KENYA Law and Practice Contributed by: Sammy Ndolo, Brian Muchiri, Damaris Muia and Nicole Gacheche, Kieti Law LLP
1. Introductory 1.1 Forms of Corporate/Business Organisations Kenyan law provides diverse legal structures to accommodate various specific needs. Companies The most common form of corporate organisa - tion is a company. The Companies Act, Chapter 486 of the Laws of Kenya ( “Companies Act” ) provides for the following types of companies: Companies limited by shares 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. Private limited companies 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 company and require all members to consent to add a new member. Public limited companies 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 com - pany. Companies limited by guarantee A guarantee limits a company if its articles limit its members’ liability to the amount they under - take to contribute to the company’s assets in the event of its liquidation, and its certificate of incorporation states that it is limited by guar - antee.
Unlimited companies A company is unlimited if there is no limit on the liability of its members, and its certificate of incorporation states that the liability of its mem - bers is unlimited. Partnerships Kenya also recognises various partnership structures. These are set out below. General partnerships A partnership is a relationship between persons carrying on a business in common and seeking profit. This traditional model entails unlimited liability for all partners, who share full responsi - bility for the partnership’s operations. They can: • sue and be sued in their own name; • enter contracts and own property for busi - ness purposes; and • ensure continuity despite partner changes, subject to the partnership agreement. Limited partnerships A form of partnership recognised as a limited partnership involves: • at least one general partner with unlimited liability and responsibility for the management of the limited partnership’s business; and • one or more limited partners whose liability is restricted to their initial contribution to the partnership. Limited liability partnerships (LLPs) LLPs combine features of general partnerships with limited liability benefits typically associ - ated with companies. Upon registration, LLPs become a separate legal entity with perpetual succession. As such, an LLP: • is a legal entity separate from its members;
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