https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8156

In re Gulf African Bank Ltd (Miscellaneous Application E648 of 2026) [2026] KEHC 8156 (KLR) (Commercial and Tax) (10 June 2026) (Ruling) Neutral citation: [2026] KEHC 8156 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Miscellaneous Application E648 of 2026 BK Njoroge, J June 10, 2026 IN THE MATTER OF AN APPLICATION FOR EXTENSION OF TIME WITHIN WHICH TO REGISTER A COMPANY REPLACEMENT CHARGE IN FAVOR OF GULF AFRICAN BANK LIMITED AGAINST KING STEEL KENYA LIMITED Ruling 1.This Ruling is in respect to the Applicant’s exparte Notice of Motion dated 9th June, 2026, Through the said application, the Applicant has moved this Court seeking the following reliefs:1.)That this Honourable Court be pleased to certify this application as urgent and the same be heard on priority basis.2.)That this Honourable Court be pleased to grant an order extending the time within which to register the Company Replacement Charge dated 16th April, 2026 created by King Steel Kenya Limited to secure loan facility from Gulf African Bank Limited which Replacement charge has not been lodged for registration against the Company in the office of the Registrar of companies within the prescribed 30-day period.3.)That the costs of this application be in the cause. 2.This Application was supported by the sworn affidavit of Madina Omar, an Advocate of the High Court of Kenya, dated the same day as the Application. Ms. Omar practices in the firm of M/S Daniel & Kenneth AdvocatesLLP, who have conduct of this matter on behalf of the Applicant. Issues for Determination 3.The Court has carefully considered the Motion, the statutory provisions cited, the Supporting Affidavit, and the annexures thereto. Upon such consideration, the Court is of the view that only one issue arises for determination:(a)Whether leave should be granted to the Applicant to register the Company Replacement Charge dated 16th April, 2026 created by King Steel Kenya Limited to secure loan facility from Gulf African Bank Limited at the Companies Registry out of time. Analysis 4.Pursuant to Section 884 of the Companies Act, the Registrar of Companies is mandated to maintain a register of charges, register such charges, issue certificates of registration thereof, and authenticate the same with the Registrar’s Official Seal. Under Section 885 of the Act, the statutory timeline for registration of a charge is thirty (30) days from the date of its creation. In the event of non-compliance, Section 888(1) of the Companies Act empowers any interested party or the company itself to apply to the Court for an extension of the prescribed period for registration. 5.Further, when considering an extension under Section 888, the Court examines whether the delay was accidental or reasonably explained. Whether it prejudiced creditors or members. Whether granting the extension is just and fair, and whether the omission is rectifiable. This requirement that such a charge must be registered with the Registrar of Companies within thirty (30) days from the date of its creation is statutory and not discretionary. It is evident that the parties have complied with all the necessary legal requirements in the creation of the charge, save for the registration. The reasons for the delay have sufficiently been explained and were beyond their control. 6.The Court has considered the reasons for delay as advanced by Counsel for the Applicant. The Applicant granted the Chargor by way of banking facility the sum of Kenya Shillings One Hundred Forty Million (Kshs 140,000,000/=) to be secured by, among other things, a Charge over Land Title Number NAIROBI/BLOCK 19/380 which Title is in the name of King Steel Limited. That King Steel Limited, being the Chargor created a Replacement Charge in favour of the Bank on 16th April, 2026 to secure the loan facility. This being a Company Charge, it was to be registered at the Office of the Registrar of Companies against the Company file within Thirty (30) days from the date of creation of the Charge. 7.Counsel averred that the Advocates for the Applicant were unable to register the Replacement Charge at the Companies Registry within the prescribed time due to delays in presenting the Replacement Charge for registration, which delays were not deliberate and were beyond the Applicant's control. The said delays were occasioned by the processing at the Lands Registry of the replacement of the Title issued from the Closed Register onto the Ardhi Sasa platform and the approval of the change of user from a single dwelling unit to multi-dwelling units. However, due to system delays experienced on the Ardhisasa platform, the Advocates were unable to complete registration of the Charge at the Companies Registry. This is because the thirty (30) days' period for registration had lapsed pursuant to Section 885 of the Companies Act. 8.That the Applicant wants to have the Charge registered in the Companies Registry to secure banking facilities already extended to the Borrower on the strength of the Charge which has not yet been registered at the Companies Registry within the prescribed time in law or at all. 9.Counsel averred that, while they were able to obtain duly registered security documents from the Lands Registry, they were unable to register the Charge at the Companies Registry as the statutory period for such registration had already lapsed during the period taken to assess, stamp, and register the Charge at the Lands Office. Pursuant to Section 885 of the Companies Act, No. 17 of 2015, the Company was required to register the Charge with the Registrar of Companies within thirty (30) days from the date of its creation. The delay in presenting the Charge for registration at the Companies Registry was occasioned by delays in the registration of the Charge, which delay was unintentional and beyond the control of both the Applicants and the Chargor. 10.The omission in the present case pertains solely to the failure to register the Charge at the Companies Registry within the statutory period prescribed under Section 885 of the Companies Act. Notwithstanding this procedural lapse, the Charge was duly executed, assessed for stamp duty, duly franked, and registered at the Lands Registry. The omission is therefore procedural in nature and, in the Court’s view, clearly rectifiable. While it is acknowledged that non-registration at the Companies Registry may affect the enforceability of the Charge as against third parties, the failure to comply with the prescribed timeline was neither wilful nor negligent. In the circumstances, the delay should not defeat an otherwise valid security instrument. This approach aligns with the provisions of Article 159(2)(d) of the Constitution. The Article enjoins Courts to administer justice without undue regard to procedural technicalities, and with the general principles of the Companies Act. This favours the promotion of substantive rights and commercial certainty. 11.There is no evidence on record to suggest that the delay in registration has occasioned any prejudice to the company’s creditors or members. On the contrary, the regularisation of the registration will enhance the protection of the lender’s interest and promote commercial transparency. The affidavit and annexures confirm that all substantive steps in the creation of the Charge, execution, stamping, and registration at the Lands Registry, were duly undertaken in a timely manner, save for the delays stated which led to delays and late filing at the Companies Registry. Accordingly, the Court is satisfied that the Applicant has provided a reasonable explanation for the delay. That the omission is capable of remedy, and that no prejudice has been occasioned to any party. The Court therefore finds it just and equitable to exercise its discretion under Section 888(1) of the Companies Act. In the result, the prayers sought in the Notice of Motion dated 9th June, 2026 are hereby granted as follow; Determination 12.The application dated 09th June, 2026 is allowed as follows;1.)That this Honourable Court HEREBY certifies this application as urgent and the same be heard on priority basis.2.)That this Honourable Court Hereby grants an order extending the time within which to register the Company Replacement Charge dated 16th April, 2026 created by King Steel Kenya Limited to secure loan facility from Gulf African Bank Limited which Replacement charge has not been lodged for registration against the Company in the office of the Registrar of companies within the prescribed 30-day period.3.)That the costs of this application be in the cause. 13.It is so ordered. 14.The file is HEREBY marked as closed. DATED, SIGNED AND DELIVERED AT MILIMANI THIS 10TH DAY OF JUNE, 2026.NJOROGE BENJAMIN K.JUDGE