Companies Act No 17of 2015 - as Plain Text by MWakili
SPECIAL.ISSUE g- ON Kenya Gazette Supplement No.
158 (Acts No.
17) 0 REPUBLIC OF KENYA (46 KENYA GAZETTE SUPPLEMENT ACTS, 2015 NAIROBI, 15th September, 2015 CONTENT Act PAGE The Companies Act, 2015.
267 010NAL WOOL W LAW W65 RECEIVED 18 SEP 2015 P0.
Box 10443-00190 NAiRdbl, KMA ;2^4-'M FAg;9741101 PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTER, NAIROBI 267 THE COMPANIES ACT No.
17 of 2015 Date of Assent: I Ith September, 2015 Date of Commencement: Section 2 on 15th September, 2015 All other provisions: See Section 1 (3) and (4) ARRANGEMENT OF SECTIONS Section PART IPRELIMINARY I Short title and commencement.
2Objects of this Act.
3 Interpretation of provisions of this Act.
4Provisions supplementing definition of "holding company" in section 3.
PART UCOMPANIES AND COMPANY FORMATION Division 1 Types of companies 5 Limited companies.
6Compames limited ^y shares.
7 Companies limit6d b an guar tee.
8Unlimited comp^nie4:1.
9 Private companies.
10Public companies.
40 Division 2Formation and registration of companies II Method of forming company.
12 Memorandum of association.
13 Registration documents.
14 Statement of capital and initial shareholdings.
15 Statement of guarantee, 16 Statement of proposed officers.
268 No.
17 Companies 2015 17Registrar to register company if requirements of Act are complied with.
18Registrar to issue company with certificate of incorporation.
19Effect of registration.
PART IHA COMPANY'S CONSTITUTION Division 1 Articles of association 20Regulations may prescribe model articles.
21 Default application of model articles.
22 Amendment of articles.
23Effect of amendment of articles on company's members.
24Amended articles to be sent to Registrar.
25Registrar's notice to comply in case of failure with respect to amended articles.
26Existing companies provisions of memorandum I treated as provisions of articles.
Division 2Resolutions and agreements affecting company's constitution 27Copies of resolutions or agreements recorded by Registrar.
Division 3 Supplementary provisions 28 Statement of company's objects.
29 Documents to be provided to members.
30Effect of company's constitution.
31Right to participate in profits otherwise than as member is void.
32Application to single member companies of enactments and rules of law.
PART IVCAPACITY OF COMPANY 33 Company's capacity.
34Power of directors to bind company.
35 Company contracts.
269 2015 Companies No.
17 36 Constitutional limitations: transactions involving directors or their associates.
37Execution of documents.
38Company may have common seal for execution of documents.
39 Execution of deeds by companies.
40 Execution of deeds or other documents by attorney.
41 Authentication of documents.
42 Official seal for use outside Kenya.
43 Official seal for share certificates etc.
44Pre-incorporation contracts, deeds and obligations^ 45 Execution of bills of exchange and promissory notes by companies.
46Company to have registered office.
47Company to notify change of address of registered office.
PART VNAME OF COMPANY Division 1 General requirements 48 Reservation of name.
49 Prohibited names.
50Name suggesting connection with the State or local or public authority.
51 Applicant to seek views of specified public officer or body if regulations so require.
52Regulations may permit or prohibit the use of certain characters, signs or symbols.
is Division 2Indications of type of company, etc.
53Registration of public limited companies.
54Registration of private limited companies.
55 Exemption from requirement to use of "limited".
56 Inappropriate use of company type or legal form.
Division 3Shnilarity to names of other companies 57 Name not to be the same as another in the index.
58Power to direct change of name in case of similarity to existing name.
270 No.
Companies 2015 17 59Power to make regulations for purposes of sections 57 and 58.
Division 4 Powers of Registrar to direct company to change its name in specified circumstances 60Power 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.
61 Company may apply to Court for order to quash direction under section 60.
Division 5 Changes of company names 62 Company may change the name.
El 63 Change of name by special resolution.
64 Change of name by means provided for in articles of company- 65 Change of name: registration and issue of certificate of change of name.
66Effect of change of name.
Division 6 Requirement of company to disclose name 67 Company to display its company name etc.
68 Minor variations in form of name.
PART VI ALTERATION OF STATUS OF COMPANIES Division I Conversion of companies: overview 69 How companies may alter their status.
Division 2 Conversion of private company into public company 70 Conversion of private company to public company.
71 Requirements as to share capital.
72Requirements as to net assets.
73^Recent allotment of shares for non-cash consideration.
74Requirements for registration of conversion of.
private company into public company.
271 - 2015 Companies No.
17 75 Statement of proposed secretary.
76Registrar to issue certificate of incorporation on registration of conversion.
Division 3 Conversion of public company into private company 77Conversion of public company into private limited company.
78Application to Court to cancel conversion resolution.
79Notices of application to Court and court order application or order to be given to Registrar.
80Requirements for registration of conversion of public company into private company.
81Registrar to issue certificate of incorporation on registration of conversion.
Division 4 Conversion of private limited company into unlimited company 82 Registration of conversion of private limited company into unlimited company.
83 Requirements for application for registration of conversion of company into unlimited company.
84 Registrar to issue certificate of incorporation on registration of conversion.
Division 5 Conversion of unlimited company into private limited company 85Conversion of unlimited company into a private limited company.
86Requirements for registration of unlimited company as private limited company.
87^Registrar to issue certificate of incorporation on registration of conversion.
88Statement of capital required if company already has share capital.
Division 6 Conversion of public company into unlimited private company with share capital 272 No.
17 Companies 2015 89Conversion of public company into private and unlimited company.
90Registrar not to register conversion unless application for registration complies with prescribed requirements.
91 Registrar to issue certificate of incorporation on registration of conversion.
PART VHCOMPANY MEMBERS Division 1 Members of company 92How persons become members of company.
Division 2Register of members 93 Company to keep register of members.
94Company to keep register of members at its registered office.
95 Certain companies to keep index of members.
96Rights of persons to inspect register of members and require copies.
97 Consequences of company refusing inspection of its register or to provide copy of its register of members.
98Offence to refuse inspection of register of members or to fail to provide copy.
99Register of members: offences in connection with request for or disclosure of information.
100Company to provide information as to state of register of members and index of members' names 10 1 Removal of entries relating to former members.
102 Single member companies.
103 Power of Court to rectify register.
104 Trusts not to be entered on register.
105 Register to be evidence.
106Time limits for claims arising from entry in register.
273 2015 Companies No.
17 Division 3 Prohibition on subsidiary being member of its holding company 107 Interpretation: Division K 108Prohibition on subsidiary being a member of its holding company.
109Subsidiary acting as executor, administrator or trustee.
110Interest to be disregarded: residual interest under pension scheme or employees' share scheme.
IllEmployers' rights of recovery under pension scheme or employees' share scheme.
112 Subsidiary acting as authorised dealer in securities.
113Protection of third parties in cases if subsidiary acting as dealer in securities.
PART VIIIEXERCISE OF RIGHTS OF MEMBERS 114Effect of provisions of articles relating to enjoyment or exercise of rights of members.
115Traded companies: nomination of persons to enjoy information rights.
116Information rights: form in which copies to be provided.
117 Information on possible rights in relation to voting.
118 Information rights and status of rights.
119Termination or suspension of nomination.
120Exercise of rights if shares held on behalf of others.
121 Exercise of rights if shares held on behalf of others: members' requests.
PART IX COMPANY DIRECTORS Division 1 Interpretation for purposes of this Part 122Persons who are connected with a director for purposes of this Part.
123 Members of a director's family.
124When director connected with a body corporate for purposes of this Part.
274 No.
17 Companies 2015 125 When a director is to be regarded as controlling a body corporate for purposes of this Part.
126When bodies corporate are to be treated as being associated for purposes of this Part.
127References to company's constitution.
Division 2 Appointment and removal of directors under this Part 128 Company required to have directors.
129Company required to have at least one natural person as a director.
130 Direction requiring company to make appointment.
131 Minimum age for director.
132 Appointment of director of public company.
133 Validity of acts of directors.
134Company to keep register of directors.
135=Particulars of directors to be registered: natural persons 136Particulars of directors to be registered: corporate directors.
137Company to keep register of directors' residential addresses.
138Duty of company to notify Registrar of changes of directors and directors' addresses.
139Resolutions to remove directors from office.
Division 3 Directors' duties 140Scope and nature of general duties.
141 Director's right to protest against removal.
142Duty of director to act within powers.
143Duty of director to promote the success of the company.
1 144 Duty of director to exercise independent judgment.
145Duty of director to exercise reasonable care, skill and diligence.
275 2015 Companies No.
17 146 Duty of director to avoid conflicts of interest.
147 Duty not to accept benefits from third parties.
Civil consequences of breach of general duties.
148 Cases within more than one of the general duties.
149 150 Consent, approval or authorisation by members.
Division 4 Declaration of interest in existing transaction or arrangement 151 Duty to declare interest in proposed or existing transaction or arrangement.
152Director to make declaration by notice in writing.
153General notice to be regarded as sufficient declaration.
154Declaration of interest in case of company with sole director.
Division 5 Transactions with directors requiring approval of members 155Definition of credit transaction for purposes of.
Division 5.
156Meaning of "quasi-loan" and related expressions.
157Director's long-term service contracts: requirement of members' approval.
158Substantial property transactions: requirement of members' approval.
159Exception for transactions with members or other group companies.
160Exception in case of company in liquidation or under administration.
161 Exception for transactions on recognised investment exchange.
162Property transactions: civil consequences of contravening section 160.
163Property transactions: effect of subsequent affirmation.
164Loans to directors to be approved by members.
276 No.
17 Companies 2015 165Quasi-loans to directors: requirement of members' approval.
166Loans or quasi-loans to persons connected with directors: requirement of members' approval.
167Credit transactions: requirement of members' approval.
168Related arrangements: requirement of members' approval.
169 Exception for expenditure on company business.
170Exception for expenditure on defending proceedings etc.
171 Exception for expenditure in connection with regulatory action or investigation.
172Exceptions for minor and business transactions.
173 Exceptions for intra-group transactions.
174 Exceptions for money-lending companies.
175 Other relevant transactions or arrangements.
176The value of transactions and arrangements.
177The person for whom a transaction or arra.
ngement is entered into.
178 Loans etc: civil consequences for contravention.
179Loans etc: effect of subsequent affirmation.
Division 6 Payments for loss of office 180 Payments for loss of office.
181 Amounts taken to be payments for loss of office.
182Members' approval required for payment by company.
183Members' approval required for payment in connection with transfer of undertaking etc.
184Members' approval required for payment in connection with share transfer.
185Exception for payments in discharge of legal obligations etc.
186 Exception for small payments.
277 2015 Companies No.
17 187 Payments made without approval: civil consequences.
188Approval by written resolution: accidental failure to send memorandum.
189What happens if approval is required under more than one provision.
Division 7 Requirements with respect to directors' service contracts 190Directors' service contracts.
191 Company to keep copy of contract or memorandum of terms available for inspection.
192Right of member to inspect and to obtain copy of memorandum.
Division 8 Contracts with sole directors 193 Contract with sole member who is also a director.
Division 9Directors' liabilities 194 Provisions protecting directors from liability.
195 Provision of insurance not prevented.
196Qualifying third party indemnity provision not affected.
197Directors to disclose qualifying indemnity provision in directors' report.
198Copy of qualifying indemnity provision to be available for inspection.
199Right of member to inspect and request copy of qualifying indemnity provision.
Division 10 Protection of information relating to directors 200 Interpretation: Division 10.
201 Protected information: restriction on use or disclosure by company.
202Protected information: restriction on use or disclosure by Registrar.
203 Permitted use or disclosure by the Registrar.
278 No.
17 Companies 2015 204 Disclosure under Court order.
205 Circumstances in which Registrar may place address on the public record.
206 Placing the director's address on the public record.
Division 11 Supplementary provisions 207 Ratification of acts of directors.
208Power to make provision for employees on cessation or transfer of business.
209Limitations on the exercise of the power to make provision for employees.
210Minutes of directors' meetings.
211Minutes taken to be evidence of proceedings at meeting of company until contrary proved.
212 Transactions under foreign law.
PART X DISQUALIFICATION OF DIRECTORS Division 1 Introductory provision 213 Interpretation: Part X.
Division 2 Disqualification orders and disqualification undertakings 214Effect of order disqualifying person from being a director or secretary.
215 Disqualification on conviction for offence.
216 Disqualification for fraud or breach of duty committed while company in liquidation or under administration.
0 217 Disqualification on conviction of offence involving failure to lodge returns or other documents with Registrar.
218Duty of court to disqualify unfit directors or secretaries of insolvent companies.
219Applications to court under section 221.
220Disqualification undertakings.
221 Disqualification after investigation of company.
222Variation of disqualification undertaking.
279 Companies 2015 No.
17 223Offence for undischarged bankrupts to act as director or secretary of company.
224Personal liability for company's debts if person acts while disqualified.
225 Application for disqualification order.
226Application for leave under an order or undertaking.
of disqualification orders and 227Register disqualification undertakings.
228Offence to breach of disqualification order or undertaking.
229 Disqualified person may apply to the Court for permission to act in way that would otherwise Ili VII "I - III breach disqualification.
230 Statements from persons who are disqualified.
23 1 Statements to be made public.
232Offence relating to statement.
Division, 3 Foreign restrictions 233Persons who are subject to foreign restrictions.
Disqualification of persons who are subject to 234 foreign restrictions.
235Person subject to foreign restrictions to be personally liable for debts of company.
236Registrar to establish and maintain Register of foreign restrictions.
Division 4 Supplementary provision 237 Admissibility in evidence of statements.
PART XIDERIVATIVE ACTIONS 23 8 Interpretation: Part XI.
239Application for permission to continue derivative claim.
240Application to Court for permission to continue claim as a derivative claim: how disposed of.
280 No.
17 Companies 2015 241 Application for permission to continue claim as a derivative action.
242Application for permission to continue derivative claim brought by another member.
PART XII COMPANY SECRETARIES 243 Private company not required to have secretary.
244 Public company required to have secretary.
245Direction requiring public company to appoint secretary.
246Qualifications of secretaries of public companies.
Discharge of functions if office vacant or secretary 247 unable to act.
248 Duty to keep register of secretaries.
249Duty to notify Registrar of change of secretary or joint secretary.
250What particulars of secretaries are required to be registered: natural persons.
251 What particulars of secretaries are required to be registered: corporate secretaries and firms.
252 Offence to include misleading, false or deceptive particulars in register of secretaries.
25 3 Offence to fail to keep register of secretaries.
254Acts done by person in dual capacity.
PART XIIIRESOLUTIONS AND MEETINGS Division 1 General provisions on company resolutions 255 Requirements for passing company resolutions.
256 Requirements for passing an ordinary resolution of a company.
257 Requirements for the passing of special resolution.
25 8 General rules for voting on company resolutions.
259Specific requirements for voting on company resolutions.
260 Votes of joint holders of shares.
281 2015 Companies No.
17 261 Effect of provision in company's articles as to admissibility of votes.
Division 2 Written resolutions 262 Written resolutions of private companies.
263 Who is entitled to vote on a written resolution.
264 Circulation date for written resolutions.
265Circulation of written resolutions proposed by directors.
266Right of members to require circulation of written resolution.
267Circulation of written resolution proposed by members.
268 Requisitioning members to meet expenses of circulation.
269 Application not to circulate members' statement.
270Procedure for signifying agreement to written resolution.
27 1 Deadline for agreeing to written resolution.
272Sending documents relating to written resolutions by electronic means.
273 Publication of written resolution on website.
274 Relationship between this Division and provisions of company's articles.
Division 3 Procedure for convening and holding company general meetings Subdivision I Convening of general meetings and passing resolutions 275 Resolutions at general meetings.
276Power of directors to convene general meetings.
277Right of members to require directors to convene general meeting.
278Directors' duty to convene general meetings required by members.
282 No.
17 Companies 2015 279Power of members to convene general meeting at the expense of the company.
280Power of Court to order general meeting to be convened.
281 Amount of notice to be given for general meetings.
282Manner in which notice of general meeting to be given.
283Publication of notice of general meeting on company's website.
284Persons entitled to receive notice of general meetings.
285Contents of notices of general meetings.
286Offence for company to fail to comply with section 281, 282, 283, 284 or 285.
287Resolutions requiring special notice.
288Accidental failure to give notice of resolution or general meeting.
289Power of members to require circulation of statements.
290Duty of company to circulate members' statements.
291 Who is liable to meet cost of circulating members' statements.
Subdivision 2 Procedure at company general meetings 292 Quorurn for general meetings.
293Members present may elect person to preside at general meeting.
294Person presiding at meeting may declare result of voting on a show of hands.
295Right of members to demand a poll at general meeting.
296Member not obliged to use all votes when voting on a poll at general meeting.
297 Representation of bodies corporate at general meetings.
283 Companies 2015 No.
17 Subdivision 3 Use ofproxies at company general meetings 298 Right of members to appoint proxies.
299Notice of meeting to contain statement of rights of members to appoint proxies.
300 Company sponsored invitations to appoint proxies.
301Notice of appointment of proxy to be given to company.
302Proxy can be elected to preside at general meeting.
303 Right of proxy to demand a poll at general meeting.
304Notice to be given to company of termination of proxy's authority.
305Articles may confer more extensive rights on members and proxies.
Subdivision 4Other matters relating to company general meetings 306Resolutions passed at adjourned general meeting.
307Sending to members documents relating to general meetings in electronic form.
Division 4 Application of sections 277 to 309 to meetings of classes of members of companies 308Application of Division 3 to meetings of holders of classes of shares.
309Application of Division 3 to meetings of classes of members of company having no share capital.
Division 5 Additional requirements for general meetings of public companies 3 10 Public companies: annual general meeting.
311Public companies: notice of annual general meeting.
312Public companies: members' power to require circulation of resolutions for annual general meeting.
313Public companies: company's duty to circulate members' resolutions for annual general meetings.
284 No.
17 Companies 2015 314Public companies: expenses of circulating members' resolutions for annual general meeting.
315 Results of poll to be made available on website.
316 Requirements as to website availability.
Division 6 Records relating to resolutions and company meetings 317Records of resolutions and meetings, etc.
318Records as evidence of resolutions, etc.
319Records of decisions by sole member.
320Inspection of records of resolutions and meetings.
321 Records of resolutions and meetings of class of members.
0 PART XIVSHARE CAPITAL OF COMPANY Division 1 Shares and share capital of a company 322Shares no longer capable of being converted into stock.
3^3 Nature of shares' 324Nominal value of shares.
325 Shares to be numbered.
326 Transferability of shares.
Division 2Allotment of shares: general provisions 327Exercise by directors of power to allot shares, etc.
328Power of directors to allot shares, etc: private company with only one class of shares.
329Power of directors to allot shares etc: authorisation by company.
330General prohibition of commissions, discounts and allowances.
33.1 Permitted commission.
332 Registration of allotment.
333 Return of allotment by limited company.
334Return of allotment by unlimited company allotting new class of shares.
285 2015 Companies No.
17 335Offence for company to fail to lodge return of allotment for registration.
336Provisions about allotment not applicable to shares taken on formation.
Division 3 Allotment of equity securities: existing shareholders' right of pre-emption 337 Interpretation: Division 3.
338 Existing shareholders' right of pre-emption.
339 Communication of pre-emption offers to shareholders 340Liability of company and officers in case of contravention.
341 Exception to pre-emption right: bonus shares.
342Exception to pre-emption right: issue for non-cash consideration 343Exception to pre-emption right: securities held under employees' share scheme.
344 Exclusion of requirements by private companies.
345Exclusion of pre-emption right: articles conferring corresponding right.
346Disapplication of pre-emption rights: private company with only one class of shares.
347Disapplication of pre-emption rights: directors acting under general authorisation.
348Disapplication of pre-emption rights by special resolution.
40 349Disapplication of pre-emption rights: sale of treasury shares.
350 References to holder of shares in relation to offer.
351 Provisions about pre-emption not applicable to shares taken on formation.
352Saving for other restrictions on offer or allotment.
353 Saving for certain older pre-emption requirements.
.286 No.
17 Companies 2015 Division 4 Public companies: allotment where issue not fully subscribed 354Public companies: allotment if issue not fully subscribed.
355Public companies: effect of irregular allotment if issue not fully subscribed.
Division 5 Payment for shares 356 Shares not to be allotted at a discount.
357Provision for different amounts to be paid on shares.
358General rule as to means of payment.
359Meaning of payment in cash.
360Public companies: shares taken by subscribers of memorandum.
361 Public companies: not to accept undertaking for work or services.
362Public companies: shares to be at least one-quarter paid up.
363 Public companies: payment by long-term undertaking.
364Liability of subsequent holders of shares.
365 Power of the Court to grant relief.
366Offences involving contravention of section 358, 363, 364 and 365.
367Meaning of "appropriate rate of interest" for purposes of this Division.
Division 6Public companies: independent valuation of non-cash consideration 368 Restrictions on public company allotting shares for non-cash consideration.
369Exception to valuation requirement: arrangement with another company.
370Exception to valuation requirement: merger.
371 Non-cash consideration for shares: requirements as to valuation and report.
287 2015 Companies No.
17 372 Copy of report to be lodged with Registrar.
373Public company: agreement for transfer of non- cash asset in initial period.
374Agreement for transfer of non-cash asset: requirement of independent valuation.
375Agreement for transfer of non-cash asset: requirements as to valuation and report.
376Agreement for transfer of non-cash asset: requirement of approval by members.
377 Copy of resolution to be lodged with Registrar.
378 Modification of provisions in relation to company whose conversion into a public company has been registered.
379Agreement for transfer of non-cash asset: effect of contravention.
380 Liability of subsequent holders of shares.
381 Power of Court to grant relief.
382Offence to contravene sections 370 or 375.
383 Enforceability of undertakings to do work, etc.
384The appropriate rate of interest for purposes of this Division.
Division 7 Share premiums 385 Interpretation: Division 7.
386Company's share premium account and application 40 of share premiums.
387Relief from requirements as to share premiums: Group reconstruction relief.
388 Merger relief.
389Merger relief: meaning of ninety percent equity holding.
390Power to make further provision by regulations for the purposes of this Division.
391Relief may be reflected in company's balance sheet.
288 No.
17 Companies 2015 Division 8 Classes of shares and variation of classes 392Classes of shares.
393 Variation of class rights: companies having a share capital.
394Variation of class rights: companies without a share capital.
395 Sections 395 and 396 not to affect powers of Court under certain provisions.
396Right to object to variation: companies having a share capital.
397Right to object to variation: companies without a share capital.
398 Copy of Court order to be lodged with Registrar.
399Notice of name or other designation of class of shares to be lodged with Registrar.
400Notice of particulars of variation of rights attached to shares to be lodged with Registrar.
401 Notice of new class of members to be lodged with Registrar.
402Notice of name or other designation of class of members to be lodged with Registrar.
403 Notice of particulars of variation of class rights to be lodged with Registrar.
PART XVREORGANISATION OF COMPANY'S SHARE CAPITAL Division 1 Alteration and consolidation of share capital 404Alteration of share capital of limited company.
405Sub-division or consolidation of shares.
406Notice to Registrar of sub-division or consolidation.
Division 2 Reduction of share capital 407 Special resolution for reduction of share capital.
408 Application to Court for confirming order.
409 Creditors entitled to object to reduction 289 2015 Companies , No.
17 410 Order confirming reduction and powers of Court on making such order.
411 Registration of Court order and statement of capital.
412Liability of members following reduction of capital 413 Liability to creditors omitted from list of creditors.
414 Offence to conceal name of creditor, etc.
415- Shares no bar to damages against company.
416- Public companies: duty of directors to convene a meeting on loss of capital.
417- Public company reducing capital below authorised minimum.
418- Expedited procedure for registration of conversion of company into a private company.
Division 3 Private companies: Reduction of capital supported by solvency statement 419Reduction of capital of private company supported by solvency statement.
420What is a solvency statement 421 Registration of resolution and supporting documents.
Division 4 Supplementary provisions 422General power to make further provision by regulations.
PART XVIACQUISITION BY LIMITED COMPANY OF ITS OWN SHARES Division 1 General provisions 423 Interpretation: Part XVI.
424General rule against limited company acquiring its own shares.
425 Treatment of shares held by nominee.
426Liability of others if nominee fails to make payment in respect of shares.
290 No.
17 Companies 2015 427Duty to cancel shares in public company held by or for the company.
428Notice of cancellation of shares.
429Conversion of company into private company in consequence of cancellation of shares.
430 Issue of certificate of incorporation on registration of conversion of public company into private company.
431 Effect of failure to apply for registration of company's conversion into private company.
432Offence to fail to cancel shares or apply for registration of company's conversion into private company.
433Application of sections 437 to 442 to private company that applies for registration of conversion into public company.
434Transfer to reserve on acquisition of shares by public company or nominee.
435Public companies: general rule against lien or charge on own shares.
436Interests to be disregarded in determining whether company has beneficial interest.
437Residual interest under pension scheme or employees' share scheme.
438 Employer's charges and other rights of recovery.
439 Rights as executor, administrator or trustee.
Division 2 Financial assistance for purchase of own shares 440Meaning of "financial assistance" for purposes of this Part.
