https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11836

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **COMMERCIAL & TAX DIVISION** **MISCELLANEOUS APPLICATION NO. E572 OF 2026** **IN THE MATTER OF BRITAM HOLDINGS PLC** **AND** **IN THE MATTER OF THE COMPANIES ACT (CHAPTER 486 OF THE LAWS OF KENYA)** **AND** **IN THE MATTER OF AN APPLICATION FOR CONFIRMATION OF REDUCTION OF THE SHARE PREMIUM OF BRITAM HOLDINGS PLC** **JUDGMENT** 1. The dispute before this Court pits a company's desire for financial agility against the rigid safeguards of the Companies Act. The battleground is a proposed reduction of share premium. The objective is to offset over five billion shillings in accumulated losses. While the corridors of this litigation are quiet and the motion unopposed, the Court's jurisdiction is firmly engaged. The Court is called upon to determine whether this internal financial realignment passes the strict statutory tests of transparency, creditor protection, and corporate equity **Background Facts** 2. The Applicant filed the Originating Motion dated 26th May, 2026 seeking the following orders: *1. THAT this Honourable Court be pleased to certify this Application as urgent and to direct that the same be heard ex parte in the first instance (spent).* *2. THAT this Honourable Court be pleased to confirm the reduction of the Applicant’s share premium pursuant to the Special Resolution passed on 21 May 2026 and to approve the accompanying Statement of Capital reflecting the capital structure of the Applicant following such reduction.* *3. THAT the costs of this Application be provided for.* 3. The Application was supported by the Affidavit of **Hilda Njeru. She** stated that on 21st May, 2026, the Applicant’s shareholders passed a Special Resolution approving the reduction of the Company’s share premium from Kshs. 13,237,451,000 to Kshs. 7,362,199,000 by cancelling Kshs. 5,875,252,000. The reduction is intended solely to offset the Applicant’s accumulated losses, which stood at Kshs.5,875,252,000 as at 31st December, 2025. It was submitted that this does not involve any reduction of unpaid share capital, return of capital, or distribution to shareholders. 4. The Applicant explained that the proposed reduction will not prejudice creditors, as the Company will remain able to meet its obligations as they fall due. Consequently, under **Section 408 of the Companies Act**, creditors have no statutory right to object, and **Section 409** does not apply. The Applicant therefore seeks the Court’s confirmation of the Special Resolution and approval of the updated Statement of Capital. It contends that the reduction is just, equitable, and in the best interests of the Company and its stakeholders. **Issues for determination** 5. The Court has carefully considered the Application, the annexures therewith, the written submissions as well as the oral highlights by Counsel for the Applicant. The Court frames a single issue for determination as follows: 1. *Whether the Application should be allowed as prayed.* **Analysis** 6. It was the Applicant's case that it has fully complied with **Sections 386(4), 408** and **410 of the Companies Act** and the applicable Disclosure Regulations. The evidence establishes that the reduction is a bona fide balance sheet restructuring undertaken solely to eliminate accumulated losses, involving no return of capital to shareholders, no reduction of liability for unpaid capital, and no diminution of assets or net worth, with the shareholding structure, issued share capital and shareholders' equity remaining unchanged. 7**. Section 386 (4)** provides as follows: ***(2) If, on issuing shares, a company has transferred an amount to its share premium account, it may use the amount to write off—*** ***(a) the expenses of the issue of those shares; and*** ***(b) any commission paid on the issue of those shares.*** ***(3) The company may use its share premium account to pay up new shares that are to be allotted to members as fully paid bonus shares.*** ***(4) Subject to subsections (2) and (3), the provisions of this Act relating to the reduction of a company's share capital apply as if the company's share premium account were part of its paid-up share capital.*** 8**. Section 408** provides as follows: ***Application to Court for confirming order*** ***(1) As soon as practicable a company has passed a resolution for reducing its share capital, it shall apply to the Court for an order confirming the reduction.*** ***(2) If the proposed reduction of capital involves either—*** ***(a) diminution of liability in respect of unpaid share capital; or*** ***(b) the payment to a shareholder of any paid-up share capital, section 409 (creditors entitled to object to reduction) applies unless the Court directs otherwise.*** ***(3) The Court may, if having regard to any special circumstances of the case it considers it appropriate to do so, direct that section 409 is not to apply in relation to a specified class or specified classes of creditors.