The Statute Law (Miscellaneous Amendment) Act 2019 came into force on 23 July 2019. It has made a number of amendments to several laws.
We set out below the amendments affecting the Companies Act, 2015.
The Companies Act, 2015
- Consent of all members needed to add a new member in a private company – Section 9(a)(iv)
The Companies Act now requires private companies to have a requirement in their Articles of Association that no new member will be added without the consent of all the existing members.
The essence of this amendment is that express consents or letters of no objection will need to be obtained from all existing members of a company prior to the sale of shares of an existing member to a non-shareholder, even where pre-emption provisions on sale of shares have not been included in a private company's Articles of Association.
- Register of Beneficial Ownership – Section 93A
Following the amendments to the Companies Act in 2017 to include express provisions requiring companies to keep information relating to beneficial ownership of shares, a new Section 93A has now been included in the Act specifically:
- requiring all companies to keep a register of beneficial owners, which shall include all information prescribed in regulations relating to beneficial ownership; and
- providing that a company shall lodge its register of beneficial owners with the Registrar of Companies within 30 days of preparation (and, in the event of any amendment, within 14 days of such amendment), failing which an offence shall have been committed which carries a fine of KES 500,000 on conviction.
The draft Companies (Beneficial Ownership Information) Regulations are currently under review following their issuance by the State Law Office. We shall update you once the said Regulations are legislated.
- All companies except single member companies now required to hold annual general meetings – Section 275A
Following the entry into force of the Companies Act, 2015, private companies could opt not to hold annual general meetings, as no express provisions requiring them to do so were included in the Act.
This position has now been reversed and all companies, except single member companies, are now required to hold annual general meetings, failing which an offence shall have been committed which carries a fine of KES 100,000 on conviction.
- Directors to exercise power to allot only by authorisation through a resolution of members – Section 329
The option for a company to authorise its directors to exercise the company's power to allot shares by providing as such in the company's Articles of Association has been deleted.
The authorisation can now only be obtained by a resolution of the members of the company, meaning that specific authorisation of the members will need to be obtained for any allotment of shares.
- Threshold to compulsorily buy out non-assenting shareholders in a takeover bid has reduced to 50% – Sections 611 and 615
The offeror in a takeover bid now has the right to compulsorily acquire the shares of any shareholder who has not assented to a takeover offer, if it has acquired, or contracted to acquire, not less than 50% in value of the shares to which the takeover relates and not less than 50% in voting rights in the shares to which the offer relates.
Previously the threshold stood at 90% and the reduction to 50% will have a key impact on any takeover bids in Kenya.
- Employee threshold for small companies regime – Section 624
The employee threshold for a company to qualify under a small company regime has been reduced from not more than 50 employees to not more than 25 employees.
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