Companies Act

Companies must keep a register of members and lodge copies with the Registrar (within 30 days of preparation) and lodge amendments (within 14 days); failure attracts fines up to 500,000 shillings and continuing defaults attract daily fines up to 50,000 shillings.

Companies must keep a register of beneficial owners, enter prescribed information, lodge amendments with the Registrar within set timeframes, retain records for ten years, and face penalties and fines for non‑compliance.

Companies must keep a register of members at their registered office; copies may be kept at another company office or at another person's office, or lodged with the Registrar. Failure to comply is an offence with a fine not exceeding five hundred thousand shillings for the company and each officer in default.

Companies with more than fifty members must keep an index of members and, unless the register itself serves as an index, must keep and lodge the index at the registered office and with the Registrar; they must update the index within 14 days of register changes and lodge a copy within 28 days of establishing it. Failure by the company or an officer in default is an offence with fines (up to 500,000 shillings, and 50,000 shillings per day for continued failure).

Members may inspect the company's register of members without charge; other persons may inspect it on payment of any prescribed fee. A public company must, on request and on receipt of any prescribed fee, provide a copy of the register or part specified.

If a company applies to the Court regarding inspection or a copy of the register of members, it must notify the person who made the request and that person is entitled to be heard; the company may either comply with the request or decline it by giving sufficient reasons in writing or apply to the Court.

If, after conviction under subsection (1), a company or any of its officers continues to refuse inspection or to fail to provide the required copy, the company and each defaulting officer commit a further offence each day and on conviction are liable to a fine not exceeding seventy-five thousand shillings for each such offence.

It is an offence for a person to make a request under section 96 containing a statement they know or suspect to be false or misleading in a material respect; associated acts or failures that result in disclosure to another person are covered; conviction can lead to a fine of up to five hundred thousand shillings or up to two years' imprisonment, or both.

Where the articles allow a member to nominate another person, that nominated person can exercise or enjoy specified member rights and, for acts required by the Act, those acts are to be done by or in relation to the nominated person; acts authorised may instead be done by or in relation to the nominated person.

Members of traded companies who hold shares for others may nominate a person to receive certain information rights, including company communications, annual reports, and hard-copy documents; a company may decline to act on some nominations.

If a nominated person notifies in writing they want hard copy documents and provides an address, the company must provide hard copy versions when given notice under subsection (4) or (5); if no notification or address is provided the nominated person is taken to have agreed to receive documents via a website.

A nominated person may have rights under an agreement with the nominating member to be appointed (or to have someone else appointed) as a proxy, or, if they lack or decline that right, to give the member instructions on how to exercise voting rights.

A person nominated under section 115 is entitled to enjoy the rights conferred by that nomination and those rights are enforceable against the company as if they were rights conferred by the company’s articles.

Nominations under section 115 can be terminated at the request of the member or the nominated person; nominations are suspended if there are more nominated persons than shares, and the company may ask a nominated person to confirm information rights — lack of response within 28 days causes the nomination to cease.

Members who exercise some or part of rights attached to shares must inform the company about the extent or manner of exercise; the company may assume members exercise all rights in the same way when members do not inform otherwise.

Section 121 sets out requirements for members’ requests where shares are held on behalf of others.

Title: "Section 213. Interpretation: Part X".

A person subject to a disqualification order must not, for the period specified in the order, act as a director, secretary, liquidator (or similar officer), supervisor of an approved voluntary arrangement, or be involved in promoting, forming or managing a company.

When a person is convicted of an offence relating to a company's promotion, formation, management, liquidation or administration, the court may make a disqualification order; if made by a magistrate's court the disqualification is five years, otherwise fifteen years; "court" includes a magistrate's court; the section applies beyond offences under this Act.

Disqualification may be imposed for fraud or breach of duty committed while a company is in liquidation or under administration; the maximum disqualification period is fifteen years.

The convicting court may make a disqualification order against a person convicted of offences under this section if, within the five years ending on the conviction date, the person has at least three such convictions; the maximum disqualification period is five years.

The court must disqualify persons who are or have been directors or secretaries of companies that became insolvent when their conduct makes them unfit to manage a company.

Office holders must report and provide requested information and records to the Attorney-General; the Attorney-General and Official Receiver may apply to court or accept undertakings; there is a two-year limit for making certain applications and a fine of up to two hundred thousand shillings for failure to comply.