*** ***(4) The Court may direct that section 409 is to apply in any other case.*** 9. **Section 410** states as follows: ***Order confirming reduction and powers of Court on making such order*** ***(1) The Court may make an order confirming the reduction of capital on such terms and conditions as it considers appropriate.*** ***(2) The Court may not confirm the reduction unless it is satisfied, in relation to each creditor of the company who is entitled to object to the reduction of capital that either—*** ***(a) the creditor's consent to the reduction has been obtained; or*** ***(b) the creditor's debt or claim has been discharged, has terminated or has been secured.*** ***(3) If the Court confirms the reduction, it may order the company to publish as the Court directs—*** ***(a) the reasons for reduction of capital, or such other information as the Court considers necessary in order to provide the public with full and detailed information about the reduction; and*** ***(b) if the Court considers it is in the public interest to do so, the causes that led to the reduction.*** ***(4) If, for any special reason, the Court considers it appropriate to do so, it may make an order directing the company, during a specified period, to add at the end of its name the words "and reduced".*** ***(5) If a company is ordered to add to its name the words "and reduced", those words form part of the name of the company until the end of the period specified in the Court's order.*** ***(6) In subsection (4), "specified period", in relation to an order of the Court, means a period specified by the Court beginning on the date of the order or on such later date as the Court specifies in the order.*** 10. The Applicant also added that on 2nd June 2026, the Court directed the Applicant to serve all its creditors, the **Capital Markets Authority** **(CMA)**, and the **Nairobi Securities** Exchange (NSE). The Applicant duly complied with those directions by serving all identified creditors, the CMA, and the NSE within the prescribed period. Despite proper service, neither any creditor nor the regulators objected to the proposed reduction of the Applicant's share premium. An affidavit of service was duly filed before this Court. 11. The Court notes that the Courts have dealt with similar applications such as ***In the Matter of Iso Health Limited [2020] KEHC 10334 (KLR)*** where it was held as follows; ***“When matter came up for further mention on 15th October 2020, Miss Akal, learned counsel for the applicant, informed the court that the application was still unopposed despite the fact that a notice had already been published in a newspaper of wide circulation. Counsel urged the court to grant the orders sought in the application.*** ***I have considered the instant application and perused the affidavit of service dated 27th August 2020 and I am satisfied that a notice of the application was duly published in a newspaper of wide circulation, to wit, the Daily Nation of 24th August 2020. I note that there has been no response or opposition to the application.*** ***Consequently, I allow the application and order that the Special Resolution passed by the shareholders of the applicant on 15th July 2020 for the reduction of the share premium account of the applicant be and is hereby approved/confirmed by this court.*** ***I make no orders as to costs.”*** 12. Further, **In re EABL International Limited [2018] KEHC 929 (KLR)** the Court allowed a similar application. 13. The Court confirms that the Applicant duly served all identified creditors, the CMA, and the NSE in compliance with the Court's directions. Despite such service, no objections have been raised. In the absence of any evidence of prejudice, and having fully complied with all statutory and regulatory requirements, there is no legal or factual basis for declining to confirm the proposed reduction. 14. In light of the above, the Court allows the application and confirms the reduction of the Applicant’s share premium pursuant to the Special Resolution passed on 21st May, 2026 and approves the accompanying Statement of Capital reflecting the capital structure of the Applicant. 15. As to costs, the same lie at the discretion of this Court and ordinarily follow the event. The Court notes that the application was not opposed. The fair order is that the Applicant shall bear its own costs **Determination** 16. The Applicant’s application by way of the Originating Motion dated 26th May, 2026 is allowed as follows: 1. *THAT this Honourable Court HEREBY confirms the reduction of the Applicant’s share premium pursuant to the Special Resolution passed on 21st May, 2026 and HEREBY approves the accompanying Statement of Capital reflecting the capital structure of the Applicant following such reduction.* 2. *That the Applicant shall bear its own costs* 17. It is so ordered. **DATED, SIGNED AND DELIVERED AT MILIMANI THIS 30TH DAY OF JULY, 2026** **NJOROGE BENJAMIN K.** **JUDGE** In the presence of: Miss Wahinya holding brief for Miss Ogula for the Applicant. Mr. John Paul - Court Assistant.