Point in Time
Act No: CAP. 446
[ Date of commencement: 1st November, 1986. ]
[ Date of assent: 4th September, 1986. ]
Arrangement of Sections
Establishment of state corporations by the President

The President may, by order, establish a state corporation as a body corporate to perform the functions specified in that order.


A state corporation established under this section shall—


have perpetual succession;


in its corporate name be capable of suing and being sued;


subject to this Act, be capable of holding and alienating movable and immovable property.

Ministerial responsibility for state corporations

The President shall assign ministerial responsibility for any state corporation and matters relating thereto to the Vice-President and the several Ministers as the President may by directions in writing determine.

Powers generally of state corporations

Subject to this Act, every state corporation shall have all the powers necessary or expedient for the performance of its functions.


After the commencement of this Act and notwithstanding subsection (1), the power of a state corporation to borrow money in Kenya or elsewhere shall be exercised only with the consent of the Minister and subject to such limitations and conditions as may be imposed by the Treasury with respect to state corporations generally or specifically with respect to a particular state corporation.


A state corporation may engage and employ such number of staff, including the chief executive, on such terms and conditions of service as the Minister may, in consultation with the Committee, approve.


A state corporation may, with the approval of the Minister in consultation with the Treasury and the Committee, establish pension, gratuity, superannuation, provident or other funds for the state corporation’s employees and their dependants.


A state corporation may establish committees consisting of members of the Board to deal with such matters as the Board may specify and notice of establishment of any committee in accordance with this section whether established before or after the commencement of this Act shall be served on the State Corporations Advisory Committee.

Annual estimates

Every state corporation shall cause to be prepared and shall, not later than the end of February in every year, submit to the Minister and to the Treasury for approval, estimates of the state corporation’s revenue and expenditure for the following financial year accompanied by proposals for funding all projects to be undertaken by the state corporation, or the implementation of which will continue during the financial year to which those estimates relate.


No annual estimates and proposals for funding projects shall be implemented until they have been approved by the Minister with the concurrence of the Treasury.

Expenditure not included in annual estimates

No state corporation shall, without the prior approval in writing of the Minister and the Treasury, incur any expenditure for which provision has not been made in an annual estimate prepared and approved in accordance with section 11.

Renewal of depreciating assets, etc., and disposal of surplus funds

Every state corporation shall make provision for the renewal of depreciating assets by the establishment of sinking funds and for contributions to such reserve and stabilization funds as may be required.


Where there are any surplus moneys after making the provision required by subsection (1) the surplus moneys shall be disposed of in such manner as the Minister, in consultation with the Board, may, in writing, direct.


Notwithstanding subsection (2), the Minister for the time being responsible for Finance may require the whole or any part of the surplus moneys to be paid into the Consolidated Fund where the exigencies of the financial situation so require.

Restriction on loans to Board members and staff

Notwithstanding any other written law establishing a state corporation or its memorandum and articles of association, no state corporation shall grant to a member of the Board or staff any loan or advance or arrange any credit facility for him except in accordance with regulations made by the state corporation under this section and approved by the Treasury, but in the absence of those regulations such loan, advance or credit facility may be granted in accordance with terms and conditions approved by the Committee.

The State Corporations Appeal tribunal

There shall be a Tribunal, to be known as the State Corporations Appeal Tribunal, which shall consider and determine appeals under section 21.


The Minister for the time being responsible for Finance shall provide the Tribunal with such facilities, material and funds as are necessary for the proper conduct of its functions.


The Tribunal shall consist of—


a chairman who shall be a person qualified by law to be appointed a judge, appointed by the President;


two other members appointed by the Minister for the time being responsible for matters relating to Finance each nominated by—

(i) the Council of the Law Society of Kenya from amongst advocates of not less than seven years’ standing; and
(ii) the Council of the Institute of Certified Public Accountants of Kenya from amongst accountants of not less than seven years’ standing.

The Attorney-General shall appoint a public officer to be secretary to the Tribunal.


There may be appointed such staff of the Tribunal whose offices shall be offices in the public service, as may be necessary.


For the purposes of the hearing and determination of any appeal by the Tribunal the secretary may, under the direction of the Tribunal, administer oaths.


The chairman, may by notice under his hand, summon any person to attend and give evidence and to produce any relevant book or document; and a person who fails to attend when so summoned shall be guilty of an offence and liable to a fine of two thousand shillings or imprisonment for one month.


The Tribunal shall have power to make such order as to costs, including—

(i) an order for the deposit by an appellant of money as security for costs before proceeding upon an appeal; and
(ii) an order that the expenses incurred by an appellant or any other party to the proceedings shall be paid by the state corporation concerned in the proceedings; and
(iii) orders as to taxation of costs in accordance with any scale prescribed for suits in the High Court,

as appears to it just.


Any costs not recovered from security ordered under paragraph (i) of subsection (8) shall be recoverable as a civil debt.


A person shall not be qualified to be appointed the chairman, or a member of the Tribunal if he is an employee of, or a member of the Board of, a state corporation.


Every appointment under this section other than an appointment under subsection (5) shall be by name and by notice in the Gazette and shall be for a renewable term of not less than five years with respect to the chairman and not more than three years with respect to the members.


The sessions of the Tribunal shall, unless the special circumstances of an appeal require, be in Nairobi, convened by the chairman as occasion requires.


The record of the proceedings and of every decision of the Tribunal shall be authenticated by the signature of the chairman and shall be kept by the secretary.


The chairman and members of the Tribunal, other than public officers in receipt of a salary, shall be paid out of public funds such sitting allowances or other remuneration as the Committee may, in consultation with the Treasury approve.


Subject to this section, the Tribunal may, with the approval of the Chief Justice, regulate its own procedures and the conduct of proceedings before it.

Functions of the Committee

The Committee shall advise on the matters and perform any functions it is required by this Act to perform and in addition shall—


with the assistance of experts where necessary, review and investigate the affairs of state corporations and make such recommendations to the President as it may deem necessary;


in consultation with the Attorney-General and the Treasury, advise the President on the establishment, reorganization or dissolution of state corporations;


where necessary, advise on the appointment, removal or transfer of officers and staff of state corporations, the secondment of public officers to state corporations and the terms and conditions of any appointment, removal, transfer or secondment;


examine any management or consultancy agreement made or proposed to be made by a state corporation with any other party or person and advise thereon;


examine proposals by state corporations to acquire interests in any business or to enter into joint ventures with other bodies or persons or to undertake new business or otherwise expand the scope of the activities and advise thereon.

Dissolution of state corporations

Where the Committee advises that a state corporation shall be dissolved then nothing in this Act shall be construed as derogating from the procedure by which the state corporation would be dissolved under the law by or under which it was established.

Offences and penalty

A state corporation which, or an officer thereof who, fails to render or submit or make available for inspection any record, book, account or information required by or pursuant to this Act, or which or who restricts the Auditor-General (Corporations) or the Inspector in the performance of his duties shall be guilty of an offence cognizable to the police and punishable by a fine not exceeding ten thousand shillings or imprisonment for a term not exceeding three years or both and section 23 of the Penal Code (Cap. 63) shall, where the offence is committed by state corporation, apply mutatis mutandis.


The President may make regulations generally for the better carrying into effect of the provisions of this Act and the powers conferred by this section may be assigned in accordance with section 18 of the Constitution.