Section 220. Disqualification undertakings

After an investigation report, the Attorney-General may apply to the High Court for a disqualification order against a current or former director or secretary; the court may make an order if satisfied the person's conduct makes them unfit to manage a company; the maximum disqualification period is fifteen years; the Attorney-General may accept a disqualification undertaking instead of applying for an order if it is in the public interest.

On the hearing of an application under subsection (1), the Attorney-General must appear, draw the Court's attention to relevant matters, and may personally give evidence or call witnesses.

An undischarged bankrupt must not act as a director or secretary of a company or participate in its promotion, formation or management; doing so is an offence punishable by a fine up to five hundred thousand shillings or imprisonment up to two years, or both.

Persons who act in the management of a company while disqualified, or who act (or are willing to act) on instructions from a disqualified person or undischarged bankrupt without the Court's leave, are personally liable for the company's relevant debts and are jointly and severally liable with the company.

A person may apply to the High Court for a disqualification order only if they have given the person against whom the order is sought written notice of intention to apply.

Specifies which court an application for leave under sections 214(1) or 222(1) must be made to depending on whether the person is subject to certain disqualification orders or undertakings, and requires the Attorney-General to appear and may give evidence or call witnesses.

The Registrar must keep a public register of disqualification orders and undertakings; courts' prescribed officers and the Attorney-General must lodge documents with the Registrar, and the Registrar must delete cancelled entries and keep the register open for public inspection (fee may apply).

It is an offence for a person subject to a disqualification order or undertaking to contravene it; on conviction they are liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding five years, or to both.

A person disqualified under this Part may apply to the Court for permission to act despite the disqualification; the Attorney-General is entitled to appear, be represented, give evidence or call witnesses at the hearing of such an application.

Regulations may require that a notice lodged under certain sections about a person subject to disqualification be accompanied by an additional statement; that additional statement must confirm the person has obtained a court's permission (under regulations for section 229) to act as a director or secretary.

A statement lodged with the Registrar in accordance with regulations made for the purpose of section 230 is to be treated as a record relating to a company for the purposes of the Register.

Section title: "Offence relating to statement"

Persons who are subject to foreign restrictions may be disqualified, required to get permission, restricted, or prohibited from acting in connection with the affairs of a company; the section also defines "company" and "director" for companies formed outside Kenya.

Persons who are subject to foreign restrictions are disqualified from being a director or secretary of a Kenyan company or from being involved in the promotion, formation or management of a Kenyan company; they stop being disqualified when they cease to be subject to foreign restrictions.

Directors, secretaries or other persons involved in the management who are subject to foreign restrictions are personally liable for company debts and other liabilities incurred while subject to those restrictions.

The Registrar must establish and maintain a register of foreign restrictions and keep it open for public inspection (fees may apply); the Registrar must enter particulars when aware and cancel entries when restrictions cease.

Statements made in compliance with requirements under this Part or the Fourth Schedule are admissible in evidence against the person making or concurring in the statement; but the prosecution may not adduce evidence relating to such a statement or ask questions about it unless the person has adduced evidence or asked such a question in the proceedings.

A derivative claim may be brought by a member in respect of causes of action involving negligence, default, breach of duty or breach of trust by a director; such a claim may be brought against the director or another person.

Members who bring a derivative claim must apply to the Court for permission to continue it; the Court may dismiss the application, make consequential orders, give directions or adjourn to obtain evidence, and may (or has power to) grant permission on terms, refuse permission and dismiss, or adjourn and give directions.

A member may apply to the Court for permission to continue a company's claim as a derivative claim where (i) the company has brought a claim and (ii) the cause of action could be pursued as a derivative claim, on the ground in subsection (2).

Section 241(3) requires the Court to give particular regard to evidence of the views of company members who have no personal interest when deciding whether to allow a derivative claim to continue.

Another member of the company may apply to the High Court for permission to continue a derivative claim; the Court may dismiss the application, make consequential orders, give directions, adjourn, grant or refuse permission, or adjourn and give directions.

A private company must have a secretary only if its paid-up capital is five million shillings or more.

Private companies with paid-up capital under five million shillings or companies limited by guarantee may appoint a company secretary; companies must lodge notices about contact persons and keep and make available certain records; failures attract fines.

Every public company must have at least one secretary.

The Registrar may direct a public company to appoint a secretary; the company must comply within a period (not less than one month and not more than three months) and officers and the company face fines for non-compliance.

