b) if the company does not admit, and is not willing to provide for, the full amount of the debt
or claim, or if the amount is contingent or not ascertained—an amount fixed by the Court
167

s not willing to provide for, the full amount of the debt
or claim, or if the amount is contingent or not ascertained—an amount fixed by the Court
167

Companies Act (Cap. 486) Kenya
after conducting the same kind of inquiry and adjudication as would be conducted if the
company were being liquidated by the Court. 410. Order confirming reduction and powers of Court on making such order
(1) The Court may make an order confirming the reduction of capital on such terms and conditions as it
considers appropriate. (2) The Court may not confirm the reduction unless it is satisfied, in relation to each creditor of the
company who is entitled to object to the reduction of capital that either—
(a) the creditor's consent to the reduction has been obtained; or
(b) the creditor's debt or claim has been discharged, has terminated or has been secured. (3) If the Court confirms the reduction, it may order the company to publish as the Court directs—
(a) the reasons for reduction of capital, or such other information as the Court considers
necessary in order to provide the public with full and detailed information about the
reduction; and
(b) if the Court considers it is in the public interest to do so, the causes that led to the reduction.

detailed information about the
reduction; and
(b) if the Court considers it is in the public interest to do so, the causes that led to the reduction.

(4) If, for any special reason, the Court considers it appropriate to do so, it may make an order directing
the company, during a specified period, to add at the end of its name the words "and reduced". (5) If a company is ordered to add to its name the words "and reduced", those words form part of the
name of the company until the end of the period specified in the Court's order. (6) In subsection (4), "specified period", in relation to an order of the Court, means a period specified
by the Court beginning on the date of the order or on such later date as the Court specifies in the
order. 411. Registration of Court order and statement of capital
(1) On production of an order of the Court confirming the reduction of a company’s share capital
and the lodgement of a copy of the order and of a statement of capital approved by the Court, the
Registrar shall register the order and statement.

al
and the lodgement of a copy of the order and of a statement of capital approved by the Court, the
Registrar shall register the order and statement.

(2) The company shall ensure that the statement of capital specifies with respect to the company's
share capital as amended by the order—
(a) the total number of shares of the company;
(b) the aggregate nominal value of those shares;
(c) for each class of shares—
(i) the particulars of the rights attached to the shares prescribed by the regulations for
the purposes of this subsection;
(ii) the total number of shares of that class; and
(iii) the aggregate nominal value of shares of that class; and
(d) the amount paid up and the amount (if any) unpaid on each share, whether on account of the
nominal value of the share or in the form of a premium. (3) The resolution for reducing share capital, as confirmed by the Court's order, takes effect—
(a) in the case of a reduction of share capital that forms part of a compromise or arrangement
sanctioned by the Court under the laws relating to insolvency;
(i) on lodgement of the order and statement of capital with the Registrar for registration;
or
168

by the Court under the laws relating to insolvency;
(i) on lodgement of the order and statement of capital with the Registrar for registration;
or
168

Companies Act (Cap. 486) Kenya
(ii) if the Court so orders, on the registration of the order and statement of capital;
(b) in any other case, on the registration of the order and statement of capital. (4) The company shall publish notice of the registration in such manner as the Court directs. (5) The Registrar shall—
(a) certify the registration of the order and statement of capital; and
(b) sign the certificate or authenticate it with the Registrar's official seal. (6) The certificate is conclusive evidence that—
(a) the requirements of this Act with respect to the reduction of share capital have been
complied with; and
(b) the company's share capital is as stated in its statement of capital. 412.

respect to the reduction of share capital have been
complied with; and
(b) the company's share capital is as stated in its statement of capital. 412.

Liability of members following reduction of capital
(1) If a company’s share capital is reduced, a member of the company (past or present) is not liable in
respect of any share to any call or contribution exceeding the amount of difference (if any) between
—
(a) the nominal amount of the share as notified to the Registrar in the statement of capital
delivered under section 411; and
(b) the amount paid on the share, or the reduced amount (if any), that is treated as having been
paid on it. (2) This section is subject to section 411. (3) This section does not affect the rights of the contributories among themselves. 413. Liability to creditors omitted from list of creditors
(1) This section applies to a creditor who, in the case of a reduction of capital confirmed by the Court,
was entitled to object to the reduction of share capital but who, as a result of being unaware—
(a) of the proceedings for reduction of share capital; or
(b) of their nature and effect with respect to the creditor's debt or claim, was not entered on the
list of creditors.

reduction of share capital; or
(b) of their nature and effect with respect to the creditor's debt or claim, was not entered on the
list of creditors.

(2) Each person who was a member of the company at the date on which the resolution for reducing
capital took effect in accordance with section 411(3) is liable to contribute for the payment of the
debt or claim an amount not exceeding that which the person would have been liable to contribute
if the proceedings for the liquidation of the company had commenced on the day before that date. (3) If, after a reduction of capital, the company is unable to pay the amount of a debt or claim of a
creditor to whom this section applies and the liquidation of the company has been completed, the
creditor may apply to the Court for an order under subsection (4). (4) If, on the hearing of an application made under subsection (3), the Court is satisfied that the
creditor was unaware of the proceedings for reduction of the company's share capital, or of their
nature or effect, it may make an order—
(a) settling a list of persons liable to contribute under this section; and
(b) providing for the making and enforcing of calls and orders on them as if they were ordinary
contributories in a liquidation. 169

this section; and
(b) providing for the making and enforcing of calls and orders on them as if they were ordinary
contributories in a liquidation. 169

Companies Act (Cap. 486) Kenya
414. Offence to conceal name of creditor, etc. An officer of a company who—
(a) intentionally or recklessly—
(i) conceals the name of a creditor entitled to object to the reduction of capital; or
(ii) misrepresents the nature or amount of the debt or claim of a creditor; or
(b) is knowingly concerned in any such concealment or misrepresentation, commits an offence and is
on conviction liable to a fine not exceeding five hundred thousand shillings or to imprisonment for
a term not exceeding two years, or to both. 415. Shares no bar to damages against company
A person is not precluded from seeking or obtaining damages or other compensation from a company only
because the person—
(a) is holding or has held shares in the company;
(b) has a right to apply or subscribe for shares in the company; or
(c) has a right to be included in the company's register of members in respect of shares in the company. 416.

subscribe for shares in the company; or
(c) has a right to be included in the company's register of members in respect of shares in the company. 416.

Public companies: duty of directors to convene a meeting on loss of capital
(1) If the net assets of a public company are half or less of its called-up share capital, the directors shall
convene a general meeting of the company to consider how to deal with the situation. (2) The directors shall issue a notice of a general meeting not later than twenty-eight days from the day
on which a director first became aware of the fact referred to in subsection (1). (3) The date for which the meeting is to be convened may not be later than fifty six days from the day
referred to in subsection (2). (4) This section does not authorise any matter to be considered at the meeting other than the situation
referred to in subsection (1).

subsection (2). (4) This section does not authorise any matter to be considered at the meeting other than the situation
referred to in subsection (1).

(5) If the directors fail to convene a meeting as required by this section, each of the directors who—
(a) authorised the failure;
(b) being aware of the requirement, failed to take all practical measures to ensure that the
requirement was complied with; or
(c) after the last date by which the meeting should have been convened—
(i) authorises the failure to continue; or
(ii) fails to take all practical measures to ensure that the meeting is convened, commits
an offence and on conviction is liable to a fine not exceeding five hundred thousand
shillings. (6) If, after a director is convicted of an offence under subsection (5), the directors continue to fail to
convene a meeting as required by this section, each of the directors commits and offence on each
day on which the failure continues and on conviction is liable to a fine not exceeding fifty thousand
shillings for each such offence. [Act No. 28 of 2017, s. 26.]
170

failure continues and on conviction is liable to a fine not exceeding fifty thousand
shillings for each such offence. [Act No. 28 of 2017, s. 26.]
170

Companies Act (Cap. 486) Kenya
417. Public company reducing capital below authorised minimum
(1) If the Court makes an order confirming a reduction of a public company’s capital that has the effect
of bringing the nominal value of its allotted share capital below the authorised minimum, the
Registrar may register the order only if—
(a) the Court so directs; or
(b) the company first converts itself into a private company and applies to the Registrar for
registration of the conversion. (2) Section 418 prescribes an expedited procedure for registering a company as a private company in
the circumstances referred to in subsection (1). 418. Expedited procedure for registration of conversion of company into a private company
(1) The Court may authorise a public company to be converted into a private company without its
having passed the special resolution required by section 77. (2) If the Court does so, it shall specify in the order the changes to the company's name and articles to
be made in connection with the conversion. (3) The company may then lodge with the Registrar an application for the registration of the
conversion.

to
be made in connection with the conversion. (3) The company may then lodge with the Registrar an application for the registration of the
conversion.

(4) The application is to be accompanied by—
(a) a copy of the Court's order; and
(b) notice of the company's name, and a copy of the company's articles, as altered by the Court's
order. (5) On receipt of such an application, the Registrar shall issue a certificate of incorporation stating the
company's unique identifying number and that the company is registered as a private company. (6) If the company does not already have a unique identifying number, the Registrar shall allocate such
a number to the company. (7) The Registrar shall specify in the certificate of incorporation that the certificate is issued on
registration of the conversion and the date on which the certificate is so issued. (8) The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's
official seal. (9) On the issue of the certificate of incorporation—
(a) the company becomes a private company; and
(b) the changes in the company's name and articles take effect. (10) The certificate of incorporation is conclusive evidence that the requirements of this Act as to
registration of the conversion have been complied with.

he certificate of incorporation is conclusive evidence that the requirements of this Act as to
registration of the conversion have been complied with.

Division 3 — Private companies: reduction of capital supported by solvency statement
419. Reduction of capital of private company supported by solvency statement
(1) A resolution for reducing share capital of a private company limited by shares is supported by a
solvency statement if—
(a) the directors of the company make a statement of the solvency of the company in accordance
with section 420 not more than fourteen days before the date on which the resolution is
passed; and
171

t of the solvency of the company in accordance
with section 420 not more than fourteen days before the date on which the resolution is
passed; and
171

Companies Act (Cap. 486) Kenya
(b) the resolution and solvency statement are registered in accordance with section 421. (2) If the resolution is proposed as a written resolution, the directors of the company shall send or
submit a copy of the solvency statement to each eligible member at or before the time at which the
proposed resolution is sent or submitted to the member. (3) If the resolution is proposed at a general meeting, the directors of the company shall make a copy
of the solvency statement available for inspection by members of the company throughout that
meeting. (4) The validity of a resolution is not affected by a failure to comply with subsection (2) or (3). 420. What is a solvency statement?

t that
meeting. (4) The validity of a resolution is not affected by a failure to comply with subsection (2) or (3). 420. What is a solvency statement?

