KENYA Law and Practice Contributed by: Sammy Ndolo, Brian Muchiri, Nicholas Owino and Valere Nyaboke, Cliffe Dekker Hofmeyr
mal search at the Companies Registry, subject to the applicable fees, including the shareholders’ names, addresses and shareholding details. 4.2 Role of Shareholders Shareholders are not involved in the company’s day- to-day operations, as this is the board of directors’ function. Shareholders, however, have the power to appoint and remove directors from office. In addi - tion, certain decisions, such as loans by a company to its directors, may only be made with the approval of shareholders. 4.3 Shareholder Meetings Every company must hold an annual general meeting within a year. Failure to do so can result in a fine of up to KES100,000 (approximately USD775). All private or public companies must provide members with at least 21 days’ notice for annual general meet - ings. For other types of meetings, a 14-day notice period is required. However, a company’s articles of association may specify longer notice periods. Members may request that directors convene a gener - al meeting. In such a case, the directors must sched - ule the meeting within 21 days. The Companies Act permits hybrid or virtual meetings. Notices for such meetings must clearly outline how to join and participate. Additionally, companies must adhere to the provisions of their articles of association regarding the conduct of general meetings. 4.4 Shareholder Claims The Companies Act recognises the institution of derivative claims by shareholders on behalf of a com - pany. For purposes of derivative claims, a “member” includes a person who is not a member but to whom shares in the company have been transferred or trans - mitted by operation of the law. This means that an applicant need not appear in the company’s register of members or hold a share certificate; it is sufficient to show that they are beneficially entitled to any shares. The grounds that the court will consider to permit a derivative claim include negligence, default, breach of duty and breach of trust by a company director.
Courts in Kenya have held that permission to com - mence a derivative claim will be denied where the suit is not in the interest of or of benefit to, the company and where the company has authorised the proposed act. 4.5 Shareholders in Publicly Traded Companies Shareholders in publicly traded companies in Kenya are subject to various disclosure obligations, as fol - lows. Notification of Holdings Above Certain Thresholds Any person obtaining a “notifiable interest” (ie, 3% or more) in shares of a listed company or who ceases to be interested in such shares must notify the listed company of the acquisition or cessation of interest in the shares. The Licensing Regulations also require that listed companies report to the NSE on a monthly basis: • all persons who have acquired or cease to have a notifiable interest in its shares; • all directors holding 1% or more in the relevant share capital; and • cumulative holding of the relevant share capital by directors. Disclosure Obligations for Ultimate Beneficial Owners Subject to certain exceptions, companies incorporat - ed in Kenya are required to file a register of beneficial owners. A beneficial owner is a natural person who holds at least 10% of the shares or voting rights or has the power to change directorship or has a significant influence over the company. Shareholding Disclosures Listed companies must publish detailed information about their shareholding, including: • a quarterly disclosure to the NSE of every person who holds or acquires 3% or more of the listed company’s ordinary shares; • publication by a listed company in its annual report of (i) distribution of shareholders; and (ii) names of the ten largest shareholders and the number of
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