Public company secretaries must either have the requisite knowledge and experience to discharge secretary functions or hold a practising certificate; a director of a public company who fails to comply with subsection (1) commits an offence and on conviction is liable to a fine not exceeding two hundred thousand shillings.

Discharge of functions if office vacant or secretary unable to act

A public company must keep a register of its secretaries; failure by the company or officers to comply is an offence punishable by fines.

Public companies must give notice of appointment (or changes) of secretaries and ensure an appointed person gives written consent; failure is an offence with fines.

Natural-person secretaries must have their name (and any former name) and their address registered.

Corporate secretaries and firms must register particular details: the company or firm name; the registered or principal office; the legal form and governing law; and, if incorporated, the register where recorded and its registration number. If all partners in a firm are joint secretaries, it is sufficient to state the particulars as if the firm were a legal person and had been appointed secretary. Regulations may provide for adding or removing particulars in a public company's register of secretaries.

It is an offence for a person who knowingly or recklessly authorises or permits misleading, false or deceptive particulars to be included in a register of secretaries; on conviction they face up to two years' imprisonment, a fine of up to one million shillings, or both.

If a public company fails to comply with a requirement of section 250 or 251, the company and each officer in default commit an offence and are liable to a fine; continued failure after conviction attracts a further daily offence and fine.

A requirement that something be done by both a director and the company secretary is not fulfilled if the same person acts in both roles.

A resolution of the members or of a class of members of a public company may be passed only at a meeting of the members.

An ordinary resolution of members (or a class of members) is one passed by a simple majority; written resolutions, poll results and proxy votes are defined by reference to members representing a simple majority of voting rights, and the company may provide that matters done by ordinary resolution may be done by special resolution.

A special resolution is one passed by at least seventy-five percent of the members (or of a class of members).

Members (or their duly appointed proxies) have voting entitlements: usually one vote per share (or per 100 shillings of stock) if the company has share capital, or one vote each if it does not; proxies and in-person attendees have votes; the section is subject to the company’s articles; if votes are equal, members must refer to the Memorandum and Articles of Association or Shareholders' Agreement.

Provisions in the articles that fix the number of votes a proxy has on a show of hands are void, and a proxy is entitled to the same number of votes on a show of hands as the appointing member would have if present.

When shares are held jointly, the company may only count the vote of the senior holder who votes and any proxies they have authorised.

Section 261: Effect of provision in company’s articles as to admissibility of votes

Directors or members of a private company may propose a written resolution; a written resolution is one proposed and passed by the company in accordance with this Division.

Members eligible to vote on a written resolution are those who would have been entitled to vote on the circulation date; if entitlement changes that day, those entitled when the first copy was sent or delivered are eligible.

The circulation date for a written resolution is the date when copies are sent or delivered to members; if copies reach members on different days, the circulation date is the first of those days.

Directors proposing a written resolution must circulate copies to all eligible members (hard copy, electronic, or website) as practicable; alternatively deliver copies in turn if possible without undue delay; failure to comply is an offence with fines.

Members of a private company may require the company to circulate a written resolution and (if requested by sufficient members) a statement of up to one thousand words; the company must circulate them as soon as practicable once requests are received from members holding at least the "requisite percentage" (five per cent unless the articles specify a lower figure).

Companies must send or deliver requested copies of written resolutions (including the resolution and any accompanying statement) to eligible members, normally within 21 days; failure to comply is an offence with a fine up to five hundred thousand shillings.

Members who requested the circulation of a resolution must pay the cost of circulating it unless the company otherwise resolves.

If the Court is satisfied that rights under section 266 and the section are being abused, a company need not circulate a members' statement under section 268; the Court may also order the members who requested circulation to pay the company's costs of the application, even if they are not parties.

A member's agreement to a written resolution cannot be revoked after it has been signified.

The deadline for agreeing to a written resolution is the deadline in the company's articles, or if none is specified, the expiry of twenty eight days from and including the circulation date.

If a company has given an electronic address in a document containing (or enclosed with or attached to) a proposed written resolution, any document or information relating to that resolution may be validly sent by electronic means to that address, subject to any conditions or limitations specified in the document.

Publication of written resolution on website.

Section 274. Relationship between this Division and provisions of company'sarticles

Text fragment referring to resolutions at general meetings and a requirement that notice in writing of the meeting and of the resolution is given.