441 Assistance by public company for acquisition of shares in its private holdingcompany.
442Assistance for acquisition of shares in public company.
443Assistance by public company for acquisition of shares in its private holding company.
291 2015 Companies No.
17 444Offence to give prohibited assistance.
445 Certain transactions excepted unconditionally from sections 442 and 443.
446Certain transactions excepted from sections 442 and 443 conditionally.
Division 3Purchase of own shares 447 Power of limited company to purchase own shares 448 Purchase of company's own shares.
449Financing of purchase of company's own shares.
450Approval for company to purchase own shares.
451 Authorisation for off-market purchase.
452Resolution authorising off-market purchase: exercise of voting rights.
453Resolution "approving off-market purchase: disclosure of details of contract.
454 Variation of contract for off-market purchase.
455Resolution approving variation: exe rcise of voting rights.
456Resolution approving variation: disclosure of details of variation 457 Release of company's rights under contract for off- market purchase.
45 8 Approval for company to make market purchase.
459Copy of contract or memorandum to be available for inspection.
460Enforcement of right to inspect copy or memorandum.
461 Company's right to purchase own shares not assignable.
462Payments apart from purchase price to be made out of distributable profits.
463 How shares purchased are to be treated.
464Return of purchase of own shares to be lodged with Registrar.
292 No.
17 Companies 2015 465 Notice to Registrar of cancellation of shares.
Division 4Redemption or purchase by private company out of capital 466 Interpretation: Division 4.
467Power of private limited company to redeem or purchase own shares out of capital.
468 The permissible capital payment.
469What profits are available.
470 Determination of available profits.
471 Requirements for payment out of capital.
472 Directors' statement and auditor's report 473Directors' statement: offence if no reasonable grounds for opinion.
474 Payment to be approved by special resolution.
475Resolution authorising payment: exercise of voting rights.
476Resolution authorising payment: disclosure of directors' statement and auditor's.
477 Public notice of proposed payment.
478Company to make directors' statement and auditor's report to be available for inspection.
479Objection to payment by members or creditors: application to the Court to cancel resolution.
480Notice of Court application or order to be lodged with Registrar.
481 When payment out of capital to be made.
Division 5 Supplementary provisions 482Company whose shares are redeemed or purchased to transfer amount to capital redemption reserve.
483Accounting consequences of payment out of capital.
484 Effect of company's failure to redeem or purchase.
293 2015 Companies No.
17 PART XVIIHOW COMPANY'S ASSETS ARE TO BE DISTRIBUTED Division I Introductory provision 485 Interpretation: Part XVH.
Division 2 General rules for distributions 486 Distributions to be made only out of profits available for the purpose.
487Net asset restriction on distributions by public companies.
Division 3justification of distribution by reference to financial statements 488 Justification of distribution by reference to relevant financial statements.
489Successive distributions etc.
by reference to the same financial statements.
Division 4 Relevant accounting matters 490 Treatment of development costs.
491 Determination of profit or loss in respect of asset where records incomplete.
Division 5 Distributions in kind 492 Distributions in kind: determination of amount.
493 Distributions in kind: treatment of unrealised profits.
Division 6 Supplementary provision 494 Consequences of unlawful distribution.
PART XVIIICERTIFICATION AND TRANSFER OF SECURITIES Division 1 Certification and transfer of securities: general 495 Share certificate to be evidence of title.
496Duty of company as to issue of certificates etc on allotment.
497 Registration of transfer ^f shares and debentures.
498 Procedure on transfer being lodged.
294 No.
17 Companies 2015 499 Transfer of shares on application of transferor.
500Execution of share transfer by executor or administrator.
501 Evidence of grant of probate, etc.
502 Certification of document of transfer of shares and debentures.
503 Duty of company as to issue of certificates etc on transfer.
504Company no longer authorised to issue share warrants after commencement of this section.
505Power of Court to order company to make good failure to issue certain documents.
Division 2 Evidencing and transfer of title to securities without written instrument 506Provision enabling procedures for evidencing and transferring title.
507Power to make regulations requiring arrangements to be adopted.
508 Provision enabling or requiring arrangements to be adopted: order-making powers.
509Duty to consult.
PART XIX PUBLIC OFFERS OF SECURITIES BY PRIVATE AND PUBLIC COMPANIES 5 10 Interpretation: Part XIX.
511 Prohibition of public offers by private companies.
512Enforcement of prohibition: order restraining proposed contravention.
513Enforcement of prohibition: orders available to the Court after contravention.
514Enforcement of prohibition: power of Court to make remedial orders.
5 15 Validity of allotment etc.
not affected 516Public company: requirement for minimum share capital.
5 17 Procedure for obtaining trading certificate.
295 2015 Companies No.
17 518 The authorised minimum.
519 Consequences of doing business etc.
without a trading certificate.
PART XXREDEEMABLE SHARES 520Power of limited company to issue redeemable shares.
521 Terms and manner of redemption.
522 Payment for redeemable shares.
523 Financing of redemption.
524Redeemed shares treated as cancelled.
525 Notice to Registrar of redemption.
PART XXITREASURY SHARES 526Treasury shares.
527Treasury shares: maximum holdings.
528 Exercise of rights in respect of treasury shares.
529Disposal of treasury shares.
530Treasury shares: notice of disposal.
531 Cancellation of treasury shares.
532Treasury shares: notice of cancellation.
533 Treatment of proceeds of sale of treasury shares.
534Treasury shares: offences.
PART XXIIINFORMATION ABOUT INTERESTS IN A PUBLIC COMPANY'S SHARES Division 1 Introductory provision 535 Application of Part XXII.
Division 2 Power of public company to require persons to provide information about their interests in the company's shares 536Notice by public company requiring information about interests in its shares 537Public company may apply to Court for order imposing restrictions on the relevant shares if notice requiring information is not complied with.
296 No.
17 Companies 2015 538 Notice requiring information: offences 539Notice requiring information: persons exempted from obligation to comply.
Division 3 Orders imposing restrictions on shares 540 Consequences of order imposing restrictions.
541 Offence to attempt to evade restrictions.
542Relaxation of restrictions 543Removal of restrictions.
544Order of Court for sale of shares.
545Application of proceeds of sale under order of Court.
Division 4 Power of members to require company to exercise its powers under this Part 546Power of members of company to require company to act.
547 Duty of company to comply with requirement.
548 Report to members on outcome of investigation.
549Offences relating to a failure to comply with requirement of section 560.
550 Right to inspect and request copy of reports.
Division 5 Register of interests disclosed 551 Company to keep register of interests disclosed.
552Register to be kept available for inspection.
553 Rights to inspect and require copy of entries 554Court supervision of purpose for which rights may be exercised 555 Register of interests disclosed: refusal of inspection or default in providing copy 556Register of interests disclosed: offences in connection with request for or disclosure of information.
55 7 Entries not to be removed from register 558 Removal of entries from register: old entries.
297 Companies 2015 No.
17 559Removal of entries from register: incorrect entry relating to third party.
560Adjustment of entry relating to share acquisition agreement.
561 Duty of company ceasing to be public company 562Interest in shares: general.
Division 6 Supplementary provisions 563 Interest in shares: right to subscribe for shares 564Interest in shares: family interests.
5 65 Interest in shares: corporate interests 566Interest in shares: agreement to acquire interests in a particular company.
567Extent of obligation in case of share acquisition agreement.
568 Information protected from wider disclosure.
569 Calculating periods for fulfilling obligations.
PART XXIH COMPANY DEBENTURES 570Perpetual debentures.
571 Enforcement of contracts to subscribe for debentures.
572 Company to register allotment of debentures.
573Company to establish and maintain register of debenture holders.
574Rights of debenture holders and others to inspect and obtain copies of register of debenture holders 575Offence to refuse inspection of register of debenture holders or to fail to provide copy.
576Register of debenture holders: offences in connection with request for or disclosure of information.
577Time limit for claims arising from entry in register of debenture holders.
578Right of debenture holder to copy of trust deed securing debentures.
298 No.
17 Companies 2015 579Provisions.
protecting trustees of deed securing debentures to be void.
580 Power to re-issue redeemed debentures.
581 Deposit of debentures to secure advances.
582Priorities when debentures secured by floating charge.
PART XXIV COMPANY TAKEOVERS Division 1 General provisions 583 Interpretation: Part XXIV.
584What constitutes a takeover offer.
585 Shares already held by the offeror, etc.
586Cases in which offer is treated as being on same terms.
587Effect of impossibility etc of communicating or accepting offer.
588 Certain shares excluded from offer.
589Persons who are associates of offerors for purposes of this Part 590How debentures that confer voting rights are treated for the purposes of this Part.
591 How convertible securities are to be treated for purposes of this Part.
Division 2Takeover Rules 592 Power of Authority to make Takeover Rules.
593 Further provisions about Takeover Rules.
594Power of Authority to give rulings in takeover cases.
595 Rules may empower Authority to give directions.
596Power of Authority to require documents and information.
597 Restrictions on disclosure of information about affairs of natural person or particular business.
598 Offence to disclose information in contravention of section 609.
299 2015 Companies No.
17 599Power of Authority to impose sanctions for breaches of Takeover Rules.
600Failure to comply with the Takeover Rules relating to bid documentation.
601 Enforcement of Takeover Rules by the Court.
602 Authority not liable for damages in connection with the performance of its functions under this Part.
603 No action for breach of statutory duty etc.
604Privilege against self-incrimination.
Division 3 Impediments to takeovers 605 Interpretation: Division 3.
606Impediments to takeovers: opting in and opting out.
607Further provision about opting-in and opting-out resolutions.
608 Consequences of opting in: effect on contractual restrictions.
609Power of offeror to require general meeting to be convened.
6 10 Requirements as to notification of opting-in or opting out resolutions.
Division 4I Squeeze in" and "sell out" 611 Right of offeror to buy out minority shareholder.
612Further provision about notices given under section 611.
613 Effect of notices under section 611.
614Further provision about consideration held on trust under section 613.
615Right of minority shareholder to be bought out by offeror.
616Further provision about rights conferred by section 615.
617Effect of exercising the rights conferred by section 615.
300 No.
17 Companies 2015 Division 5 Supplementary provisions 618 Circumstances in which offeror or minority shareholder may apply to the Court.
619When takeover offers are made by two or more persons jointly.
PART XXV COMPANY ACCOUNTING RECORDS AND FINANCIAL STATEMENTS Division 1 Introductory provisions 620 Interpretation: Part XXV.
621 Notes to a company's financial statements.
622Application of this Part.
623 Companies subject to the small companies regime.
624Companies qualifying as small: general rules.
625 Companies qualifying as small: parent companies.
626Companies excluded from the small companies regime.
627When company is a quoted company or an unquoted company for the purposes of this Part.
Division 2 Companies to keep accounting records 628Duty of company to keep proper accounting records.
629Offence for company to fail to keep proper accounting records.
630Where and for how long company is required to keep its records.
40 631 Offences relating to company's failure to preserve records.
Division 3 Financial years of companies 632How company's financial year is to be determined.
633How accounting reference periods and accounting reference date of company are determined.
634Power of company to change its accounting reference date.
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17 Division 4 Directors of companies to prepare annual financial statement 635Duty of directors to prepare individual financial statements.
636Financial statements to give true and fair view.
637Accounting framework applicable to individual financial statements.
63 8 Requirements for individual financial statements.
639Company that is not a small company to prepare group financial statement.
640 Exemption for company included in group financial statement of larger group.
641 Exemption if no subsidiary undertakings need to be included in consolidation.
642Group financial statements: applicable accounting framework.
643 Requirements for group financial statements.
subsidiary financial statements: 644Group undertakings to be included in consolidation.
645 Directors of parent company to ensure consistency of financial reporting within group.
646Certain information may be omitted from individual profit and loss account when group financial statement is prepared.
647Information about related undertakings to be provided in notes to financial sta tements.
Is 648Information about related undertakings: alternative compliance.
649Information about employee numbers and costs to be included in company's annual financial statement.
650Directors to include in notes to company's annual financial statement details of their benefits other than remuneration.
302 No.
17 Companies 2015 65 1 Information about directors' benefits to be included in notes to company's individual financial statement.
652 Directors to approve and sign financial statements.
Division 5Directors' reports 65 3 Duty to prepare directors' report.
654General requirements for contents of directors' report.
655 Business review to be included in certain directors' reports.
656When business review not required.
657Contents of directors' report: statement as to disclosure to auditors.
65 8 Directors to approve and sign directors' report.
Division 6 Directors' remuneration reports 659 Duty of directors of quoted company to prepare directors' remuneration report.
660 Regulations may prescribe requirements for contents of directors' remuneration report.
661 Directors to approve and sign directors' remuneration report.
Division 7 Publication of financial statements and company reports 662Company's duty to circulate copies of annual financial statement and reports.
663Deadline for sending out copies of annual financial statement and reports.
664Offence to fail to send out copies of financial statement and reports.
665 Option to provide summary financial statement.
666Duty of company to send financial statements and reports to persons entitled.
667Form and contents requirements for summary financial statements of unquoted companies.
303 2015 Companies No.
17 668Form and contents requirements for summary financial statements of quoted companies.
669Offences relating to summary financial statements.
670Quoted company to make annual financial statement available on company's website.
671 Quoted company to make preliminary statement of results available on company's website.
672 Requirements as to website availability.
673Right of member or debenture holder of unquoted company to copies of company's financial statements and reports.
674Right of member or debenture holder of quoted company to copies of company's financial statement and reports.
675Name of signatory to be stated in published copies of annual financial statement and reports, etc.
676 Requirements in connection with publication of statutory financial statement.
677 Requirements in connection with publication of non-statutory financial statement.
678Meaning of "publication" in relation to company's financial statement and reports.
Division 8 Public companies: laying of financial statements and reports before general meeting 679Public company to present annual financial statement and reports at general meeting of company.
40 680Offence for public company to fail to present annual financial statement and reports at general meeting of company.
Division 9 Directors remuneration report to be approved by members 681 Directors of quoted company required to obtain members' approval of directors' remuneration report.
682Offence for directors of quoted company to fail to comply with section 681.
304 No.
17 Companies 2015 Division 10 Certain financial statements and reports to be lodged with Registrar 683Company's directors to lodge certain documents with Registrar.
684Deadline for lodging financial statements and reports with Registrar.
685Calculation of deadline for lodging financial statements with Registrar.
686Lodgement requirements for companies subject to small companies regime.
687 Lodgernent requirements for unquoted companies.
68 8 Lodgement requirements for quoted companies.
689Exemption of unlimited comp, anies from requirement to lodge financial statements with Registrar.
690Special auditor's report required if abbreviated financial statement is lodged with Registrar.
691 Directors of company to approve and sign abbreviated financial statement.
692Offence to fail to lodge annual financial statement and reports with Registrar.
693Power of the Court to order compliance if annual financial statement or reports not lodged with Registrar.
694Company liable to default penalty for failure to lodge annual financial statement and reports with Registrar.
0 Division 11 Revision of defective financial statements and reports 695 Voluntary revision of defective financial statements and reports.
696Cabinet Secretary may give notice in respect of company's financial statements or reports that are believed to be defective.
697Application to the Court to rectify defective annual financial statement or directors' report of company.
305 2015 Companies No.
17 698Power of Cabinet Secretary to authorise other persons to make application to the Court under section 7 10.
699Power of Kenya Revenue Authority to disclose information to authorised person for certain purposes.
700 Power of Cabinet Secretary or authorised person to require documents, information and explanations.
701 Restrictions on disclosure of information obtained under compulsory powers.
702Permitted disclosure of information obtained under compulsory powers.
Division 12 Supplementary provisions 703Liability of directors for false or misleading statements in company's financial statement and reports.
704Regulations may make further provision about financial statements and reports of companies.
PART XXVICOMPANIES TO MAKE ANNUAL RETURNS TO REGISTRAR 705Duty of company to lodge annual returns with Registrar.
706 Contents of annual return: general.
707Contents of annual return: information about share capital and shareholders.
708Offence for company not to lodge annual return on time, etc.
PART XXVIIAUDITING OF COMPANY FINANCIAL STATEMENTS Division 1 Requirements for audited financial statement 709 Requirements for auditing financial statements.
7 10 Right of members to require audit.
711 Small companies: conditions for exemption from audit.
306 No.
17 Companies 2015 712Companies excluded from small companies exemption.
713 Availability of small companies exemption in case of group company.
714Conditions for exemption from audit for dormant companies.
715Companies excluded from dormant companies exemption 716Exemption from audit for non-profit-making companies subject to public sector audit.
Division 2 Appointment of auditors 717Appointment of auditors of private company: general.
718Appointment of auditors of private company: default power of the Cabinet Secretary.
719 Term of office of auditors of private company.
720Members of private company may block automatic re-appointment of auditor.
721 Appointment of auditors of public company: general.
722Appointment of auditors of public company: default power of the Cabinet Secretary.
723 Term of office of auditors of public company.
724Fixing of auditor's remuneration.
725 Company to disclose terms of audit appointment.
726Regulations to Provide for safeguarding disclosure of nature of services provided by company's auditor.
Division 3 Functions of auditors 727Auditor's report on annual financial statement of company.
728 Auditor's report on directors' report.
729Auditor's report on auditable part of directors' remuneration.
730 Responsibilities of auditor.
M 307 2015 Companies No.
17 731 Auditor's right to information.
732Auditor's right to information from foreign subsidiaries.
733 Auditor's rights to information: offences.
734Auditor's rights in relation to resolutions and meetings.
735 Auditor to sign and date auditor's report.
736Name of auditor to be stated in published copies of auditor's report.
737 Circumstances in which auditors' names may be omitted from published copies of auditors' report.
738Offences in connection with auditor's report.
Division 4 Cessation of office of auditors Resolution removing auditor from office.
739 740Special notice required for resolution removing auditor from office.
741 Notice of resolution removing auditor from office.
742Rights of auditor who has been removed from office.
743Failure to re-appoint auditor: special procedure required.
744Failure to re-appoint auditor: special notice required for resolution at general meeting.
745 Resignation of auditor.
746Notice to Registrar of resignation of auditor.
747 Rights of resigning auditor.
748 Statement by auditor on ceasing to hold office to be lodged with company.
749 Company's duties in relation to statement.
750 Auditor to lodge copy of statement with Registrar.
751 Duty of auditor to notify appropriate audit authority.
9 308 No.
17 Companies 2015 752Duty of company to notify appropriate audit authority if auditor ceases to hold office before end of auditor's term.
753Appropriate audit authority to notify prescribed accounting body of cessation of auditor's appointment.
754Meaning of "appropriate audit authority" for purpose of this Division.
755 Effect of casual vacancies.
Division 5 Quoted companies: right of members to raise audit concerns at accounts meeting 756Members' power to request website publication of audit concerns.
757 Requirements as to website availability.
758Website publication: company's supplementary duties.
759Website publication: offences.
760Meaning of "quoted company" for purposes of sections 769 to 772.
Division 6 Auditors' liability 761 Provisions protecting auditors from liability to be void.
762Indemnity for costs of successfully defending proceedings.
763 Power of Court to grant relief in certain cases.
764Liability limitation agreements.
765 Terms of liability limitation agreement.
766Authorisation of agreement by members of the company.
767 Effect of liability limitation agreement.
768Company to disclose liability limitation agreement.
Division 7 Supplementary provisions 769Quoted Companies: audit committee.
770Quoted companies: corporate governance.
309 2015 Companies No.
17 PART XXVHISTATUTORY AUDITORS 771 Purpose of Part XXVIII.
772 Eligibility for appointment as a statutory auditor.
prohibited from acting as 773Ineligible person.
statutory auditor.
774 Statutory auditor to be independent.
775 Effect of lack of independence of statutory auditor.
776Effect of appointment of a partnership as statutory auditor.
777Appropriate qualifications for appointment as a statutory auditor.
778Power of Cabinet Secretary to recognise qualifications of foreign auditors for purposes of this Act.
779Cabinet Secretary's power to require eligible person to provide certain information.
PART XXIXPROTECTION OF MEMBERS AGAINST OPPRESSIVE CONDUCT AND UNFAIR PREJUDICE -7 80 Application to Court by company member for order under section 796 781 Application to Court by Attorney General for order under section 796 782Power of Court to make orders for protection of members against oppressive conduct and unfair prejudice.
I 783Copy of order affecting company s constitution to be lodged with Registrar.
784 Supplementary provisions applicable if company's constitution altered.
PART XXXCOMPANY INVESTIGATIONS Division 1 Introduction 7 85 Interpretation: Part XY_X.
Division 2 Appointment of inspectors by the Court 786 Investigation of company's affairs on application of members.
310 No.
17 Companies 2015 7 87 Investigation of company's affairs in other cases.
788Power of inspectors to carry investigation into affairs of related companies.
789General powers of court to give directions to inspector.
790Power of court to direct conduct of investigation under this Division.to be terminated.
791 Resignation and revocation of appointment of inspector appointed by the Court.
792 Power of court to appoint replacement inspector.
793 Production of documents and evidence to inspector appointed by the Court.
794Obstruction of inspectors appointed by Court to be contempt of C6urt.
795 Power of inspector appointed by Court to apply to Court to conduct examination.
796Power of Court to obtain information from former inspectors etc.
797Inspector appointed by the Court to submit reports to the Court.
798 Power of Director of Public Prosecutions to bring prosecution for offences disclosed by inspectors' report.
899 Expenses of investigation of company's affairs.
Division 3 Powers of Attorney General with respect to investigation of company ownership 800Appointment of inspector to investigate ownership of company.
801 Power of inspector appointed by Attorney General to investigate ownership, etc.
of related companies 802General powers of Attorney General to give directions to inspectors appointed by the Attorney General.
803Direction to terminate conduct of investigation under this Division.
311 2015.
Companies No.
17 804Resignation and revocation of appointment of inspectors appointed by the Attorney General.
805Appointment of replacement inspectors appointed by the Attorney General.
806Production of documents and evidence on investigation under this Division.
807Obstruction of inspectors appointed by the Attorney General to be contempt of Court.
808Inspector appointed by the Attorney General may apply to Court to conduct examination of person.
809Inspector appointed by the Attorney General to submit reports to the Attorney General.
40 810Power of Director of Public Prosecutions to bring prosecution for offences disclosed by inspectors' report made under section 823.
811Power of Attorney General to require information about persons interested in securities of a company.
812Power of Attorney General to impose restrictions on securities.
Division 4 Supplementary provisions 813 Inspector's report to be evidence.
814Power to bring civil proceedings on company's behalf.
815 Issue of warrants to enter and search premises.
816Protection in relation to certain disclosures: information provided to Attorney General 817Prohibition on disclosure of information obtained under section 825 or 830.
818Offence to destroy, mutilate or falsify company documents.
819 Offence to provide false information.
820Disclosure of information by Attorney General or inspector.
821 Certain information protected from disclosure.
312 No.
17 Companies 2015 822Answers to questions put by inspector during examination admissible in legal proceedings as evidence.
823 Application of this Part to foreign companies.
824Offences against this Part committed by bodies corporate.
Division 5 Effect of orders imposing restrictions on disposal of company's securities 825 Consequence of order imposing restrictions.
826Offence to attempt to evade restriction imposed by or under this Part.
827 Power of Court to order relaxation or removal of 828Provisions applicable to sale by Court order of restricted securities.
PART XXXIREGISTRAR OF COMPANIES AND REGISTRATION OF COMPANY DOCUMENTS Division I Introductory provisions 829 Application of Part XXXI 830Part to apply to foreign companies.
Division 2 Appointment and functions of Registrar of Companies 831 Registrar and Deputy and Assistant Registrars of Companies.
832Register of Companies and functions of Registrar.
833 Registrar's official seal.
834Fees payable to Registrar.
835 Registrar to give public notice of issue of certificate of incorporation.
836Right to obtain certificate of incorporation.
837 Registrar to allocate number to each company.
838Registrar to allocate unique number to each foreign company registered under this Act.
839Power of Registrar to impose requirements with respect to lodgement of documents.
313 2015 Companies No.
17 Division 3 Specific requirements and powers relating to registration of documents 840Regulations may require documents to be lodged by electronic means.
841 Agreement for lodgement of documents by electronic means.
842Document not lodged for purposes of this Act until received by Registrar.
843 Requirements for proper lodgement.
844Powers of Registrar to correct documents in certain cases.
845 Power of Registrar to.
accept replacement for document previously lodged.
846Power of Registrar to exclude unnecessary information.
847 Registrar's notice to remedy defective lodgement.
848 Annotation of the Register.
849Allocation of unique identifiers for purpose of identifying directors and certain other persons.
850 Preservation of original documents.
851 Power of Registrar to destroy records of dissolved company after elapse of two years.
852Right of members of public to inspect Register.
853Right of members of public to be provided with copies of records kept by Registrar.
854Certain records not to be made available for public inspection.
855Registrar can be required to make address unavailable for public inspection.
856Form of application for inspection or copy.
857 Form and manner in which copies to be provided.
858 Certification of copies of records by Registrar.
859Issue of legal process for production of records kept by the Registrar.
314 No.
17 Companies 2015 Division 4 Correction or removal of material on the Register 860Registrar's notice to resolve inconsistency on the Register.