(1) A solvency statement is a statement that each of the directors—
(a) has formed the opinion, as regards the company's situation at the date of the statement,
that no ground exists on which the company could then be found to be unable to pay (or
otherwise discharge) its debts; and
(b) has also formed the opinion—
(i) if it is intended to commence the liquidation of the company within twelve months
after that date, that the company will be able to pay (or otherwise discharge) its debts
in full within twelve months of the commencement of the liquidation; or
(ii) in any other case, that the company will be able to pay (or otherwise discharge) its
debts as they fall due during the year immediately following that date. (2) In forming those opinions, the directors shall take into account all the company’s liabilities
(including any contingent or prospective liabilities). (3) The directors shall ensure that the solvency statement contains the prescribed information (if any)
and states—
(a) the date on which it is made; and
(b) the name of each director of the company.

statement contains the prescribed information (if any)
and states—
(a) the date on which it is made; and
(b) the name of each director of the company.

(4) If the directors make a solvency statement without having reasonable grounds for the opinions
expressed in it, and the statement is lodged with the Registrar, each of the directors who is in
default commits an offence and on conviction is liable to a fine not exceeding one million shillings. 421. Registration of resolution and supporting documents
(1) Within fourteen days after the resolution for reducing share capital is passed the company shall
lodge with the Registrar for registration a statement of capital that complies with subsection (3). (2) The requirement under subsection (1) is in addition to the copy of the resolution itself that is
required to be lodged with the Registrar for registration. (3) A statement of capital complies with this subsection if it states with respect to the company's share
capital as reduced by the resolution—
(a) copy of the solvency statement; and
(b) a statement of the total number of shares of the company;
(c) the aggregate nominal value of those shares;
(d) for each class of shares—
(i) the particulars of the rights attached to the shares prescribed by the regulations for
the purposes of this subsection;
172

each class of shares—
(i) the particulars of the rights attached to the shares prescribed by the regulations for
the purposes of this subsection;
172

Companies Act (Cap. 486) Kenya
(ii) the total on each share (whether on account of the nominal value of the which the
resolution was passed; and
(iii) the aggregate nominal value of shares of that class; and
(e) provided to members in accordance with section 419(2) or number of shares of that class;
and
(f) the amount paid up and the amount (if any) unpaid on shares or in the form of a premium). (4) The Registrar shall register the documents lodged under subsection (1) as soon as practicable after
receiving them. (5) The resolution does not take effect until the Registrar has registered the lodged documents. (6) Within fourteen days after the resolution is passed, the company shall also lodge with the Registrar
for registration a statement by the directors confirming that the solvency statement was made not
more than fourteen days before the date under subsection (3). (6) The validity of a resolution is not affected by—
(a) a failure to lodge the documents required to be lodged with the Registrar under subsection
(1) within the time specified in that subsection; or
(b) a failure to comply with subsection (5).

red to be lodged with the Registrar under subsection
(1) within the time specified in that subsection; or
(b) a failure to comply with subsection (5).

(7) If the company lodges with the Registrar a solvency statement that was not provided to members
in accordance with section 419(2) or (3), the company, and each officer of the company who is in
default, commit an offence and on conviction are each liable to a fine not exceeding five hundred
thousand shillings. (8) If a company-fails to comply with subsection (1) or (6), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. (9) If, after a company or any of its officers is convicted of an offence under subsection (8), the
company continues to fail to lodge with the Registrar any of the documents required by subsection
(1) or (6), the company, and each officer of the company who is in default, commits a further offence
on each day on which the failure continues and on conviction are each liable to a fine not exceeding
twenty thousand shillings for each such offence. Division 4 — Supplementary provision
422. General power to make further provision by regulations
The regulations may make further provision for the implementation of this Part.

provision
422. General power to make further provision by regulations
The regulations may make further provision for the implementation of this Part.

Part XVI – ACQUISITION BY LIMITED COMPANY OF ITS OWN SHARES
Division 1 — General provisions
423. Interpretation: Part XVI
(1) In this Part—
"distributable profits", in relation to the giving of any financial assistance—
(a) means those profits out of which the company could lawfully make a distribution equal in
value to that assistance; and
173

y financial assistance—
(a) means those profits out of which the company could lawfully make a distribution equal in
value to that assistance; and
173

Companies Act (Cap. 486) Kenya
(b) if the financial assistance consists of or includes, or is treated as arising in consequence of,
the sale, transfer or other disposition of a non-cash asset—includes any profit that, if the
company were to make a distribution of that kind, would be available for that purpose;
"distribution" has the same meaning as in Part XVII (How company's assets are to be distributed). (2) In this Part—
(a) a reference to a person incurring a liability includes circumstances in which the person's
financial position changes because of an agreement or arrangement (whether enforceable or
unenforceable, and whether made on the person's own account or with another person); and
(b) a reference to a company giving financial assistance for the purpose of reducing or
discharging a liability incurred by a person in order to acquire shares includes giving
assistance for the purpose of wholly or partly restoring the person's financial position to
what it was before the acquisition took place. (3) For the purposes of this Part, a director of a company is an employee of the company for the
purposes of a pension scheme or an employees' share scheme. 424.

purposes of this Part, a director of a company is an employee of the company for the
purposes of a pension scheme or an employees' share scheme. 424.

General rule against limited company acquiring its own shares
(1) A limited company shall not acquire its own shares, whether by purchase, subscription or
otherwise, except in accordance with this Part. (2) Subsection (1) does not prevent a limited company from acquiring any of its own fully paid shares
otherwise than for valuable consideration. (3) Subsection (1) does not prohibit a company from—
(a) acquiring shares in a reduction of capital duly made; or
(b) forfeiting shares, or accepting the surrender of shares, in accordance with a company's
articles, for a failure to pay an amount payable for the shares. (4) An acquisition in contravention of this section is void. (5) If a company contravenes this section, the company, and each officer of the company who is in
default, commit an offence. (6) A company found guilty of an offence under subsection (5) is liable on conviction to a fine not
exceeding one million shillings. (7) An officer of a company who is found guilty of an offence under subsection (5) is liable on
conviction to a fine not exceeding five hundred thousand shillings. 425.

a company who is found guilty of an offence under subsection (5) is liable on
conviction to a fine not exceeding five hundred thousand shillings. 425.

Treatment of shares held by nominee
(1) This section applies to shares in a limited company that—
(a) are taken by a subscriber to the memorandum as nominee of the company;
(b) are issued to a nominee of the company; or
(c) are acquired by a nominee of the company, partly paid up, from a third person. (2) Shares to which this section applies are for all purposes taken to be held by the nominee on the
nominee's own account, in which case the company has no beneficial interest in them. 174

s are for all purposes taken to be held by the nominee on the
nominee's own account, in which case the company has no beneficial interest in them. 174

Companies Act (Cap. 486) Kenya
(3) This section does not apply—
(a) to shares acquired otherwise than by subscription by a nominee of a public company; if—
(i) a person acquires shares in the company with financial assistance given to the person
(directly or indirectly) by the company for the purpose of, or in connection with, the
acquisition; and
(ii) the company has a beneficial interest in the shares; or
(b) to shares acquired by a nominee of the company when the company has no beneficial
interest in the shares. 426. Liability of others if nominee fails to make payment in respect of shares
(1) This section applies to shares in a limited company that—
(a) are taken by a subscriber to the memorandum as a nominee of the company;
(b) are issued to a nominee of the company; or
(c) are acquired by a nominee of the company, partly paid up, from a third person.

inee of the company;
(b) are issued to a nominee of the company; or
(c) are acquired by a nominee of the company, partly paid up, from a third person.

(2) If the nominee, having been called on to pay an amount for the purposes of paying up, or paying
any premium on, shares to which this section applies, fails to pay the amount within twenty-one
days after being requested to do so, the following persons are jointly and severally liable with the
nominee to pay the amount—
(a) in the case of shares that the nominee has agreed to take as subscriber to the memorandum,
the other subscribers to the memorandum;
(b) in any other case, the persons who were directors of the company when the shares were
issued to, or acquired by, the nominee. (3) If, in proceedings for the recovery of an amount under subsection (2), it appears to the Court that
the subscriber or director—
(a) has acted honestly and reasonably; and
(b) having regard to all the circumstances of the case, ought fairly to be relieved from liability,
the Court may make an order relieving the subscriber or director wholly or partly from the
liability on such terms as the Court considers just.

ility,
the Court may make an order relieving the subscriber or director wholly or partly from the
liability on such terms as the Court considers just.

(4) A subscriber to a company's memorandum or a director of a company who reasonably believes that
a claim will or might be made for the recovery of such an amount—
(a) may apply to the Court for relief; and
(b) the Court has the same power to grant relief as it would have had in proceedings for recovery
of the amount. (5) This section does not apply to shares acquired by a nominee of the company if the company has no
beneficial interest in the shares. 427. Duty to cancel shares in public company held by or for the company
(1) This section applies to a public company if—
(a) shares of the company are forfeited, or are surrendered to the company instead of forfeiture,
as provided by the company's articles for a failure to pay an amount payable for the shares;
(b) shares of the company are acquired by it otherwise than in accordance with this Part or Part
XVI and the company has a beneficial interest in the shares;
175

of the company are acquired by it otherwise than in accordance with this Part or Part
XVI and the company has a beneficial interest in the shares;
175

Companies Act (Cap. 486) Kenya
(c) a nominee of the company acquires shares of the company from a third person without
financial assistance being given (directly or indirectly) by the company and the company has
a beneficial interest in the shares; or
(d) a person acquires shares in the company with financial assistance given to the person
(directly or indirectly) by the company for the purpose of, or in connection with, the
acquisition and the company has a beneficial interest in the shares. (2) Except when the shares or the company's interest in the shares have or has been already disposed
of, a company to which this section applies shall—
(a) cancel the shares and diminish the amount of the company's share capital by the nominal
value of the cancelled shares; and
(b) if the effect is that the nominal value of the company's allotted share capital is brought
below the authorised minimum—apply to the Registrar for the registration of the conversion
of the company into a private company, stating the effect of the cancellation.

d minimum—apply to the Registrar for the registration of the conversion
of the company into a private company, stating the effect of the cancellation.

(3) The deadline for complying with subsection (2)—
(a) in a case within subsection (1)(a) or (b), three years from the date of the forfeiture or
surrender;
(b) in a case within subsection (1)(c) or (d), three years from the date of the acquisition; or
(c) in a case within subsection (1)(e), one year from the date of the acquisition. (4) The directors of the company may take any measures necessary to enable the company to comply
with this section, and may do so without complying with the provisions of Part XV relating to the
reduction of a company's share capital. (5) Neither the company nor, in a case within subsection (1)(d) or (e), the nominee or other shareholder
may exercise voting rights in respect of the shares. (6) Any purported exercise of those rights is invalid. 428. Notice of cancellation of shares
(1) Within one month after cancelling shares in order to comply with section 427, a company shall
lodge with the Registrar for registration a notice giving details to the cancelled shares. (2) The company shall attach to, or enclose with, the notice a statement of capital that complies with
subsection (3).

etails to the cancelled shares. (2) The company shall attach to, or enclose with, the notice a statement of capital that complies with
subsection (3).

