The amended provisions of the company Act and state its significant is as follows:

1. Incorporation of a private company under the Companies Act, 2015

Commencement date
The Companies Act 2015 was enacted on 11th September 2015. The Companies Act 2015 will
replace the Companies Act 1948. The commencement of the operative sections of the Companies
Act 2015 will be by notice in the Kenya Gazette and no notice in this regard had been published
on the date of this review.
A private company
The Companies Act 2015 like the Companies Act 1948 provides that a company is a private
company if: (i) it restricts the right of members to transfer shares, (ii) limits the number of
members to 50, and (iii) prohibits invitation to the public to subscribe for shares or debentures.
How to incorporate
The Companies Act 1948 provides that a person wishing to incorporate a company requires
completing and filing with the Registrar of Companies the memorandum and articles of
association together with at least four statutory forms containing details of the directors and
secretary, the registered offices, declaration by an advocate and the statement of nominal capital.
The information required at the time of incorporation will not materially change. However, there
appears to be an attempt in the Companies Act 2015 at making the process simpler and this new
Act provides that a person wishing to incorporate a company should lodge with the Registrar the
following:
(a) An application for registration containing the proposed company name, the registered office,
liability of members (whether limited by shares or guarantee), the nature of the company (if
private or public) and the name and address of the agent if an agent is used to make the
application.
(b) The application for registration may contain or be accompanied by a statement of capital and
initial shareholding and the memorandum of association and/or articles of association.

The form of application for registration has not been published, but it is likely that an investor
will only require completing the application for registration and filing the memorandum of
association in order for the company to be incorporated.
2. Registration of a foreign company in Kenya
Commencement date
The Companies Act 2015 was enacted on 11th September 2015 and will replace the Companies
Act 1948. The commencement of the operative sections of the Companies Act 2015 will be by
notice in the Kenya Gazette. As of the date of this review no notice in this regard had been
published and the Companies Act 1948 continues being the applicable law for the time being.
Establishment of a place of business or carrying on business
The Companies Act 1948 provides that a foreign company (a company incorporated outside
Kenya) shall within 30 days of establishing a place of business within Kenya apply for
registration in Kenya. Without being prescriptive and remaining equally ambiguous, the Act
provides that a foreign company is not deemed to have a place of business solely on account of
its doing business through an agent in Kenya at the place of business of the agent.
The Companies Act 2015 on the other hand provides that a foreign company shall not 'carry on
business in Kenya' unless it is registered or has applied to be registered in Kenya. In attempting
to explain what amounts to carrying on business in Kenya, the Companies Act 2015 complicates
matters by providing that carrying on business in Kenya includes but is not limited to: (a)
offering debentures in Kenya; (b) being a guarantor for debentures offered in Kenya.
It is difficult to understand how the 'offering' a debenture or 'being' a guarantor can amount to
carrying on business in Kenya and investors will need to be aware that a foreign company
engaged in some activity in Kenya may be compelled to register as a foreign company in Kenya.
Without examining what amounts to 'offering debentures in Kenya', it also seems that a foreign
company investor (not having a subsidiary or being registered in Kenya) will need to be cautious
when offering a debenture or acting as guarantor in Kenya since the foreign company that
conducts business in Kenya without having been registered or applied for the said registration
(and each officer who is in default) commits an offence and on conviction is each liable to a fine
not exceeding five million shillings.
How to register and what else is new
The registration of a foreign company in Kenya pursuant to the Companies Act 1948 has been a
fairly straightforward process. It has involved the filing the foreign company constitution
(memorandum and articles of association) together with statutory forms setting out the details of
the foreign company's directors, company secretary, registered office (in Kenya and abroad) and
the details of at least one person resident in Kenya authorized to accept service of process.