Every company must convene a general meeting once a year; single-member companies are exempt; the Registrar may extend the period; failure is an offence liable to a fine not exceeding one hundred thousand shillings.

Directors of a company may convene a general meeting of the company.

Members of a company may require the directors to convene a general meeting.

Directors must convene a members' requested general meeting within 21 days of the request, hold the meeting within 28 days of the notice convening it, and include a proposed resolution in the meeting notice if the request includes one.

If directors fail to convene a general meeting after being required to do so, the requesting members (or those representing over half the voting rights) may convene the meeting; members must include proposed resolution text in the notice, ensure the meeting is within three months, and convene it as nearly as practicable in the directors' manner; the company must reimburse reasonable expenses and deduct those from defaulting directors' remuneration.

The Court has the power to order a company's general meeting to be convened and may give directions related to such meetings, including treating one member present as a quorum.

Private companies must give at least 21 days' written notice to members when convening a general meeting (other than an adjourned meeting); annual general meetings require at least 21 days' notice and other meetings at least 14 days. Members may agree to shorter notice; the shorter notice is valid only if agreed by the required majority.

Defines "hard copy form" as a document or information sent, supplied or delivered in a paper copy or similar form capable of being read.

A company that gives notice of a general meeting by website must comply with this section; the company must ensure the notice is available on the website from the date of the notification until the meeting concludes.

Members and directors (including certain former directors) of a company are entitled to receive notice of general meetings; member includes persons entitled by death or bankruptcy if the company has been notified.

Notices of general meetings must state the time and date of the meeting.

A company and any officer in default commit an offence for failing to comply with specified sections and, on conviction, each is liable to a fine (up to 500,000 shillings) and, if non-compliance continues after conviction, further daily fines (up to 50,000 shillings per day).

The company must, if practicable, give its members written notice of such resolutions; the company may give that notice by newspaper advertisement or other methods allowed by its articles.

An accidental failure to give written notice to one or more persons does not prevent notice of a meeting or resolution being treated as duly given for that meeting or resolution.

Members have rights to require circulation of statements and, in specified cases, have a right to vote at the meeting to which the requests relate.

Companies must circulate members’ statements in the same manner and at the same time (or as soon as reasonably practicable after) as the written notice of the meeting.

Members who requested circulating statements must pay the company's expenses for circulating them unless the company resolves otherwise; the company is required to comply with the circulation requirement only if a reasonably sufficient deposit is made not later than seven days before the meeting unless it has previously resolved not to circulate statements.

For a company limited by shares or guarantee that has only one member, a single qualifying person present at a meeting counts as a quorum.

Members present at a company's general meeting may, by ordinary resolution, elect one of the members to preside at the meeting; this is subject to any company articles that specify who may or may not chair or preside.

The person presiding at a general meeting may declare the result of voting on a show of hands.

Members of a company are entitled to demand a poll at a general meeting in specified circumstances.

A member entitled to two or more votes at a general meeting may choose not to use all their votes or may cast them differently.

A body corporate may, by resolution of its directors or governing body, authorise one or more persons to represent it at a company meeting; if only one is authorised that person may exercise the body's powers, and if two or more are authorised any one of them may do so; where representatives act in the same way the power is taken to be exercised, otherwise it is not.

A member of a company is entitled to appoint another person as their proxy to attend, speak and vote at company meetings; members with share capital may appoint more than one proxy if each proxy represents different shares.

Section requires the notice of a general meeting to state members' proxy appointment rights; failure to comply does not invalidate the meeting; non-compliance by a company or officers is an offence punishable by a fine up to five hundred thousand shillings.

If a company pays for invitations for members to appoint specified proxies for a meeting, the company must issue those invitations to all members entitled to vote; if it fails to do so the company and any officer in default commit an offence and on conviction are liable to a fine not exceeding five hundred thousand shillings.

Notice of appointment of a proxy must be given to the company.

A company may elect a proxy, by resolution at the meeting, to preside at a general meeting; this is subject to any article provision about who may or may not be chairperson.

Appointment of a proxy to vote authorises the proxy to demand, or join in demanding, a poll on that matter.

A member of a company may terminate a proxy appointment by giving notice in writing.

Articles may grant broader rights to members and proxies.

A resolution passed at an adjourned general meeting is treated as passed on the actual date it was passed and cannot be treated as having been passed on an earlier date.

If a company has given an electronic address in the notice convening a general meeting, the company may send documents or information relating to the meeting, and documents relating to proxies, by electronic means to that address subject to any conditions or limitations specified in the notice.