(3) The statement complies with this subsection if it states with respect to the company’s share capital
immediately following the cancellation—
(a) the total number of shares of the company;
(b) the aggregate nominal value of those shares;
(c) for each class of shares—
(i) the particulars of the rights attached to the shares prescribed by the regulations for
the purposes of this subsection;
(ii) the total number of shares of that class; and
(iii) the aggregate nominal value of shares of that class; and
(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the
nominal value of the share or in the form of a premium). 176

he amount paid up and the amount (if any) unpaid on each share (whether on account of the
nominal value of the share or in the form of a premium). 176

Companies Act (Cap. 486) Kenya
(4) If the company fails to comply with a requirement of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings. (5) If, after a company or any of its officers is convicted of an offence under subsection (4), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. 429. Conversion of public company into private company in consequence of cancellation of
shares
(1) If a public company is obliged to convert itself into a private company in order to comply with
section 427, the directors may resolve that the company should be so converted. (2) Such a resolution may make such changes—
(a) to the company's name; and
(b) to the company's articles, as are necessary in connection with its becoming a private
company.

y make such changes—
(a) to the company's name; and
(b) to the company's articles, as are necessary in connection with its becoming a private
company.

(3) The company shall—
(a) include in the application for registration of the conversion a statement of the company's
new name on conversion; and
(b) attach to, or enclose with, it—
(i) a copy of the resolution, unless a copy has already been forwarded under this Act; and
(ii) a copy of the company's articles as amended by the resolution. 430. Issue of certificate of incorporation on registration of conversion of public company
into private company
(1) The Registrar shall register the conversion of a company into a private limited company if satisfied
that the application for registration complies with the requirements of section 429. (2) If the company does not already have a unique identifying number, the Registrar shall allocate such
a number to the company. (3) On the registration of the conversion of a public company into a private limited company, the
Registrar shall issue a certificate of incorporation stating the company's unique identifying number
and that the company is registered as a private company. (4) The Registrar shall state in the certificate of incorporation that it is issued on registration of the
conversion and the date on which the certificate is issued.

r shall state in the certificate of incorporation that it is issued on registration of the
conversion and the date on which the certificate is issued.

(5) The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's
official seal. (6) On the issue of the certificate of incorporation—
(a) the company specified in the certificate becomes a private company; and
(b) the changes in the company’s name and articles take effect. (7) The certificate of incorporation is conclusive evidence that the requirements of this Act as to
registration of the conversion have been complied with. 177

ertificate of incorporation is conclusive evidence that the requirements of this Act as to
registration of the conversion have been complied with. 177

Companies Act (Cap. 486) Kenya
431. Effect of failure to apply for registration of company's conversion into private
company
(1) If a public company that is required by section 427 to apply to the Registrar for the registration of
the conversion of the company into a private company fails to do so before the deadline specified in
subsection (3) of that section, Part XIX applies to it as if it were a private company. (2) Except as provided by subsection (1), the company continues to be treated as a public company
until its conversion into a private company is registered. 432. Offence to fail to cancel shares or apply for registration of company's conversion into
private company
(1) If a company that is required to do so by section 427—
(a) fails to cancel specified shares; or
(b) fails to make an application for the registration of the conversion of the company into a
private company,
before the deadline specified in subsection (3) of that section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.

officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.

(2) If, after a company or any of its officers is convicted of an offence under subsection (1), the
company continues to fail to cancel the relevant shares or to make the required application for
the registration of the conversion of the company into a private company, the company, and each
officer of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. 433.

each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence. 433.

Application of sections 437 to 442 to private company that applies for registration of
conversion into public company
(1) This section applies to a private company that is registered as a public company—
(a) after shares in the company have been forfeited in accordance with the company's articles or
have been surrendered to the company instead of forfeiture;
(b) after shares in which the company had a beneficial interest have been acquired by the
company (otherwise than by any of the methods permitted by this Part or Part XVI;
(c) after shares in which the company had a beneficial interest have been acquired by a nominee
of the company from a third party without financial assistance being given directly or
indirectly by the company; or
(d) after shares in which the company had a beneficial interest have been acquired by a person
with financial assistance given (directly or indirectly) by the company for the purpose of or in
connection with the acquisition.

acquired by a person
with financial assistance given (directly or indirectly) by the company for the purpose of or in
connection with the acquisition.

(2) When this section applies to a private company whose conversion into a public company has
been registered, sections 427 to 432 apply to the company as if it had been a public company
at the time of the forfeiture, surrender or acquisition, except that, in the application of section
427, the deadline specified in subsection (3)(a), (b) or (c) of that section runs from the date of the
registration of the conversion of the company into a public company. 178

ed in subsection (3)(a), (b) or (c) of that section runs from the date of the
registration of the conversion of the company into a public company. 178

Companies Act (Cap. 486) Kenya
434. Transfer to reserve on acquisition of shares by public company or nominee
(1) If—
(a) a public company, or a nominee of a public company, acquires shares in the company; and
(b) those shares are shown in a balance sheet of the company as an asset,
the company shall transfer to a reserve account from profits available for the payment of dividends
an amount equal to the value of the shares. (2) The company shall not distribute the amounts so transferred. (3) Subsection (1) applies to an interest in shares as it applies to shares and as it so applies the
reference to the value of the shares is a reference to the value to the company of its interest in the
shares. (4) If a company contravenes subsection (1) or (2), the company, and each officer of the company who
is in default, commit an offence. (5) A company found guilty of an offence under section (4) is liable on conviction to a fine not
exceeding one million shillings. (6) An officer of a company who is found guilty of an offence under subsection (4) is liable on
conviction to a fine not exceeding five hundred thousand shillings. 435.

a company who is found guilty of an offence under subsection (4) is liable on
conviction to a fine not exceeding five hundred thousand shillings. 435.

Public companies: general rule against lien or charges on own shares
(1) A lien or other charge of a public company on its own shares(whether taken expressly or otherwise)
is void, except as permitted by this section. (2) In the case of any description of company, a charge is permitted if the shares are not fully paid up
and the charge is for an amount payable in respect of the shares. (3) In the case of a company whose ordinary business—
(a) includes lending money; or
(b) consists of or includes providing credit or hiring or selling goods under hire-purchase,
conditional sale or retention of title agreements, a charge is permitted (whether the shares
are fully paid or not) if it arises in connection with a transaction entered into by the company
in the ordinary course of that business. (4) In the case of a company whose conversion into a public company has been registered, a charge is
permitted if it was in existence immediately before the application for registration was lodged with
the Registrar. 436.

been registered, a charge is
permitted if it was in existence immediately before the application for registration was lodged with
the Registrar. 436.

Interests to be disregarded in determining whether company has beneficial interest
In determining for the purposes of this Part whether a company has a beneficial interest in shares, the
interests referred to in sections 437, 438 and 439 are to be disregarded. 437. Residual interest under pension scheme or employees’ share scheme
(1) When the shares are held in trust for the purposes of a pension scheme or an employees’ share
scheme, any residual interest of the company that has not vested in possession is to be disregarded. (2) For the purpose of subsection (1), “residual interest” means a right of the company to receive any of
the trust property if—
(a) all the liabilities arising under the scheme are satisfied or provided for;
179

ns a right of the company to receive any of
the trust property if—
(a) all the liabilities arising under the scheme are satisfied or provided for;
179

Companies Act (Cap. 486) Kenya
(b) the company ceases to participate in the scheme; or
(c) the trust property at any time exceeds what is necessary to satisfy the liabilities arising, or
that are expected to arise, under the scheme. (3) In subsection (2)—
(a) the reference to a right includes a right dependent on the exercise of a discretion vested by
the scheme in the trustee or another person; and
(b) the reference to liabilities arising under a scheme includes liabilities that have resulted, or
may result, from the exercise of such a discretion. (4) For the purposes of this section, a residual interest vests in possession—
(a) in a case within subsection (2)(a), on the occurrence of the event referred to there (whether
the amount of the property receivable under the right is ascertained or not);
(b) in a case within subsection (2)(b) or (c), when the company becomes entitled to require the
trustee to transfer to it any of the property receivable under that right.

subsection (2)(b) or (c), when the company becomes entitled to require the
trustee to transfer to it any of the property receivable under that right.

(5) If, because of this section—
(a) shares are exempt from section 425 or 426 at the time they are taken, issued or acquired; but
(b) the relevant residual interest vests in possession before the shares are disposed of or fully
paid up, those sections apply to the shares as if they had been taken, issued or acquired on
the date on which the interest vests in possession. (6) If, because of this section—
(a) shares are exempt from sections 427 to 433 at the time they are required; but
(b) the relevant residual interest vests in possession before they are disposed of, those sections
apply to the shares as if they had been acquired on the date on which the interest vests in
possession. 438.

fore they are disposed of, those sections
apply to the shares as if they had been acquired on the date on which the interest vests in
possession. 438.

Employer’s charges and other rights of recovery
(1) If the relevant shares are held on trust for the purposes of a pension scheme, the following are to be
disregarded—
(a) a charge or lien on, or set-off against, any benefit or other right or interest under the scheme
for the purpose of enabling the employer or former employer of a member of the scheme to
obtain the discharge of a monetary obligation due to the employer or former employer from
the member;
(b) a right to receive from the trustee of the scheme, or as trustee of the scheme to retain,
an amount that can be recovered or retained under a prescribed enactment relating to
pensions or the provision of retirement benefits, or otherwise, as reimbursement or
partial reimbursement for contributions equivalent premium paid in connection with the
enactment.

tirement benefits, or otherwise, as reimbursement or
partial reimbursement for contributions equivalent premium paid in connection with the
enactment.

(2) If the shares are held in trust for the purposes of an employees' share scheme, a charge or lien on,
or set-off against, a benefit or other right or interest under the scheme is to be disregarded if it
is designed to enable the employer or former employer of a member of the scheme to obtain the
discharge of a monetary obligation due to the employee or former employee from the member. 439. Rights as executor, administrator or trustee
(1) If the company is an executor, administrator or trustee, rights that the company has in that capacity
are to be disregarded. 180

trator or trustee
(1) If the company is an executor, administrator or trustee, rights that the company has in that capacity
are to be disregarded. 180

Companies Act (Cap. 486) Kenya
(2) Those rights include—
(a) a right of the company to recover its expenses or be remunerated out of the estate or trust
property; and
(b) a right of the company to be indemnified out of that property for a liability incurred because
of an act or omission of the company in performing its duties as executor, administrator or
trustee. Division 2 — Financial assistance for purchase of own shares
440.

ssion of the company in performing its duties as executor, administrator or
trustee. Division 2 — Financial assistance for purchase of own shares
440.