861 Administrative removal of information from the Register.
862 Rectification of Register on application to Registrar.
863 Rectification of the Register under Court order.
864Powers of Court on ordering removal of entry from the Register.
Division 5 Special provisions for documents not in the English language 865Documents to be prepared and lodged in the English language.
866Documents that may be prepared and lodged in other languages.
867 Voluntary lodgement of translations.
868 Certified translations.
869 Transliteration of names and addresses: permitted characters.
870 Transliteration of names and addresses: voluntary translation into Roman characters.
871 Translation of names and addresses: certification.
Division 6 Supplementary provisions 872Offence to lodge false or misleading documents or to make false or misleading statements to Registrar.
873 Enforcement of company's lodgement obligations.
874 Supplementary provisions relating to electronic communications.
875Provision for publishing notices by alternative means.
876Registrar's power to make Rules.
315 2015 Companies No.
17 PART XXXHCOMPANY CHARGES 877 Interpretation: Part XXXII.
878 Charges created by a company.
879Charges existing on property acquired.
880Lodgement for registration of charge in series of debentures.
881Additional registration requirement for commission, allowance or discount in relation to debentures.
882Certificate of registration to be endorsed on debentures.
883 Charges created in, or over property located outside Kenya.
884Registrar to keep register of charges.
8 85 Deadline for registering a charge.
886Holder of floating charge to lodge with Registrar notice of appointment and cessation of appointment of administrator of company.
887Registrar to record memorandum of satisfaction or release.
888 Rectification of register of charges.
889Consequence of failure to register charges created by a company 890Companies to keep copies of documents creating charges.
891 Company's register of charges.
892Right of creditors, members and others to inspect documents that create company's charges and to inspect company's register of charges.
PART XXXIII DISSOLUTION AND RESTORATION TO THE REGISTER Division 1 Interpretation 893 Interpretation: Part XXXIH.
316 No.
17 Companies 2015 Division 2 Dissolution of companies 894Power of Registrar to strike off company not carrying on business or in operation.
895 Duty of Registrar to act in case of company that has been liquidated or no liquidator is acting.
896 Supplementary provisions as to service of letter or notice.
897 Striking off company on company's application.
898 Circumstances in which application not to be made: activities of company.
899 Circumstances in which application not to be made: other proceedings not concluded.
900Copy of application to be given to members, employees, etc.
901 Copy of application to be given to new members, employees, etc.
902Copy of application: provisions as to service of documents.
903 Circumstances in which application taken to be withdrawn.
904When withdrawal of application takes effect.
Division 3 Undistributed property of dissolved company to vest in the State 905 Property of dissolved company to vest in the State.
906Disclaimer of property vesting in the State.
0 907 Effect of State disclaimer.
908General effect of disclaimer.
909Disclaimer of leaseholds.
9 10 Power of Court to make vesting order.
9 11 Protection of persons holding under a lease.
Division 4Restoration of companies to the Register 912Application for administrative restoration to the Register.
913 Requirements for administrative restoration.
317 2015 Companies No.
17 application for decision on 914Registrar's administrative restoration.
915 Effect of administrative restoration.
916 Application to Court for restoration to the Register.
917 When application to the Court may be made.
918Decision on application for restoration by the Court.
919Effect of Court order for restoration to the Register: power of Court to make consequential directions.
920 Company's name on being restored to the Register.
921 Effect of restoration to the Register if property has 40 vested in the State under section 919.
PART XXXIV COMPROMISES, ARRANGEMENTS, RECONSTRUCTIONS AND AMALGAMATIONS 922 Part XXXIV: Application and interpretation 923 Court may order meeting of company's creditors or members to be held 924Explanatory statement setting out effect of arrangement or compromise to be circulated or made available to company's creditors and members of company.
925Duty of directors and trustees to provide information.
926 Court order sanctioning compromise or arrangement.
927Powers of the Court to facilitate reconstruction or amalgamation.
928Copy of order to be lodged with the Registrar for registration.
929Obligations of company with respect to its constitution.
PART XXXVMERGERS AND DIVISIONS OF PUBLIC COMPANIES Division 1 Preliminary 930 Interpretation: Part XXXV.
318 Companies 2015 No.
17 931 Application of this Part.
932 Relationship of this Part to Part XXXIV.
Division 2 Mergers 93 3 Introductory: mergers and merging companies.
934 Draft terms of scheme for proposed merger.
935 Draft terms of proposed merger to be published 936Scheme not effective unless approved by members of merging companies.
937Directors of merging companies to prepare explanatory report relating to proposed merger.
938Merging companies to arrange for preparation of experts' reports.
939 Supplementary financial statement to be prepared for merger in certain cases.
940Members of merging companies entitled to inspect merger documents.
941 Articles of transferee company involved in merger to be approved.
942Protection of holders of securities to which special rights attached (merger) 943Allotment of shares to transferor company (or its nominee) prohibited.
944 Circumstances in which certain particulars and reports not required in relation to merger 945 Circumstances in which meeting of members of transferee company not required for merger.
946 Circumstances in which meeting of members of transferee company not required in relation to merger.
947 Other circumstances in which meeting of members of transferee company not required in relation to merger.
Division 3Division of companies 948 Introductory: companies and involvement of companies in division.
319 2015 Compant.
es No.
17 949 Draft terms of scheme to be prepared and adopted in relation to division.
950 Draft terms relating to division to be published.
951Approval of members of companies involved in division.
952Directors to prepare explanatory report in relation to division.
953Expert's report to be prepared for each company involved in division.
954 Supplementary financial statement to be prepared for division in certain cases.
955Members of companies involved in division entitled to inspect certain documents.
956Report on material changes of assets of transferor company involved in division.
Articles of transferee company involved in division 957 to be approved by transferor company.
Protection of holders of securities to which special 958 rights attached (division).
959Allotment of shares to transferor company (or its nominee) prohibited.
960 Circumstances in which meeting of members of transferor company involved in division is not required.
961Other exceptions: circumstances in which meeting of members of transferee company not required in relation to division.
962Members of companies involved in division can agree to dispense with reports, etc.
963Power of the Court to exclude certain requirements in the case of division.
Division 4 Supplementary provisions 964Expert's report: valuation by another person.
965 Experts and valuers: independence requirement.
966 Power of the Court to convene meeting of members or creditors of existing transferee company.
320 Companies 2015 No.
17 967Court to fix date for transfer of undertaking etc of transferor company.
968Liability of transferee companies for each other's defaults.
PART XXXVICOMPANIES NOT FORMED UNDER THIS ACT 969 Companies not formed under companies legislation can be registered under this Act.
970Regulations providing for registration of companies to which section 970 applies.
971 Regulations may apply provisions of this Act may to unregistered companies 972Application of this Part to certain existing companies.
PART XXXVHFOREIGN COMPANIES Division I Introductory provisions 973 Interpretation: Part XYXVII.
974When foreign company may carry on business in Kenya.
Division 2 Procedure for registering foreign companies 975 Application for registration of foreign companies.
976 Requirements with respect to names of foreign companies.
977Foreign company can be registered under alternative name under which it will carry on business in Kenya.
978Registrar to issue certificate of registration on change of name of registered foreign company.
Division 3Local representatives of registered foreign companies 979Foreign company required to have local representative.
980Appointment and termination of appointment of local representative.
981 Liability of local representative.
321 2015 Companies No.
17 Division 4 Regulation of registered foreign companies 982Particulars of places of businesses of registered foreign companies to be notified to Registrar.
983Registered foreign company to have registered office.
984Registered foreign company to display its name at office and places of business.
985Registered foreign company to state its name and other information in documents and communications relating to its business in Kenya.
986Registered foreign company to give notice of certain changes relating to its constitution, director and business in Kenya.
987Copies of registered foreign company's financial statements and other documents to be lodged with Registrar.
988Provision for registration of charges over Kenyan property of foreign company.
989Registered foreign company to lodge certain returns with Registrar.
990Natural person's residential address to be protected from disclosure.
Division 5 Circumstances in which registered foreign company's name can be struck off or restored to Register of Foreign Companies 991 Local representative of registered foreign company to notify Registrar of certain events affecting the 40 company.
992Power of Registrar to strike registered foreign company's name from Register of Foreign Companies in certain circumstances.
993Restoration of foreign company to Foreign Companies Register in certain circumstances.
Division 6 Supplementary provisions 994Registrar to keep Foreign Companies Register.
995Power of Cabinet Secretary to make foreign companies regulations.
322 No.
17 Companies 2015 PART XXXVHILEGAL PROCEEDINGS 996 Liability of officers who are in default.
997Application of section 1010 to bodies other than companies 998 Proceedings against unincorporated bodies 999Legal professional privilege.
1000Production and inspection of documents if offence suspected.
1001Power to enter and search of premises under warrant.
1002 Offence of fraudulent trading.
1003 Power of the Court to prohibit payment or transfer of money, financial products or other property 1004Power of the Court to grant injunctions in certain cases 1005 Power of a court to grant relief in certain cases PART XXXIXCOMPANY RECORDS 1006 Form of company records.
1007Power to make regulations as to where certain company records can be kept.
1008Power to make regulations about the inspection of records and the provision of copies.
1009Duty of company to take precautions against falsification of its records.
PART XLSERVICE OF DOCUMENTS ON AND BY COMPANIES 1010Service of documents on companies.
10 11 Service of documents on directors, secretaries and others.
10 12 Requirements for service addresses.
10 13 Companies Communications Regulations.
1014Right to require company to provide hard copy version of company document or information.
10 15 Requirements for authentication of documents and information.
1016When documents and information taken to have been sent or supplied by company.
323 Companies 2015 No.
17 PART XLIGENERAL PROVISIONS RELATING TO INDEPENDENT VALUATION AND REPORT 1017Part XLI: Application and interpretation of valuation requirements.
1018Valuation to be carried out only by qualified valuer.
1019 Valuer to satisfy independence requirement.
1020Meaning of "associate" for purposes of section 1023.
1021 Valuer entitled to full disclosure.
PART XLH SUPPLEMENTARY PROVISIONS 1022Power of Cabinet Secretary to make regulations for purposes of this Act.
1023 Repeals and revocations.
1024Continuity of the law.
1025 Sixth Schedule: savings and transitional provisions.
1026Power to make savings and transitional regulations.
SCHEDULES FIRST SCHEDULE: CONNECTED PERSONS: REFERENCES TO AN INTEREST IN SHARES OR DEBENTURES SECOND SCHEDULE: MATTERS FOR DETERMINING UNFITNESS OF A DIRECTOR THIRD SCHEDULE: REQUIREMENTS TO BE COMPLIED WITH TO AVOID CONTRAVENING PART XVII (HOW COMPANY'S ASSETS ARE TO BE DISTRIBUTED) FOURTH SCHEDULE: SPECIFIED PERSONS FIFTH SCHEDULE: AUTHORISED DISCLOSURES SIXTH SCHEDULE: SAVINGS AND TRANSITIONAL PROVISIONS 324 No.
17 Companies 2015 THE COMPANIES ACT, 2015 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 ENACTED by the Parliament of Kenya, as follows PART 1PRELIMINARY 1.
(1) This Act may be cited as the Companies Short title and Act, 2015.
commencement.
(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.
(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 (1) Jn this Act, unless the context otherwise provisions of this Act.
requires "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 (c) a postal and physical address; 325 2015 Companies No.
17 "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 Cap 1851.
exchange approved by the Capital Markets Authority in accordance with the Capital Markets Act; 6carticles" means the articles of association of a company; 66associate" (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; "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 326 No.
17 Companies 2015 (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; "body corporate" includes a firm that is a legal person under the law by which it is governed; "Cabinet Secretary" means the Cabinet Secretary for the time being responsible for matters relating to companies; 46 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; 64 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; 66 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; "the Court" means (unless some other court is specified) the High Court; 6^ 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; 327 2015 Companies No.
17 "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; Ccelectronic 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;64 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 328 No.
17 Companies 2015 (b) being entirely transmitted, conveyed and received by wire, radio, optical means or by other electromagnetic means; 64electronic 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; 64electronic 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 hold ing 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; 64equity securities" means- (a) ordinary shares in a company; or (b) rights to subscribe for, or to convert securities into ordinary shares in the company; 329 2015 Companies No.
17 ^'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; 64 expenses" includes costs; and "expenses" (of an investigation) includes expenses incidental to the investigation; 46expression" includes sign, symbol, logo and mark; 64existing 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; "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; 64general meeting", in relation to a company, means a general meeting of the company; 46group", 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; 64 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; 330 No.
17 Companies 2015 "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 Cap.
507.
agreement as defined in section 2(l) of the Hire Purchase Act; "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; "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; 331 2015 Companies No.
17 "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; 64name", 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; 66notice" means notice in writing; "notify" means notify in writing; 66net 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; 664officer", 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 332 No.
17 Companies 2015 (ii) because 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; 44 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; 66 prescribed financial accounting standards" means statements of standard accounting practice issued by a professional body or bodies in accounting and finance recognized by law in Kenya; " 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; 10; "public company" has the meaning given by section publish", in relation to a document or information, 46 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; 333 2015 Companies No.
17 "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 Actin 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; 46register" (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; 64registered 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; 334 No.
17 Companies 2015 the repealed Act" means the Companies Act Cap.
486 44 repealed by this Act; 66 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; "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 ic representing the goods; securities" includes- (a) options; (b) futures; and (c) contracts for differences, and rights or interests in those investments; 66 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; 44 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; 335 2015 Companies No.
17 6 '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; 66 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; 6 'under administration" has the same meaning as provided for in the laws related to insolvency; undertaking" means 11 a body corporate or partnership; or (a) (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 336 No.
17 Companies 2015 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 re' serve that the company is prohibited from distributing by its articles; 66 unlimited company" has the meaning.
given by section 8; 49 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.
(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 statementto 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.
(7) In a provision of this Act in which a reference to 337 2015 Companies No.
17 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.
4.
(1) For the purposes of paragraph (a) of the Provisions supplementing definition of "holding company" in section 3(l), a definition of "holding company controls the composition of another company's company" in section board of directors if it has power to appoint or remove all, 3.
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.
(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 338 Companies 2015 No.
17 company exercisable, by a person by virtue of a debenture of that other company, or of a trust deed for securing an i , sSue ot 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 HCOMPANEES AND COMPANY FORMATION Division 1 Types of companies 5.
For the purposes of this Act, a company is a Limited companies.
limited company if it is a company limited by shares or by guarantee.
6.
(1) For the purposes of this Act, a company is a Companies limited company limited by shares if the liability of its members is by shares.
limited by the company's articles to any amount unpaid on the shares held by the members.
(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.
(1) For the purposes of this Act, a company is a Companies limited company limited by guarantee if by guarantee.
(a) it does not have a share capital; (b) the liability of its members is limited by the 339 2015 Companies No.
17 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.
For the purposes of this Act, a company is an Unlimited unlimited company if companies.
(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.
(1) For the purposes of this Act, a company is a Nvate companies.
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; (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.
10.
For the purposes of this Act, a company is a Public companies.
340 No.
17 Companies 2015 public company if (a) its articles allow its members the right to transfer their shares in the company; (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.
(1) One or more persons who wish to form a Method of forming company may- company.
(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.
(1) A memorandum of association is a Memorandum of memorandum stating that the subscribers association.
(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.
(1) A person who wishes to register a company Registration shall lodge with the Registrar- documents.
(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 341 2015 Companies No.
17 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.
(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; and (c) a statement of the company's proposed officers in accordance with section 16.
(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.
14.
(1) If the company is to have a share capital, the Statement of capital and initial 342 No.
17 Companies 2015 applicants for registration shall ensure that the requisite lareholdings.
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.
(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; and (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.
15.
(1) The applicant for registration of a company Statement of 343 2015 Companies No.
17 to be limited by guarantee shall ensure that the requisite guarantee.
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.
(1) The applicant for registration shall ensure Statement of that the requisite statement of the company's proposed proposed officers.
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; and (c) in the case of a person appointed as an authorised signatory, in the company's register of authorised signatories.
(4) The statement of the company's proposed 344 No.
17 Companies 2015 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.
17.
If satisfied that an application for registration Registrar to register company if complies with the requirements of this Act relating to requirements of Act registration, the Registrar shall register the company and are complied witb.
allocate to it a unique identifying number.
18.
(1) On the registration of a company in Registrar to issue company with accordance with section 17, the Registrar shall issue to the certificate of company a certificate of incorporation that complies with incorporation.
0 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.
(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 0 requirements of this Act relating to registration have been complied with and that the company is duly registered under this Act.
Effect of 19.
From the date of incorporation of a company registration.
(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 345 2015 Companies No.
17 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 (e) 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 HIA COMPANY'S CONSTITUTION Division 1 Articles of association 20.
(1) The regulations may prescribe model Regulationsmay articles for companies.
prescribe model articles.
(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.
(1) On the formation of a limited company Default application of model articles.
(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 346 No.
17 Companies 2015 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.
A company may amend its articles only by Amendment of 22.
articles.
special resolution.
23.
(1) A member of a company is not bound by an "t of amendment of articles on amendment to the articles of a company after the date on company's which the person became a member, if and so fat as the members.
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.
(1) If a company amends its articles, the Amended articles to be sent to Registrar.
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 1^1 (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.
(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 347 2015 Companies No.
17 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.
(1) On being satisfied that a company has failed Registrar , s notice to to comply with any provision requiring it comply in case of failure with respect to amended articles.
(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.
(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.
(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 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.
Provisions that Existing companies immediately before the provisions of commencement of this Part were contained in a company's memorandum memorandum of association but are not provisions of the treate' as provisions kind referred to in section 12 become provisions of the of articles.
company's articles on that commencement.
Division 2Resolutions and agreements affecting 348 No.
17 Companies 2015 company's constitution 27.
(1) Within fourteen days after a resolution or Copies of resolutions or agreement to which this section applies is passed or made, agreements recorded the company concerned shall lodge with the Registrar for by Registrar.
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; (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 45 1; (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 an old public 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), 349 2015 Companies No.
17 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 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.
28.
(1) Unless the articles of a company specifically Itaternen, of restrict the objects of the company, its objects are company's objects.
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.
(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 40 Documents to be 29.
(1) A company shall, on being requested to do provided to so by a member of the company, send to the member the members.
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; (d) a copy of any court order under Part XXXIV that 350 No.
17 Companies 2015 sanctions a compromise or arrangement involving the company or facilitating its reconstruction or amalgamation; (e) a copy of any court order under section 782 that alters the company's constitution; (f) a 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) in the case of a company limited by guarantee, a copy of the statement of guarantee.
- (2) The statement of capital of the company require d 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.
(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 351 2015 Companies No.
17 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.
(1) A company's constitution binds the Effect of company's company and its members to the same extent as if the constitution.
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.
In the case of a company limited by guarantee, a Right to participate in profits otherwise provision in the articles of the company, or in a resolution than as member is of the company, purporting to give a person a right to void.
participate in the divisible profits of the company otherwise than as a member is void.
32.
Any enactment or rule of law applicable to Application to single member companies companies formed by two or more persons or having two of enactments and or more members applies with any necessary modification rules of law- in relation to a company formed by one person or having only one person as a member.
PART IVCAPACITY OF COMPANY 33.
The validity of an act or omission of a company Company's capacity.
may not be called into question on the ground of lack of capacity because of a provision in the constitution of the company.
34.
(1) In favour of a person dealing with a Power of directors to company in good faith, the power of the directors to bind bind company.
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 (I) (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 352 Companies 2015 No.
17 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.
(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 0 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.
(1) A contract may be made Company contracts.
(a) by a company, in writing under its common seal; 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.
36.
(1) This section applies to a transaction if or to Constitutional limitations: the extent that its validity depends on section 34.
transactions involving directors (2) Nothing in this section precludes the operation of or their associates.
353 2015 Companies No.
17 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 40 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.
(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 354 No.
17 Companies 2015 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.
(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.
(1) A document is executed by a company Execution of (a) by the affixing of its common seal (if any) and d.cu.e,,t,.
witnessed by a director; or 40 (b) in accordance with subsection (2).
(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.
(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 355 2015 Companies No.
17 also a company).
38.
(1) A company may have a common seal.
Company may have common seal for (2) A company that has a common -seal shall ensure execution of that its name is engraved on the seal in legible characters.
documents.
(3) If a company fails to comply with subsection (2), the company, and each officer of the company who is in default, commits an offence.
(4) A person to whom this subsection applies who uses or authorises the use of a seal that purports to be a seal of a company commits an offence if the company's name is not engraved on the seal as required by subsection (2).
(5) Subsection (4) applies to being an officer of the company or a person acting, or purporting to act, on behalf of the company, 0A person found guilty of an offence under this (6) section is on conviction liable to a fine not exceeding five hundred thousand shillings.
39.
(1) A document is validly executed by a Execution of deeds company as a deed only if the document is by companies.
(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.
(1) A company may, in writing, authorise a Execution of deeds or other documents person, either generally or in respect of specified matters, by attorney.
as its attorney to execute deeds or other documents on its 0 behalf.
(2) A deed or other document executed by a person authorised under subsection (1) has effect as if executed by the company.
requiring Authentication of proceedings or document 41.
A documents.
authentication by a company is sufficiently authenticated by a signature of a person authorised by the company to act on its behalf.
42.
(1) A company that has a common seal may Official seal for use have an official seal for use outside Kenya.
outside Kenya.
(2) A company that has an official seal shall ensure 356 No.
17 Companies 2015 that it is a facsimile of the company's common seal, with the addition on its face of the place or places where it is to be used.
(3) A company's official seal has, when duly affixed to a document, the same effect as the common seal of the company.
(4) A company that has an official seal may, in writing, authorise any person appointed for the purpose to affix it to a deed or other document to which the company is a party and which is to be executed in a place specified on its face.
(5) If a company has appointed an agent for purposes of subsection (4), the authority of the agent when dealing with a company or another person continues (a) during the period specified in the document conferring the authority; or (b) if no period is specified, until notice of the revocation or termination of the authority of the agent has been given to the company or person dealing with the agent.
(6) The person affixing the official seal of a company shall certify in writing on the deed or other document to which the seal is affixed- (a) the date on which; and (b) the place at which, it is affixed.
(7) Failure to comply with subsection (6) renders the deed or other document void so far as the company is concerned.
43.
(1) A company that has a common seal may Ifficial seal for also have an official seal for use in sealing share certificates etc.
(a) securities issued by the company; or (b) documents creating or evidencing securities so issued.
(2) A seal is effective as a company's official seal for the purpose of subsection (1) only if it is a facsimile of the company's common seal with the addition on its face of 357 2015 Companies No.
17 the word "securities".
(3) When duly affixed to a document, an official seal has the same effect as the company's common seal.
44.
(1) A contract that purports to be made by or on Pre-incorporation contracts, deeds and behalf of a company at a time when the company has not obligations.
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.
45.
A bill of exchange or promissory note is binding Ixec,tion of bills of exchange and on a company if made, accepted or endorsed in the name promissory notes by of, by or on behalf or on account, of the company by a companies.
person acting under its authority.
46.
A company shall at all times ensure that it has a Company to have registered office.
registered office to which all communication and notices may be addressed.
47.
(1) A company may change the address of its Company to notif^ change of address of registered office by lodging with the Registrar for registered office.
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.
(4) In relation to a duty of a company 40 (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 358 No.
17 Companies 2015 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 VNAME OF COMPANY Division 1 General requirements 0 48.
(1) The Registrar may, on written application, le,ervation of reserve a name pending registration of a.
company or a name, 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, al- low, and during that period of thirty days or that period as extended, no other company is entitled to be registered by that name.
49.
(1) The Registrar may not register a company by Prohibited names.
a particular name if (a) the use of the name would constitute an offence; (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 40 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.
The approval of the Registraris required for a Name suggesting company to be registered under this Act by a name that conn ction with the State or local or would be likely to give the impression that the company is public authority.
connected with (a) a State organ; 359 2015 Companies No.
17 (b) a county government; or (c) any public authority prescribed by the regulations.
51.
(1) If the regulations so require, an applicant for Applicant to seek views of specified the Registrar's approval for the use of a specified name, or public officer or a name of a specified description, shall seek the views of a body if.
regulations so require.
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.
(1) The regulations may- Regulations may permit or prohibit (a) provide for the letters or other characters, signs the use of certain characters, signs or or symbols, including accents and other symbols.
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 name that consists of or includes anything that is not 40 permitted in accordance with the regulations.
Division 2 Indications of type of company, etc.
53.
A company that is both a limited company and a Registration of public limited public company may only be registered with a name that companies.
ends with the words "public limited company" or the abbreviation "plc".
54.
A company that is both a limited company and a Registration of private limited private company may be registered only with a name that companies.
ends with the word "limited" or the abbreviation "ltd." Exemption 55.
The Cabinet Secretary may, by notice given to the from requirement to use of "limited".
360 No.
17 Companies 2015 company, exempt a private company from using the word "limited" or "ItO as required by section 54.
56.
(1) The regulations may prohibit the use in a Inappropriate use of company type or company name of specified words, expressions or other legalform.
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 3Similarity to names of other companies 57.
(1) The Registrar shall not register a company Name not to be the under this Act by a name that is the same as another name sarn a another in the index.
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.
(1) The Registrar may direct a company to Power to direct c ange of name in change its name if it has been registered by a name that is ch Sir ase of similarity to the same as or, in the opinion of the Registrar, too nilar existing name.