Division 3 applies (with necessary modifications) to meetings of holders of a class of shares, subject to the listed exceptions and specific quorum rules.

Division 3 applies, with necessary modifications, to meetings of a class of members of a company with no share capital, subject to specified exclusions; specific quorum rules apply; any member present may demand a poll; amendments to articles varying class rights count as variations.

Every public company must hold an annual general meeting within six months after its accounting reference date each year.

Public companies must state in the written notice convening an annual general meeting that the meeting is an annual general meeting.

Members of a public company may require the company to circulate to entitled members a notice of a resolution for the next annual general meeting; failure to comply with subsection (3) makes the company and defaulting officers commit an offence punishable on conviction by a fine not exceeding five hundred thousand shillings.

Public companies must circulate members’ resolutions for annual general meetings as provided in section 313(1); failure by the company or any officer in default is an offence punishable by a fine not exceeding five hundred thousand shillings.

Members who requested circulation of a resolution are exempt from paying company expenses if sufficient requests arrive before the end of the preceding financial year; otherwise, unless the company resolves otherwise, those members must pay the company's expenses and must deposit an amount reasonably sufficient to meet those expenses six weeks before the meeting or, if later, when the written notice of the meeting is given.

Quoted companies must publish poll results on their website, including meeting date, resolution text or subject, and vote counts for and against; failure is an offence punishable by a fine up to five hundred thousand shillings.

Requires a quoted company to make meeting-related information available on a website, not condition access on payment or other requirements, keep it available for at least two years, and creates offences with fines for non‑compliance.

Companies must keep records of resolutions, meeting minutes and takeover-related details for at least ten years; failure by the company or defaulting officers is an offence punishable by fines.

Records kept under section 317 and records or minutes signed as described in this section are evidence of resolutions and of meeting proceedings; written-resolution formalities for private companies are presumed complied with unless the contrary is proved; meetings, proceedings and appointments at meetings are presumed valid as stated.

If a company limited by shares or guarantee has only one member, that member must provide the company with details of decisions taken (unless the decision is by written resolution).

Companies must keep records available for inspection at their registered office; members may inspect records without charge and may request copies, which companies must provide within seven days on payment of any prescribed fee; offences attract fines up to 500,000 shillings and daily fines of up to 50,000 shillings for continued non-compliance.

Records of resolutions and meetings of class of members

Shares of a company may not be converted into stock.

Shares or other interests of a member in a company are personal property and are not real estate.

Shares in a limited company with a share capital must each have a fixed nominal value and must be denominated in shillings; allotments not complying are void; companies and defaulting officers who purport to allot in contravention commit an offence and on conviction are liable to a fine not exceeding five hundred thousand shillings.

Companies with a share capital must number each share unless subsections (2) or (3) apply; if shares are allotted without numbers, the company and any defaulting officer commit an offence and are liable to a fine up to five hundred thousand shillings.

Transferability of shares

Section 327 concerns the exercise by directors of the power to allot shares and to grant rights to subscribe for or convert securities into shares, and creates an offence with a fine for knowingly participating in or authorising contraventions of subsection (1).

Directors have the power to allot shares of that class.

Directors may not allot shares or grant subscription/conversion rights unless authorised by the company; the company may give, renew, vary or revoke such authorisations (ordinary resolution), but a resolution that amends the articles is effective only if it is a special resolution.

Companies and their defaulting officers must not subscribe, agree to subscribe, procure or agree to procure subscriptions for shares in the company that are the subject of a takeover offer; contravention is an offence punishable (on conviction) by a fine not exceeding five hundred thousand shillings.

Permitted commission: subscribing or agreeing to subscribe, whether absolutely or conditionally, for shares in the company.

Companies must register any allotment of shares as soon as practicable and in any event within two months after the allotment; failure exposes the company and defaulting officers to fines.

A limited company must, within one month after allotting shares, lodge with the Registrar for registration a return of the allotment.

When an unlimited company allots shares of a class whose rights are not uniform with previously allotted shares, the company must lodge a return of that allotment with the Registrar within one month of the allotment.

Failure by a company or an officer in default to lodge the required return of allotment is an offence punishable on conviction by fines (up to 200,000 shillings; and thereafter up to 20,000 shillings for each day the failure continues).

Provisions about allotment do not apply to shares taken on formation.