Meaning of “financial assistance” for purposes of this Part
(1) In this Division, “financial assistance” means—
(a) financial assistance given in the form of a gift;
(b) financial assistance given—
(i) in the form of a guarantee, security or indemnity other than an indemnity in respect
of the indemnifier's own neglect or default; or
(ii) in the form of a release or waiver;
(c) financial assistance given—
(i) in the form of a loan or any other agreement under which any of the obligations of the
person giving the assistance are to be fulfilled at a time when in accordance with the
agreement any obligation of another party to the agreement remains unfulfilled; or
(ii) in the form of the novation of, or the assignment of rights arising under, a loan or
such other agreement; or
(d) any other financial assistance given by a company if—
(i) the net assets of the company are reduced to a material extent by the giving of the
assistance; or
(ii) the company has no net assets. (2) In this Part, “net assets” means the aggregate amount of the company’s assets of the company less
the aggregate amount of its liabilities.

assets. (2) In this Part, “net assets” means the aggregate amount of the company’s assets of the company less
the aggregate amount of its liabilities.

(3) In the case of a company that prepares an individual financial statement, the liabilities of the
company include any provision that is made in that statement. 441. [Repealed by Act No. 28 of 2017, s. 27.]
442. Assistance for acquisition of shares in public company
(1) If a person is acquiring or proposing to acquire shares in a public company, neither the company
nor any other company that is a subsidiary of the company may give financial assistance (directly
or indirectly) for the purpose of the acquisition before or at the same time as the acquisition takes
place. (2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of
shares in it or its holding company if—
(a) the company's principal purpose in giving the assistance is not for the purpose of the
acquisition; or
(b) giving assistance for that purpose is only incidental to achieving some larger purpose of the
company; and the assistance is given in good faith in the interests company. 181

at purpose is only incidental to achieving some larger purpose of the
company; and the assistance is given in good faith in the interests company. 181

Companies Act (Cap. 486) Kenya
(3) If—
(a) a person has acquired shares in a company; and
(b) the person or another person has incurred a liability for the purpose of the acquisition;
neither the company nor any other company that is a subsidiary of the company may give financial
assistance, either directly or indirectly, for the purpose of reducing or discharging the liability
if, at the time the assistance is given, the company in which the shares were acquired is a public
company. (4) Subsection (3) does not prohibit a company from giving financial assistance if—
(a) the company's principal purpose in giving the assistance is not to reduce or discharge any
liability incurred by a person for the purpose of the acquisition of shares in the company or
its holding company; or
(b) the reduction or discharge of any such liability is only incidental to achieving some larger
purpose of the company, and the assistance is given in good faith in the interests of the
company. (5) This section has effect subject to sections 445 and 446. [Act No. 28 of 2017, s. 28.]
443.

is given in good faith in the interests of the
company. (5) This section has effect subject to sections 445 and 446. [Act No. 28 of 2017, s. 28.]
443.

Assistance by public company for acquisition of shares in its private holding company
(1) If a person is acquiring or proposing to acquire shares in a private company, a public company that
is a subsidiary of that company shall not give financial assistance (directly or indirectly) for the
purpose of the acquisition before or at the same time as the acquisition takes place. (2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of
shares in its holding company if—
(a) the company's principal purpose in giving the assistance is not for the purpose of the
acquisition; or
(b) giving assistance for that purpose is only incidental to achieving some larger purpose of the
company, and the assistance is given in good faith in the interests of the company. (3) If—
(a) a person has acquired shares in a private company; and
(b) the person or another person has incurred a liability for the purpose of the acquisition, a
public company that is a subsidiary of the company shall not give financial assistance, either
directly or indirectly, for the purpose of reducing or discharging the liability.

ubsidiary of the company shall not give financial assistance, either
directly or indirectly, for the purpose of reducing or discharging the liability.

(4) Subsection (3) does not prohibit a company from giving financial assistance if—
(a) the company's principal purpose in giving the assistance is not to reduce or discharge any
liability incurred by a person for the purpose of the acquisition of shares in the company or
its holding company; or
(b) the reduction or discharge of any such liability is only incidental to achieving some larger
purpose of the company, and the assistance is given in good faith in the interests of the
company. (5) This section has effect subject to sections 445 and 446. [Act No. 28 of 2017, s. 29.]
182

is given in good faith in the interests of the
company. (5) This section has effect subject to sections 445 and 446. [Act No. 28 of 2017, s. 29.]
182

Companies Act (Cap. 486) Kenya
444. Offence to give prohibited assistance
(1) If a company contravenes section 442(1) or (3) or 443(1) or (3), the company, and each officer of the
company who is in default, commit an offence. (2) A company that is found guilty of an offence under subsection (1) is liable on conviction to a fine
not exceeding one million shillings. (3) An officer of a company who is found guilty of an offence under subsection (1) is liable on
conviction to a fine not exceeding five hundred thousand shillings or to a term of imprisonment not
exceeding two years, or to both. [Act No. 28 of 2017, s. 30.]
445.

fine not exceeding five hundred thousand shillings or to a term of imprisonment not
exceeding two years, or to both. [Act No. 28 of 2017, s. 30.]
445.

Certain transactions excepted unconditionally from sections 442 and 443
Sections 442 and 443 do not prohibit any of the following transactions—
(a) a distribution of a company’s assets in the form of—
(i) a dividend lawfully made; or
(ii) a distribution in the course of a company's liquidation;
(b) an allotment of bonus shares;
(c) a reduction of capital;
(d) a redemption of shares;
(e) anything done in accordance with an order of the Court sanctioning a compromise or arrangement
with members or creditors;
(f) anything done under an arrangement under which the liquidator in the liquidation of a company
accepts shares as consideration for sale of the company’s property;
(g) anything done under a voluntary arrangement entered into under the laws relating to insolvency. 446.

ideration for sale of the company’s property;
(g) anything done under a voluntary arrangement entered into under the laws relating to insolvency. 446.

Certain transactions excepted from sections 442 and 443 conditionally
(1) This section applies to the following transactions—
(a) if the lending of money is part of the ordinary business of the company, the lending of
money in the ordinary course of the company’s business;
(b) the provision by the company, in good faith in the interests of the company or its holding
company, of financial assistance for the purposes of an employees’ share scheme;
(c) the provision of financial assistance by the company for the purposes or, or in connection
with, anything done by the company (or another company in the same group) for the purpose
of enabling or facilitating transactions in shares in the first-mentioned company or its
holding company between, and involving the acquisition of beneficial ownership of those
shares by—
(i) bona fide employees or former employees of that company (or another company in the
same group); or
(ii) spouses, widows, widowers or surviving, or minor children or step-children of any
such employees or former employees;
(d) the making by the company of loans to persons (other than directors) employed in good faith
by the company with a view to enabling those persons to acquire fully paid shares in the
company or its holding company to be held by them as beneficial owners.

pany with a view to enabling those persons to acquire fully paid shares in the
company or its holding company to be held by them as beneficial owners.

183

183

Companies Act (Cap. 486) Kenya
(2) Sections 442 and 443 do not prohibit any of the transactions to which this section applies—
(a) if the company giving the assistance is a private company; or
(b) if the company giving the assistance is a public company and—
(i) the company has net assets that are not reduced by the giving of the assistance; or
(ii) to the extent that those assets are so reduced, the assistance is provided out of
distributable profits. (3) In this section, a reference to "net assets" is to the amount by which the aggregate of the company's
assets exceeds the aggregate of its liabilities. (4) For the purpose of subsection (3)—
(a) the amounts of both assets and liabilities are as stated in the company's accounting records
immediately before the financial assistance is given; and
(b) "liabilities" includes any amount retained as reasonably necessary for the purpose of
providing for a liability the nature of which is clearly defined and that is either likely to be
incurred or certain to be incurred but uncertain as to amount or as to the date on which it
will arise.

learly defined and that is either likely to be
incurred or certain to be incurred but uncertain as to amount or as to the date on which it
will arise.

(5) For the purposes of subsection (1)(c), a company is in the same group as another company if it
is a holding company or subsidiary of that company or a subsidiary of a holding company of that
company. Division 3 — Purchase of own shares
447. Power of limited company to purchase own shares
(1) A limited company having a share capital may purchase its own shares (including any redeemable
shares), subject to—
(a) the following provisions of this Division; and
(b) any restriction or prohibition in the company's articles. (2) A limited company may not purchase its own shares if as a result of the purchase there would no
longer be any issued shares of the company other than redeemable shares or shares held as treasury
shares. 448. Purchase of company’s own shares
(1) A limited company may not purchase its own shares unless they are fully paid. (2) A limited company that purchases its own shares shall pay for them on purchase. (3) A purchase in contravention of this section is void. 449. Financing of purchase of company's own shares
(1) A private limited company may purchase its own shares out of capital in accordance with Division 4.

Financing of purchase of company's own shares
(1) A private limited company may purchase its own shares out of capital in accordance with Division 4.

(2) Subject to subsection (1)—
(a) a limited company may purchase its own shares only out of—
(i) distributable profits of the company; or
(ii) the proceeds of a fresh issue of shares made for the purpose of financing the purchase;
and
184

of—
(i) distributable profits of the company; or
(ii) the proceeds of a fresh issue of shares made for the purpose of financing the purchase;
and
184

Companies Act (Cap. 486) Kenya
(b) any premium payable on the purchase by a limited company of its own shares is required to
be paid out of distributable profits of the company, subject to subsection (3). (3) If the shares to be purchased were issued at a premium, any premium payable on their purchase
by the company may be paid out of the proceeds of a fresh issue of shares made for the purpose of
financing the purchase, up to an amount equal to—
(a) the aggregate of the premiums received by the company on the issue of the shares
purchased; or
(b) the current amount of the company's share premium account (including any sum transferred
to that account in respect of premiums on the new shares), whichever is the less. (4) The amount of the company's share premium account is reduced by an amount corresponding (or by
sums in the aggregate corresponding) to the amount of any payment made under subsection (3). (5) This section has effect subject to section 484(5). 450.

ms in the aggregate corresponding) to the amount of any payment made under subsection (3). (5) This section has effect subject to section 484(5). 450.

Approval for company to purchase own shares
(1) A limited company may purchase its own shares only—
(a) by an off-market purchase, under a contract approved in advance in accordance with section
451; or
(b) by a market purchase, approved in accordance with section 458. (2) A purchase is off-market if the shares either—
(a) are purchased otherwise than on an approved securities exchange; or
(b) are purchased on an approved securities exchange but are not subject to a marketing
arrangement on the exchange. (3) For the purpose of subsection (2), a company's shares are subject to a marketing arrangement on an
approved securities exchange if the company has been given facilities for dealings in the shares to
take place on the exchange—
(a) without prior permission for individual transactions from the authority governing the
exchange; and
(b) without limit as to the time during which those facilities are to be available. (4) A purchase is a market purchase for the purpose of this section if—
(a) it is made on an approved securities exchange; and
(b) it is not an off-market purchase because of subsection (2)(b).

purpose of this section if—
(a) it is made on an approved securities exchange; and
(b) it is not an off-market purchase because of subsection (2)(b).