361 2015 Companies No.
17 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.
(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.
0 (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.
59.
For the purposes of sections 57 and 58, the Power to make regulations for regulations may provide for either or both of the purposes of sections following 57 and 58.
(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.
(1) The Registrar may direct a company to Power of Registrar to direct company to change its name if of the opinion change its name because of (a) that misleading information has been given for misleading information given the purposes of a company's registration by a for registration of particular name and that an undertaking or company or because its name gives misleading 362 No.
17 Companies 2015 assurance has been given for that purpose and indication of has not been fulfilled; or company's activities.
(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.
(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 0 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 0a 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.
(1) A company that is dissatisfied with a Company may apply direction given to it under section 60 may apply to the to Court for order to quash direction Court to quash the direction.
under section 60.
(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 363 2015 Companies No.
17 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.
A company may change its name Company may change the 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.
(1) Within fourteen days after a change of name Change of name by has been agreed to by a company by special resolution, the special resolution.
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.
(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.
(1) Within fourteen days after a company Change of name by means provided for changes its name by other means provided for in its in articles of articles, it shall lodge with the Registrar for registration aW"Y' notice of the change, together with a statement that the change has been made in accordance with the company's 364 No.
17 Companies 2015 articles.
(2) The Registrar may rely on the statement as sufficient evidence of the matters stated in it.
65.
(1) On receivin a notice of a change of a Change of name: 9 reg istration and company's name and on being satisfied issu of certificate of (a) that the new name complies with the requirements change of name.
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.
(1) A change of a company's name has effect Effect of change of from the date on which the certificate of change of name is name.
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.
(1) A company shall Company to display its company name (a) display its name and other prescribed information etc.
in specified places; 0 (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 365 2015 Companies No.
17 name of a company, any variations between a word or words are to be disregarded.
(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.
(1) In relation to the name of a company, no Minor variations in account is to be taken of whether- form of name.
(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(l) 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 VIALTERATION OF STATUS OF COMPANIES Division 1 Conversion of companies: overview part, How companies may 69.
A company can, in accordance with this convert itself alter their status.
(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 366 No.
17 Companies 2015 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.
(1) A private company, whether limited or Conversion of private company to unlimited, can convert itself into a public company limited public company.
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; (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; that the company has made such changes to its M 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 (1) A company that has resolved to convert itself Requirements as to into a public company may lodge an application for share capital.
registration of the conversion only if the following requirements are satisfied- (a) the nominal value of the company's allotted 367 2015 Companies No.
17 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 them 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.
(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 368 No.
17 Companies 2015 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.
72.
(1) A private company that has resolved to Requirements as to convert itself into a public company may not apply to have net assets.
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.
(3) In subsection (1)(b), 66 means- unqualified report" (a) if the balance sheet was prepared for a financial year of the companya 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 companya report stating without material qualification the auditor's 369 2015 Companies No.
17 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.
(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.
(1) This section applies to shares that are allotted Recent allotment of hares for non-cash by a company during the period between the date as at sonsideration.
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.
(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.
(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 370 No.
17 Companies 2015 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.
(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.
(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 371 2015 Companies No.
17 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.
(1) The Registrar shall refuse an application for Requirements for registration of the registration of the conversion of a company into a conversion of public company if the application does not comply with pri,ate company into public subsection (2).
company.
(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 (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; I (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(l); and (iv) if section 73 applies, a copy of the valuation report (if any) referred to in subsection (2)(a) of that section.
75.
(1) The statement of the company's proposed Statement of secretary complies with this section only if proposed secretary.
(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 372 No.
17 Companies.
2015 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.
(1) The Registrar shall register the conversion of Registrar to issue certificate of a company into a public company if satisfied that the incoToration on registration of tS application for registration complies with the requiremen conversion.
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.
(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 373 2015 Companies No.
17 with.
Division 3 Conversion of public company into private company 77.
(1) A public company can convert itself into a Conversion of public company into private limited company if (but only if) private limited (a) a special resolution to that effect is passed; company.
(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 or into a private company limited by guarantee.
78.
(1) If a special resolution by a public company Application to Court to can el conversion rcsoluc to convert itself into a private limited company has been tion.
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 374 No.
17 Companies 2015 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 (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.
(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 (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 Is capital; and (b) make such alteration to the company's articles as may be required in consequence of that direction.
79.
(1) On making an application under section 78, Notices of application to Court 375 2015 Companies No.
17 the applicants, or the person making the application on and court order their behalf, shall immediately give notice to the Registrar.
application or order to be given to (2) Subsection (1) applies without affecting any Registrar.
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.
(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.
(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 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.
The Registrar may not register the conversion of Requirements for registration of a public company as a private limited company unless the conversion of application for registration public company into private company.
(a) contains a statement of the company's new name on conversion; and is (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 I (ii) a copy of the company s articles as proposed to be amended.
81.
(1) The Registrar shall register the conversion Registrar to issue certificate of of a public company into a private limited company if incorporation on satisfied that the application for registration complies with registration of the requirements of this Division.
conversion.
(2) If the company does not already have a unique 376 No.
17 Companies 2015 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.
(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- 0 (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.
(1) A private limited company may convert Registration of conversion of itself into an unlimited company if- private limited (a) all the members of the company have assented to company into its conversion; unlimited company.
(b) the company has not previously been registered as an unlimited company; and 0 (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.
377 2015 Companies 10INVA (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 becoming unlimited; and (b) the executor or administrator of a deceased member of the company may assent on behalf of the deceased.
83.
The Registrar may not register the conversion of Requirements for application for a company as an unlimited company unless the application registration of for registration conversion of company into (a) contains a statement of the company's new name unlimited company.
on conversion; and 9 (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 Is articles as proposed to be amended.
84.
(1) The Registrar shall register the conversion Registrar to issue certificate of of a private limited company into an unlimited company if incorporation on satisfied that the application for registration complies with registration of the requirements of this Division.
conversion.
(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 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.
378 No.
17 Companies 2015 (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 5Conver8ion of unlimited company into private limited company 85.
(1) An unlimited company may convert itself Conversion of unlimited company into a private limited company if (but only if) the into a private limited conditions specified in subsection (2) are complied with.
company.
(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 or a private company limited by guarantee.
(3) A special resolution has no effect unless it states whether the company is to be limited by shares or by guarantee.
0 86.
The Registrar may not register the conversion of Requirements for registration of an unlimited company as a private limited company unless unlimited company the application for registration as private limited company.
(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; 379 2015 Companies No.
17 (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 Is 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 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 40 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.
(1) The Registrar shall register the conversion Registrar to issue certificate of an unlimited company into a private limited company if incorporation on satisfied that the application for registration complies with registration of the requirements of this Division.
conversion.
(2) If the company does not already have a unique identifying number, the Registrar shall allocate such a number to the company.
0 (3) The Registrar shall issue a certificate of incorporation stating the company's unique identifying number and that the company is incorporated as a linuited 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.
380 No.
17 Companies 2015 (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.
(1) If, in the case of a company whose Statement of capital required if company conversion has been registered under section 87, the already has share company has already allotted share capital, it shall, within capital.
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 (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.
381 2015 Companies No.
17 (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.
(1) A public company limited by shares may Conversion of public company into convert itself into an unlimited private company with a privateand share capital if unlimited company.
(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 privat ' e 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.
382 No.
17 Companies 2015 90.
The Registrar may not register the conversion of Registrar not to register conversion a private limited company into an unlimited company unless application unless the application for registration for registration complies with (a) contains a statement of the company's new name prescribed ' on conversion; and requirements.
(b) is accompanied by (i) the 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.
91.
(1) The Registrar shall register the conversion Registrar to issue certificate of of a public company into an unlimited private company if incorporation on satisfied that the application for registration complies with registration of the requirements of this Division.
conversion.
(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.
11 (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.
(7) The certificate of incorporation is conclusive evidence that the requirements of this Act as to registration of the conversion have been complied with.
383 2015 Companies No.
17 PART VUCOMPANY MEMBERS Division 1 Members of company 92.
(1) The subscribers to the memorandum.
and How persons become members of articles become members of the company on the company.
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 2Register of members 93.
(1) Every company shall keep a register of its Company to keep members.
register.of members.
(2) A company shall enter in its register of members- (a) the names and addresses of the members; (b) the date on which each person was registered as a member; and (c) the date on which any person ceased to be a member.
(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.
.
.
.
384 No.
17 Companies 20,15 (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 fourteen days after completing its preparation.
(9) A 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.
94.
(1) Except in so far as the regulations otherwise cOmPany "I keeP register of members provide, a company shall ensure that its register of at its registered members is office.
385 2015 Companies No.
17 (a) kept at its registered office; 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.
95.
(1) A company that has more than fifty members 1,1ain companies to keep index of shall keep an index of the names of the members of the members.
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.
(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.
10 (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.
(1) A public company shall keep its register of Rights of persons to inspect register of members and its index of members (if any) open for members and require inspection by copies.
386 No.
Companies 2015 17 (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) 1f 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; E (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.
(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 I 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.
(1) Within five working days after receiving a Consequences of 0 request under section 96, a company shall either- company refusing inspection of its register or to provide (a) comply with the request or decline it by giving copy of its register sufficient reasons in writing; or of members.
(b) apply to the Court.
(2) If the company applies to the Court, it sh all notify the person who made.
request and that person is entitled to be heard.
98.
(1) If a company- Offence to refiise inspection of register (a) refuses -to allow an inspection required under of members or to fail.
section 96; or to provide copy.: 387 2015 Companies No.
17 (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.
E 99.
(1) A person who makes a request under section Register of members: offences 96 that contains a statement that the person knows, or has in connection with reason to suspect, is false or misleading in a material request It or disclosure of respect commits an offence.
information.
.
(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 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.
100.
(1) When a person inspects a company's register Company to provide information as to of members, or a company provides the person with a copy state of register of of the register or any part of it, the company shall inform members and index the person of the most recent date (if any) on which of members' names.
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 388 No.
17 Companies 2015 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.
(1) A company may expunge from its register of Removal of entries relating to former members an entry relating to a person who was formerly a members.
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.
(1) If a limited company is formed under this Act Singl member e.
with only one member, the Registrar shall enter in the companies.
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 0 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 389 2015 Companies No.
17 (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.
103.
(1) If Power of Court to rectify register.
(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 failure.
is On hearing such an application, the Court may- (3) (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.
390 No.
17 Companies 2015 (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.
(1) A company shall not accept, and Trusts not to be shall not enter in its register of members, notice of any entered on register.
trust, expressed, implied or constructive.
' (2) 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.
0 105.
Until the contrary is proved, the register of Register to be members of a company is evidence of the matters required evidence.
or authorised to be included in it.
106.
(1) Liability incurred by a company Time limit for claims arising from (a) from making or deleting an entry in the register entry in 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 0 its holding company 107.
(1) In relation to a company other than a Interpretation: company limited by shares, a reference in this Division to Division 3.
shares is a reference to the interest of its members as such,.
whatever the form of that interest.
(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.
(1) Except as provided in sections 109 and 110 Prohibition on subsidiary being a member of its 391 2015 Companies No.
17 (a) a body corporate may not be a member of , a holding company.
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.
(1) The prohibition in section 108(l)(a) does not Subsidiary acting as executor, of_ ad.i.istator or apply if the subsidiary is acting only in the capacity.
trustee.
(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.
(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.
(1) If shares in a company are held in trust for Interest to be disregarded: residual the purposes of a pension scheme or an employees' share interest under scheme, any residual interest that has not yet vested in pension scheme or employees' share possession.
is to be disregarded for the purposes of section scheme.
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- 392 No.
17 Companies 2015 (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 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 any such discretion.
is (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 q the company or subsidiary becomes entitled to require the trustee to transfer any of the property in accordance with the right.
111.
(1) For purposes of section 110, if shares in a Employers' rights of recovery under company are held in trust for the purposes of a pension pension scheme or scheme or an employees' share scheme, of any charge or employees' share lien on, or set-off against, any benefit or other right or scheme.
0 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 393 2015 Companies No.
17 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.
112.
(1) The prohibition in section 108 does not apply lubsidiary acting as authorised dealer in if the shares are held by the subsidiary in the ordinary securities.
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.
Cap.
485A (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 (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; and 394 No.
17 Companies 2015 (b) "insurance business" means business that involves effecting or carrying out of contracts of insurance.
113.
If Protection of third parties in cases if (a) a subsidiary that is a dealer in securities has subsidiary acting as purportedly acquired shares in its holding dealer in securities.
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 0 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 VIIIEXEROSE OF RIGHTS OF MEMBERS 114.
(1) This section applies to a provision in the Effect of provisions of articles relating articles of a company that enables a member to nominate to enjoyment or another person or persons to enjoy or exercise all or any exercise of rights of specified rights of the member in relation to the company.
members.
(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 0 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; 395 2015 Companies No.
17 (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 (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.
(1) A member of a company whose shares are 1r,ded co panies: nominatiom to nof admitted to trading on a regulated market and who holds persons enjoy shares on behalf of another person may nominate a person infonna"on rights.
to enjoy information rights.
(2) The following are information rights for the purpose of subsection (l) (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.
(3) A company need not act on a nomination purporting to relate to certain information rights only.
116.
(1) If the person to be nominated under section Infor-ation lights: form in which 115 wishes to receive copies of documents or other copies to be information in hard copy form, that person shall, before the provided.
nomination is made- 396 No.
17 Companies 2015 (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.
(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.
117.
(1) When a company sends a copy of a notice of Information on possible ri hts in a meeting to a person nominated under section 115, it shall iatio.
togvoting.
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 397 2015 Companies No.
17 (b) if the nominated person has no such right or does not wish to exercise it, the person may have a Tight 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.
(1) This section has effect as regards the rights 'nlnn'ion rights conferred by a nomination under section 1 15.
and status of rights.
(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.
(3) An enactment, or a provision of the company Is 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- 398 No.
17 Companies 2015 (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.
(1) The nomination of a person under section Termination or u,pen,jon of 115 may be terminated at the request of the member or of nomination.
the nominated person.
0 (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 399 2015 Compant.
es No.
17 (b) there are more nominated persons than the member has shares confer-ring 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.
(1) If a member holds shares in a company on Exercise of rights if shares held on behalf of more than one person behalf of others.
(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 thesame 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.
(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 400 No.
17 Companies 2015 (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.
(1) This section applies to sections 289, 312 and Ixercise of rights if shares held on 766.
behalf of others: (2) A company is required to act under a section to members' requests.
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 401 2015 Companies No.
17 (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.
PART IX COMPANY DIRECTORS Division I Interpretation for purposes of this Part 122.
(1) For the purposes of this Part, a person is Persons who are connected with a director for purposes connected with a director of a company if the person is th is Part' (a) a member of the director's family as defined in of 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 402 No.
17 Companies 2015 (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.
(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.
For the purposes of this Part, a person is a Members of a member of a director's family if the person is director's family.
(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; or (d) a parent of the director.
124.
(1) In this Part, a director is connected with a When director connected with a body corporate if, but only if, the director and the persons body corporate for connected with the director together purposes of this Part.
(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.
(3) The rules set out in the First Schedule apply for the purposes of this section.
(4) A reference in this section to voting power the exercise of which is controlled by a director includes 403 2015 Companies No.
17 voting power whose exercise is controlled by a body corporate controlled by.
the director.
- (5) 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.
(6) 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.
(1) For the purposes of this Part, a director of a When a director is to be regarded as company is taken to control a body corporate if, but only controlling a body corporate for (a) the director or any person connected with the purposes of this Part.
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.
404 No.
17 Companies 2015 (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.
(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.
For the purposes of this Part- When bodies corporate are to be (a) bodies corporate are associated if one is a treated as being associated for subsidiary of the other or both are subsidiaries of purposes of this Part.
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.
A reference in this Part to a company IS References to company s constitution includes constitution.
0 (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.
(1) A private company is.
required to have at Company required least one director.
to have directors.
405 Companies 2015 No.
17 (2) A public company is required to have at least two directors.
129.
(1) A company is required to have at least one Company required to have at least one director who is a natural person.
natural person as a director.
(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.
(1) On forming the opinion that a company is in Direction requiring company to make breach of section 128 or 129, the Registrar may give the appointment.
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.
(4) A company that is in breach of section 128 or 129 shall comply with the direction given by the Registrar by- Is (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.
406 No.
17 Companies 2015 (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.
(1) A person who has not reached eighteen years Minimum age for of age may not be appointed to be a director of a company.
director.
19 (2) An appointment made in contravention of subsection (1) is void.
132.
(1) A public company shall ensure that at a Appointment of director of public general meeting of the company a motion for the company.
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 re- appointment 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.
(1) The acts of a director are valid even if it is Validity of acts of later discovered that directors.
(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 407 2015 Companies No.
17 (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 sectionl32.
134.
(1) Every company shall keep a register of its Company to keep directors.
register of 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 i , o1.11, 1, (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).
(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 408 No.
17 Companies 2015 not exceeding one hundred thousand shillings for each such offence.
135.
(1) A company's register of directors is Particulars of directors to be required to contain the following particulars in respect of a registered: natural director who is a natural person persons.
(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.
(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.
(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".
136.
If a director of a company is a body corporate, a Particulars of I directors to be company s register of directors is required to contain the registered: corporate following particulars in respect of the body directors.
(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 409 2015 Companies No.
17 (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.
(1) Every company shall keep a register of Company to keep register of directors' addresses that contains the Usual residential directors' residential , addresses.
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 0 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.
(1) Within fourteen days after- Duty of company to notify Registrar of (a) a person is appointed or ceases to hold changes of directors and directors' appointment as a director of a company; or addresses.
(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.
410 No.
17 Companies 2015 (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 colfipany, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine n6t 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.
139.
(1) A company may, by ordinary resolution at a Resolutions to remove directors meeting, remove a director before the end of the director's fro.
offi.e.
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.
(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.
411 2015 Companies No.
17 (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.
(t) The general duties specified in this Division Scope and nature of are owed by a director of a company to the company.
general duties.
(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 412 No.
47 Companies 2015 regard to the corresponding common law rules and equitable principles.
141.
(1) On receipt of notice of a' motion for a Director's right to Protest against resolution to remove a director under section 139, the removal.
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 (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 413 2015 Companies No.
17 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.
(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.
A director of a company shall Duty of director to act within powers.
(a) act in accordance with the constitution of the company; and 0 (b) only exercise powers for the purposes for which they are conferred.
143.
(1) A director of a company shall act in the way Duty of director to promote the success in which the director considers, in good faith, would of the company.
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 0 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.
414 No.
17 Companies 2015 (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.
(1) A director of a company shall exercise Duty of director to independent judgment.
exercise independent judgment.
(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.
In performing the functions of a director, a Duty of director to exercise reasonable 0 director of a company shall exercise the same care, skill care, skill and and diligence that would be exercisable by a reasonably diligence.
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.
MA director of a company shall avoid a Duty of director to avoid conflicts of situation in which the director has, or can have, a direct or interest.
indirect interest that conflicts, or may conflict, with the interests of the company.
(2) Subsection (1) applies in particular to the exploitation of any property, information or opportunity, F- and it does not matter whether the company could take 6-1 advantage of the property, information or opportunity.
(3) The duty of a director under subsection (1) is not infringed- (a) if the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; or (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 415 2015 Companies No.
17 them, so long as nothing in the company's constitution invalidates the giving of such an authorisation.
(5) An authorisation under subsection (3)(b) may, in the case of a public company, be given by the directors of the company by the matter concerned being proposed to and authorised by them, but only if the company's constitution includes a provision enabling the directors to give such an authorisation and the directors comply with the requirements of the provision.
(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.
147.
(1) A person who is a director of a company Duty not to accept benefits from third shall not accept a benefit from a third party if the benefit is parties.
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) The duty imposed by subsection (1) is not infringed if the acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest.
(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.
416 No.
17 Companies 201.5 (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.
148.(1) The consequences of breach (or,^threatened Civil consequences of breach of general breach) of the general duties of directors set out in this duties.
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.
Cases within more Except as otherwise provided, more than one of the general duties may apply to a director in any given than one of the general duties.
case.
150.(1) If Consent, approval or authorisation by (a) section 146 is complied with by authorisation by members.
.
I 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 d6ties does not remove the need for approval under any applicable provision of Division 5.
417 2015 Companies No.
17 (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 .are not dealing with conflicts of interest infringed by anything done or omitted to be done by the directors (or by 'any of them) in accordance with those provisions.
(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 40 any other enactment or rule of law.
Division 4Declaration of interest in existing transaction or arrangement 151.
(1) If a.
director of, a company is in any way, Duty to declare interest in proposed directly or indirectly, interested in a proposed transaction or existing or arrangement with the company, or in a transaction or transaction or arrangement.
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.
(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 exceeds ten percent of the value of the assets of the company, the declaration shall also be made to the members of the compan y either- (a) at a general meeting of the company; or (b) by notice given to.
the members, in accordance 152.
with section (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 auditors as being the true market value of those goods or services and those assets.
418 No.
17 Companies 2015 (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.
(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.
is (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 0 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.
(10) A director who contravenes this section comr-nits an offence and is liable on conviction to a fine not exceeding one million shillings.
152.
(1) A director who is required to make a Director to make declaration by notice declaration of interest shall give a notice to the other in writing, directors.
419 2015 Companies No.
17 (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.
(1) A general notice given in accordance with General notice to be regarded as this section is a sufficient declaration of interest in relation s.fficient to the matters to which it relates.
declaration.
(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.
(4) A general notice is not effective unless (a) it is given at a meeting of the directors; or (b) the director takes reasonable steps to ensure that the notice is brought to the attention of the 420 No.
17 Companies 2015 directors and read aloud at the next meeting of the directors after it is given.
154.
(1) If a declaration of interest under section 151 Declaration of.
interest in case of is required of a .sole director of a company that is required company ^vith sole to have more than one director- 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 (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.
0 Division 5 Transactions with directors requiring approval of members 155.
(1) In this Division,.
."credit transaction" means Definition of creditt transaction ior purposes a transaction under which one party (a creditor).
of Division (a) supplies any goods under a hire-purchase 5.
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.
(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.
421 2015 Companies No.
17 (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.
Meaning of "quasi- 156.
(1) For the purposes of -this Division, a quasi loan" and related e.pressions.
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.
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 theborrower.
(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.
157.
(1) This section applies to 'a contract under Directors' long-term service contracts: which the employment of a person as a director of a requirement of company is guaranteed members' approval.
(a) with the company; or (b) if the person is the director of a holding companywithin 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- 422 No.
17 Companies 2015 (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.
(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 noticethe 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.
(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 resolutionby 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- 423 2015 Companies No.
17 (i) at the company's registered Pffice 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.
(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.
(1) A company may not enter into an Substantial property transactions: arrangement under which- requirement of (a) a director of the company or of its holding members' approval.
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, 0 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.
424 No.
17 Companies 2015 (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 equalto the aggregate value of all the non-cash assets involved in the arrangement, or the series.
(6) This section does not apply ^oa 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 Is asset value and is more than five million shillings; or (b) exceeds ten million shillings.
(8) For the'purpose 'of ubsection' (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; ori (b) if no such statement has been preparedthe amount of the company's called-up share capital.
(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 425 2015 Companies No.
17 (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.
An approval is not required to be obtained under Exception for transactions with section 158 members or other (a) for a transaction between a company and a group compjanics, person as a member of the company; or (b) for a transaction between- (i) a holding company and its wholly-owned subsidiary; or 0 (,i) two wholly-owned subsidiaries of the same holding company.
160.
(1) This section applies to a company- Exception in case of company in (a) that is in liquidation, unless the liquidation is a liquidation or under members' voluntary liquidation; or administration (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.
(1) An approval is not required to be obtained Exception for transactions on under section 158 for a transaction on an approved recognised securities exchange that is effected by a director, or a investment person connected with the director, through the agency of a exchange.
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.
(1) An arrangement entered into by a company Ir,p,rty transactions: civil in contravention of section 158 and any transaction entered consequences of into in accordance with the arrangement (whether by the contravening section 159.
426 No.
17 Companies 2015 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.
(2) Whether or not the arrangement or any such transaction has been avoided, each of the persons specified 0 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 autborised 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).
427 2015 Companies No.
17 (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) A person so connected is not liable because of subsection (3)(b) if the person shows that, at the time the arrangement was entered into, the person was unaware of the relevant circumstances constituting the contravention.
(7) A director is^ not liable because of subsection (3)(d) if the director shows that, at the time the arrangement was entered into, the director was unaware of the relevant circumstances constituting the contravention.
(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.
163.
(1) If a transaction or arrangement is entered Properly tra sactions: effect into by a company in contravention of section 158 but, of aubsequent within a reasonable period, it is affirmed affirmation.
(a) in the case of a contravention of subsection (1) of that sectionby resolution of the members of the company; and (b) in the case of a contravention of subsection (2) of that sectionby resolution of the members of the holding company, the transaction or arrangement can no longer be avoided under section 162.
E (2) A period that exceeds three months is not a reasonable period for the purposes of subsection (1).
164.
(1) A company may not Loans to directors to be approved by (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.
428 No.
17 Companies 2015 (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 0 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.
(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.
(1) This section applies to a company that is- Quasi-loans to directors: requirement of (a) a public company; or members' approval.
