KENYA Law and Practice Contributed by: Sammy Ndolo, Brian Muchiri, Nicholas Owino and Valere Nyaboke, Cliffe Dekker Hofmeyr
• at least one general partner with unlimited liability and responsibility for the management of the lim - ited partnership’s business; and • one or more limited partners whose liability is restricted to their initial contribution to the partner - ship. Limited liability partnerships (LLPs) LLPs combine features of general partnerships with limited liability benefits typically associated with com - panies. Upon registration, LLPs become a separate legal entity with perpetual succession. As such, an LLP: • is a legal entity separate from its members; • has unlimited capacity and can do anything that a legal person can do; and • its members have limited liability, hence they do not need to meet the LLP’s liabilities. 1.2 Corporate Governance Legislation and Regulation Several key sources that establish corporate govern - ance requirements for companies in Kenya have been outlined below. • The Companies Act sets out the primary legal framework governing the formation, operation and dissolution of companies, including aspects of corporate governance. • The Insolvency Act, Chapter 53 of the Laws of Kenya (“Insolvency Act”), provides regulations for dealing with financially distressed companies and influences how companies manage their finances. • The Partnership Act, Chapter 29 of the Laws of Kenya (“Partnership Act”) sets out the framework for the formation, management and operation of general partnerships and limited partnerships. • The Limited Liability Partnerships Act, Chapter 30 of the Laws of Kenya (“LLP Act”) specifically addresses the registration and management of LLPs. • Common law: Principles established through past court decisions (precedent) in England regarding companies can still be relevant even if not directly codified in Kenyan law. • Internal governance documents: A company’s articles of association or a partnership’s partner -
ship deed and, in the case of companies listed on the Nairobi Securities Exchange (“NSE”), its board charter, establish internal rules governing its opera - tions, including directors’ powers and shareholder meetings. • The Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 (the “CMA Governance Code”) is a set of guidelines issued by the Capital Markets Authority (“CMA”) that applies to publicly traded companies in Kenya and sets out various requirements aimed at ensuring fair treat - ment of shareholders, transparency and responsi - ble management. • The Code of Governance for State Corporations (Mwongozo) is a set of guidelines that lays a foundation for the management, governance and oversight of state corporations in Kenya. 1.3 Companies With Publicly Traded Shares Publicly traded companies in Kenya must comply with the CMA Governance Code, with some of its key requirements outlined below. Fair Treatment of Shareholders The CMA Governance Code mandates companies to treat all shareholders fairly, including minority and for - eign shareholders. This includes ensuring equal voting rights and access to information. Disclosure The CMA Governance Code follows an “Apply or Explain” principle in which listed companies are required to fully disclose any instances where they are not complying with the CMA Governance Code. While the CMA may consider satisfactory explanations for non-compliance, adherence to the mandatory disclo - sure provisions outlined in the Capital Markets (Pub - lic Offers, Listing and Disclosures) Regulations, 2023 (“POLD Regulations”) is essential. 1.4 Stock Exchange Requirements Developments The POLD Regulations introduced significant changes to listing requirements affecting corporate govern - ance in Kenya. These changes were further clarified by CMA Circular No. 06/2024 dated 13 June 2024 (“CMA Circular”).
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