(5) In this section "approved securities exchange" means a securities exchange approved by the Capital
Markets Authority under the Capital Markets Act [Cap 485A]. 451. Authorisation for off-market purchase
(1) A company may make an off–market purchase of its own shares under a contract but only if—
(a) the terms of the contract have been approved by a special resolution of the company before
the contract was entered into; or
(b) the contract provides that no shares may be purchased under the contract until its terms
have been approved by a special resolution of the company. 185

he contract provides that no shares may be purchased under the contract until its terms
have been approved by a special resolution of the company. 185

Companies Act (Cap. 486) Kenya
(2) The contract may be a contract, entered into by the company and relating to shares in the company,
that does not amount to a contract to purchase the shares but under which the company may
(subject to any conditions) become entitled or obliged to purchase the shares. (3) The authority conferred by a resolution under this section may be varied or revoked or from time to
time be renewed, but only by a special resolution of the company. (4) In the case of a public company a resolution conferring, varying or renewing approval shall specify a
date on which the approval is to expire, which may not be later than eighteen months after the date
on which the resolution is passed. (5) A resolution conferring, varying, revoking or renewing approval under this section is subject to
sections 452 and 453. 452. Resolution authorising off-market purchase: exercise of voting rights
(1) This section applies to a resolution to confer, vary, revoke or renew an approval for the purposes of
section 451. (2) If the resolution is proposed as a written resolution, a member who holds shares to which the
resolution relates is not an eligible member.

n 451. (2) If the resolution is proposed as a written resolution, a member who holds shares to which the
resolution relates is not an eligible member.

(3) A resolution proposed at a meeting of the company is not effective if—
(a) any member of the company holding shares to which the resolution relates exercises the
voting rights conferred by any of those shares in voting on the resolution; and
(b) the resolution would not have been passed if the member had not done so. (4) For the purpose of subsection (3)—
(a) a member who holds shares to which the resolution relates is taken to have exercised the
voting rights conferred by those shares not only if the member votes in respect of them on a
poll on the question whether the resolution should be passed, but also if the member votes
on the resolution otherwise than on a poll;
(b) any member of the company may demand a poll on that question; and
(c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as
a vote and a demand by the member. 453. Resolution approving off-market purchase: disclosure of details of contract
(1) This section applies to a resolution passed by a company to confer, vary, revoke or renew an
approval to make a purchase under section 451.

ntract
(1) This section applies to a resolution passed by a company to confer, vary, revoke or renew an
approval to make a purchase under section 451.

(2) The company shall ensure that a copy of the relevant contract (if it is in writing) or a memorandum
setting out its terms (if it is not in writing) is made available to its member of the company—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to the member;
(b) in the case of a resolution passed at a meeting, by being made available for inspection by
members of the company both—
(i) at the company's registered office for not less than fourteen days ending with the day
before the date of the meeting; and
(ii) at the meeting itself. (3) The company shall include in a memorandum of contract terms that are made available to the
members of the company the names of the members holding shares to which the contract relates. 186

dum of contract terms that are made available to the
members of the company the names of the members holding shares to which the contract relates. 186

Companies Act (Cap. 486) Kenya
(4) The company shall attach to the copy of the contract made available to the members of the
company a written memorandum specifying such of those names as do not appear in the contract
itself. (5) A resolution to which this section applies is not validly passed if the requirements of this section
are not complied with. 454. Variation of contract for off-market purchase
(1) A company may agree to a variation of a contract approved under section 451 only if the variation is
approved in advance in accordance with this section. (2) The terms of the variation have effect only if they have been approved by a special resolution of the
company. (3) The approval may be varied, revoked or from time to time renewed by a special resolution of the
company. (4) In the case of a public company, a resolution conferring, varying or renewing the approval has
effect only if it specifies a date on which the authority is to expire. That date may not be later than
eighteen months after the date on which the resolution is passed. (5) A resolution conferring, varying, revoking or renewing an approval under this section is subject to
sections 455 and 456. 455.

solution is passed. (5) A resolution conferring, varying, revoking or renewing an approval under this section is subject to
sections 455 and 456. 455.

Resolution approving variation: exercise of voting rights
(1) This section applies to a resolution passed by a company to confer, vary, revoke or renew an
approval to vary a contract under section 454. (2) If the resolution is proposed as a written resolution, a member who holds shares to which the
resolution relates is not an eligible member. (3) A resolution proposed at a meeting of the company is not effective if—
(a) any member of the company holding shares to which the resolution relates exercises the
voting rights conferred by any of those shares in voting on the resolution; and
(b) the resolution would not have been passed if the member had not done so.

rights conferred by any of those shares in voting on the resolution; and
(b) the resolution would not have been passed if the member had not done so.

(4) For the purpose of subsection (3)—
(a) a member who holds shares to which the resolution relates is taken to have exercised the
voting rights conferred by those shares not only if the member votes in respect of them on a
poll on the question whether the resolution should be passed, but also if the member votes
on the resolution otherwise than on a poll;
(b) any member of the company may demand a poll on that question; and
(c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as
a vote and a demand by the member. 456. Resolution approving variation: disclosure of details of variation
(1) This section applies to a resolution passed by a company under section 454. 187

Resolution approving variation: disclosure of details of variation
(1) This section applies to a resolution passed by a company under section 454. 187

Companies Act (Cap. 486) Kenya
(2) The company shall ensure that a copy of the proposed variation (if it is in writing) or a written
memorandum giving details of the proposed variation (if it is not) is made available to the members
of the company—
(a) in the case of a written resolution, by being sent or submitted to every eligible member of the
company at or before the time at which the proposed resolution is sent or submitted to the
member;
(b) in the case of a resolution at a meeting, by being made available for inspection by members
of the company both—
(i) at the company's registered office for not less than fourteen days ending with the day
before the date of the meeting; and
(ii) at the meeting itself. (3) The company shall also ensure that a copy of the original contract or, a memorandum of its terms,
together with any variations previously made, are made available to the members of the company. (4) The company shall include in a memorandum of the proposed variation made available to its
members the names of the members holding shares to which the variation relates.

nclude in a memorandum of the proposed variation made available to its
members the names of the members holding shares to which the variation relates.

(5) The company shall attach to the copy of the proposed variation made available to its members a
written memorandum specifying such of those names as do not appear in the variation itself. (6) A resolution to which this section applies is not validly passed if the requirements of this section
are not complied with. 457. Release of company’s rights under contract for off-market purchase
(1) An agreement by a company to release its rights under a contract approved under section 451 is
void unless the terms of the release agreement are approved in advance in accordance with this
section. (2) The terms of the proposed agreement have effect only if they are approved by a special resolution of
the company. (3) The approval may be varied, revoked or from time to time renewed by a special resolution of the
company. (4) In the case of a public company, a resolution conferring, varying or renewing the approval has
effect only if it specifies a date on which the authority is to expire. That date may not be later than
eighteen months after the date on which the resolution is passed.

pecifies a date on which the authority is to expire. That date may not be later than
eighteen months after the date on which the resolution is passed.

(5) Section 455 and 456 apply to a resolution authorising a proposed release agreement as they apply to
a resolution authorising a proposed variation. 458. Approval for company to make market purchase
(1) A company may make a market purchase of its own shares only if the purchase has been approved
by a resolution of the company. (2) Such an approval—
(a) can be general or limited to the purchase of shares of a particular class or description; and
(b) can be unconditional or made subject to conditions. (3) Such an approval is not effective unless it—
(a) specifies the maximum number of shares authorised to be acquired; and
(b) determines both the maximum and minimum prices that may be paid for the shares. 188

es the maximum number of shares authorised to be acquired; and
(b) determines both the maximum and minimum prices that may be paid for the shares. 188

Companies Act (Cap. 486) Kenya
(4) The company may vary, revoke or renew such an approval only by a further resolution of the
company. (5) A resolution conferring, varying or renewing an approval is not effective unless it specifies a date on
which it is to expire. That date may not be later than eighteen months after the date on which the
resolution is passed. (6) A company may make a purchase of its own shares after the expiry of the time limit specified if—
(a) the contract of purchase was entered into before the approval expired; and
(b) the terms of the approval permitted the company to enter into a contract of purchase that
would or might be executed wholly or partly after its expiration. (7) A resolution to confer or vary an approval under this section can determine either or both the
maximum and minimum price for purchase by—
(a) specifying a particular amount; or
(b) providing a basis or formula for calculating the amount of the price (but without reference to
any person's discretion or opinion). (8) The provisions of Part III relating to resolutions affecting a company's constitution apply to a
resolution passed in accordance with this section. 459.

e provisions of Part III relating to resolutions affecting a company's constitution apply to a
resolution passed in accordance with this section. 459.

Copy of contract or memorandum to be available for inspection
(1) This section applies to a company that has entered into—
(a) a contract approved under section 451; or
(b) a contract for a purchase approved under section 458. (2) The company shall keep available for inspection—
(a) a copy of the contract; or
(b) if the contract is not in writing, a written memorandum setting out its terms. (3) The company shall keep the copy or memorandum available for inspection from the date on which
the contract is entered into until the end of the period of ten years from and including—
(a) the date on which the purchase of all the shares under the contract is completed; or
(b) if the contract specifies some other date, the date specified. (4) Except in so far as the regulations otherwise provide, the company shall keep the copy or
memorandum available for inspection at the company’s registered office. (5) The company shall ensure that a copy or memorandum required to be kept under this section is
kept open for inspection without charge—
(a) by any member of the company; and
(b) in the case of a public company, by any other person.

is section is
kept open for inspection without charge—
(a) by any member of the company; and
(b) in the case of a public company, by any other person.

(6) This section applies to a variation of a contract as it applies to the original contract. 460. Enforcement of right to inspect copy or memorandum
(1) If a company fails to comply with a requirement of section 459, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding two hundred thousand shillings. 189

icer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding two hundred thousand shillings. 189

Companies Act (Cap. 486) Kenya
(2) If, after a company or any of its officers is convicted of an offence under subsection (1), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. (3) If a company has failed to comply with section 459(5), a person aggrieved by the failure may apply
to the Court for an order under subsection (4). (4) If, on the hearing of an application made under subsection (3), the Court finds the application to be
substantiated, it shall, by order, compel an immediate inspection of the relevant document. On the
hearing of the application, the company is entitled to be heard as respondent. 461. Company’s right to purchase own shares not assignable
The rights of a company under a contract authorised under section 451 or 458 are not capable of being
assigned. 462.

urchase own shares not assignable
The rights of a company under a contract authorised under section 451 or 458 are not capable of being
assigned. 462.