(b) a company associated with a public company.
(2) A company to which this section applies may not- 429 2015 Companies No.
17 (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.
(4) A resolution approving a transaction referred to in subsection (2) can be passed only if a memorandum setting out the matters referred to in subsection (5) is made is available to members- (a) in the case of a written resolutionby 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.
(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.
430 No.
17 Companies 2015 166.
(1) This section applies to a company that is Loans or quasi-loans to persons connected (a) a public company; or with directors: req irement of members' approval.
(b) a company associated with a public company.
u (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.
0 (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 0 (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.
431 2015 Companies No.
17 (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.
167.
(1) This section applies to a company that is Credit transactions: requirement of (a) a public company; or members' approval.
(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 4D 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.
(4) A resolution approving a transaction to which this section applies can be passed only if a memorandum etting out the matters referred to in subsection (5) is made 0vailable 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 432 No.
17 Companies 2015 (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.
(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 10 corporate.
168.
(1) A company may not- Related arrangements: (a) participate in an arrangement under which requirement of members' aliproval.
(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 (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.
(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- 433 2015 Companies No.
17 (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.
(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.
(1) An approval is not required under section Ix"PtiO111 expenditure on company business.
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 434 No.
17 Companies 2015 (b) to enable any such person to avoid incurring such expenditure.
(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.
(1) An approval is not required under section Excvption for expenditure on 164, 165, 166 or 167 for anything done by a company defending (a) to provide a director of the company or of its proceedings Otc.
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).
(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; 435 2015 Companies No.
17 (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.
An approval is not required under section 164, Exception for expenditure in 165, 166 or 167 for anything done by a company- connection with regulatory action or (a) to provide a director of the company or of its investigation.
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 I such expenditure.
172 (1) An approval is not required under section Exceptions for minor and business 164, 165 or 166 for a company to make a loan or quasi- transactions.
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- 436 No.
17 Companies 2015 (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, (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 A (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.
(1) An approval is not required under section Exception, for intra- 164, 165 or 166 for group transactions.
(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.
(2) An approval is not required under section 1 67 (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.
(1) An approval is not required under section Ixcption, Ir money-lending 164, 165 or 166 for the making of a loan or quasi-loan, or companies.
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 437 2015 Companies No.
17 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.
(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.
(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 loan made for the purpose of facilitating the (a) 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.
(1) This section has effect for determining what Other relevant transactions or are "other relevant transactions or arrangements" for the arrangements.
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.
438 No.
17 Companies 2015 (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.
into (5) If the transaction or arrangement is entered (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 person connected with the director, because of the relevant exception by the holding 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.
(1) For the purposes of this Division The value of transactions and (a) the value of a transaction or arrangement is to be arrangements.
determined in accordance with subsections (2) to (7); and (b) the value of any other relevant transaction or arrangement is taken to be the value so 439 Companies 2015 No.
17 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.
(7) If, for whatever reason, the value of a transaction or arranoement is not capable of being expressed as a tD specific amount of money, its value is taken to exceed five million shillings.
177.
For the purposes of this Division, the person for The person for whom a transaction or arrangement is whom a transaction or arrangement is entered into is entered into.
(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.
440 No.
17 Companies 2015 178.
(1) This section applies to a transaction or Loan, ctc.: civil consepences for arrangement entered into by a company in contravention of contravention 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.
(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; 441 Companies No.
17 2015 (d) any other director of the company who authorised the transaction or aff angement.
(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).
(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.
If a transaction or arrangement is entered into by Loan, otc.: effect of subsequent a company in contravention of section 164, 165, 166, 167 affirmation.
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 companyby 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 companyby a resolution of the members of the holding company, the transaction or arrangement can no longer be avoided under section 178.
442 No.
17 Companies 2015 Division 6 Payments for loss of office 180.
(1) In this Division, "payment for loss of Paymoril, for loss of office" means a payment made to a director or past director office.
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 (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.
443 2015 Companies No.
17 (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.
(1) This section applies if, in connection with aI-ounIs taken to be payments for loss of transfer of the kind referred to in section 183 or 184, a office.
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.
(1) A company may not make a payment for Members' approval requ,red for payment loss of office to a director of the company unless the by company.
payment has been approved by a resolution of the members of the company.
40 (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.
(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- 444 No.
17 Companies 2015 (a) in the case of a written resolutionby 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 meetingby 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.
(1) A person may not make a payment for loss Members' approval re,urred for payment of office to a director of a company in connection with the in connection with transfer of the whole or any part of the undertaking or transfer of property of the company unless the payment has been undertaking etc.
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.
(3) A resolution approving a payment to which this section applies can be passed only if a memorandum is 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 resolutionby 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 445 2015 Companies No.
17 (i) at the company's registered office for not ' fourteen days ending with the day less than 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.
(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.
184.
(1) A person may riot make a payment for loss Members' approval ,equ,,ed for payment of office to a director of a company in connection with a in connection with transfer of shares in the company, or in a subsidiary of the share transfer 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.
(3) A resolution approving a payment to which this I 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 resolutionby 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; 446 No.
17 Companies 2015 (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.
(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 447 2015 Companies No.
17 185.
(1) An approval is not required under section Exception for payments in 182, 183 or 184 for a payment made in good faith- di scharge of legal in discharge of an existing legal obligation; obligations etc.
(a) (b) as damages for breach of such an obligation; (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.
L] (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.
(1) An approval is not required under section Exception for small 40 payments 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.
448 No.
17 Companies 2015 (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 40 (b) by the company making that payment or any of its subsidiaries.
187.
(1) If a payment is made in contravention of Payments made section 182 without approval: civil consequences.
(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 18 3, the payment is held by the recipient on trust for the company whose undertaking or property is or is proposed to be transferred.
(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 182 183, subsection and (2) applies instead of subsection (1).
449 2015 Companies 101mb (5) If a payment contravenes both sections 182 and 184, subsection (3) applies instead of subsection (1), unless the Court directs otherwise 188.
(1) If Approval by written resoluti n: (a) approval under this Division is sought by written accidental failure to resolution; and send memorandum.
(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.
0 (2) Subsection (1) has effect subject to the company's articles.
189.
(1) An approval may be required under more What happens if than one section of this Division.
approval is required under more than one (2) If an approval is required unde r more than one provision.
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.
0 Division 7Requirements with respect to directors' service contracts 190.
(1) For the purposes of this Division, a contract Directors' service is a director's service contract if it is a contract under contracts.
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.
450 No.
17 Companies 2015 (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.
191.
(1) A company shall keep available for Company to keep copy of contract or inspection memorandum of terms available for (a) a copy of each director's service contract with the inspection company or with a subsidiary of the company; or (b) if the contract is not in writinga written memorandum setting out the terms of the contract.
(2) Except in so far as the regulations otherwise 0 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.
(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, 0 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.
(1) This section applies to a company that is Right o member to and to obtain inspectf required to keep a copy of a director's service contract, or a copy of memorandum setting out the terms of the contract, memorandum.
available in accordance with section 191.
451 2015 Companies No.
17 (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.
(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.
(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 with a copy of it 40 Division 8 Contracts with sole directors 193.(1) If Contract with so] member who is also (a) a limited company having only one member a director.
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).
452 No.
17 Companies 2015 (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 ,<',^ompany 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 isions 194.
(1) This section applies to the following pro * * protecting directors v provisions from liability.
(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.
453 2015 Companies No.
17 195.
Section 194(3) does not prevent a company from P10vi1iOn Of insuran cc not purchasing and maintaining insurance against any liability prevented.
specified in that subsection for a director of the company or a director of an associated company.
196.
(1) Section 194(3) does not apply to a Qualifying third party indemnity qualifying third party indemnity provision.
provision not (2) In this section, "third party indemnity provision", affected.
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.
(5) For purpose of subsection (4) (a) a conviction or judgment becomes final- (i) if not appealed againstat the end of the period for bringing an appeal; or (ii) if appealed againstat 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 454 No.
17 Companies 2015 (ii) if it is abandoned or otherwise ceases to have effect.
(1) In this section, "qualifying indemnity lirecto,, 10 disclose 197.
qualifying indemnity provision" means provision in directors' report.
(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.
(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.
198.
(1) This section has effect if a qualifying Copy of qualifying indemnity provision indemnity provision is made for a director of a company to be available for and inspection.
(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 455 2015 Companies No.
17 (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.
(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.
(1) This section applies to a company that is Right of member to required to keep available for inspection a copy of a inspect and request copy of qualif^ying qualifying indemnity provision or memorandum in indemnity provision.
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.
(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 456 Companies 2015 No.
17 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.
(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.
Division 10 Protection of information relating to 0 directors Interpretation: 200.
(1) The purpose of this Division is to protect Division 10.
(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; 64protected 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.
(1) A company shall not use or disclose Protected 0 201.
information: protected information about any of its directors, except- restriction on use or disclosure by (a) for communicating with the director concerned; company.
(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.
457 2015 Companies No.
17 202.
(1) The Registrar shall omit protected Protected information: information from the material on the register that is restriction on use or available for inspection if disclosure by Registrar.
(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 0 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.
(1) The Permitted use or Registrar may use protected disclosure by the information relating to a director for communicating with Registrar.
the director.
(2) The Registrar may disclose protected information- (a) to a prescribed public authority; or (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; 458 No.
17 Companies 2015 (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.
(7) In this section- 66 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.
(1) The Court may make an order for the Disclosure under disclosure of protected information by the company or by Court order 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.
41 (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.
(4) Any of the following persons may make an application for an order under this section: 459 2015 Companies No.
17 (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.
205.
(1) The Registrar may place a director's usual c"cumstances in which Registrar may residential address on the public record if place address on the public record.
(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.
(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 ^Peclfied 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.
460 No.
17 Companies 2015 206.
(1) On deciding in accordance with section 205 " 'c'ng ` director's address on that a director's usual residential address is to be placed on the public record.
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.
do (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 directo.-'s usual residential addrcss is the same as the director's service address.
(4) A company that has been -noti ffied by a director of a mere 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 (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 Tesidential 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.
461 2015 Companies No.
17 Division 11 Supplementary provisions 207.
(1) A decision of a company to ratify the Ratification of acts conduct of a director amounting to negligence, default, of directors.
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.
(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.
(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 laNv imposing additional requirements for valid ratification or of any rule of law as to acts that are incapable of being ratified by the company.
(1) The powers of the directors of a company Power to make 208.
provision for include a power to provide for the benefit of persons employees on cessation or transfer 462 No.
17 Companies 2015 employed or formerly employed by the company, or any of business.
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.
(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.
(1) A resolution of the directors under section Limitations on the 208(3) exercise of the is not sufficient authority for payments to or for the power to make benefit of directors, or former directors.
provision for employees.
(2) The power confer-red by section 208(l) 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.
(1) A company shall ensure that minutes of all Minutes of directors' proceedings at meetings of its directors are recorded.
meetings.
(2) A company shall keep the minutes of each meeting of its directors' for at least ten 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, comr-nit 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 463 2015 Companies No.
17 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.
211.
(1) Minutes of a meeting of the directors Minutes taken to be evidence of recorded in accordance with section 210 are, if proceedings at meeting of company authenticated by the person presiding at the meeting or by until contrary the person presiding at the next directors' meeting, proved.
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 0 have duly taken place; and (c) all appointments at the meeting are presumed to have been validly made.
212.
For the purposes of this Part, it does not matter Iransactions under whether the law that, apart from this Act, governs an foreign law.
arrangement or transaction is the law or part of the law of Kenya.
PART X DISQUALIFICATION OF DIRECTORS Division 1 Introductory provision 213.
In this Part, unless the context otherwise requires' Interpretation: "disqualification order" means a disqualification order Part x.
made under this Part or insolvency related laws or any other enactment prescribed by the regulations for the 0 purposes of this section.
Division 2 Disqualification orders and disqualification undertakings 214.
(1) If a court makes a disqualification order Effect of order disqualifying person against a person, the person is, unless the court gives leave from being a to the contrary, disqualified from director or secretary.
(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 464 No.
Companies 17 2015 (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.
(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 0 made may be criminally liable in respect of those matters.
215.
(1) On convicting a person of an offence Disqualification on relating to the promotion, formation, management, conviction for liquidation or administration of a company, the court may offence.
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.
(1) This section applies to holders of the Disqualification for following offices of, or in relation to, a company: fraud or breach of duty committed (a) an officer of the company; while company in liquidation or under (b) a liquidator or provisional liquidator of the administration.
company; (c) if the company is under administration the administrator, (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 465 2015 Companies No.
17 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.
(1) This section applies to offences of which a lisqualification on conviction of person is convicted in consequence of a failure to comply offence involving with any provision of this Act or the insolvency related failure to lodge returns or other laws requiring documents with Registrar.
(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.
(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.
(1) A court shall make a disqualification order luty of court to disqualify unfit against a.person if satisfied, on an application made to it directors and under section 21.9 secretaries of insolvent companies.
(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 466 Companies 2015 No.
17 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 I 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.
(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.
(1) If the Attorney General is satisfied that it Ipplication, to court would be in the public interest for a disqualification order under section 219.
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 467 2015 Companies No.
17 of a company that is being liquidated by the Courtthe Official Receiver, inay 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(l) 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 Courtthe Official Receiver; (b) in the case of a company that is being liquidated otherwise that by the Courtthe 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(l) 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 468 No.
17 Companies 2015 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.
(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.
220.
(1) In the circumstances specified in section li,qualification 218, the Attorney General may accept a disqualification undertakings.
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 40 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.
(1) If, as result of a report of an investigation Disqualification after investigation of conducted under Part XXX, the Attorney General considers co-pany.
that it would be in the ppblic interest for a disqualification order to be made against a person who is or has been a 469 2015 Companies No.
17 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.
(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.
(1) The relevant court may, on the application V,'iation of disqualification of a person who is subject to a disqualification nd,taking.
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 ^ourt to any matters that appear to the Attorney General to be relevant, and may personally give evidence or call witnesses.
(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 whei, tne d1squalificalion wider',L-or,.g was pr-,),^ideG, ^he application COLIc! have been made.
470 No.
17 CompaW6 2015 223.
(1) A person who, except with the leave of a Offence for undischarged court bankrupts to act as director or secretary (a) acts as a director or secretary of a company; and of company.
(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.
(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.
(1) For the purposes of this section, a person is Personal liability for company's debts if personally responsible for all the relevant debts of a person acts while company if at any time disqualified.
(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.
(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 471 2015 Companies No.
17 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 vvas 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 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.
(1) A person may make an application to the Application for leave under an order Court for a disqualification order only if the person has or undertaking.
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 Receivei- or 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.
472 No.
17 Companies 2015 226.
(1) If a person is subject to a disqualification Application for leave under an order order made by the Court, an application for leave for the or undertaking.
purposes of section 214(l) 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 sL6ect to a disqualification order made under section 217, an application for leave for the purposes of section 214(l) 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 0 undertaking, any application for leave for the purposes of section 222(l) 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.
(4) If a person is subject- (a) to two or Ynore 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(l) or 222(l) 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.
0 (5) On the hearing of an application for leave for the purposes of section 214(l) or 222(l), the Attorney General shall appearand draw the attention of the court to any matters that appear to the Attorney General to be relevant, and may pers6nally give evidence or call witnesses.
227.
(1)' The Registrar shall establish and maintain a Register of disqualification register of ^disqtzalification orders and disqualification orders and undertakin 'S in which the Registrar shall enter all disqualification undertakings.
particulars, provided in accordance with subsection (2) or 473 2015 Companies No.
17 (2) Whenever a court (a) makes a disqualification order; (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 thecourt 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).
(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.
A person who, while subject to a disqualification Offence to breach of disqualification order or disqualification undertaking, contravenes the order order or or undertaking commits an offence and on conviction is u,111in,.
liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding five years, or to both.
229.
(1) A person who is disqualified under this Part li,qualified person may apply to the may apply to the Court for permission to act in a way that Court for permission to act in way that would otherwise be a breach of the disqualification.
would otherwise 474 No.
17 Companies 2015 (2) The Attorney General is entitled to appear or be breach represented at the hearing of an application made under disqualification.
subsection (1) and to give evidence or call witnesses at the hearing of such an application.
230.
(1) The regulations may require a statement or Statements from persons who are notice lodged with the Registrar under section 16, 135 or disqualified.
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.
(1) A statement that is lodged with the Registrar 1,atements to be made public.
in accordance with regulations made for the purpose o 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.
(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.
A person who Offence relating to statement.
(a) fails to comply with a requirement to lodge a9 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.
475 2015 Companies No.
17 Division 3 Foreign restrictions 233.
(1) For the purposes of this Division, a person is lellon, who ae subject to foreign subject to foreign restrictions if, under the law of a country restrictions.
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.
(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.
(1) A person who is subject to foreign Disqualification of persons who re restrictions is disqualified from subject to foreign (a) being a director or secretary of a Kenyan restrictions.
company; or 476 No.
17 Companies 2015 (b) in any way, whether directly or indirectly, being concerned in the promotion, formation or management of a Kenyan company.
(2) A person ceases to be disqualified under subsection (1) on ceasing to be subject to foreign restrictions.
235.
(1) A person who- Persons subject to foreign restrictions to be personally (a) is a director or secretary of a company registered liable for debts of in Kenya;and company.
(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.
0 (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.
(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.
(1) The Registrar shall establish and maintain a Registrar to establish and maintain register of foreign restrictions in which the Registrar shall Register of foreign enter particulars of foreign restrictions relating to a persons restrict""' who is or may become a director or secretary of a Kenyan 477 2015 Companies No.
17 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.
(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 4Supplementary provision 237.
(1) In any legal proceedings (whether or not 11mi,sibility in evidence of under this Act), any statement made in compliance or ^tawrnent^.
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 (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 Cap.
63 (b) an offence under- 478 No.
17 Companies 2015 (i) section 107 of the Penal Code (perjury and subornation of perjury); or (ii) section 114 of that Code (false swearing).
PART XIDERIVATIVE ACTIONS 238.
(1) In this Part, "derivative claim" means Interpretation: Part proceedings by a member of a company X1.
(a) in respect of a cause of action vested in the company; and (b) seeking reliefon 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 0 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 0 in the company have been transferred or transmitted by operation of law.
Appli 239.
(1) In order to continue a derivative claim ca tion for brought under this Part by permission to a member, the member has to continue derivative apply to the Court for permission to continue it.
claim.
(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 479 2015 Companies No.
17 (b) may make any consequential order it considers appropriate.
I (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.
(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.
Application to Court 240.
(1) If for permission to continue claim as a (a) a company has brought a claim; and derivative claim: the cause of action on which the claim is based how disposed of.
(b) 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; 0 (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.
480 No.
17 Companies 2015 (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.
(1) If a member of a company applies for Application for permission under section 239 or 240, the Court shall refuse permission to con tinue claim as a permission if satisfied- derivative action.
(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 occurthat the act or omission has been authorised by the company; or (c) if the cause of action arises from an act or omission that has already occurredthat the act or omission (i) was authorised by the company before it occurred; or (ii) has been ratified by the company since it occurred.
0 (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 481 2015 Companies 101VIVA (i) authorised by the company before it occurs; or (ii) ratified by the company after it occurs; P 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 0 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.
(1) If a derivative claim- Application for permission to (a) has been brought by a member of a company; continue derivative claim brought by (b) was brought by a company and is continued by a another member.
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 0 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.
(3) If it appears to the Court that the application and the evidence provided by the applicant in support of it does 482 No.
17 Companies 2015 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.
(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 Private company not 243.
(1) A private company is required to have ae ed to have secretary only if it has a paid up capital of five million secretary.
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.
483 2015 Companies No.
17 244.
Every public company is required to have at least Public company required to have one secretary.
secretary.
245.(l) If satisfied that a public company is failing Direction requiring public company to to comply with section 244, the Attorney General may give appoint secretary.
the company a direction under this section.
(2) The Attorney General 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.
(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.
484 Companies 2015 No.
17 246.
(1) The directors of a public company shall take Qualifications of secretaries of public all reasonable steps to ensure that the secretary or each companies.
joint secretary of the company- (a) is a person who appears to them to have 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 Cap.
534 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.
If, in the case of a public company, the office of Discharge of 247.
functions if office 0 secretary is vacant, or for any other reason there is no vacant or secretary secretary capable of acting, anything required or authorised unable to act.
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.
(1) A public company shall keep a register of its Duty to keep register secretaries.
of 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 0 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).
485 2015 Companies No.
17 (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.
(1) A public company shall, within fourteen luty to n,li'Y Registrar of change days after of secretary or joint (a) a person is appointed to be its secretary or one of sec,eta,,, 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.
(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.
486 No.
17 Companies 2015 250.
(1) If the secretary of a public company is a What particulars of secretaries are natural person, the company shall ensure that its register of required to be secretaries contains the following particulaTs: registered: natural persons.
(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.
0 (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.
251.
(1) If the secretary of a public company is a What particulars of secretaries are company or a firm, the company shall ensure that its required to be register of secretaries contains the following particulars registered: corporate secretaries and (a) the name of the company or the firm; firms.
(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.
40.
(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.
A person who knowingly or recklessly authorises Offence to include misleading, false or or permits the inclusion of misleading, false or deceptive deceptive particulars particulars in a register of secretaries commits an offence in register of secretaries.
487 2015 Companies No.
17 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.
(1) If a public company fails to comply with a Offence to fail to keep register of requirement of section 250 or 251, the company, and each secretaries.
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 0 not exceeding twenty thousand shillings for each such offence.
A provision requiring or authorising a thing to be Acts done by person 254.
in dual capacity.
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 XHIRESOLUTIONS AND MEETINGS Division I General provisions about company resolutions 255.
(1) A resolution of the members, or of a class of Requirements for passing company members of a private company may be passed either- resolutions.
(a) as a written resolution; or (b) at a meeting of the members.
0 (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.
256.
(1) A resolution is an ordinary resolution of the Requirements for passing an ordinary members (or of a class of members) of a company if it is resolution of a passed by a simple majority.
company.
(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- 488 No.
17 Companies 2015 (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.
(1) A resolution is a special resolution of the 1equirernents for the pa,slng of special members (or of a class of members) of a company if it is resolution.
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 statedit 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.
(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 489 2015 Companies No.
17 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.
258.
(1) When a vote on a written resolution put to General rules for voting on company the members of a company is taken, then resolutions (a) if the company has a share capitaleach 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.
0 (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 capitaleach 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.
490 No.
17 Companies 2015 (4) This section has effect subject to provisions of the company's articles to the contrary.
on Spec 259.
(1) If a member entitled to vote a resolution.
ific requirements for has appointed one proxy only, and the company's articles voting on company provide that the proxy has fewer votes in a vote on a resolution,.
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 vote& on a show of hands as the member who appointed the proxy would have if the member were present at 0 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.
(1) If two or more persons hold a share jointly, Vo,, of join, 260.
holders of shares.
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.
If a person who was not entitled to vote on a Effect of provision in company's resolution of a company purports to vote on the resolution articies as to 0 and the company's articles provide that objections to the admi sibility of entitlement of the person to vote are to be determined in votes" 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.
491 2#15 Companies No.
17 Division Z-- Written resolutions 262.
(1) For the purpose of this Division, a written resolutions resolution of private , is a written resolution of a private, com pany if it co-panim is proposed and passed by the.I company in accordance with.
this Division.
(2) The following may not be passed as a written resolution- under (a) a resolution section 139 removing a director from.
off-ice 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 by the company a gpeneral meeting; or (a) in (b) by a meeting of a class of members of the company.
263.
(1) In, relation to, a resolution proposed.
as a Who is entitled to vote on a written written resolution of a ate company, the eligible resolution.
priv 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.
A reference in this Part to the circulation date of Circulation date for 264.
written resolutions.
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.
(1) This section applies to a resolution proposed circulation of ritten resolutions proposed by as a written resolution.
by the.
directors of the company.
(2) The company shall send or deliver a copy of a directors.
4 rit w ten resolution of the directors of the company to every eligible member- 492 No.
17 Companies 2015 (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 (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 is (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.
(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.
(1) The members of a private company may Right of members to require circulation of require the company to circulate a resolution that may written resolution.
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 493 2015 Companies No.
17 (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.
(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.
company that is required under section Circulation of 267.
(1) A written resolu'ti, on 266 to circulate a resolution shall, subject to section 268, or proposed by an application not to circulate a members' statement, send members.
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 ^69.
(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 494 ,No.
17; Companies iolis i.
n 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 ul ndue delayby -delivering the'samecopy , I to each eligible member inturn ordifferent:copie-stoeach ,of ^a numberof eliggible members in tum ; or (c) by sending copies 'to so -me m- embers in accordance with paragraph (a) and -,delivering a copy or copies to other members in -accordance with iparagraph (b).
'(4)The ^compafty.
9hall send ordeliver the ^copies,of the written -resolution -or, if copies are ^sent or delivered to members -on different &ys, the first of those -copies not L more than -twenty-one -days after it receives a -.request -to -A circulate the ^resolution.
Thecompany shall attachlo, ror endlose , With, the '(5) copy:of the iresolution that is sent or delivered -to me m-b.ers under -.this ^secfion -inform.
ation specifying ^(a) how ithey are to 'signify their agreement ^(or disagreement) with the resolution; -and (b) the Jeadline, for passing the resolution if itisnot to lapse.
