Point in Time
Act No: No. 17 of 2015
Act Title: COMPANIES
[ Date of commencement: 15th September, 2015 : Section 1; 6th November , 2015 : Parts 1–14, 23, 31, 32, 38, 40, 42, 1st Sch., 2nd Sch., and 6th Sch.; 15th June, 2016 : Others Parts and Schedules. ]
[ Date of assent: 11th September, 2015. ]
Arrangement of Sections
PART 1 – PRELIMINARY
1.
Short title and commencement
(1)

This Act may be cited as the Companies Act, 2015.

(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.

4.
Provisions supplementing definition of “holding company” in section 3
(1)

For the purposes of paragraph (a) of the definition of "holding company" in section 3(1), a company controls the composition of another company's board of directors if it has power to appoint or remove all, or a majority, of that other company's directors without any other person's consent.

(2)

For the purposes of subsection (1), a company has the power to make such an appointment if—

(a)

without the exercise of the power in a person's favour by the company, the person cannot be appointed as a director of that other company; or

(b)

it necessarily follows from a person being a director or other officer of the company that the person is appointed as a director of that other company.

(3)

In paragraph (c) of that definition, a reference to a company's issued share capital excludes any part of it that carries no right to participate beyond a specified amount in a distribution of profits or capital.

(4)

For the purposes of that definition—

(a)

if any share is held, or any power is exercisable, by a company in a fiduciary capacity, the share or power is to be regarded as not being held or exercisable by the company; and

(b)

subject to subsections (5) and (6), if any share is held, or any power is exercisable, by a subsidiary of a company, or by a person as nominee for a company or such a subsidiary, the share or power is to be regarded as being held or exercisable by the company.

(5)

For the purposes of that definition, any share in another company held, or any power in relation to another company exercisable, by a person by virtue of a debenture of that other company, or of a trust deed for securing an issue of such a debenture, is to be regarded as not being held or exercisable by the person.

(6)

For the purposes of that definition, any share held, or any power exercisable, by a company or a subsidiary of a company, or by a person as nominee for a company or such a subsidiary, is to be regarded as not being held or exercisable by the body corporate or subsidiary if—

(a)

the ordinary business of the company or subsidiary includes the lending of money; and

(b)

the share or power is held or exercisable by way of security only for the purpose of a transaction entered into in the ordinary course of that business.

(7)

In subsection (4)(b), a reference to a company or subsidiary excludes a company or subsidiary that is concerned only in a fiduciary capacity.

PART II – COMPANIES AND COMPANY FORMATION

Division 1 — Types of companies

5.
Limited companies

For the purposes of this Act, a company is a limited company if it is a company limited by shares or by guarantee.

6.
Companies limited by shares
(1)

For the purposes of this Act, a company is a company limited by shares if the liability of its members is limited by the company's articles to any amount unpaid on the shares held by the members.

(2)

For the purposes of subsection (1), the liability of the members of an existing company is taken to be limited by the company's articles to any amount unpaid on the shares held by the members if a condition of the memorandum of association of the company stating that the liability of the members is limited is regarded as a provision of the articles by virtue of section 70.

7.
Companies limited by guarantee
(1)

For the purposes of this Act, a company is a company limited by guarantee if—

(a)

it does not have a share capital;

(b)

the liability of its members is limited by the company's articles to the amount that the members undertake, by those articles, to contribute to the assets of the company in the event of its liquidation; and

(c)

its certificate of incorporate states that it is a company limited by guarantee.

(2)

Subsection (1) does not prohibit a company limited by guarantee from having a share capital if it was formed and registered before the commencement of this section.

8.
Unlimited companies

For the purposes of this Act, a company is an unlimited company if—

(a)

there is no limit on the liability of its members; and

(b)

its certificate of incorporation states that the liability of its members is unlimited.

9.
Private companies
(1)

For the purposes of this Act, a company is a private company if—

(a)

its articles—

(i) restrict a member's right to transfer shares;
(ii) limit the number of members to fifty; and
(iii) prohibit invitations to the public to subscribe for shares or debentures of the company;
(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.
Public companies

For the purposes of this Act, a company is a public company if—

(a)

its articles allow its members the right to transfer their shares in the company;

(b)

its articles do not prohibit invitations to the public to subscribe for shares or debentures of the company; and

(c)

its certificate of incorporation states that it is a public company.

Division 2 — Formation and registration of companies

11.
Method of forming company
(1)

One or more persons who wish to form a company may—

(a)

subscribe their names to a memorandum of association; and

(b)

comply with the requirements of sections 13 to 16 with respect to registration.

(2)

A company formed for an unlawful purpose may not be registered.

12.
Memorandum of association
(1)

A memorandum of association is a memorandum stating that the subscribers—

(a)

wish to form a company under this Act; and

(b)

agree to become members of the company and, in the case of a company that is to have a share capital, to take at least one share each.

(2)

A company may not be registered unless its memorandum of association is—

(a)

in the form prescribed by the regulations; and

(b)

authenticated by each subscriber.

13.
Registration documents
(1)

A person who wishes to register a company shall lodge with the Registrar—

(a)

an application for registration of the company that complies with subsections (2) and (4);

(b)

a memorandum of association of the company; and

(c)

except as provided by section 21, a copy of the proposed articles of association.