Payments apart from purchase price to be made out of distributable profits
(1) A payment made by a company in consideration of—
(a) acquiring any right with respect to the purchase of its own shares under a contingent
purchase contract approved under section 451;
(b) the variation of any contract approved under that section; or
(c) the release of any of the company's obligations with respect to the purchase of any of its own
shares under a contract approved under section 451 or 458,
may be made only out of the company’s distributable profits. (2) If subsection (1) is contravened, the following provisions apply—
(a) in a case within subsection (1)(a), a purchase by the company of its own shares under that
contract cannot be made under this Division;
(b) in a case within subsection (1)(b), such a purchase following the variation cannot be made
under this Division; and
(c) in a case within subsection (1)(c), purported release is void. 463.

uch a purchase following the variation cannot be made
under this Division; and
(c) in a case within subsection (1)(c), purported release is void. 463.

How shares purchased are to be treated
If a limited company makes a purchase of its own shares in accordance with this Division, then—
(a) if section 458 applies, the shares are to be held and dealt with in accordance with Part XXI, but;
(b) if that section does not apply—
(i) the shares are cancelled; and
(ii) the amount of the company's issued share capital is diminished by the nominal value of the
shares cancelled. [Act No. 28 of 2017, s. 31.]
464. Return of purchase of own shares to be lodged with Registrar
(1) Within fourteen days after a company purchases shares under this Division, it shall lodge with the
Registrar for registration a return that complies with subsections (2) to (4). 190

mpany purchases shares under this Division, it shall lodge with the
Registrar for registration a return that complies with subsections (2) to (4). 190

Companies Act (Cap. 486) Kenya
(2) The return complies with this subsection if it distinguishes—
(a) shares in relation to which section 428 applies and shares in relation to which that section
does not apply; and
(b) shares in relation to which that section applies—
(i) that are immediately cancelled under section 531; and
(ii) that are not so cancelled. (3) The return complies with this subsection if it states, with respect to shares of each class purchased
—
(a) the number and nominal value of the shares; and
(b) the date on which the shares were delivered to the company. (4) In the case of a public company, the return complies with this subsection if it states—
(a) the aggregate amount paid by the company for the shares; and
(b) the maximum and minimum prices paid in respect of shares of each class purchased. (5) Particulars of shares delivered to the company on different dates and under different contracts can
be included in a single return. (6) If a company exercises the right conferred by subsection (5), the amount required to be stated under
subsection (4)(a) is the aggregate amount paid by the company for all the shares to which the return
relates.

, the amount required to be stated under
subsection (4)(a) is the aggregate amount paid by the company for all the shares to which the return
relates.

(7) If a company fails to comply with subsection (1), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding two
hundred thousand shillings. (8) If, after a company or any of its officers is convicted of an offence under subsection (7), the
company continues to fail to lodge with the Registrar the requisite return, the company, and each
officer of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. 465. Notice to Registrar of cancellation of shares
(1) If, on the purchase by a company of any of its own shares in accordance with this Part—
(a) section 526 does not apply (so that the shares are treated as cancelled); or
(b) that section applies but the shares are immediately cancelled under section 531, the
company shall, within one month after receiving the shares, lodge with the Registrar for
registration a notice specifying the shares that are cancelled.

mpany shall, within one month after receiving the shares, lodge with the Registrar for
registration a notice specifying the shares that are cancelled.

(2) The company shall attach to, or enclose with, the notice a statement of capital that complies with
subsection (3). (3) A statement of capital complies with this subsection if it states with respect to the company's share
capital immediately following the cancellation—
(a) the total number of shares of the company;
(b) the aggregate nominal value of those shares;
(c) for each class of shares—
(i) the particulars of the rights attached to the shares prescribed by the regulations for
the purposes of this subsection;
191

each class of shares—
(i) the particulars of the rights attached to the shares prescribed by the regulations for
the purposes of this subsection;
191

Companies Act (Cap. 486) Kenya
(ii) the total number of shares of that class; and
(iii) the aggregate nominal value of shares of that class; and
(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the
nominal value of the share or in the form of a premium). (4) If a company fails to comply with a requirement of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding two hundred thousand shillings. (5) If, after a company or any of its officers is convicted of an offence under subsection (1), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. Division 4 — Redemption or purchase by private company out of capital
466.

le to a fine not exceeding twenty thousand shillings for
each such offence. Division 4 — Redemption or purchase by private company out of capital
466.

Interpretation: Division 4
In this Division—
(a) a reference to payment out of capital is to any payment so made, whether or not it would, apart
from this section, be treated as a payment out of capital; and
(b) "the permissible capital payment", in relation to shares, is the amount required under section
468. 467. Power of private limited company to redeem or purchase own shares out of capital
A private limited company may in accordance with this Division, but subject to any restriction or
prohibition in the company's articles, make a payment in respect of the redemption or purchase of its own
shares otherwise than out of distributable profits or the proceeds of a fresh issue of shares. 468. The permissible capital payment
A payment that, in accordance with this Division, can be made by a company out of capital in respect of
the redemption or purchase of its own shares is such amount as, after applying for that purpose—
(a) available profits of the company; and
(b) the proceeds of a fresh issue of shares made for the purposes of the redemption or purchase, is
required to meet the price of redemption or purchase. 469.

proceeds of a fresh issue of shares made for the purposes of the redemption or purchase, is
required to meet the price of redemption or purchase. 469.

What profits are available
(1) For the purposes of this Division, the available profits of the company, in relation to the redemption
or purchase of any of its shares, are the profits of the company that are available for distribution
(within the meaning of Part XVII. (2) Whether a company has any profits so available; and the amount of any such profits, are to be
determined in accordance with section 480 instead of in accordance with Part XVII. 192

its so available; and the amount of any such profits, are to be
determined in accordance with section 480 instead of in accordance with Part XVII. 192

Companies Act (Cap. 486) Kenya
470. Determination of available profits
(1) The available profits of the company are determined as follows—
(a) first—
Determine the profits of the company by reference to the following items as stated in the
relevant financial statements—
(i) profits, losses, assets and liabilities;
(ii) provisions of a kind specified for the purposes of this subsection by the regulations;
(iii) share capital and reserves (including undistributable reserves). (b) Second—
Reduce the amount so determined by the amount of—
(i) each distribution lawfully made by the company; and
(ii) each other relevant payment lawfully made by the company out of distributable
profits, after the date of the relevant accounts and before the end of the relevant
period. (2) For the purpose of subsection (1)(b)(i), "other relevant payment lawfully made" includes—
(a) financial assistance lawfully given out of distributable profits in accordance with Division 2;
(b) payments lawfully made out of distributable profits in respect of the purchase by the
company of any shares in the company; and
(c) payments of any description specified in section 462.

ibutable profits in respect of the purchase by the
company of any shares in the company; and
(c) payments of any description specified in section 462.

(3) The resulting figure is the amount of available profits. (4) For the purposes of this section, "the relevant financial statements" are any that—
(a) are prepared as at a date within the relevant period; and
(b) are such as to enable a reasonable judgment to be made as to the amounts of the items
mentioned in subsection (2). (5) In this section, "the relevant period" means the period of three months ending with the date on
which the directors' statement is made in accordance with section 472. 471. Requirements for payment out of capital
(1) A payment out of capital by a private company for the redemption or purchase of its own shares is
not lawful unless the requirements of section 472, 474, 477 and 478 are satisfied. (2) Subsection (1) is subject to any order of the Court under section 479. 472. Directors’ statement and auditor’s report
(1) The company’s directors shall make a statement that complies with subsection (2).

nder section 479. 472. Directors’ statement and auditor’s report
(1) The company’s directors shall make a statement that complies with subsection (2).

(2) A statement complies with this subsection only if it specifies the amount of the permissible capital
payment for the relevant shares and states that, having made full inquiry into the affairs and
prospects of the company, the directors have formed the opinion—
(a) with respect to its initial situation immediately following the date on which the payment out
of capital is proposed to be made, that there will be no grounds on which the company could
then be found unable to pay its debts; and
193

payment out
of capital is proposed to be made, that there will be no grounds on which the company could
then be found unable to pay its debts; and
193

Companies Act (Cap. 486) Kenya
(b) with respect to the company's prospects for the year immediately following that date, that,
having regard to—
(i) their intentions with respect to the management of the company’s business during
that year; and
(ii) the amount and character of the financial resources that will in their view be available
to the company during that year, the company will be able to continue to carry on
business as a going concern (and will accordingly be able to pay its debts as they fall
due) throughout that year. (3) In forming their opinion for the purposes of subsection (2)(a), the directors shall take into account
all of the company's liabilities (including any contingent or prospective liabilities). (4) The directors shall ensure that their statement contains such information with respect to the
nature of the company's business as is prescribed by regulations made for the purposes of this
section. (5) The directors shall attach to their statement the report prepared by the company's auditor in
accordance with subsection (6).

ses of this
section. (5) The directors shall attach to their statement the report prepared by the company's auditor in
accordance with subsection (6).

(6) To enable the directors to comply with subsection (5), the company's auditor shall prepare a report
addressed to the directors stating that—
(a) the auditor has inquired into the company's financial position;
(b) the auditor is satisfied that the amount specified in the statement as the permissible capital
payment for the relevant shares is properly determined in accordance with sections 468 to
471; and
(c) the auditor is not aware of anything to indicate that the opinion expressed by the directors
in their statement as to any of the matters referred to in subsection (3) is unreasonable in all
the circumstances. 473. Directors’ statement: offence if no reasonable grounds for opinion
If the directors make a statement under sections 468 to 471 without having reasonable grounds for the
opinion expressed in it, each of the directors who is in default commits an offence and on conviction is
liable to a fine not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding
twelve months, or to both. 474.

nviction is
liable to a fine not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding
twelve months, or to both. 474.

Payment to be approved by special resolution
(1) A payment out of capital is invalid unless it is approved by a special resolution of the company that
complies with this section. (2) Such a resolution is void unless it is passed on; or within the week immediately following, the date
on which the directors make the statement required by section 472. (3) A resolution under this section is subject to sections 475 and 476. 475. Resolution authorising payment: exercise of voting rights
(1) This section applies to a resolution passed by a company under section 474. (2) If the resolution is proposed as a written resolution, a member who holds shares to which the
resolution relates is not an eligible member. (3) If the resolution is proposed at a meeting of the company, it is not effective if—
(a) any member of the company holding shares to which the resolution relates exercises the
voting rights conferred by any of those shares in voting on the resolution; and
194

mpany holding shares to which the resolution relates exercises the
voting rights conferred by any of those shares in voting on the resolution; and
194

Companies Act (Cap. 486) Kenya
(b) the resolution would not have been passed if the member had not done so. (4) For the purpose of subsection (3)—
(a) a member who holds shares to which the resolution relates is taken to have exercised the
voting rights conferred by those shares not only if the member votes in respect of them on a
poll on the question whether the resolution should be passed, but also if the member votes
on the resolution otherwise than on a poll;
(b) any member of the company may demand a poll on that question; and
(c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as
a vote and a demand by the member. 476. Resolution authorising payment: disclosure of directors’ statement and auditor’s
report
(1) This section applies to a resolution passed by a company under section 474.

ising payment: disclosure of directors’ statement and auditor’s
report
(1) This section applies to a resolution passed by a company under section 474.