(6) The validity of the resolution, -if passed, is not affected by a failureto 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 Jefault, corn mit an dffence and on conviction are each liable to -a fine not exceed^ing five 'hundred thousand shillings.
0 268.
(11) The members w'horequested the,diTculation RequisitioninZ of the :resolution shall -meet - members to meet the cost of circulating the expenses of resolutionunless1he company otherwiser-esolves.
circulation.
(2) U nless the company ihas jpreviously so resolved, 'it is - ,not bound ;to comply -with section 2.67 ^unless there is deposited with or tendered to the -company an amount reasonably sufficientlo rheet1he ,expenses -of ^the company in ^c.
irculating the resolution.
-260--(l) A company is not required to jcirculate a Application not to -members' statement tinder :section -268 circulate.
members' if,,on an application statement.
by -the company or another person who claims ito be 495 2015 Companies No.
17 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.
270.
(1) A member signifies agreement to a Procedure for signifying proposed written resolution when the company receives agreement to written from that member, or from someone acting on the resolution.
member's behalf, an authenticated document- (a) id entifying 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.
(1) A proposed written resolution lapses if it is Deadline for agreeing to written not passed before resolution.
(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.
272.
If a company has given an electronic address in a Sending documents relating to written document containing, or enclosed with or attached to, a resolutions by proposed written resolution, any document or information electronic means.
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.
If a company sends to a person by means of a Publication of written resolution on website- website.
(a) a written resolution; or 496 No.
17 Companies 2015 (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.
A provision of the articles of a private company Relationship is void to the extent that it would have the effect that a between this Division and resolution that is required by or otherwise provided for in provisions of an enactment could not be proposed and passed as a written company's articles.
resolution.
Division 3 Procedure for convening and holding company general meetings Subdivision I Convening of general meetings and passing resolutions 275.
A resolution of the members of a company is Resolutions at validly passed at a general meeting if general meetings.
(a) notice of the meeting and of the resolution is given; and (b) the meeting is held and conducted, in accordance with this Act and the company's articles.
276.
The directors of a company may convene a Power of directors to general meeting of the company.
convene general meetings.
277.
(1) The members of a company may require the Right of members to directors to convene a general meeting of the company.
require directors to convene general (2) The directors are required to convene a general meeting.
meeting as soon as practicable after the company has received requests to do so from- (a) members representing at least the required 0 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).
497 2015 Companies No.
17 (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.
(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.
(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.
(1) If requested to convene a general meeting of lirectors' duty to convene general the company, the directors shall meeting required by (a) do so within twenty-one days from the date on members.
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.
498 No.
17 Companies 2015 at -may be dealt with at the (3) The business -thh 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 --his;section noticeof the resolution inaccordance with t 279.
(1) If., after having been required toconvene a Power of members to convene general general meeting under section 277, the directors fail to do meeting at the expense of the as required by:section 278, the members who requested the company.
- more than one half of 'g,orany of them representin g meetm the total voting rights of all & them, :may convene a general meeting.
(2) If the requests receivedby the company included 0 the text of a resolution intended to be moved at the meeting, the members concerned shall include in the notice convening the meeting the textof the intended -resolution.
(3) The members concerned shall ensure that the meeting is convened -for a date not morethan three months l after the date on which the directors were requested to convene a meeting.
(4) The members concerned shall convene the meeting, as nearly aspracticable, inthe 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.
(6) The company shall reimburse the members concerned for all reasonable expenses incurred by them F_ LI 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 ubsection (6).
expenses reimbursed to members under g (1) This section applies if for any reason it is Power of 1,urt 1 280.
order general impracticable meeting to be convened.
(a) to convene a meeting of a company in any manner in which meetings of that company may be convened; or 499 2015 Companies No.
17 (b) -to conduct the -meeting in the manner requiredby the articles of the companyor this Act.
(2) The Court may, either on its ^own initiatiye ,or on the application (a) of a director.of thecom- pany; or ,(b) of a member of the company who would be .entitled to vote attherneeting, make an order requiring a meeting to be convened, held and conducted in any manner the Court considers appropriate.
0) 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 atthe imeeting be regarded as iconstituting a-quorum.
,(5) A meeting convened, held and conducted in accordancewith an order -under this section is taken for all purposes to The am eeting of the company properly convened,held and conducted.
281.
(1) In convening a general m eetin ;(other than Amount of notice to 9 be given for general an adjourned meeting), a private company shall give a least meetings.
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 general 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.
500 No.
17 Companies 2015 (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 40 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.
(8) The proceedings of a meeting that do not comply with the requirements of this section are void.
A company shall give notice of a general Manner in which 282.
notice of general meeting meeting to be given.
(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.
283.
(1) Notice of a general meeting that is given by Publication of notice 0 of general meeting a company by means of a website is not effective unless it on company's is complies with this section.
website.
(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 t he meeting; and 501 2015 Companies No.
17 (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.
284.
(1) A company shall send a notice of a general Persons entitled to receive notice of meeting of the company to general meetings.
(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.
In giving notice of a general meeting, a company contents of notices shall specify- of general meetings.
(a) the time and date of the meeting; (b) the place of the meeting; and (c) the general nature of the business to be dealt with 0 at the meeting.
286.
(1) If a company fails to comply with a Offence for company to fail to requirement of section 281(l) or (2), 282, 283(2) or (3), comply witb section 284(l) or 285, the company, and each officer of the 281,282,283,284 company who is in default, commit an offence and on or 285.
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 502 No.
17 Companies 20-1-5 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.
(1) If a provision of this Act requires a special Resolution requiring notice of a resolution to be given, the resolution is not special notice.
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 riot 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.
(1) If a company gives notice of- Accidental failure to give notice of (a) resolution or general a general meeting; or meeting.
0 (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, (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.
(1) The members of a company may require the Power of members to require circulation company to circulate, to members of the company entitled fstateme.t.
503 2015 Companies Ne^ 17 to receive notice of a general meetin& 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) other business to be dealt with, at that meeting.
(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.
In subsection (2), "relevant right to vote" (3) means- to a statdmeht With respect to a matter (a) in relationi referred to in a proposed resolution, a right to vote on that resolution at the meeting to which the requests relate; and (b) it! relation to any other statement, a right to vote at the meeting to which the requests relate.
(4) A request under stibsectioh (2) is effective only if it- (a) is in hard copy form or in electronic form, (b) identifies the stateinent to be circulated; (c) is authenticated by the person or persons mdldng it-, and (d) is received by the company at least seven days before the meeting to which it relates.
200.
(1) A co m- in accordance with section Duty of company to pany that, circulate members' 289, is required by its members to circulate a statement statements.
shall send to each of its members Who is entitled to receive notice of the meeting a copy of the statement- (a) in the game manner as the notice' of the meeting; and 504 No.
17 Companies 2015 (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.
(1) The members who requested the statement Who is liable to meet cost of to be circulated need not pay the expense incurred by the circulating company in complying with section 290 if members' statements.
(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 otherwisethe members who requested the statement to be circulated are liable to meet the expenses of the company in complying with section 290; and (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.
(1) In the case of a company limited by shares Quorum for general or guarantee and having only one member, one qualifying meetings.
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- 505 2015 Companies No.
17 (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.
(1) The members present at a general meeting Members present may elect person to of the company may, by ordinary resolution, elect one of preside at general the members to preside at the meeting.
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.
(1) On a vote on a resolution at a meeting with Person presiding at g neral meeting may a show of hands, the person presiding at the meeting may declare result of declare that the resolution voting on a show of hands.
(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.
(1) A provision of a company's articles is void 'is" of members to demand a poll at to the extent that it would have the effect of excluding the general meeting.
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.
506 No.
17 Companies 2015 (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; (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.
A member who is entitled to cast two or more Member not obliged to use all votes when votes at a poll taken at a general meeting of a company is voting on a poll at not obliged to use all of those votes or to cast them all in general meeting.
the same way.
297.
(1) If a body corporate is a member of a Representation of bodies corporate at company, it may, by resolution of its directors or other general meetings.
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) if they purport to exercise the power in the same waypower is taken to be exercised in that way; and 507 2015 Companies No.
17 (b) if they do not purport to exercise the power in the same waypower is taken not to be exercised.
Subdivision 3 Use ofproxies at company general meetings 298.
(1) A member of a company is entitled to Right of members to appoint another person as the member's proxy to exercise appoint proxies.
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.
Go lolice of general 299.
(1) In every notice convening a meeting of a meeting to contain company, the company shall include a prominently statement of rights displayed statement informing the member of of members to appoint proxies.
(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.
(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.
(1) If, for the purposes of a meeting, invitations lompany sponsored invitations to are issued at the expense of the company to members to appoint proxies.
40 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 508 No.
17 Companies 2015 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.
(1) This section applies to- Notice of appointment of proxy to be given to (a) the appointment of a proxy; and company.
(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.
(1) A proxy may be elected to preside at a Proxy can be elected 0 to preside at general general meeting by a resolution of the company passed at meeting.
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.
(1) The appointment of a proxy to vote on a Right of proxy to demand a poll at matter at a meeting of a company authorises the proxy to ge.eralmeeting.
demand, or join in demanding, a poll on that matter.
(2) In applying section 295 to a proxy of a member of a company 509 2015 Companies No.
17 (a) for the purpose of subsection (2)(a) of that sectiona demand by a proxy counts as a demand by the member; (b) for the purpose of subsection (2)(b) of that sectiona 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.
(1) A member of a company who has appointed Notice to be given to company of a person to act as a proxy of the member may terminate the termination of appointment by notice.
proxy's authority.
(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.
(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 demandedbefore 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.
510 No.
17 Companies 2015 (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.
(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.
305.
Sections 298 to 304 do not prevent a company IS Articles may confer more extensive articles from conferring more extensive rights on members rights on members or proxies than those conferred by those sections.
and proxies.
Subdivision 4-0ther matters relating to company general meetings 306.
If a resolution is passed at an adjourned eneral lesolutions passed 9 at adjourned general meeting of a company, the resolution is for all purposes to meeting.
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.
(1) If a company has given an electronic Sending to members documents relating address in a notice convening a general meeting, any t.
general meetings document or information relating to proceedings at the in electronic form.
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 511 2015 Companies No.
17 (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 4Application of Division 3 to meetings of classes of members of companies 308.
(1) Subject to subsection (2) and (3), Division 3 Application of Division 3 to applies, with necessary modifications, to a meeting of meetings of holders holders of a class of shares of a company as it applies to a of classes of shares.
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 512 No.
17 Companies 2015 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.
(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.
309.
(1) Subject to subsection (2) and (3).
Division 3 IpPlication of Division to applies, with necessary modifications, to a meeting of a meetings of classes of me hers of class of members of a company having no share capital as it compa`ny having no applies to a general meeting of the company.
share capital.
(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 (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 513 2015 Companies No.
17 (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.
(1) Every public company shall hold a general Public companies: annual general meeting as its annual general meeting within six months meeting.
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 0 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.
(1) A public company shall state in the notice Public coin panies: notice of annual convening an annual general meeting of the company that general meeting.
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.
514 No.
17 Companies 2015 (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.
(1) The members of a public company may Public companies: require the company to give to members of the company members' power to require circulation who are entitled to receive notice of the next annual general of resolutions for annual general meeting a notice of a resolution that is proposed to be meeting.
moved at that meeting.
(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); 0 (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.
(4) A request is effective for the purpose of this 0 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 515 2015 Companies No.
17 (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.
(1) A company that is required under section Public companies: c mpany's duty to 312 to give notice of a resolution shall send a copy of the circulate members r ' " for resolution to each member of the company entitled to ''nuo '' nI gene raI receive notice of the annual general meeting meetings.
(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).
(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.
314.
(1) The members who requested the circulation Public companies: e penses of of the resolution need not pay the expenses of the company circulating in complying with section 313 if requests sufficient to members' resolutions for require the company to circulate it are received before the annual general 0 end of the financial year preceding the meeting.
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 516 No.
17 Companies 2015 (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.
(1) If a poll is taken at a general meeting of a Results of poll to be made available on quoted company, the company shall ensure that the website.
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.
(1) A quoted company shall make the Requirements as to information referred to in section 315(l) available on a website availability.
website that 40 (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.
awl 2015 Companies No.
17 (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.
(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 keep records Records f shall 317.
(1) Every company ns and resolutioO comprising meetings, etc.
(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.
518 No.
17 Companies 2015 (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.
(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.
(1) This section applies to the records kept in Record, as evidence accordance with section 317.
of resolutions, etc.
(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.
(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.
519 2015 Companies No.
17 319.
(1) This section applies to a company that is Records of decisions by sole limited by shares or by guarantee and has only one member.
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).
(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.
(1) This section applies Inspection of records of resolutions and (a) to a company that is required to keep records in meetings.
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).
(5) If the company fails without reasonable excuse to comply with (a) subsection (2); or (b) a request made under subsection (3) or (4), 520 No.
17 Companies 2015 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 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.
This , Division Records of applies, with necessary resolutions and modifications, in relation to resolutions and meetings of meetings of class of (a) holders of a class of shares; and members.
(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 XIVSHARE CAPITAL OF COMPANY Division 1 Shares and share capital of a company 322.
(1) The shares of a company may not be Shares nolonger capable of being converted into stock.
converted into (2) An attempt to convert a company's shares into ,lock, stock has no effect.
323.
The shares or other interest of a member in a Nature of shares.
company are personal property and are not in the nature of real estate.
324.
(1) Shares in a limited company having a share Nominal value of capital are each required to have a fixed nominal value.
shares.
(2) Shares in a limited company having a share capital are required to be denominated in shillings.
521 2015 Companies No.
17 (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.
(1) Except as provided by subsections (2) and Shares to be numbered.
(3), a company that has a share capital shall ensure that each of its shares is distinguished by an appropriate 0 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.
(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.
The shares and any other interests of a member in 1,ansferability of 40 a company are transferable in accordance with the shares.
company's articles.
Division 2Allotment of shares: general provisions 327.
(I)The directors of a company shall not exercise a Exercise by directors of power power of the company to allot shares, etc.
(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 522 No.
17 Companies 2015 (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.
(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 0 shillings.
(5) Nothing in this section affects the validity of an allotment or other transaction.
328.
If a private company has only one class of shares, Power of directors to allot shares etc: the directors may exercise any power of the company private company with only one class (a) to allot shares of that class; or of shares.
(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.
329.
(1) The directors of a company may exercise a Power of directors to allot shares etc: power of the company- authorisation by (a) to allot shares in the company; or company.
(b) to grant rights to subscribe for or to convert any 0 security into shares in the company, only if they are authorised to do so by the company's articles or 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, and may be unconditional or subject to conditions.
(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 523 2015 Companies No.
17 (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.
(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.
524 No.
17 Companies 1 2015 (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.
330.
(1) Except as permitted by section 331, a General prohibition of commissions, company shall not apply any of its shares or capital money, discounts and either directly or indirectly, in payment of any commission , allowances.
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.
(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.
A company may pay a commission to a person in Permitted 331.
commission.
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.
(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 525 2015 Companies No.
17 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.
(1) A company shall register an allotment of Rogi,,'ation of shares as soon as practicable and in any event within two allotment.
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.
(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.
(1) Within one month after making an allotment Return of allotment of shares, a limited company shall lodge with the Registrar company.
for registration a return of the allotment.
by limited (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; (b) the aggregate nominal value of those shares; (c) for each class of shares 526 No.
17 Companies 2015 (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.
(1) An unlimited company that allots shares of a Return of allotment by unlimited class with rights that are not in all respects uniform with company allotting shares previously allotted shall, within one month after new class of shares.
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.
(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.
(1) If a company fails to lodge a return of Offence for company to fail to allotment as required by section 333 or 334, the company, lodge return of Commit allotment for and each officer of the company who is in default, an offence and on conviction are each liable to a fine not registration.
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.The provisions of this Part on allotment do not Provision, about allotment not apply to the taking of shares by the subscribers to the applicable to shares memorandum on the formation of the company.
taken on formation.
527 2015 Companies No.
17 Division 3 Allotment of equity securities: existing shareholders' right of pre-emption 337.
In this Division, a reference to the allotment of Interpretation: equity securities includes- Division 3.
(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.
338.
(1) A company shall not allot equity securities Existing shareholders' right to a person on any terms unless of pre-emption.
(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.
(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.
528 No.
17 Companies 2015 339.
(1) This section has effect as to the manner in Communication of pre-emption offers which offers required by section 338 are to be made to to shareholders.
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 twenty7one 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 Gazettewith 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.
(1) If a company contravenes section 338 or Liability of company and 339, the company and each officer of the company who is officers in case of in default, are jointly and severally liable to compensate contravention.
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.
(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.
529 2015 Companies No.
17 341.
Section 338(l) does not apply in relation to the Exception to pre- emption right: issue allotment of bonus shares.
for non-cash consideration.
342.
Section 338(l) does not apply to a particular Exception to pre- emption right: allotment of equity securities if these are, or are to be, securities held wholly or partly paid up otherwise than in cash under employees' share scheme.
343.
Section 338 does not apply to the allotment of Exception to pre- emption right: securities that would, apart from any renunciation or securities held assignment of the right to their allotment, be held under an under employees' share scheme.
employees' share scheme 344.
(1) The articles of a private company may Exclusion of requirements by provide that all or any of the provisions of section 338 or private companies.
339 do not apply to the company.
(2) Any such provisions may be excluded (a) generally in relation to the allotment by the company of equity securities; or (b) in relation to allotments of a particular description.
(3) Any requirement or authorisation contained in the articles of a private company that is inconsistent with section 338 or 339 is to be treated for the purposes of this section as a provision excluding that section.
(4) A provision to which section 345 applies (exclusion of pre-emption right: corresponding right conferred by articles) is not to be treated as inconsistent with section 338.
345.
(1) This section applies when, in a case in which Exclusion of pre- emption right: section 338 would otherwise apply articles conferring corresponding right.
(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(l) 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.
530 No.
17 Companies 2015 (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.
(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.
0 (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.
346.
(1) The articles of a private company that has Disapplication of only one class of shares, or a resolution passed by the pre-emption rights: private company company, may confer on the directors of the company with only one class power to allot equity securities of that class as if section of shares.
339 (a) did not apply to the allotment; or (b) applied to the allotment with such modifications as the directors may determine.
0 (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.
(1) If the directors of a company are generally Disapplication of pre-emption rights: authorised for the purposes of section 329, they may be directors acting given power by the articles, or by a special resolution of the under general company, to allot equity securities pursuant to that authorisation.
authorisation as if section 338 (a) did not apply to the allotment; or 531 2015 Companies No.
17 (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.
(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 pov ,er may also be renewed, for a period not longer than that for which the authorisation is renewed, by a special resolution of the company.
40 (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.
(1) If the directors of a company are authorised Di,application of pre-emption rights for the purposes of section 329 (whether generally or by special otherwise), the company may by special resolution resolve resolution.
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.
(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.
532 No.
17 Companies 2015 (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 40 (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.
is- (8) The directors shall ensure that their statement (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.
(1) This section applies in relation to a sale of Di,application of pre-emption rights: shares that is an allotment of equity securities because of sale of treasury section 337(b).
shares.
(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 338 533 2015 Companies No.
17 (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.
(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.
(1) In relation to an offer to allot securities ""'s to hol der of shares in required by section 338, a reference, however expressed, to relation to offer.
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.
(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.
The provisions of this Division relating to Provisions about pre-emption not shareholders' pre-emption rights do not apply to the taking applicable to shares of shares by the subscribers to the memorandum on the taken on formation.
formation of the company.
352.
(1) This Division does not limit the application laving for other restrictions on offer of any other written law under which a company is or allotment.
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 534 No.
17 Companies 2015 (b) the shares are not to be regarded as forming part of the ordinary share capital of the company.
353.
(1) This Division does not apply to an allotment Saving for certain older pre-emption of equity securities of a public company that are subject to a requirements.
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.
(1) A public company shall not allot shares of Public companies: allotment if issue the company offered for public subscription unless not fully (a) the issue is subscribed for in full; or subscribed.
(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).
535 2015 Companies No.
17 (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.
(1) If an allotment of shares is made to an Public companies: effect of irregular applicant in contravention of section 354, the applicant has allotment if issue a right to avoid the allotment at any time within one month not fully subscribed.
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.
(1) A company shall not allot its shares at a Shares not to be allotted at a discount.
discount.
536 No.
17 Companies 2015 (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.
A company may, if authorised to do so by its Provision for different amounts to articles, pay dividends in proportion to the amount paidUp be paid on shares.
on each share.
358.
Shares allotted by a company, and any premium General rule as to on them, may be paid up in money or in money's worth means of payment.
(including goodwill and know-how).
359.
For the purposes of this Act, a share in a company Meaning of is paid up, as to its nominal value or any premium on it, in payment in cash.
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).
(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 537 2015 Companies No.
17 securities and to the existing shareholders' right of pre- emption.
(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.
(1) A subscriber to the memorandum of a public Public companies: shares taken by company who takes shares of the company as a result of an subscribers of undertaking given in the memorandum shall pay for the memorandum.
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.
(1) A public company shall not accept at any Public companies: not to accept time, in payment up of its shares or any premium on them , undertaking for an undertaking given by a person that the person or another work or services 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).
(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.
(1) A public company shall not allot a share Public companies: shares to be at least ne-quarter paid up.
except as paid up at least as to one-quarter of its nominal value and the whole of any premium on it.
538 No.
17 Companies 2015 (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.
(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.
(1) A public company shall not allot shares as Public companies: fully or partly paid up as to their nominal value or any payment by long- term undertaking.
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 40 much of that aggregate as is treated as paid up by the 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.
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.
539 2015 Companies No.
17 (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.
364.
(1) Except as provided by subsection (2), a Liability of subsequent holders person who becomes a holder of shares in respect of ofshares.
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 Oointly 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- 540 No.
17 Companies 2015 (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.
(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.
(1) This section applies in relation to liability Power of the Court under section 360(2), 362(3) or (4) or 366 as it applies in to grant relief.
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.
(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 541 2015 Companies No.
17 (ii) has done or is likely to do any other thing in payment or part payment for the shares.
(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.
(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.
(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 No.
17 Companies 2015 (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.
If a company contravenes a provision of section Offences involving 356, 361, 362 or 362, the company, and each officer of the travention of section 358, 363, con company who is in default, commits an offence and on 364 and 365.
conviction are each liable to a fine not exceeding one million shillings.
367.
(1) For the purpose of this Division, the Meaning of appropriate rate of interest is "appropriate rate of interest" for purposes of this (a) five percent; or Division.
(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.
(1) A public company shall not allot shares as Restrictions on fully or partly paid up (as to their nominal value or any public company allotting shares for premium on them) otherwise than in cash unless non-cash consideration.
(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 (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.
543 2015 Companies No.
17 (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.
(1) Section 368 does not apply to the allotment Exception to valuation of shares by a company in connection with an arrangement requirement: for the allotment of shares in the company on terms that the arrangement with whole or part of the consideration for the shares allotted is another company.
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.
(3) 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.
(4) 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 classall the holders of shares of that class, can take part in the arrangement.
(5) In determining whether this section applies to an arrangement, the following are to be disregarded: 544 No.
17 Companies 2015 (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.
(6) 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 0 (b) "company", except in relation to the allotting, includes a body corporate of any kind.
370.
(1) Section 368 does not apply to the allotment 1xceplion to valuation of shares by a company in connection with a proposed requirement: merger.
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.
(1) Part XLI applies to the valuation and report Non-cashconsideration for required by section 368.
shares: requirements as to valuation and (2) The valuer shall specify in the report- 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- 545 2015 Companies No.
17 (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.
(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 40 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- ')46 No.
17 Companies 2015 (a) the valuer shall carry out, or arrange for, such other valuations as will enable the valuer to determine that proportion; and (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.
(1) A company to which a report is made under COPY Of 1ePOTt to be section 368 as to the value of any consideration for which, lodged with or partly for which, it proposes to allot shares shall lodge a RegistraT.
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.
(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 11 -,-tI 2015 Companies 1015VIVA the copy for such period as it considers appropriate.
373.
(1) A public company formed as such shall not Public company: agreement for enter into an agreement- transfer of non-cash asset in initial (a) with a person who is a subscriber to the period.
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.
0 (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.
(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.
374.
(1) The following conditions axe conditions that Agreement for trans r of non-cash fe are required to be complied with for the purpose of section asset: requirement of 373 independent valuation.
(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; 548 No.
17 Companies 2015 (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.
0 (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.
(1) Part XLI applies to the valuation and report Agreement for transfer of non-cash required by section 374.
asset: requirements as to valuation and (2) In the report, the valuer shall specify report.
(a) the consideration to be received by the company, describing the relevant asset (specifying the 0 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.
(4) Irrespective of whether the report was made by the valuer or by some other person, the valuer shall include 549 2015 Companies No.
17 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; (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.
(1).
The following conditions are further Agreement for transfer of non-cash conditions that are required to be complied with for the asset: requirement of approvalby purpose of section 374 members.
(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.
550 No.
17 Companies 2015 (2) The reference in subsection (1)(c) to the other party to the proposed agreement is to the person referred to in section 374(l)(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 resolutionthat 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.
(1) Within fourteen days after a company passes Copy of resolution a resolution with respect to the transfer of a non-cash asset, to be lodged with Registrar.