Some of which include:

(a) That at least 30% of the foreign company's shareholding must be held by Kenyan citizens by
birth;
(b) The yet to be published foreign companies regulations will prescribe, among other things, the
time within which an application for registration should be dealt with;
(c) The foreign company may specify an alternative name, other than its corporate name, under
which it proposes to carry on business in Kenya;
(d) A mechanism for the appointment of a liquidator of the foreign company in respect of its
property in Kenya;
(e) The protection of a natural person's usual residential address from disclosure;
(f) The suggestion that in addition to its foreign directors, a foreign company may have a local
board of directors with specified powers; and

3. Directors Statutory General Duties in Kenya

Introduction
A company under Kenyan law has its own legal personality independent of those who own or
manage it. As such, it can enter into legal relationships in the same way as individuals can.
However, a company, unlike an individual, must act through the agency of individuals. The
directors are the agents through which the company's business and affairs are managed.
The Companies Act 2015 defines a director as including any person occupying the position of a
director, whatever his title. There is therefore no distinction between executive (management)
and non-executive (supervisory) directors and all directors of a company have the same duties
and liabilities to the company.
A company's articles of association establish a company's board of directors and vests in the
board the power and authority to run the company on behalf of the shareholders. The duties and
liabilities of the directors to the Company have until now been governed by common law rules
and principles.
Directors' Statutory General Duties
The Companies Act 2015 provides that the general duties of directors contained in the Act 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.

The general duties of directors contained in the Companies Act 2015 are a replica of those found
in the English Companies Act 2006.
Other additional duties of directors such as those arising from tax, environmental and insolvency
laws are not addressed in this alert.
The following are the general duties of a director under the Companies Act 2015:
a) Duty to act within power and to use powers for the right purpose A director of a company
must act in accordance with the company's constitution and only exercise powers for the
purposes for which they are conferred.
b) Duty to promote the success of the company
A director must act in the way in which he considers, in good faith, would promote the success
of the company for the benefit of its members as a whole.
c) Duty to exercise independent judgment
A director must exercise independent judgment. A director does not infringe this duty if he acts
(i) in accordance with an agreement entered into by the company which restricts the future
exercise of its directors' discretion or (ii) in a way authorised by the company's constitution.
d) Duty to exercise reasonable care, skill and diligence In performing his duty, a director must
exercise the same care, skill and diligence that would be exercisable by a reasonably diligent
person with:
4. Offences and penalties under the Companies Act, 2015
Introduction
The Companies Act 2015 was enacted on 11 September 2015 and will replace the Companies
Act 1948. The commencement of the operative sections of the Companies Act 2015 will be by
notice in the Kenya Gazette. As of the date of this review, no notice in this regard had been
published and the Companies Act 1948 continues being the applicable law for the time being.
The Companies Act 2015 will introduce significant liabilities for non-compliance with the
provisions of the Act by a company and its directors. The average fine under the Companies Act
2015 is between Kenya shillings two hundred thousand and Kenya shillings one million. This
represents a significant change from the Companies Act 1948 in which the fines average between
Kenya shillings one hundred and Kenya shillings ten thousand.
For purposes of this alert, we only highlight some of the offences for which a company and its
directors may be liable.
Offences and penalties

A company and each officer of the company who is in default is liable upon conviction to the
following fines or imprisonment terms:
A. A fine not exceeding Kenya shillings two hundred thousand (KES 200,000) when a company:
i. fails to file its amended articles of association with the Registrar not later than 14 days after the
resolution containing the amendment is passed;
ii. does not file, within 14 days after the resolution or agreement is passed or made, the following
resolutions and agreements with the Registrar: (a) special resolution; (b) a resolution for
voluntary liquidation; (c) a resolution passed regarding transfer of securities; (d) a resolution
converting an old public company (although it is not clear what nature of company this is) into a
public company; (e) a resolution or agreement agreed to by all members or binding all members
generally or binding members of a particular class; or (f) a resolution relating to the company's
market or off-market purchase of its own shares; iii. does not comply with the Registrar's
direction to change its name where the Registrar is of the opinion that the name has been
registered on the basis of misleading information or where the name of the company gives an
indication of the nature of its activities that is so misleading as to be likely to cause harm to the
public;
iv. fails to notify the Registrar within 14 days after the appointment or resignation of a director or
a change in a director's particulars or residential address;
V. fails to keep available for inspection a copy of each director's service contract with a company
or its subsidiary;
vi. Fails to file with the Registrar a return of allotment of shares within one month after making
the allotment of shares;
vii. fails to file an annual return (or files one that does not comply with the prescribed
particulars) with the Registrar,
5. Meetings and resolutions by private companies in Kenya

REFERENCES
Ogola, J. J. (2015). Company law. Nairobi, Kenya: Focus Books.
Ogola, J. J. (2015). Company law. Nairobi, Kenya: Focus Books.
Hussain, A. (2015). A textbook of company law in Kenya. Nairobi: Heinemann
Educational Books.