(2) The company shall ensure that a copy of the directors' statement and auditor's report under section
482 are made available to its members—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or
before the time at which the proposed resolution is sent or submitted to the member; or
(b) in the case of a resolution at a meeting, by being made available for inspection by members
of the company at the meeting. (3) The resolution is void if subsection (2) is not complied with. 477.

being made available for inspection by members
of the company at the meeting. (3) The resolution is void if subsection (2) is not complied with. 477.

Public notice of proposed payment
(1) Within the seven days immediately after the date of the resolution under section 474, the company
shall cause to be published in the Gazette a notice—
(a) stating that the company has approved a payment out of capital for the purpose of acquiring
its own shares by redemption or purchase, or both;
(b) specifying—
(i) the amount of the permissible capital payment for the relevant shares; and
(ii) the date of the resolution;
(c) stating where the directors' statement and auditor's report required by section 472 are
available for inspection; and
(d) stating that any creditor of the company may, at any time within the five weeks immediately
following the date of the resolution, apply to the Court under section 479 for an order
preventing the payment. (2) Within the seven days immediately following the date of the resolution the company shall also
either—
(a) have published, in a newspaper of nationwide circulation in Kenya, a notice to the same
effect as that required by subsection (1); or
(b) give notice to that effect to each of its creditors.

wide circulation in Kenya, a notice to the same
effect as that required by subsection (1); or
(b) give notice to that effect to each of its creditors.

(3) Not later than the day on which the company—
(a) first publishes the notice required by subsection (1); or
195

(3) Not later than the day on which the company—
(a) first publishes the notice required by subsection (1); or
195

Companies Act (Cap. 486) Kenya
(b) if earlier, first publishes or gives the notice required by subsection (2), the company shall
lodge with the Registrar for registration a copy of the directors' statement and auditor's
report required by section 472. 478. Company to make directors’ statement and auditor’s report to be available for
inspection
(1) A company that passes a resolution in accordance with section 475 shall ensure that the directors’
statement and auditor’s report required by section 472 are kept available for inspection throughout
the relevant period. (2) For the purpose of subsection (1), the relevant period is the period—
(a) from and including the day on which the company—
(i) first publishes the notice required by section 477(1); or
(ii) if earlier, first publishes or gives the notice required by section 477(2); and
(b) ending five weeks after the date of the resolution for payment out of capital. (3) Except in so far as the regulations otherwise provide, a company to which this section applies shall
keep the directors' statement and auditor's report available for inspection at its registered office.

e, a company to which this section applies shall
keep the directors' statement and auditor's report available for inspection at its registered office.

(4) The company shall, on being requested to do so by a member of the company, make the directors'
statement and auditor's report available for inspection by the member without charge. (5) If a member of the company requests the company to provide the member with a copy of the
directors' statement or auditor's report, the company shall comply with the request within seven
days after receiving the request, subject to payment of the prescribed fee (if any). (6) If the company fails without reasonable excuse to comply with—
(a) subsection (3); or
(b) a request made under subsection (4) or (5), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding
five hundred thousand shillings. (7) If, after a company or any of its officers is convicted of an offence under subsection (8), the
company continues to fail to comply with subsection (3), or with the relevant request, the company,
and each officer of the company who is in default, commit a further offence on each day on which
the failure continues and on conviction are each liable to a fine not exceeding fifty thousand
shillings for each such offence.

e on each day on which
the failure continues and on conviction are each liable to a fine not exceeding fifty thousand
shillings for each such offence.

(8) If a company refuses to allow an inspection as requested under subsection (4), or to provide a copy
of a record requested under subsection (5), the Court may, on the application of a person affected
by the refusal, make an order compelling the company to allow an immediate inspection of the
records, or to provide that person with a copy of the requested record. (9) At the hearing of an application made under subsection (8), the company is entitled to be heard as
respondent in the proceedings. 479. Objection to payment by members or creditors: application to the Court to cancel
resolution
(1) If a private company passes a special resolution approving a payment out of capital for the
redemption or purchase of any of its shares—
(a) any member of the company (other than one who consented to or voted in favour of the
resolution); and
196

mption or purchase of any of its shares—
(a) any member of the company (other than one who consented to or voted in favour of the
resolution); and
196

Companies Act (Cap. 486) Kenya
(b) any creditor of the company, may apply to the Court for the cancellation of the resolution. (2) Such an application may be made by the persons entitled to make it or by such one or more of their
number as they may appoint in writing for the purpose, but is not effective unless made within five
weeks after the passing of the resolution or within such extended period as the Court may in special
circumstances allow. (3) On hearing an application made under subsection (2), the Court shall, subject to subsection (4),
make an order either cancelling or confirming the resolution, and may do so on such terms and
conditions as it considers appropriate. (4) At the hearing, the Court may—
(a) adjourn the proceedings in order that an arrangement can be made to the satisfaction of the
Court—
(i) for the purchase of the interests of dissentient members; or
(ii) for the protection of dissentient creditors; and
(b) give such directions and make such orders as it thinks necessary in order to facilitate or
implement such an arrangement.

ssentient creditors; and
(b) give such directions and make such orders as it thinks necessary in order to facilitate or
implement such an arrangement.

(5) If the Court confirms the resolution, it may by order alter or extend any date or period of time
specified—
(a) in the resolution; or
(b) in any provision of this Division applying to the redemption or purchase to which the
resolution relates. (6) In making an order under this section, the Court may—
(a) provide for the purchase by the company of the shares of any of its members and for the
reduction accordingly of the company's capital; and
(b) make any alteration in the company's articles that may be required in consequence of that
provision. (7) The Court may also include in such an order direction directing the company not to amend, or to
make any specified amendments to, its articles without the leave of the Court. 480. Notice of Court application or order to be lodged with Registrar
(1) Within fourteen days after making an application under section 479, the applicant shall lodge with
the Registrar for registration a notice of the application. (2) Subsection (1) does not affect the operation of any provision of rules of Court as to service of notice
of the application.

ce of the application. (2) Subsection (1) does not affect the operation of any provision of rules of Court as to service of notice
of the application.

(3) Within seven days after being served with notice of any such application, the company shall lodge
with the Registrar for registration a notice of the application. (4) Within fourteen days after the making of the Court's order on the application; or such extended
period as the Court may at any time allow, the company shall lodge with the Registrar for
registration a copy of the order. (5) A person who fails to comply with subsection (1) commits an offence and on conviction is liable to a
fine not exceeding two hundred thousand shillings. (6) If, after a person is convicted of an offence under subsection (5), the person continues to fail to
comply with the relevant requirement, the person commits a further offence on each day on which
the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings
for each such offence. 197

ce on each day on which
the failure continues and on conviction is liable to a fine not exceeding twenty thousand shillings
for each such offence. 197

Companies Act (Cap. 486) Kenya
(7) If a company fails to comply with subsection (3) or (4), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding two hundred thousand shillings. (8) If, after a company or any of its officers is convicted of an offence under subsection (7), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for
each such offence. 481. When payment out of capital to be made
(1) A payment out of capital is invalid unless it is made—
(a) no earlier than five weeks after the date on which the resolution under section 475 is passed;
and
(b) no later than seven weeks after that date. (2) Subsection (1) is subject to any exercise of the Court's powers under section 479(5). Division 5 — Supplementary provisions
482.

after that date. (2) Subsection (1) is subject to any exercise of the Court's powers under section 479(5). Division 5 — Supplementary provisions
482.

Company whose shares are redeemed or purchased to transfer amount to capital
redemption reserve
(1) In this section, “capital redemption reserve”, in relation to a company, means the reserve referred
to in subsection (2). (2) If under this Part or Part XX, shares of a limited company are redeemed or purchased wholly out of
the company’s profits, the company shall transfer to a reserve an amount equal to the amount by
which the company’s issued share capital is diminished in accordance with section 463 or 524. (3) If—
(a) the shares are redeemed or purchased wholly or partly out of the proceeds of a fresh issue;
and
(b) the aggregate amount of the proceeds is less than the aggregate nominal value of the shares
redeemed or purchased, the company shall transfer to the capital redemption reserve an
amount equal to the difference. (4) Subsection (3) does not apply to a private company that, in addition to the proceeds of the fresh
issue, applies a payment out of capital in accordance with Division 4 in making the redemption or
purchase.

, in addition to the proceeds of the fresh
issue, applies a payment out of capital in accordance with Division 4 in making the redemption or
purchase.

(5) If a company's share capital is diminished in accordance with section 524, the company shall
transfer to its capital redemption reserve an amount equal to that by which the company's share
capital is diminished. (6) A company may use its capital redemption reserve to pay up new shares that are to be allotted to
members as fully paid bonus shares. (7) Subject to subsection (6), the provisions of this Act relating to the reduction of a company's share
capital apply as if the capital redemption reserve were part of its paid up share capital. (8) If a company fails to comply with subsection (1) or (2), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding one million shillings. 198

each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding one million shillings. 198

Companies Act (Cap. 486) Kenya
483. Accounting consequences of payment out of capital
(1) This section applies if a payment out of capital is made in accordance with Division 4. (2) If the permissible capital payment is less than the nominal amount of the shares redeemed or
purchased, the company shall transfer an amount equal to the amount of the difference to the
company's capital redemption reserve. (3) If the permissible capital payment is greater than the nominal amount of the shares redeemed or
purchased, the company can reduce—
(a) the amount of its capital redemption reserve, share premium account or fully paid share
capital (if any); and
(b) any amount that represents unrealised profits of the company for the time being standing
to the credit of any revaluation reserve maintained by the company, by an amount not
exceeding (or by amounts in total not exceeding) the amount by which the permissible
capital payment exceeds the nominal amount of the shares.

unt not
exceeding (or by amounts in total not exceeding) the amount by which the permissible
capital payment exceeds the nominal amount of the shares.

(4) If the proceeds of a fresh issue are applied by the company in making a redemption or purchase
of its own shares in addition to a payment out of capital under this Division, the references in
subsections (2) and (3) to the permissible capital payment refer to the aggregate of that payment
and those proceeds. (5) If a company fails to comply with subsection (2), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding five
hundred thousand shillings. (6) If, after a company or any of its officers is convicted of an offence under subsection (5), the
company continues to fail to transfer the requisite amount to the company's capital redemption
reserve, the company, and each officer of the company who is in default, commit a further offence
on each day on which the failure continues and on conviction are each liable to a fine not exceeding
fifty thousand shillings for each such offence. 484. Effect of company’s failure to redeem or purchase
(1) This section applies to a company that—
(a) issues shares on terms that they are or are liable to be redeemed; or
(b) agrees to purchase any of its shares.

section applies to a company that—
(a) issues shares on terms that they are or are liable to be redeemed; or
(b) agrees to purchase any of its shares.