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.
(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.
Sections 373 to 377 apply with the following Modification of modifications in relation to a company whose conversion prov^, on, m relation to company into a public company has been registered by the whose conversion Registrar into a public company has been registered.
(a) the reference in section 373(l)(a) to a person who is a subscriber to the company's memorandum is 551 2015 Companies No.
17 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.
379.
(1) If a public company enters into an Agreement for agreement in contravention of section 373 and either transfer of non-cash asset: effect of (a) the other party to the agreement has not received contravention.
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.
(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 40 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.
(1) If a person becomes a holder of shares in Liability of respect of which subsequent holders of shares.
(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 Oointly and severally with any other 552 No.
17 Companies 2015 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(l), the person who becomes the holder of the shares is also liable to pay that amount Oointly and severally with any other person so liable), unless the person is exempted is 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).
(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 0 members in respect of those shares; or (b) to have a transfer of the shares executed in the person's favour.
381.
(1) A person who Power of Court to is liable to a company under a provision of this grant relief.
(a) 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 553 Companies 2015 No.
17 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.
(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.
(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 554 No.
17 Companies 2015 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.
(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(l), 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.
If a company contravenes section 368 or 373, the O1nc6 to contravene sections company, and each officer of the company who is in 368 or 373.
default, commit an offence and on conviction are each liable to a fine not exceeding five hundred thousand shillings.
555 2015 Companies No.
17 383.
(1) An undertaking given by any person, in or in Enforceability of undertakings to do connection with payment for shares in a company, to do work etc.
work or perform services or to do any other thing, if it is 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.
(1) For the purposes of this Division the What is the 46 appropriate rate of appropriate rate" of interest is interest for the purposes of this (a) five percent per year; or Division? (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.
In this Division- Interpretation: Division 7.
"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; 64 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; "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(l); "share premium account", in relation to a company, means the account established by the company under 556 Na.47 Companies 2015 'section 386; "transferor company", in relation to an issuing ^^ompany, means the company whose non-cash assets are trdtfsferfed lo the issuing company as referred to in section (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.
(1) If a company issues shares at a premium Company's share premium account and application of (Whether for cash or otherwise), the company shall share premiums.
(it) 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 arnount 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 Jo pay up new shares that are to be allotted to members as Jully paid bonus shares.
Subject to subsedtions (2) and (3), the provisions f this Act relating to the reduction of a company's share o ita apply as if the company's share premium account ^,e,'e- part of its paid up share capital.
557 2015 Companies No.
17^;, (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.
(1) This section applies if an issuing company Relief from requirement.i.as 0 share PrV' ' s: , ."t, that is a wholly-owned subsidiary of a holding compaqy W1'UP 'I.' -, ^ ' allots shares Group.
.
reconstruction x6lief (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.
(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 by which the base value of the ib` value is the amount (if any) consideration for the shares allotted exceeds the a greg4te 9 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.
(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 account ing records immediately before the transfer; and P1, 558 No.
17 Companies 2015 (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.
(1) This section applies if an issuing company Merger relief.
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.
40 (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 in that company 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 0 arrangement.
(4) This section does not apply to a case to which section 387 applies.
389.
(1) This section applies for the purpose of Merger relief: meaning of ninety determining whether a company has, for the purposes of percent equity section 388, acquired at least a ninety percent equity holding.
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 559 2015 Companies No.
17 cancellation of equity shares in another company (under an arrangement referred to in section 388(l), 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.
(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.
The regulations may prescribe provisions for Power to make further provision by either or both of the following regulations for the purposes of this (a) for relieving companies from the requirements of Division.
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.
If an amount that corresponds to the amount Relief may be reflected in representing the premiums, or part of the premiums, on company's balance shares issued by a company that, as a result of relief (if sheet.
any) under this Division, is not included in the company's share premium account, the amount can also be disregarded 560 No.
17 Companies 2015 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 8Classes of shares and variation of classes 392.
(1) For the purposes of this Act, shares are of Classes of shares.
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.
(1) This section is concerned with the v iation Variation of class rights: companies of the rights attached to a class of shares in ac mpany having a share 0 having a share capital.
capital.
(2) Rights attached to a class of a comp* s shares may be varied only (a) in accordance with the provisions of the company's articles providing for the v ation of those rights; or T (b) if the company Is articles contain 0o such provisionif the holders of shares of hat class r, consent to the variation in accordan e with this section.
II (3) Subsection (2) does not affect ay other restrictions varying the rights.
1 (4) The consent required for the purpos I of this section to be given by the holders of a class of ac(Impany's shares is 40 (a) consent in writing from the holders o at least of three-quarters in nominal value t, le issued shares of that class (excluding any shai -s held as treasury shares); or (b) a special resolution passed at a separa e general meeting of the holders of that classts ctioning 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 561 2015 Companies No.
17 purpose of this section.
(6) In this section, and (except when the context otherwise requires) in any provision of a company Is 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.
394.
(1) This section is concerned with the variation Variation of class rights: companies of the rights of a class of members of a company that does without a share not have a share capital.
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 provisionif 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.
Neither section 393 nor section 394 affects the le lions 393 and 39c.
not to affect powers of the Court under section 78, Part XXIX or powers of Court XXXIV.
under certain provisions.
562 No.
17 Companies 2015 396.
(1) This section applies if the rights attached to Right to object to variation: companies any class of shares in a company are varied under section having a share 393.
capital.
(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.
(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 10 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.
(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.
(1) This section applies if the rights of any class Right to object to va iation: companies of members of a company are varied under section 394.
Ivit'hout a share capital.
563 2015 Companies No.
17 (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.
(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 0 rights of a class of members includes a reference to their 1 abrogation.
398.
(1) Within fourteen days after the making of an Copy of Court order to be lodged with order by the Court on an application under section 396 or R-gi.t,-.
397, the company concerned shall lodge a copy of the order with the Registrar for registration.
(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.
564 No.
17 Companies 2015 (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.
(1) If a company assigns a name or other Notice of name or other designation of designation, or a new name or other designation, to any class of shares.
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.
(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.
(1) If the rights attached to shares of a company Notice of particulars of variation of rights are varied, the company shall, within fourteen days after attached to shares to the date on which the variation is made, lodge with the be lodged with Registrar for registration a notice giving particulars of the Registrar.
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.
565 2015 Companies No.
17 401.
(1) If a company not having a share capital Notice of new class of members to be creates a new class of members, the company shall, within lodged with fourteen days after the date on which the new class is 1,&I,ar.
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.
(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, 0 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.
402.
(1) If a company not having a share capital Notice of name or other designation of assigns a name or other designation, or a new name or class of members to other designation, to any class of its members, it shall, be lodged with within fourteen days after doing so, lodge with the Registrar.
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 40 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.
(1) If the rights of any class of members of a Notice of particulars of variation of class company not having a share capital are varied, the rights.
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.
566 No.
17 Companies 2015 (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 XVREORGANISATION OF COMPANY'S SHARE CAPITAL Division 1 Alteration and consolidation of share capital 404.
(1) A limited company having a share capital Alteration of share capital of limited may alter its share capital only company.
(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.
(1) A limited company having a share capital Sub-division or consolidation of may shares.
(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.
(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.
567 2015 Companies No.
17 (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 0f 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.
(1) Within one month after subdividing, Notice to Registrar of sub-division or consolidating or dividing its shares, a company shall lodge consolidation.
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.
(3) If a company fails to comply with subsection (1), the company, and each officer of the company who is in 568 No.
17 Companies 2015 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 2Reduction of share capital 407.
(1) A limited company that has a share capital Special resolution for reduction of may reduce its share capital by special resolution.
share capital.
(2) A special resolution under subsection (1) takes effect as provided by section 411(3).- (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.
(1) As soon as practicable a company has Application to Court for confirming passed a resolution for reducing its share capital, it shall order.
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.
569 2015 Companies No.
17 (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.
(1) When this section applies, each creditor of '0111011 entitled to the company who, at the date fixed by the Court, is entitled object to reduction.
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.
(4) 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 Is with the consent of that creditor on the company securing payment of the debt or claim.
(5) 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 570 No.
17 Companies 2015 claim, or if the amount is contingent or not ascertainedan amount fixed by the Court after conducting the same kind of inquiry and adjudication as would be conducted if the company were being liquidated by the Court.
410.
(1) The Court may make an order confirming Order confirming reduction and the reduction of capital on such terms and conditions as it powers of Court on considers appropriate.
making such order.
(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.
(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.
(1) On production of an order of the Court Registration of Court order and confirming the reduction of a company's share capital and statement of capital.
the lodgement of a copy of the order and of a statement of 571 2015 Companies No.
17 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 (ii) if the Court so orderson 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.
572 No.
17 Companies 2015 (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.
(1) If a company's share capital is reduced, a Liability of members following reduction member of the company (past or present) is not liable in feapital.
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.
(1) This section applies to a creditor who, in the liability to creditors omitted from list of case of a reduction of capital confirmed by the Court, was creditors.
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.
(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 573 2015 Companies No.
17 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.
Offence to conceal 414.
An officer of a company who name of creditor, 0 (a) intentionally or recklessly etc.
(i) conceals the name of a cred4or 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.
A person is not precluded from seeking or Shares no bar to obtaining damages or other compensation from a company damages against only because the person- company.
E (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.
(1) If the net assets of a public company are half Public companies: duty of directors to or less of its called-up share capital, the directors shall convene a meeting convene a general meeting of the company to consider how on loss of capital.
to deal with the situation.
574 No.
17 Companies 2015 (2) The directors shall convene a general meeting of the company not later than twenty-eight days from the day on which a director of the company first became aware of that fact.
(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).
(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 witli; 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.
417.
(1) If the Court makes an order confirming a Public company reducing capital reduction of a public company's capital that has the effect be].- authorised of bringing the nominal value of its allotted share capital minimum' 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.
575 2015 Companies No.
17 (2) Section 418 prescribes an expedited procedure for registering a company as a private company in the circumstances referred to in subsection (1).
418.
(1) The Court may authorise a public company Expedited procedure for registration of to be converted into a private company without its having conversion of passed the special resolution required by section 77.
company into a private company.
(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.
(4) The application is to be accompanied by- (a) a copy of the Court's order; and 11 (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 E 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.
576 No.
17 Companies 2015 Division 3 Private companies: reduction of capital supported by solvency statement 419.
(1) A resolution for reducing share capital of a leluction of capital of private company private company limited by shares is supported by a supported by solvency statement if solvency statement.
(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 (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.
(1) A solvency statement is a statement that What is a solvency each of the directors- statement? (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 40 (b) has also formed the opinion (i) if it is intended to commence the liquidation of the company within twelve months after that datethat 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.
577 2015 Companies No.
17 (2) In forming those opinions, the directors shall take into account all of 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.
(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.
(1) Within fourteen days after the resolution for Registration of resolution and reducing share capital is passed the company shall lodge supporting with the Registrar for registration a statement of capital that documents.
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; (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 578 No.
17 Companies 2015 (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 is 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.
The regulations may make further provision for General power to make further the implementation of this Part.
provision by regulations.
579 2015 Companie,^ No.
17 PART XVIACQUISITION BY LIMITED COMPANY OF ITS OWN SHARES Division 1 General provisions 423.
(1) In this Part- interpretation: Part XV1.
"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 (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 assetincludes 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.
limited company shall not acquire its own General rule against 424.
(1) A limited company shares, whether by purchase, subscription or otherwise, acquiring its own shares.
except in accordance with this Part.
580 No.
17 Companies 2015 (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.
void.(4) An acquisition in contravention of this section is (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.
(1) This section applies to shares in a limited Tmatmen, of shares company that held by nominee.
(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.
(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 581 2015 Companies No.
17 (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.
(1) This section applies to shares in a limited lialil ity of others if 426.
nominee fails to company that make payment in respect of shares.
(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.
(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 memorandumthe other subscribers to the memorandum; (b) in any other casethe 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.
(4) A subscriber to a company's memorandum or a director of a company who reasonably believes that a claim 582 No.
17 Companies 2015 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.
(1) This section applies to a public company luty I cancel if shares in public company held by or (a) shares of the company are forfeited, or are for the company.
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; (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 minimumapply to the Registrar for the registration of the conversion of the 583 2015 Companies No.
17 company into a private company, stating the effect of the cancellation.
(3) The deadline for complying with subsection (2) is- (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.
(1) Within one month after cancelling shares in Notice of cancellation of order to comply with section 427, a company shall lodge shares.
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).
(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 584 No.
17 Companies 2015 (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 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.
(1) If a public company is obliged to convert Conversion of public company into itself into a private company in order to comply with private company in section 427, the directors may resolve that the company consequence of cancellation of should be so converted.
shares.
(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.
(3) The company shall- 0 (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.
585 2015 Companies No.
17 430.(1) The Registrar shall register the conversion Issue of certificate of incorporation on of a company into a private limited company if satisfied registration of that the application for registration complies with the conversion of public company into requirements of section 429.
private company.
(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 0 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.
(5) The certificate of incorporation is conclusive evidence that the requirements of this Act as to registration of the conversion have been complied with.
431.
(1) If a public company that is required by Effect of failure to apply for registration 10 section 427 to apply to the Registrar for the registration of of company's the conversion of the company into a private company fails conversion into to do so before the deadline specified in subsection (3) of private company.
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.
(1) If a company that is required to do so by Offence to fail to can cel shares or section.
427 apply for registration of company's conversion into private company.
586 Companies 2015 No.
17 (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.
(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 0 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.
(1) This section applies to a private company Application of sectio - 437 to 442 that is registered as a public company.
private company that applies for (a) after shares in the company have been forfeited registra^ ion of conversion into in accordance with the company's articles or public company.
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.
587 2015 Companies No.
17 (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.
434.
(1) If Transfer to reserve on acquisition of (a) a public company, or a nominee of a public shares by public company or company, acquires shares in the company; and nominee.
(b) those shares are shown in a balance sheet of the company as an asset, 0 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 trans-ferred.
(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.
(1) A lien or other charge of a public company Public companies: general rule against on its own shares (whether taken expressly or otherwise) is lien or charge on void, except as permitted by this section.
own shares.
(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- 588 No.
17 Companies 2015 (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.
In determining for the purposes of this Part Interests to be disregarded in whether a company has a beneficial interest in shares, the determining whether interests referred to in sections 437, 438 and 439 are to be ,, pany has disregarded.
bemneficial interest.
437.
(1) When the shares are held in trust for the Residual interest under pension purposes of a pension scheme or an employees' share scheme or scheme, any residual interest of the company that has not employees' share vested in possession is to be disregarded.
scheme.
(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; (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-- 589 2015 Companies No.
17 (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.
(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 acquired; 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.
(1) If the relevant shares are held on trust for Employer's charges and other rights of the purposes of a pension scheme, the following are to be recovery.
disregarded- (a) a charge or lien on, or set-off against, any benefit or other right or interest under the scheme for the 41 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.
590 No.
17 Companies 2015 (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.
(1) If the company is an executor, administrator IgIls as executor, administrator or or trustee, rights that the company has in that capacity are trustee.
to be disregarded.
(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 2Financial assistance for purchase of own shares 440.
(1) In this Division, "financial assistance" Meaning of "financial means assistance" for purposes of this Part.
(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 591 2015 Companies No.
17 (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.
(3) In the case of a company that prepares an 0 individual financial statement, the liabilities of the company include any provision that is made in that statement.
441.
(1) If a person is acquiring or proposing to Assistance by public company for acquire shares in a private company, a public company that acquisition of shares is a subsidiary of that company shall not give financial in its private holding assistance (directly or indirectly) for the purpose of the company.
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 principal purpose of the company in giving the assistance is not for the purpose of the acquisition; or (b) giving the assistance for the purpose of the acquisition 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 592 No.
17 Companies 2015 (directly or indirectly) for the purpose of reducing or discharging the liability.
(4) If a company contravenes subsection (1) 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 one million shillings.
442.
(1) If a person is acquiring or proposing to Assistance for acquisition of shares acquire shares in a public company, neither the company in public 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 0 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 of the company.
(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 (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 593 2015 Companies No.
17 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.
443.
(1) If a person is acquiring or proposing to Assistance by public company for acquire shares in a private company, a public company that acquisition of shares is a subsidiary of that company shall not give financial in its private holding assistance (directly or indirectly) for the purpose of the company.
acquisition before or at the same time as the acquisition 40 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 to give it for the purpose of the acquisition; or (b) giving the 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 49 liability for the purpose of the acquisition, a public company that is a subsidiary of that company shall not give financial assistance (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 a liability incurred by a person for the purpose of the acquisition of shares in its holding company; or 594 Companies No.
17 2015 (b) the reduction or discharge of the 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.
444.
(1) If a company contravenes section 452(l) or OInce to give ohibited (3) or 453(l) or (3), the company, and each officer of the assistance.
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.
455.
Sections 442 and 443 do not prohibit any of the lertain transactions excepted following transactions unconditionally from section, 442 (a) a distribution of a company's assets in the form and 443.
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 40 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.
595 2015 Companies No.
17 446.
(1) This section applies to the following Certain transactions excepted from transactions sections 442 and 443 (a) if the lending of money is part of the ordinary conditionally.
business of the companythe lending of money in the ordinary course of the company Is business; (b) the provision by the companyin 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 of, 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.
(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.
596 I Companies 2015 No.
17 (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.
0 (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.
(1) A limited company having a share capital Power of limited company to may purchase its own shares (including any redeemable Purchase own shares 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 0 shares or shares held as treasury shares.
448.
(1) A limited company may not purchase its Purchase of own shares unless they are fully paid.
company's own shares.
(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.
(1) A private limited company may purchase its Financing of own shares out of capital in accordance with Division 4.
purchase of company's own (2) Subject to subsection (1) shares.
597 2015 Companies No.
17 (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 (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 40 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.
(1) A limited company may purchase its own Approval for company to shares only purchase own (a) by an off-market purchase, under a contract shares.
approved in advance in accordance with section 45 1; 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 Cap.
485A exchange but are not subject to a marketing arrangement on the exchange.
598 No.
17 Companies 2015 (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 0 (b) it i's 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.
451.
(1) A company may make an off-market Authorisationfor purchase of its own shares under a contract but only if off-market purchase.
(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.
40 (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 599 2015 Companies No.
17 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.
(1) This section applies to a resolution to Resolution authorising off- confer, vary, revoke or renew an approval for the purposes market purchase: of section 45 1.
exercise of voting rights.
(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; is (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.
(1) This section applies to a resolution passed Resolution approving off- by a company to confer, vary, revoke or renew an approval market purchase: to make a purchase under section 45 1.
disclosure of details of contract.
(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 600 No.
17 Companies 2015 available to its members of the company- (a) in the case of a written resolutionby 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.
(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.
(1) A company may agree to a variation of a Variation of contract for off-market contract approved under section 451 only if the variation IS purchase.
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 pas'sed.
(5) A resolution conferring, varying, revoking or renewing an approval under this section is subject to sections 455 and 456.
601 2015 Companies No.
17 455.
(1) This section applies to a resolution passed Resolutlon approving variation: by a company to confer, vary, revoke or renew an approval exercise of voting to vary a contract under section 454.
rights.
(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 f voting rights cc- '-ffed 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.
(1) This section applies to a resolution passed Resolution approv ing variation: by a company under section 454.
disclosure of details 0 (2) The company shall ensure that a copy of the of variation.
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- 602 No.
17 Companies 2015 (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.
(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.
(1) An agreement by a company to release its Release of rights under a contract approved under section 451 is void company's rights under contract for unless the terms of the release agreement are approved in off-market purchase.
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.
(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.
(1) A company may make a market purchase of Approval for its own shares only if the purchase has been approved by a an to make market purchase.
resolution of the company.
com 603 2015 Companies No.
17 (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) determine^s both the maximum ' and minimum prices that may be paid for the ' shares.
(4) The company may vary, revoke or renew such an approval only by a further resolution of the company.
0 (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 di scretion 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.
(1) This section applies to a company that has Copy of contrAct or entered into mernorandurn to be available for inspection.
(a) a contract approved under section 45 1; or 604 No6 17 Companies 201.5 (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 0 (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 Is 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 companyby.any other person.
(6) This section applies to a variation of a contract as it applies to the original contract.
460.
(1) If a company fails to comply with a Enforcem nt of right to inspect copy ore requirement of section 459, the company, and each officer memorandum.
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 comply with the relevant requirement, the company, and each officer of the company who is in default, comrruit a further offence on each day on which the failure continues and on conviction are each liable to a fine 605 2015 Companies No.17 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.
The rights of a company under a contract Company's right to purchase own shares authorised under section 451 or 458 are not capable of not assignable.
being assigned.
.
462.
(1) A payment made by a company in Payments apart from purchase price to be consideration of made out of acquiring any right with respect to the purchase distributable profits.
(a) of its own shares under a contingent purchase.
contract approved under section 45 1; (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, I may be made only out of the company s distributable profits.
(2) If subsection (1) is contravened, the following provisions apply 0 (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.
If a limited company makes a purchase of its own How shares purchased are to be shares in accordance with this Division, then treated.
606 No.
17, Companies 2015 (a) if section 428 Applies, th& shares are to be held and dealt with in accordance with Part XVI, 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.
464.
(1) Within fourteen days after a company Return of purchase purchases shares under this Division, it shall lodge with the of own shares to be lodged with Registrar for registration a return that complies with Registrar.
subsections (2) to (4).
(2) The return complies with this subsection if it distinguishes- (a) shares in relation to which section 428 applies 0 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 GO 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 subsecti : on if it states- (a) the aggregate amount paid by the company for 0 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 relate& 607 2015 Companies No.
17 (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.
(1) If, on the purchase by a compan y of any of Notice to Registrar 0 of cancellation of its own shares in accordance with this Part shares.
- (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.
(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; (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 608 No.
17 Companies 2015 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 F_ -I offence.
L_J Division 4 Redemption or purchase by private company out of capital 466.
In this Division- Interpretation: (a) Division 4.
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 sha res, is the amount required under section 468.
467.
A private limited company may in accordance Power of private limited company to with this Division, but subject to any restriction or redeem or purchase prohibition in the company's articles, make a payment in own shares out of respect of the redemption or purchase of its own shares capital.
otherwise than out of distributable profits or the proceeds 0 of a fresh issue of shares.
468.
A payment that, in accordance with this Division, The permissible can be made by a company out of capital in respect of the capital payment.
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.
609 2015 Companies No.
17 469.
(1) For the purposes of this Division, the What profits are available profits of the company, In relation to the available.
redemption or purchase of any of its shares, are the profits of the company that are available for distribution (within the meaning of Part XVIL (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 XVIL 470.
(1) The available profits of the company are Determination of determined as follows- available profits.
(a) first- Determine the profits of the company by reference to 0 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 610 No.
17 Companies 2015 (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).
(7) 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.
(1) A payment out of capital by a private Requirements for paym ent out of company for the redemption or purchase of its own shares capital.
is not lawful unless the requirements of sections 472, 474, 477 and 478 are satisfied.
(2) Subsection (1) is subject to any order of the Court under section 479.
472.
(1) The company's directors shall make a Directors' statement statement that complies with subsection (2).
and auditor's report.
(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 madethat there will be no grounds on which the company could then be found unable to pay its debts; and (b) with respect to the company's prospects for the year immediately following that datethat, having regard to- (i) their intentions with respect to the management of the company Is business during that year; and 611 2015 Companies No.
17 (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).
(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.
If the directors make a statement under sections Dirmtm' tUm"'t: 468 to 471 without having reasonable grounds for the offence il no opinion expressed in it, each of the directors who is in reasonable grounds fo"Pu"on- 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.
612 No.
Companies.
P-1111i 11 474.
(1) A payment out of capital is invalid unless it Payment I be approved by special is approved by a special resolution of the company that resolution.
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.
(1) This section applies to a resolution passed Isolution authorising by a company under section 474.
payment: exercise of (2) If the resolution is proposed as a written voting rights.
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 (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; 10 (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.
ion 476.
(1) This section applies to a resolution passed Resolut' a.1honsing by a company under section 474.
payment: disclosure of directors' (2) The company shall ensure that a copy of the statement and directors' statement and auditor's report under section 482 auditor's report.
are made available to its members- 613 2015 Companies No.
17 (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.
(1) Within the seven days immediately after the Public notice of date of the resolution under section 474, the company shall proposed payment.
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.
(3) Not later than the day on which the company (a) first publishes the notice required by subsection ( 1 ); or (b) if earlier, first publishes or gives the notice.
required by subsection (2), the company shall 614 No.
17 Companies 2015 lodge with the Registrar for registration a copy of the directors' statement and auditor's report required by section 472.
478.
(1) A company that passes a resolution in Company to make accordance with section 475 shall ensure that the directors' directors' statement and auditor's report statement and auditor's report required by section 472 are to be available for kept available for inspection throughout the relevant inspection.
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(l.); 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.
(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.
615 2015 Companies No.
17 (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.
(8) If a company refuses to allow an inspection as ft 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 opy 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.
(1) If a private company passes a special Objection to resolution approving a payment out of capital for the payment by members or redemption or purchase of any of its shares creditors: application to the (a) any member of the company (other than one who Court to cancel consented to or voted in favour of the resolution); resolution.
and (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 Kffective unless made within five weeks after the passing of he 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 616 No.
