KENYA Law and Practice Contributed by: Sammy Ndolo, Brian Muchiri, Nicholas Owino and Valere Nyaboke, Cliffe Dekker Hofmeyr
2.3 Decision-Making Processes The board of directors and the shareholders make the decisions through the following processes: Directors The board makes decisions through formal resolu - tions, typically reached during board meetings. The company’s articles of association outline the spe - cific procedures, quorum requirements (the number of members needed to be present), meeting notice periods and voting requirements for passing resolu - tions. Generally, a simple majority vote suffices. Writ - ten resolutions can also be used to make decisions without a physical meeting. Shareholders Shareholders make decisions through shareholder resolutions. These resolutions can be passed either by a vote at a formal shareholders’ meeting or as a written resolution without a meeting. Some exceptions exist, such as the early removal of a director or auditor, which requires a meeting and cannot be done through a written resolution. The type of resolution needed ordinary (simple majority) or special (75% majority), depends on the specific decision and is dictated by both the Companies Act and the company’s articles of association. Private companies must have at least one natural director, although their governing documents may establish a higher or lower limit. Public companies, on the other hand, require at least two directors, one of whom must be a natural person. As with private companies, public companies retain the flexibility to set higher minimum or maximum num - bers of directors in their governing documents. Leadership In most cases, the board elects a chairperson from among its members to lead and manage board meet - ings, unless the company’s articles of association or a shareholders’ agreement specify otherwise. 3. Directors and Officers 3.1 Board Structure Number of Directors
Registrar of Companies and file the required docu - ments, such as annual returns and financial state - ments. Shareholders Shareholders are the owners of shares in a company. Their ownership translates into specific rights and influence over the company’s direction. Shareholders exercise their power through voting rights, allowing them to elect board members and approve significant changes, including amendments to the company’s articles of association. Contact Person Private companies or companies limited by guarantee that do not meet the threshold for a company secre - tary and do not have a resident director in Kenya must appoint a contact person. The contact person’s primary function is to maintain critical company records, including those related to directorships, shareholding, beneficial ownership and any other information required by law. Notably, the contact must be a natural person with a permanent Kenyan residence. 2.2 Types of Decisions Directors The board of directors is the primary decision-making body for the company. It is entrusted with oversee - ing day-to-day operations and setting the company’s strategic direction. The articles of association will typically provide that the company’s business is to be managed by the directors, who are empowered to exercise all the company’s powers. Shareholders Certain fundamental decisions are explicitly reserved for the shareholders and require a formal resolution passed at a duly constituted meeting. These decisions typically involve significant changes to the company’s core structure or capital, such as amendments to the articles of association and alterations to the share capital. The company’s articles of association may, however, allow for the delegation of certain reserved decisions to the board of directors.
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