(2) A company to which this section applies is not liable in damages for failing to redeem or purchase
any of the shares. (3) Subsection (2) does not affect a right of the holder of the shares other than the holder's right to sue
the company for damages in respect of its failure. (4) The Court may not grant an order for specific performance of the terms of redemption or purchase if
the company shows that it is unable to meet the costs of redeeming or purchasing the shares out of
distributable profits. (5) If the liquidation of the company has been completed and at the commencement of the liquidation
any of the shares have not been redeemed or purchased, the terms of redemption or purchase are
enforceable against the company. (6) Shares redeemed or purchased under this subsection are cancelled by operation of this subsection. (7) Subsection (5) does not apply if—
(a) the terms provided for the redemption or purchase to take place at a date later than that of
the commencement of the liquidation; or
199

apply if—
(a) the terms provided for the redemption or purchase to take place at a date later than that of
the commencement of the liquidation; or
199

Companies Act (Cap. 486) Kenya
(b) during the relevant period the company could not at any time have lawfully made a
distribution equal in value to the price at which the shares were to have been redeemed or
purchased. (8) For the purpose of subsection (7), the relevant period is the period—
(a) from and including the date on which the redemption or purchase was to have taken place;
and
(b) ending with the commencement of the liquidation. (9) The following are payable in priority to amounts that the company is liable to pay under subsection
(5) in respect of shares—
(a) all other debts and liabilities of the company (other than any due to members in their
character as such);
(b) if other shares confer rights (whether as to capital or as to income) that are preferred to the
rights as to capital attaching to the first-mentioned shares, any amount due in satisfaction of
those preferred rights. (10) Subject to subsection (9), those amounts are payable in priority to amounts due to members in
satisfaction of their rights as members (whether as to capital or income). Part XVII – HOW COMPANY'S ASSETS ARE TO BE DISTRIBUTED
Division 1 — Introductory provision
485.

r rights as members (whether as to capital or income). Part XVII – HOW COMPANY'S ASSETS ARE TO BE DISTRIBUTED
Division 1 — Introductory provision
485.

Interpretation: Part XVII
(1) In this Part, “distribution” means every description of distribution of the assets of a company to its
members (whether in cash or otherwise) subject to the exceptions in subsection (2). (2) The following are not distributions for the purposes of this Part—
(a) an issue of shares as fully or partly paid bonus shares;
(b) a reduction of share capital—
(i) by extinguishing or reducing the liability of any of the members on any of the shares
of the company in respect of share capital not paid up; or
(ii) by paying off paid up share capital;
(c) the redemption of any of the company's own shares out of capital (including the proceeds of
any fresh issue of shares, or out of unrealised profits);
(d) a distribution of assets to members of the company on its liquidation. (3) This Part does not limit the application or effect of any enactment, or any provision of a company's
articles, restricting the amounts out of which, or the cases in which, a distribution can be made.

t of any enactment, or any provision of a company's
articles, restricting the amounts out of which, or the cases in which, a distribution can be made.

(4) Except as provided by subsection (5), this Part does not limit the application or effect of any rule of
law restricting the amounts out of which, or the cases in which, a distribution may be made. (5) For the purposes of any rule of law requiring distributions to be paid out of profits or restricting the
return of capital to members—
(a) section 492 (distributions in kind: determination of amount) applies to determine the
amount of any distribution or return of capital consisting of or including, or treated as
arising in consequence of the sale, transfer or other disposition by a company of a non-cash
asset; and
200

consisting of or including, or treated as
arising in consequence of the sale, transfer or other disposition by a company of a non-cash
asset; and
200

Companies Act (Cap. 486) Kenya
(b) section 493 (distributions in kind: treatment of unrealised profits) applies as it applies for
the purposes of this Part. (6) In this section, a reference to a distribution is to amounts regarded as distributions for the purposes
of any rule of law of the kind referred to in subsection (4). Division 2 — General rules for distributions
486. Distributions to be made only out of profits available for the purpose
(1) A company may make a distribution only out of profits available for the purpose. (2) The profits of a company available for distribution are—
(a) its accumulated, realised profits (so far as not previously utilised by distribution or
capitalisation), less—
(b) its accumulated, realised losses (so far as not previously written off in a lawfully made
reduction or reorganisation of capital). (3) If a company contravenes subsection (1), the company, and each officer of the company who is in
default, commit an offence and on conviction are each liable to a fine not exceeding one million
shillings. (4) A company may not apply an unrealised profit in paying up debentures or amounts unpaid on its
issued shares.

not exceeding one million
shillings. (4) A company may not apply an unrealised profit in paying up debentures or amounts unpaid on its
issued shares.

(5) An application of an unrealised profit in contravention of subsection (4) is void. 487. Net asset restriction on distributions by public companies
(1) A public company may make a distribution only—
(a) if the amount of its net assets is not less than the aggregate of its called-up share capital and
undistributable reserves; and
(b) if, and to the extent that, the distribution does not reduce the amount of those assets to less
than that aggregate. (2) For the purpose of subsection (1), a company's net assets are the aggregate of the company's assets
less the aggregate of its liabilities. (3) For the purpose of subsection (1), a company's undistributable reserves are—
(a) its share premium account;
(b) its capital redemption reserve;
(c) the amount by which its accumulated, unrealised profits (so far as not previously utilised by
capitalisation) exceed its accumulated, unrealised losses (so far as not previously written off
in a reduction or reorganisation of capital duly made);
(d) any other reserve that the company is prohibited from distributing—
(i) by any enactment (other than one contained in this Part); or
(ii) by its articles.

other reserve that the company is prohibited from distributing—
(i) by any enactment (other than one contained in this Part); or
(ii) by its articles.

(4) The reference in subsection (3)(c) to capitalisation does not include a transfer of profits of the
company to its capital redemption reserve. (5) A public company may not include any uncalled share capital as an asset in a financial statement
that is relevant for purposes of this section. 201

5) A public company may not include any uncalled share capital as an asset in a financial statement
that is relevant for purposes of this section. 201

Companies Act (Cap. 486) Kenya
(6) If a company contravenes subsection (1) or (5), the company, and each officer of the company
who is in default, commit an offence and on conviction are each liable to a fine not exceeding one
million shillings. Division 3 — Justification of distribution by reference to financial statements
488. Justification of distribution by reference to relevant financial statements
(1) Whether a distribution may be made by a company without contravening this Part is determined by
reference to the following items as stated in the relevant financial statements—
(a) profits, losses, assets and liabilities;
(b) provisions of a kind specified for the purposes of this section by the regulations;
(c) share capital and reserves (including undistributable reserves).

ovisions of a kind specified for the purposes of this section by the regulations;
(c) share capital and reserves (including undistributable reserves).

(2) The relevant financial statements are the company's last annual financial statements, except that—
(a) if the distribution would be found to contravene this Part by reference to the company’s last
annual financial statements, it may be justified by reference to interim financial statements;
and
(b) if the distribution is proposed to be declared during the company's first accounting reference
period, or before any financial statements have been circulated in respect of that period, it
may be justified by reference to initial financial statements. (3) The company shall ensure that the requirements of the Fifth Schedule are complied with as and if
applicable. (4) If the company fails to comply with any applicable requirement of the Fifth Schedule, the relevant
financial statements may not be relied on for the purposes of this Part and the distribution is
accordingly treated as contravening this Part. 489.

nt
financial statements may not be relied on for the purposes of this Part and the distribution is
accordingly treated as contravening this Part. 489.

Successive distribution etc by reference to the same financial statements
(1) In determining whether a proposed distribution may be made by a company in a case in which—
(a) one or more previous distributions have been made in pursuance of a determination made by
reference to the same relevant financial statements; or
(b) relevant financial assistance has been given, or other relevant payments have been made,
since those financial statements were prepared,
this Part applies as if the amount of the proposed distribution was increased by the amount of the
previous distributions, financial assistance and other payments.

lies as if the amount of the proposed distribution was increased by the amount of the
previous distributions, financial assistance and other payments.

(2) The financial assistance and other payments that are relevant for the purpose of subsection (1) are
as follows—
(a) financial assistance lawfully given by the company out of its distributable profits;
(b) financial assistance given by the company in contravention of section 442 or 443 in a case
where the giving of that assistance reduces the company's net assets or increases its net
liabilities;
(c) payments made by the company in respect of the purchase by it of shares in the company,
except a payment lawfully made otherwise than out of distributable profits;
(d) payments of any description specified in section 462. (3) In this section, "financial assistance" has the same meaning as in section 450. 202

its;
(d) payments of any description specified in section 462. (3) In this section, "financial assistance" has the same meaning as in section 450. 202

Companies Act (Cap. 486) Kenya
(4) For the purpose of applying subsection (2)(b) in relation to any financial assistance—
(a) "net assets" means the amount by which the aggregate amount of the company’s assets
exceeds the aggregate amount of its liabilities; and
(b) "net liabilities" means the amount by which the aggregate amount of the company's
liabilities exceeds the aggregate amount of its assets,
taking the amount of the assets and liabilities to be as stated in the company's accounting records
immediately before the financial assistance is given. (5) For this purpose a company's liabilities include any amount retained as reasonably necessary for the
purposes of providing for any liability—
(a) the nature of which is clearly defined; and
(b) which is either likely to be incurred or certain to be incurred but uncertain as to amount or as
to the date on which it will arise. Division 4 — Relevant accounting matters
490. Treatment of development costs
(1) If development costs are shown or included as an asset in a company’s accounting records, any
amount shown or included in respect of those costs is to be treated for the purposes of section 486
as a realised loss.

pany’s accounting records, any
amount shown or included in respect of those costs is to be treated for the purposes of section 486
as a realised loss.

(2) Subsection (1) does not apply to any part of that amount representing an unrealised profit made on
revaluation of those costs. (3) Subsection (1) does not apply if—
(a) there are special circumstances in the company's case justifying the directors in deciding
that the amount there mentioned is not to be treated as required by subsection (1);
(b) it is stated in the note required by regulations in force for the purposes of section 647 as
to the reasons for showing development costs as an asset, that the amount is not to be so
treated; and
(c) the note explains the circumstances relied upon to justify the decision of the directors to
that effect. 491. Determination of profit or loss in respect of asset where records incomplete
In determining for the purposes of this Part whether a company has made a profit or loss in respect of an
asset when—
(a) there is no record of the original cost of the asset; or
(b) a record cannot be obtained without unreasonable expense or delay,
its cost is taken to be the value ascribed to it in the earliest available record of its value made on or after its
acquisition by the company. Division 5 — Distributions in kind
203