17 Companies 2015 (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.
(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.
(1) Within fourteen days after making an Notice of Court application or order application under section 479, the applicant shall lodge to be lodged with with the Registrar for registration a notice of the 1,ilar.
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 617 2015 Companies No.
17 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.
(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.
(1) A payment out of capital is invalid unless it 1,n pay,,nt on' of capital to be is made made.
(a) no earlier than five weeks after the date on which the resolution under section 475 is passed; and 10 (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.
(1) In this section, "capital redemption reserve", Company whose shares are redeemed in relation to a company, means the reserve referred to in or purchased to subsection (2).
transfer amount to capital redemption (2) If under this Part or Part XX, shares of a limited reserve, 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 618 No.
17 Companies 2015 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.
(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.
483.
(1) This section applies if a payment out of Accounting consequences of capital is made in accordance with Division 4.
payment out of (2) If the permissible capital payment is less than the capital.
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- 619 2015 Companies No.
17 (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.
(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 0 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.
(1) This section applies to a company that- Effect of company's failure to redeem or (a) issues shares on terms that they are or are liable purchase.
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.
620 Companies 2015 No.
17 (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 (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 sharesany amount due in satisfaction of those preferred rights.
621 Companies 2015 No.
17 (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 XVIIHOW COMPANY'S ASSETS ARE TO BE DISTRIBUTED Division 1 Introductory provision 485.
(1) In this Part, "distribution" means every Interpretation: Part description of distribution of the assets of a company to its XVII.
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- 0 (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.
(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 622 No.
17 Companies 2015 (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 0 of the sale, transfer or other disposition by a company of a non-cash asset; and (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.
(1) A company may make a distribution only Distributions to be made only out of out of profits available for the purpose.
prcf^'s 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.
(5) An application of an unrealised profit in contravention of subsection (4) is void.
487.
(1) A public company may make a distribution Net asset restriction only on distributions by public companies.
(a) if the amount of its net assets is not less than the aggregate of its called-up share capital and undistributable reserves; and 623 2015 Companies No.
17 (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.
(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.
(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 3justification of distribution by reference to financial statements 488.
(1) Whether a distribution may be made by a Justification of distribution by company without contravening this Pan is determined by reference to relevant reference to the following items as stated in the relevant financial statements.
financial statements- 624 Companies 2015 No.
17 (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).
(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 Is 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.
(1) In determining whether a proposed Successive.
.
distributions etc by distribution may be made by a company in a case in reference to the which same financial statements.
(a) one or more previous distributions have been made in pursuance of a determination made by 40 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.
(2) The financial assistance and other payments that are relevant for the purpose of subsection (1) are as 625 2015 Companies No.
17 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.
(4) For the purpose of applying subsection (2)(b) in relation to any financial assistance- (a) "net assets" means the amount by which the I 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.
(1) If development costs are shown or included Ireatmen, 1 as an asset in a company's accounting records, any amount development costs.
626 CoMpanies 2015 No.
17 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.
In determining for the purposes of this Part Determination of ctr loss in s of asset rperopfe whether a company has made a profit or loss in respect of ito an asset when where records incomplete.
(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 E 492.
(1) This section applies for determining the Distributions in kind: determination amount of a distribution consisting of or including, or of amount.
treated as arising in consequence of, the sale, transfer or other disposition by a company of a non-cash asset if (a) at the time of the distribution, the company has profits available for distribution; and (b) assuming the amount of the distribution were to be determined in accordance with this section, the company could make the distribution without contravening this Part.
627 2015 Companies No.
17 (2) The amount of the distribution, or the relevant part of it, is taken to be (a) if the amount or value of the consideration for the disposal is not less than the book value of the assetnil; and (b) in any other case the amount by which the book value of the asset exceeds the amount or value of any consideration for the disposal.
(3) For the purposes of subsection (1)(a), the profits of a company available for distribution are treated as increased by the amount if any by which the amount or value of any consideration for the disposition exceeds the book value of the asset.
(4) In this section "book value", in relation to an asset, means (a) the value stated in the relevant- accounting records; or (b) if no such value is stated in those records nil.
493.
(1) This section applies if Distributions in kind: treatment of (a) a company makes a distribution consisting of or unrealised profits.
including, or treated as arising in consequence of, the sale, transfer or other disposition by the company of a non-cash asset; and (b) any part of the amount at which that asset is stated in the relevant accounts represents an unrealised profit.
(2) For the purpose of this Part, the profit is treated as a realised profit- (a) for the purpose of determining the lawfulness of the distribution in accordance with this Part (whether before or after the distribution takes place); and (b) in relation to anything done with a view to or in connection with the making of the distribution, for the purpose of the application of any provision of the regulations (if any) under which only realised profits are to be included in, or transferred to, the profit and loss account.
628 No.
17 Companies 2015 (b) if the regulations make provision in relation to the making of distributions for the purpose of the application of any provision of the regulations under which only realised profits are to be included in, or transferred to, the profit and loss account.
Division 6 Supplementary provision 494.
(1) This section applies to a distribution, or part Consequences of unlawful of a distribution, that is made by a company to oneOf its &trib.tion.
members in contravention of this Part.
(2) If, at the time of the distribution, the member knew or had reasonable grounds for believing that a distribution to which this section applies was made in contravention of this Part, the member is liable (a) to repay to the company the amount of the is distribution or the relevant part of it; or (b) in the case of a distribution made otherwise than in cash, to pay the company an amount equal to the value of the distribution or part at that time.
(3) Subsection (2) does not affect any obligation imposed apart from this section on a member of a company to repay a distribution or part of a distribution that was unlawfully made to the member.
(4) This section does not apply in relation to (a) financial assistance given by a company in contravention of (i) section 441 (assistance by public company for acquisition of shares in its private holding company); or (ii) section 442 (assistance for acquisition of 0 shares in public company); or (b) a payment made by a company in respect of the redemption or purchase by the company of shares in itself.
PART XVMCERTIFICATION AND TRANSFER OF SECURITIES Division 1 Certification and transfer of securities: general 495.
A certificate under the common seal of the Share certificate to company specifying any shares held by a member is, in the be evidence of title.
absence of proof to the contrary, evidence of the member's 629 2015 Companies No.
17 title to the shares.
496.
(1) A company shall, within two months after Duty of company as to issue of the allotment of any of its shares, debentures or debenture certificates etc on stock, complete and have ready for delivery allotment.
(a) the certificates of the shares allotted; (b) the debentures allotted; or (c) the certificates of the debenture stock allotted.
(2) Subsection (1) does not apply if the conditions of issue of the shares, debentures or debenture stock provide otherwise.
(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 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 complete and have ready for delivery the documents to which subsection (1) applies, 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.
497.
(1) A company may register a transfer of shares Registration of transfer of shams in or debentures of the company only if a proper document and debentures.
of transfer has been delivered to it.
(2) Except as provided by subsection (3), a purported 40 registration of a transfer of shares or debentures in contravention of subsection (1) is void.
(3) Subsection (1) does not affect a power of the company to register as a shareholder or debenture holder a person to whom the right to any shares in or debentures of the company has been transmitted by operation of law.
498.
(1) As soon as practicable (and in any case not Procedure on transfer being later than two months) after the date on which a transfer of lodged.
a company's shares or debentures is lodged with it, the company shall either- 630 No.
17 Companies 2015 (a) register the transfer; or (b) if it refuses to register the transfer, give the transferee a notice of the refusal, together with a statement specifying the reasons for the refusal.
(2) If the company refuses to register the transfer, it shall provide the transferee with such further information about the reasons for the refusal as the transferee may reasonably request.
(3) The information required to be provided under subsection (2) does not include copies of minutes of meetings of directors.
(4) This section does not apply in relation to the transmission of shares or debentures by operation of law.
(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 499.
(1) On the application of the transferor of any Transfer of shares on application of share or interest in a company, the company shall enter in transferon.
its register of members the name of the transferee in the same manner and subject to the same conditions as if the application for the entry were made by the transferee.
(2) A company that, without lawful justification, fails to comply with subsection (1) is liable to pay damages to the applicant.
500.
A document of transfer of the share or other Execution of share transfer by executor interest of a deceased member of a company or administrator.
(a) can be made by the deceased member's executor or administrator even though the executor or administrator is not a member of the company; and 631 2015 Companic, No.
17 (b) is as effective as if the executor or administrator had been such a member at the time of the execution of the document.
501.
(1) If a document produced to a company is by Evidence of grant of law sufficient evidence of the grant of probate, etc.
(a) probate of the will of a deceased person; (b) letters of administration, of the estate of a deceased person; or (c) confirmation as executor of a deceased person, the company is obliged to accept the document as sufficient evidence of the grant.
(2) A company that refuses to comply with subsection (1) is liable to pay damages to any person who sustains loss in consequence of the refusal.
502.
(1) A certificate issued by a company in relation le"fication of document of transfer to a transfer of shares in, or of debentures of, the company ofshares or is to be taken to be a representation by the company to any debentures.
person acting on the faith of the certificate that there have been produced to the company such documents as on their face show title to the shares or debentures in the transferor named in the certificate.
(2) The certificate is not in itself a representation that the transferor has any title to the shares or debentures.
(3) If a person acts on the faith of a false certificate issued by a company made negligently, the company is liable to pay damages to the person as if the certificate had been made fraudulently.
0 (4) For the purposes of this section- (a) a certificate issued by a company in relation to a transfer is treated as having been made by the company if the certificate is signed by a person authorised to certify transfers on the company's behalf or by an officer or employee either of the company or of a body corporate so authorised; and (b) a certificate is treated as signed by a person if (i) it purports to be authenticated by the person's signature or initials (whether handwritten or not); and 632 No.
17 Companies 2015 (ii) it is not established that the signature or initials was or were placed there by someone other than that person, or a person authorised to use that person's signature or initials, for the purpose of certifying transfers on the company's behalf.
(1) A company shall, within two months after Duty of company as 503.
to issue of the date on which a transfer of any of its shares, debentures e-tiftcates etc on or debenture stock is lodged with the company, complete lan,l,.
and have ready for delivery- (a) the certificates of the shares transferred; (b) the debentures transferred; or (c) the certificates of the debenture stock transferred.
0 (2) For the purpose of subsection (1), "transfer" does not include a transfer that the company is for any reason entitled to refuse to register and does not register.
(3) Subsection (1) does not apply if the conditions of issue of the shares, debentures or debenture stock provide otherwise.
(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 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 complete and have ready for delivery the documents referred to in subsection (1), the company, and each officer of the company who is in default, commits 0a 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.
(1) Irrespective of whether a company limited Company no longer 504.
authorised to issue by shares purports to be authorised by its articles to issue share warrants after with respect to any fully paid shares a share warrant stating commencement of that the bearer of the share warrant is entitled to the shares this section.
specified in it, the company may no longer issue such share warrants after the commencement of this section.
(2) A share warrant issued in contravention of subsection (1) is void.
633 2015 Companies No.
17 505.
(1) If a company is failing to comply with Power of Court to order company to section 496(l), any person claiming to be affected by the make good failure to failure may serve on the company a notice requiring it to issue certain rectify the failure without delay and in any case within ten documents.
days after the service of the notice.
(2) If a company that is served with a notice served under subsection (1) fails to comply with the notice within ten days after the date of service, the person who served the notice may apply to the Court for an order under subsection (4).
(3) The company is entitled to be served with a copy of the application and to be heard at the hearing of the application by the Court.
(4) On the hearing of an application under subsection (2) and on being satisfied as to the company's failure to comply, the Court may make an order directing the company, and any of its officers, to rectify the failure -f--re such date, as may be specified within such period, or bc in the order.
(5) Such an order may provide that all costs of, and incidental to, the application are to be bome by the company or by a specified officer of the company who was, in the opinion of the Court, responsible for the failure.' Division 2Evidencing and transfer of title to securities without written instrument 506.
(1) Regulations may be made for the purpose of Provision enabling procedures for this Division to enable title to securities to be evidenced evidencing and and transferred without a written document.
transferring title.
(2) In particular, those regulations may (a) prescribe procedures for recording and transferring title to securities; and (b) regulate those procedures and the persons responsible for or involved in their operation.
(3) Any such regulations are invalid to the extent that they do not contain such safeguards as may be necessary- 634 No.
17 Companies 2015 (a) for the protection of investors; and (b) for ensuring that competition is not restricted, distorted or prevented.
(4) Any such regulations may, for the purpose of enabling or facilitating the operation of the procedures referred to in subsection (2)(a), prescribe the rights and obligations of persons in relation to securities dealt with under the procedures.
(5) Any such regulations may also- (a) include provisions for the purpose of giving effect to (i) the transmission of title to securities by Is operation of law; (ii) any restriction on the transfer of title to securities arising under the provisions of any enactment or document, Court order or agreement; and (iii) any power conferred by any such provision on a person to deal with securities on behalf of the person entitled; and (b) make provision with respect to the persons responsible for the operation of the procedures prescribed by the regulations (i) as to the consequences of their insolvency or incapacity; or (ii) as to the transfer from them to other persons of their functions in relation to those procedures.
507.(1) Regulations made for the purpose of this Power to make Division may regulations requiring arrangements to be (a) enable the members of a company or of any adopta designated class of companies to adopt, by ordinary resolution, arrangements under which title to securities is required to be evidenced or transferred or both without a written document; or (b) require companies, or any designated class of companies, to adopt such arrangements.
635 2015 Companies No.
17 (2) Any such regulations may apply- (a) in respect of all securities issued by a company; or (b) in respect of all securities of a specified description.
(3) The Cabinet Secretary shall ensure that any such regulations do not provide- (a) that persons who, but for the arrangements would be entitled to have their names entered in the company's register of members, cease to be so entitled; or (b) that persons who, but for the arrangements would be entitled to exercise any rights in respect of the securities, continue to be able effectively to control the exercise of those rights.
(4) Any such regulations may (a) prohibit the issue of any certificate by the company in respect of the issue or transfer of securities; (b) require the provision by the company to holders of securities of statements at specified intervals or on specified occasions of the securities held in their name; and (c) provide for matters of which any such certificate or statement is, or is not, evidence.
(5) In this section- (a) a reference to a designated class of companies is to a class designated in the regulations or by order under section 508; and (b) "specified" means specified in the regulations.
508.
(1) The Cabinet Secretary may, by order- Provision enabling or requiring (a) designate classes of companies for the purposes arrangements to be adopted: order- of section 507; making powers.
(b) provide that, in relation to securities of a specified description (i) in a designated class of companies; or (ii) in a specified company or class of companies, specified provisions of those 636 No.
17 Companies 2015 regulations either do not apply or apply subject to specified modifications.
(2) In subsection (1), "specified" means specified in the order.
509.
Regulations purporting to be made under sections 1"ty to consult.
506 or 507, and an order purporting to be made under section 508, are invalid unless the Cabinet Secretary has previously carried out such consultation as in the Cabinet Secretary's opinion are appropriate.
PART XIXPUBLIC OFFERS OF SECURITIES BY COMPANIES Interpretation: Part 510.
(1) For the purposes of this Part, an offer to the X,X.
public includes an offer to any section of the public, is however selected.
(2) An offer is not regarded as an offer to the public if it can properly be regarded as (a) not being likely to result, directly or indirectly, in securities of the company becoming available to persons other than those receiving the offer; or (b) otherwise being a private concern of the person receiving it and the person making it.
(3) An offer is to be regarded, unless the contrary is proved, as being a private concern of the person receiving it and the person making it if (a) it is made to a person already connected with the company and, if it is made on terms allowing that person to renounce ehe person's rights, the rights may be renounced only in favour of another person already connected with the company; or (b) it is an offer to subscribe for securities to be held under the share scheme of an employee and, if it is made on terms allowing that person to renounce the person's rights, the rights may be renounced only in favour of (i) another person entitled to hold securities under the scheme; or (ii) a person already connected with the company.
63 / 2015 Companies No.
17 (4) For the purposes of this section, "person already connected with the company" means- (a) an existing member or employee of the company; (b) a member of the family of a person who is or was a member or employee of the company; (c) the widow or widower of a person who w as a member or employee of the company; (d) an existing debenture holder of the company; or (e) a trustee of a trust of which the principal beneficiary is a person referred to in paragraphs (a) to (d).
(5) For the purposes of subsection (4)(b), a person is a member of the family of another person if the person is the other person's spouse, child or step-child or a descendant of any of any such child or step-child.
511.
(1) A private company limited by shares or a Prohibition of public offers by private company limited by guarantee may not companies.
(a) offer to the public any securities of the company; or (b) allot or agree to allot any securities of the company with a view to their being offered to the public.
(2) Unless the contrary is proved, an allotment or agreement to allot securities is presumed to be made with a view to their being offered to the public if an offer of the securities, or any of them, to the public is made - (a) within six months after the allotment or agreement to allot; or Is (b) before the receipt by the company of the whole of the consideration to be received by it in respect of the securities.
(3) A company does not contravene this section if (a) it acts in good faith under arrangements under which it is to be converted into a public company before the securities are allotted; or (b) as part of the terms of the offer, it undertakes to convert itself into a public company within a 638 No.
17 Companies 2015 specified period and that undertaking is complied with.
(4) The specified period for the purposes of subsection (3)(b) is a period ending not later than six months after the day on which the offer is made or, in the case of an offer made on different days, first made.
512.
(1) If a member or creditor of a company, or the Enforcement of Attorney General, alleges that a company is proposing to prohibition: order restraining proposed act in contravention of section 511, the member, creditor or contravention.
Attorney General may apply to the Court for an order under this section.
(2) If, on the hearing of an application under subsection (1), the Court is satisfied that the company concerned is proposing to act in contravention of section 511, it shall make an order restraining the company from contravening that section.
513.(1) If a member or creditor of a company, or the Enforcementof Attorney General, alleges that a company is contravening, prohibition orders available to the or has contravened, section 511, the member, creditor or Court after Attorney General may apply to the Court for an order under contravention.
this section.
(2) A person is eligible to make an application under subsection (1) as a member of the company only if the person (a) was a member of the company when the offer constituting the contravention was made or, if that offer was made over a period, at any time during that period; or (b) became a member as a result of that offer.
(3) A person is eligible to make an application under subsection (1) as a creditor of the company only if the person was a creditor of the company at the time when the offer constituting the contravention was made or, if that offer was made over a period, at any time during that period.
(4) If, on the hearing of an application under subsection (1), the Court is satisfied that the company concerned has acted in contravention of section 511, it shall make an order requiring the company to convert itself into a public company and to apply to the Registrar for- 639 2015 Companies No.
17 registration of the conversion, unless it appears to the Court- (a) that the company does not meet the requirements for conversion into a public company; and (b) that it is impractical or undesirable to require it to take steps to do so.
(5) If it does not make an order under subsection (4), the Court may make either or both of the following; (a) a remedial order under section 514; (b) an order for the compulsory liquidation of the company.
514.
(1) An order is a remedial order for the purpose Enforcement of prohibition: power of this section if it is made in order to place a person of Court to make affected by a contravention of section 5 11 in the position in remedial orders.
which the person would have been in had the contravention not occurred.
(2) If a private company has (a) allotted securities as a result of an offer to the public; or (b) allotted or agreed to allot securities with a view to their being offered to the public, a remedial order may require any person knowingly concerned in the contravention of section 511 to offer to purchase any of those securities at such price and on such other terms as the Court considers appropriate.
(3) A remedial order may be made (a) against any person knowingly concerned in the contravention, whether or not an officer of the company concerned; (b) irrespective of anything in that company s constitution that includes, for this purpose, the terms on which any securities of the company are allotted or held; and (c) whether or not the holder of the securities subject to the order is the person to whom that company allotted or agreed to allot them.
(4) If a remedial order is made against the company itself, the Court may make such order reducing the company's capital as appears to it to be appropriate.
640 Companies 2015 No.
17 (5) Subsections (2) to (5) do not limit in any way the Court's power to make a remedial order.
515.
Nothing in this Part affects the validity of an Validity of allotment allotment or sale of securities or of an agreement to allot or etc not affected.
sell securities.
(1) A company that is a public company shall Public company: 516.
,equ,,ement for not conduct business or exercise a borrowing power unless minimum share the Registrar has issued it with a trading certificate under capital.
this section.
(2) On receiving an application made by a public company under section 517, the Registrar shall issue a trading certificate to the company if satisfied that the nominal value of the allotted share capital of the company is not less than the authorised minimum.
(3) For the purpose of subsection (2), a share allotted under a share scheme of an employee can be taken into account only if it is paid up to (a) at least one-quarter of the nominal value of the share; and (b) the whole of any premium on the share.
(4) A trading certificate has effect from the date on which it is issued and is conclusive evidence that the company is entitled to do business and exercise any borrowing powers.
517.
(1) A public company that wishes to obtain a Procedure for obtaining trading trading certificate shall make an application in writing to certificate.
the Registrar.
(2) The Registrar shall refuse such an application if it does not- (a) state that the nominal value of the company allotted share capital of the company is not less than the authorised minimum; (b) specify the amount, or estimated amount, of the preliminary expenses of the company; and (c) specify any amount or benefit paid or given, or intended to be paid or given, to any promoter of the company, and the consideration for the payment or benefit.
641 2015 Companies No.
17 518.
For the purposes of sections 516 and 517, the The authorised authorised minimum is six million severi ll-ilIndred and fifty minimum.
thousand shillings.
519.
(1) If a company does business or exercises any Consequences of doing business etc borrowing powers in contravention of section 516, the without a trading company, and each officer of the company who is in certificate.
default, commit an offence and on conviction are each liable to fine not exceeding one million shillings.
.(2) A contravention of section 516 does not affect the validity of a transaction entered into by the company, but if a company (a) enters into a transaction in contravention of that section; and (b) fails to comply with its obligations in connection with the transaction within twenty-one days from being called on to do so, the directors of the company are jointly and severally liable to indemnify any other party to the transaction in respect of any loss or damage suffered by that party because of the company's failure to comply with those obligations.
PART XXREDEEMABLE SHARES 520.(lA limited company having a share capital Power of limited company to issue may issue redeemable shares that are to be redeemed, or redeemable shares.
are liable to be redeemed, at the option of the company or the shareholder.
company may (2) The articles of a private liMILed exclude or restrict the issue of redeemable shares.
(3) A public limited company may issue redeemable shares only if it is authorised to do so by its articles.
(4) A company may issue redeemable shares only if there are no issued shares of the company that are not redeemable.
521.
(1) The directors of a limited company may Terms and manner determine the terms, conditions and manner of redemption ofredemption.
of shares if they are authorised to do so (a) by the company's articles; or 642 No.
17 Companies 2015 (b) by a resolution of the company.
(2) A resolution under subsection (1)(b) may be an ordinary resolution, even if it amends the company's articles.
(3) If the directors are authorised under subsection (1) to determine the terms, conditions and manner of redemption of shares- (a) the directors shall do so before the shares are allotted; and (b) any obligation of the company to state in a statement of capital the rights attached to the shares extends to the terms, conditions and manner of redemption.
522.
(1) Redeemable shares in a limited company Payment for can be redeemed only if they are fully paid.
redeemable shares.
(2) The terms of redemption of shares in a limited company may provide that the amount payable on redemption can, by agreement between the company and the holder of the shares, be paid on a date later than the redemption date.
523.
(1) Redeemable shares of a limited company Financing of can be redeemed only out of redemption.
(a) distributable profits of the company; or (b) the proceeds of a fresh issue of shares made for the purposes of the redemption.
(2) Subject to subsection (5), any premium payable on redemption of shares in a limited company is payable out of distributable profits of the company.
(3) Where in pursuance of this section, a company has redeemed or is about to redeem any preference shares, it shall have power to issue shares up to the nominal value of the shares redeemed or to be redeemed as if those shares had never been issued, and accordingly the share capital of the company shall not for the purpose of any enactments relating to stamp duty be deemed to be increased by the issue of shares in pursuance of this subsection.
(4) Despite subsection (3), where new shares are issued before the redemption of the old shares, the new 643 2015 Companies No.
17 shares shall not, so far as relates to stamp duty, be deemed to have been issued in pursuance of this subsection unless the old shares are redeemed within one month after the issue of the new shares.
(5) If the redeemable shares were issued at a premium, any premium payable on their redemption can be paid out of the proceeds of a fresh issue of shares made for the purposes of the redemption, up to an amount equal to (a) the aggregate of the premiums received by the company on the issue of the shares redeemed; or (b) the current amount of the share premium account of the company including any sum transferred to that account in respect of premiums on the new shares, whichever is the less.
(6) The amount of the share premium account of the company is reduced by an amount equal to, or amounts equal to the aggregate amounts equal to, the amount of any premium payable under subsection (2).
524.
If shares in a limited company are redeemed Redeemed shares treated as cancelled.
(a) the shares are cancelled by operation of this section; and (b) the amount of the issued share capital of the company is diminished by the nominal value of the shares redeemed.
525.
(1) Within one month after a company has Notice to Registrar redeemed any redeemable shares, the company shall lodge of redemption.
with the Registrar for registration a notice specifying the shares that have been redeemed.
(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 share capital of the company immediately following the redemption (a) the total number of shares of the company; (b) the aggregate nominal value of those shares; (c) for each class of shares 644 No.
17 Companies 2015 (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