With the introduction of the Business Laws (Amendment) Bill, 2019 (the Bill), businesses stand to win big as the Kenyan government moves to amend certain statutes with the aim of improving the ease of doing business in the country. The Bill, which was introduced in the National Assembly in November 2019 and is currently in its First Reading stage, proposes several changes which, if adopted, could reduce costs and time spent on certain transactions in Kenya.



12 March 20

We have put together a comprehensive review of the proposed changes by the Bill and its impact on the cost of doing business in Kenya.

a) Companies Act, 2015
The Bill proposes to amend the Companies Act, 2015 as follows:

  1. To eliminate the requirement of affixing a company seal in the execution of company documents, contracts and deeds. A document, contract or deed will be considered to be validly executed by a company if it is signed on behalf of the company by two authorised signatories or by a director of the company in the presence of a witness who attests the signature. This is a welcome amendment which reflects modern-day practice in developed jurisdictions.
  2. To abolish the use of bearer shares. Bearer shares are unregistered equity securities owned by the possessor of the physical share documents. Their use worldwide has dwindled because they incur increased costs and are convenient instruments to secure funding for terrorism and other criminal activities. The Companies Act, 2015 prohibits the issuance of bearer shares. However, bearer shares that had been issued under the previous law would, if the Bill is approved, be converted into registered shares within 9 months of the law coming into effect.
  3. To raise the applicable threshold for ‘squeezing in’ and ‘selling out’ of shares in a company to at least 90 percent of the shares of the company. The Companies Act, 2015 had previously been amended in 2019 to reduce the threshold from 90 percent to 50 percent which was a major blow to the protection of minority shareholders’ rights. This is a welcome amendment as it seeks to protect the rights of minority shareholders against majority shareholders who might want to compulsorily acquire the shares of the minority shareholders.

b) The Land Registration Act, 2012
The Bill proposes to amend the Land Registration Act as follows:

  1. To abolish the requirement to produce a land rent clearance certificate and a land rates clearance certificate before the Land Registrar can effect registration of an instrument of transfer of land. If the Bill passes, it will fall upon a purchaser to ensure that the vendor of the property has paid all the land rates and land rent in respect of the property as the Land Registrar will not demand proof of payment of land rates and land rent in order to register a transfer in respect of a property.
  2. To abolish the requirement to obtain any consent that may be required from the national government or county government in respect of leasehold properties. This will go a long way in reducing the time, cost and expenses incurred while obtaining the consents from the national government or county governments.
  3. To provide for the use of electronic signatures in the execution of documents processed under the Land Registration Act and gives the Registrar powers to maintain the Principal Land Registry in Nairobi and the Coast Registry in Mombasa in both physical and electronic forms.

c) The Insolvency Act, 2015
The Bill proposes to amend the Insolvency Act as follows:

  1. To entrench creditors’ protection by giving them the right to request for information from an insolvency practitioner in respect of a company that has been placed under administration. The insolvency practitioner is obliged to provide the information requested within 5 days or such other number of days agreed between the insolvency practitioner and the creditor.
  2. To provide for additional factors that a Court may consider in lifting a moratorium for a company under administration. The Bill provides that a Court shall take into consideration the perishability of a movable asset and whether or not the movable asset is being used to maintain the company as a going concern before lifting the moratorium on legal processes.

We will be keenly following as the Bill goes through the various stages of law-making in the National Assembly and keep you updated on further developments.

Should you have any questions regarding the information in this legal alert or any other employment matters, please do not hesitate to contact Sonal Tejpar or Rosa Nduati-Mutero.

The content of this alert is intended to be of general use only and should not be relied upon without seeking specific legal advice on any matter.