KENYA Law and Practice Contributed by: Sammy Ndolo, Brian Muchiri, Nicholas Owino and Valere Nyaboke, Cliffe Dekker Hofmeyr
Kieti Law LLP Merchant Square, 3rd floor, Block D Riverside Drive PO Box 22602-00505 Nairobi Kenya Tel: +25 471 056 0114 Email: cakenya@cdhlegal.com Web: www.cliffedekkerhofmeyr.com/en/kieti-law/
1. Corporate Governance Requirements 1.1 Corporate Forms and Governance Requirements Kenyan law provides diverse legal structures to accommodate various specific needs. Companies The most common form of corporate organisation is a company. The Companies Act, Chapter 486 of the Laws of Kenya (“Companies Act”) provides for the A company is 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. A company limited by shares can take one of two forms: • a private limited company – companies whose articles restrict a member’s right to transfer shares, limit membership to 50, prohibit public invitations to subscribe for shares or debentures of the com - pany and require all members to consent to add a new member; and • public limited company – companies whose articles allow their members the right to transfer their shares in the company and do not prohibit initiations to the public to subscribe for shares or debentures of the company. following types of companies: Companies limited by shares
Companies limited by guarantee A company is limited by a guarantee if its articles limit its members’ liability to the amount they undertake to contribute to the company’s assets in the event of its liquidation and its certificate of incorporation states that it is limited by guarantee. Unlimited companies A company is unlimited if there is no limit on the liabil - ity of its members and its certificate of incorporation states that the liability of its members is unlimited. Partnerships Kenya also recognises various partnership structures. These are set out below. General partnerships A partnership is a relationship between persons car - rying on a business in common and seeking profit. This traditional model entails unlimited liability for all partners, who share full responsibility for the partner - ship’s operations. They can: • sue and be sued in their own name; • enter into contracts and own property for business purposes; and • ensure continuity despite partner changes, subject to the partnership agreement. Limited partnerships (LP) In Kenya, an LP is a form of partnership that involves:
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