(2)

An application for registration complies with this subsection if it states—

(a)

the proposed name of the company;

(b)

the proposed location of the registered office of the company;

(c)

whether the liability of the members of the company is to be limited, and if so whether it is to be limited by shares or by guarantee; and

(d)

whether the company is to be a private or a public company.

(3)

If the application for registration of a company is submitted by an agent for the subscribers to the memorandum of association, the agent shall include in the application the name and address of the agent.

(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.
Statement of capital and initial shareholdings
(1)

If the company is to have a share capital, the applicants for registration shall ensure that the requisite statement of capital and initial shareholding comply with subsections (2) and (3).

(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.
Statement of guarantee
(1)

The applicant for registration of a company to be limited by guarantee shall ensure that the requisite statement of guarantee contains the prescribed information to enable the subscribers to the memorandum of association to be identified.

(2)

The applicant shall also ensure that the statement of guarantee states that each person who is a member undertakes, if the company is liquidated while the person is a member or within twelve months after the person ceases to be a member, to contribute to the assets of the company such amount as may be required for—

(a)

paying the debts and liabilities of the company contracted before the person ceases to be a member;

(b)

paying the costs, charges and expenses of liquidation; and

(c)

adjusting the rights of the contributories among themselves.

16.
Statement of proposed officers
(1)

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

(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 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.
Registrar to register company if requirements of Act are complied with

If satisfied that an application for registration complies with the requirements of this Act relating to registration, the Registrar shall register the company and allocate to it a unique identifying number.

18.
Registrar to issue company with certificate of incorporation
(1)

On the registration of a company in accordance with section 17, the Registrar shall issue to the company a certificate of incorporation that complies with this section.

(2)

A certificate of incorporation complies with this section if it states—

(a)

the name of the company and its unique identifying number;

(b)

the date of the company's incorporation;

(c)

whether the company's liability is limited or unlimited, and if it is limited, whether it is limited by shares or by guarantee; and

(d)

whether the company a private or a public one.

(3)

The Registrar shall sign the certificate of incorporation and authenticate it with the Registrar's official seal.

(4)

The certificate is conclusive evidence that the requirements of this Act relating to registration have been complied with and that the company is duly registered under this Act.

19.
Effect of registration

From the date of incorporation of a company—

(a)

the subscribers to the memorandum, together with such other persons as may from time to time become members of the company, become a body corporate by the name stated in the certificate of incorporation;

(b)

the company can do all of the things that an incorporated company can do;

(c)

the registered office of the company is as stated in the application for registration;

(d)

the status of the company is as stated in its certificate of incorporation;

(e)

in the case of a company having a share capital, the subscribers to the memorandum of association become holders of the shares specified in the statement of capital and initial shareholdings; and

(f)

the persons named in the statement of proposed officers—

(i) as directors of the company;
(ii) in the case of a public company, as the secretary or as a joint secretary of the company; or
(iii) as an authorised signatory of the company, become holders of those offices.
PART III — A COMPANY'S CONSTITUTION

Division 1 — Articles of Association

20.
Regulation may prescribe model articles
(1)

The regulations may prescribe model articles for companies.

(2)

Different versions of model articles may be prescribed for different descriptions of companies.

(3)

A company may adopt all or any of the provisions of a prescribed version of model articles.

(4)

An amendment to regulations prescribing a version of model articles does not affect a company registered before the amendment took effect.

21.
Default application of model articles
(1)

On the formation of a limited company—

(a)

if its articles are not registered; or

(b)

if its articles are registered, in so far as they do not exclude or modify the relevant model articles, the relevant model articles, so far as applicable, form part of the company's articles in the same manner and to the same extent as if articles in the form of those articles had been duly registered.

(2)

In subsection (1), "relevant model articles" means the model articles prescribed for a company of that kind in force on the date the company is registered.

22.
Amendment of articles

A company may amend its articles only by special resolution.

23.
Effect of amendment of articles on company’s members
(1)

A member of a company is not bound by an amendment to the articles of a company after the date on which the person became a member, if and so far as the amendment—

(a)

requires the person to take or subscribe for more shares than the number held by the person at the date on which the amendment is made; or

(b)

in any way increases the person liability as at that date to contribute to the company's share capital or otherwise to pay money to the company.

(2)

Subsection (1) does not apply if the member agrees in writing, either before or after the amendment is made, to be bound by the amendment.

24.
Amended articles to be sent to Registrar
(1)

If a company amends its articles, the company shall lodge with the Registrar for registration a copy of the articles as amended not later than fourteen days after the resolution containing the amendment is passed.

(2)

This section does not require a company to set out in its articles any provisions of model articles that—

(a)

are applied by the articles; or

(b)

apply because of section 2.

(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 default, commit a further offence on each day on which the failure continues and on conviction are each liable to a fine not exceeding twenty thousand shillings for each such offence.

25.
Registrar’s notice to comply in case of failure with respect to amended articles
(1)

On being satisfied that a company has failed to comply with any provision requiring it—

(a)

to lodge with the Registrar a document making or evidencing an amendment in the company's articles; or

(b)

to lodge with the Registrar a co