Section 337 concerns interpretation and refers to a grant of a right to subscribe for, or to convert securities into, ordinary shares of the company.

When a company subject to a takeover offer issues new securities, it must offer to allot to each holder of ordinary shares a proportion of those securities on the same or more favourable terms equal (as nearly as practicable) to their existing proportion of ordinary share capital, and that offer can only be accepted within the offer period or after written notices of acceptance/refusal have been received.

Offers under section 338 must state an acceptance period of not less than twenty-one days and that the offer will not be withdrawn before the end of that period.

If a company contravenes section 338 or 339, the company and each officer in default are jointly and severally liable to compensate any person to whom an offer should have been made for loss, damage or expenses caused by the contravention.

Section 338(l) does not apply in relation to the allotment of bonus shares (exception to pre-emption right).

Section 338(1) does not apply to an allotment of equity securities if they are, or will be, wholly or partly paid up otherwise than in cash.

Section 338 does not apply to allotments of securities that would be held under an employees' share scheme (apart from any renunciation or assignment of the allotment right).

Section 344. Repealed by ActNo. 28 of 2017, s. 24.

Articles that prohibit allotment of ordinary shares require an offer to holders under section 338(1); if complied with, section 338 does not apply and the company may allot; contraventions make the company and culpable officers jointly liable to compensate.

Directors may determine modifications to the way subsection 346(1)(b) applies to an allotment.

Directors may allot shares under a general authorisation (including with modifications they determine), the company may renew the power by special resolution when the authorisation is renewed, and directors may complete previously made offers even after the power has expired.

Section 348 allows special resolutions to disapply pre-emption rights for specified allotments and sets conditions on directors' recommendation, notification, and consequences for non-compliance.

This section governs when pre-emption rights are disqualified for a sale of treasury shares that is treated as an allotment of equity securities under section 337(b), and applies related subsections of sections 347 and 348 with any stated modifications.

For an offer to allot securities, 'holder of shares' means whoever held those shares at close of business on the date specified in the offer; that specified date is only effective if it falls within 28 days before the offer.

Shareholders' pre-emption rights do not apply to shares taken by the subscribers to the memorandum on the formation of the company.

This Division does not limit other written laws that prohibit a company from offering or allotting equity securities to a person.

Division does not apply to allotments of equity securities of a public company that were subject to a pre-emption requirement under the repealed Act immediately before this Division began; older pre-emption requirements that applied to a private company immediately before the Division continue to have effect as if included in that private company’s articles.

If shares cannot be allotted and 40 days have passed since the offer, the company must repay applicants without delay and without interest; if repayment is not made within 48 days, the directors are jointly and severally liable to repay with interest, though a director who proves the default was not due to their misconduct or negligence is not liable.

Section 355 gives the applicant a one-month right to avoid an allotment made in contravention of section 354; makes voidability explicit for allotments contravening section 356; makes defaulting directors liable to compensate the company and allottee for losses; and bars proceedings to recover such losses brought more than three years after the allotment.

A company must not allot its shares at a discount; if shares are allotted in contravention, the allottee must pay the amount of the discount with interest.

A company may, if authorised by its articles, pay dividends in proportion to the amount paid up on each share.

Shares allotted by a company, and any premium on them, may be paid up in money or in money's worth (including goodwill and know-how).

Section 359 defines what counts as a payment in cash for the purposes of the Part: it lists cash received by the company, certain cheques, release of liabilities, undertakings to pay, other means giving entitlement to payment or credit equivalent to cash, notes that regulations may include further means, states payments to persons other than the company count as consideration other than cash (with an exception), and says cash includes foreign currency.

A subscriber to the memorandum of a public company who takes shares because of an undertaking in the memorandum must pay for the shares and any premium in cash.

A public company must not accept an undertaking to work or perform services as payment for shares or any premium; a person giving such an undertaking must pay amounts due, pay interest, and either be registered or have a transfer executed.

A public company must not allot a share unless at least one-quarter of its nominal value and any premium are paid; allottees who receive shares in breach must pay the shortfall with interest; employee share-scheme allotments are exempt; bonus shares are exempt from subsection (3) unless the allottee knew or ought to have known of the contravention.

Public companies must not allot shares as (fully or partly) paid otherwise than in cash when the consideration includes an undertaking to be performed more than five years after allotment; where that rule is breached the allottee must pay the company the nominal value and any premium (with interest).

