State Corporations Act

The President may, by order, establish a state corporation as a body corporate; such a state corporation has perpetual succession, can sue and be sued, and (subject to the Act) can hold and alienate movable and immovable property.

The President must assign ministerial responsibility for any state corporation and related matters to the Vice‑President and the several Cabinet Secretary.

State corporations have necessary powers to perform their functions; borrowing requires Cabinet Secretary consent and Treasury limits; corporations may employ staff and establish employee funds with specified approvals.

The President may, by notice in the Gazette, exempt a state corporation (except one established under section 3) from provisions of this Act, but such an exemption cannot apply to the listed sections.

Chairperson and members of a Board are entitled to be paid sitting allowances or other remuneration from the state corporation's funds; the Board may approve such remuneration within scales set by the Committee, and the Board may refund travelling and other expenses incurred by chairperson or members within those scales.

Every state corporation must have its financial year run from 1 July to 30 June of the next year.

Section 6 sets out the composition of state corporation boards, lists categories of members (Chairperson appointed by the President; the chief executive; Principal Secretaries; the Attorney-General or representative; and up to eleven other members appointed by the Cabinet Secretary), describes grounds on which membership may cease (resignation, absence, conviction with prescribed imprisonment or fine, incapacity, or conduct inconsistent with membership as determined by the Cabinet Secretary in consultation with the Committee), disqualifies certain former members from reappointment, and allows the Cabinet Secretary, in consultation with the Committee, to appoint alternate members who may attend and act in place of substantive members.

The President may give directions to a state corporation's Board, which the Board must implement; the President may require amendments to founding documents to conform with the Act and may remove and replace Board members or constitute a new Board if the Board fails to act in the national interest.

Rules for Board meetings: the Board must meet at least four times a year with no more than four months between meetings; Board decides meeting dates or the Chairperson (with the chief executive) may set them; meetings must be at the registered office unless the Committee gives prior written approval; 14 days' written notice is required unless three-quarters agree; quorum is two-thirds (with adjournment and deeming rules); Chairperson presides; decisions by majority with casting vote; members with interests must declare and retire and not vote; chief executive may require his dissent be recorded.

A state corporation may establish committees of Board members to deal with matters the Board specifies.

Every state corporation must prepare and, by the end of February each year, submit to the Cabinet Secretary and the Treasury for approval estimates of revenue and expenditure for the next financial year together with proposals to fund projects.

State corporations must not incur any expenditure not provided for in the annual estimates unless they have prior written approval from the Cabinet Secretary and the Treasury.

Section 13 sets conditions under which state corporations may deal with assets and empowers the Cabinet Secretary responsible for finance, in consultation with the Committee, to make rules for acquisition and disposal of assets; it also exempts procurements or disposals subject to the Public Procurement and Asset Disposal Act.

State corporations must keep proper books recording their property, undertakings, funds, activities, contracts, transactions and other business; the Cabinet Secretary responsible for finance may prescribe the form of such books.

The Board is responsible for the proper management of a state corporation and accountable for its moneys, financial business and management; the chief executive may be summoned by the Public Investments Committee to answer on behalf of the Board about Auditor-General reports.

State corporations must establish sinking funds and make contributions to reserve and stabilization funds for renewal of depreciating assets; the Cabinet Secretary may direct disposal of surplus moneys in writing and the Cabinet Secretary for finance may require surplus moneys to be paid into the Consolidated Fund when exigencies require.

State corporations must not grant loans, advances or arrange credit facilities for Board members or staff except under regulations made by the corporation and approved by the Treasury; if those regulations are absent, such loans may be granted under terms approved by the Committee.

Section 18 assigns the Inspector-General (Corporations) functions to advise the Government, report to the Cabinet Secretary and Auditor-General, inspect records and premises of state corporations, attend meetings when necessary, conduct special investigations if required by the Committee or Controller and Auditor-General, and appoint necessary public-service staff to assist.

The Inspector-General (Corporations) may disallow items of account contrary to law or lawful directions, surcharge responsible persons for disallowed expenditure, unpaid sums, losses or deficiencies, certify surcharge amounts, and must furnish a person surcharged with a prescribed certificate as soon as practicable after certifying the surcharge. A person is not freed from liability to surcharge merely because they acted pursuant to a board resolution that was contrary to law.

The Inspector-General (Corporations) must, on application by an aggrieved person, furnish that person with written reasons for a disallowance or surcharge made under section 19 within fourteen days of the application.

Any person aggrieved by a disallowance or surcharge may appeal to the State Corporations Appeal Tribunal within thirty days by written memorandum; the Tribunal has power on appeal to confirm, vary or quash the Inspector-General's decision and to remit the case with directions.

Establishes the State Corporations Appeal Tribunal, its membership and appointments, provides that the Cabinet Secretary for finance must fund it, grants procedural powers (including summoning and regulating procedures), permits the secretary to administer oaths, and creates an offence for failing to attend a summons with a fine or imprisonment.

Certain persons may appeal Tribunal decisions to the High Court within thirty days; the High Court may confirm, vary or annul those decisions; civil-appeal procedures apply to such appeals; the High Court's decision under this section is final.

A person must pay any sum certified by the Inspector-General (Corporations) to be due to the state corporation within 30 days, or within 14 days after an appeal is disallowed/abandoned/failed; the Inspector-General may pursue unpaid sums in court, and on production of the Inspector-General's certificate the Court must give a decree which has effect under the Civil Procedure Act.

State corporations that are the subject of investigation must reimburse or bear the Inspector-General (Corporations)'s legal expenses in specified circumstances.

Section 26 establishes the State Corporations Advisory Committee, lists its membership, allows the Committee to co-opt persons, requires the President to appoint a public officer as secretary, requires the Committee to determine its procedure subject to the President's directions, and provides that members and the secretary shall be paid out of public funds as approved by the President.

The Committee must, with assistance of experts where necessary, review and investigate the affairs of state corporations and make recommendations to the President.

If the Committee advises that a state corporation is to be dissolved, nothing in this Act overrides the dissolution procedure set out in the law under which that corporation was established.

State corporations and their officers must render, submit, or make available for inspection records, books, accounts or information required under the Act; failing to do so is an offence punishable by a fine up to ten thousand shillings or up to three years' imprisonment or both.

The President may make regulations to better carry the provisions of this Act into effect.