If a contravention of this Division causes someone to be liable to pay under the contravened provision, a subsequent holder described as "another person" is also jointly and severally liable to pay that amount.

An applicant may apply to the Court to be exempted in whole or in part from liability arising under specified sections; the Court may exempt a person or order contributions.

If a company contravenes certain sections, the company and each officer in default commit an offence and on conviction are liable to a fine up to one million shillings.

The “appropriate rate of interest” is five percent unless another rate is fixed under subsection (2); the Cabinet Secretary may vary that rate by order published in the Gazette.

Section 368 imposes requirements on allotments of shares for non-cash consideration, including that a valuer's report be made to the company within six months before allotment and that an allottee who has not received the report (or knew of certain contraventions) is liable to pay the company specified amounts with interest.

Creates an exception to the valuation requirement for an arrangement with another company.

Section 368 does not apply to a company's allotment of shares made in connection with a proposed merger with another company.

Requires a valuer to include specified statements in a valuation report and to carry out or arrange further valuations and prepare a report of valuations and reasons.

A company receiving a valuation report under section 368 must lodge a copy of that report with the Registrar (at the same time as lodging the allotment return); failure is an offence punishable by fines, and the company or officers may apply to Court for relief.

Section sets conditions when a public company may enter into an agreement to transfer a non-cash asset in its initial two-year period, including that the counterparty may be a subscriber and that the consideration equals one-tenth or more of issued share capital; the section excludes agreements entered under Court supervision.

Section 374 requires an independent valuation and related reporting and circulation steps for agreements transferring non-cash assets, and provides that a person who already received the valuer's report as a member need not be sent another copy.

Requirements for valuation reports when a company transfers a non-cash asset: the valuer must include specified notes and statements and carry out or arrange supporting valuations.

The company must have the terms of an agreement for transfer of a non-cash asset approved by an ordinary resolution.

A company must, within fourteen days after passing a resolution about transferring a non-cash asset, lodge with the Registrar a copy of the resolution and the valuer’s report.

The reference in section 373(1)(a) to a subscriber to the company's memorandum means a person who is a member of the company on the date of registration.

If an agreement contravenes the Division's requirements, the company whose shares are subject to a takeover offer may recover consideration given (or its value); unperformed parts of such an agreement are void; and where it concerns an allotment the allottee must pay the company the nominal value plus any premium with interest.

Persons who become liable under section 368 or because of certain share allotment agreements are also jointly and severally liable to pay the amount due, unless exempted under subsection (4).

The Court may exempt a person (on application) from liability arising under provisions of this Division or Division 5, wholly or partly, if it appears just and equitable.

A company that contravenes section 368 or 373, and any officer of the company in default, commits an offence and on conviction each is liable to a fine not exceeding five hundred thousand shillings.

A company may enforce an undertaking given by any person in connection with payment for its shares even if a provision of this Division or Division 5 has been contravened.

The rate of interest for this Division is five percent per year unless the Cabinet Secretary specifies another rate by order.

Section 385 provides definitions used in Division 7 (arrangement, company, equity/non-equity shares, holding company, issuing company, share premium account, transferor company) and states that references to acquisition, issue or transfer of shares by a company include actions by a nominee and that transfer of shares includes transfer of a right to be included in the register.

Companies must establish a 'share premium account' and transfer share premiums into it; the company may use that account to pay up bonus shares; failure to comply with subsection (1) is an offence attracting a fine not exceeding five hundred thousand shillings.

If shares issued in consideration for a transfer are issued at a premium, the issuing company is not required by section 386 to transfer any amount in excess of the minimum premium value to the share premium account.

Merger relief under section 388 may be effected by issue or transfer to the issuing company of equity or non-equity shares in the other company, or by cancellation of such shares not held by the issuing company; if shares allotted in consideration are issued at a premium, section 386 does not apply to those premiums; section 388 does not apply where section 387 applies.

Defines when a company is treated as having acquired at least a ninety percent equity holding in another company for merger relief purposes.

Power to make regulations to relieve companies from the requirements of section 386 in relation to premiums other than cash premiums.

Relief may be reflected in company’s balance sheet.

Shares are of one class if the rights attached to them are in all respects uniform.

Sets how rights attached to a class of shares may be varied by either written consent of at least three-quarters in nominal value of issued shares of that class or by a special resolution at a separate meeting of those holders.

Rules for varying the rights of a class of members in a company that has no share capital, including consent or special resolution requirements and recognition of articles.