Companies Act

Sections 393 and 394 do not affect the Court's powers under section 78, Part XXIX or Part XXXIV.

Shareholders holding at least 15% of a class (who did not consent or vote for the variation) may apply to the Court to cancel a variation of that class's rights.

If the rights of a class of members are varied, members comprising at least fifteen percent of that class who did not consent or vote in favour may apply to the Court to cancel the variation; the variation has no effect until confirmed by the Court.

A company must lodge a copy of the court order with the Registrar within fourteen days; failure makes the company and any defaulting officers guilty of an offence and liable to fines (up to 200,000 shillings), and continued failure after conviction attracts daily fines (up to 20,000 shillings).

When a company assigns a name or other designation to any class of its shares it must, within fourteen days, lodge with the Registrar a written notice giving particulars of the name or designation; failing to do so is an offence with fines up to 200,000 shillings and continued failure after conviction attracts fines up to 20,000 shillings per day.

When rights attached to a company's shares are varied, the company must lodge a written notice with the Registrar giving particulars within fourteen days of the variation.

If a company without a share capital creates a new class of members it must, within fourteen days, lodge with the Registrar for registration a written notice containing particulars of the rights attached to that class.

If a company without a share capital assigns (or reassigns) a name or other designation to any class of its members, it must, within fourteen days, lodge with the Registrar a written notice giving particulars of the name or designation.

If the rights of any class of members of a company not having a share capital are varied, the company shall, within fourteen days after the date on which the variation is made, lodge with the Registrar for registration a notice containing particulars of the variation.

An 'offer to the public' is defined to include an offer to any section of the public, however selected.

Private companies must not offer to the public, or allot with a view to offering to the public, any of their securities, subject to limited exceptions and timing conditions.

Members, creditors, or the Attorney-General may apply to the Court for an order if they allege a company is proposing to contravene section 511; if the Court is satisfied, it shall order the company restrained from contravening section 511.

A member, a creditor, or the Attorney-General may apply to the Court for an order under this section if they allege the company contravened section 511.

Defines a remedial order and gives the Court power to make remedial orders, including reducing a company's capital when a remedial order is made against the company.

This Part does not affect the validity of an allotment or sale of securities or of an agreement to allot or sell securities.

Public companies must not trade or borrow unless issued a trading certificate by the Registrar; the Registrar must issue a trading certificate on application if satisfied the company's allotted share capital meets the authorised minimum; a trading certificate evidences entitlement to trade and borrow.

A public company that wants a trading certificate must apply in writing to the Registrar and the application must state specified information about capital, preliminary expenses and amounts or benefits to promoters.

The authorised minimum nominal allotted share capital for a public listed company is six million seven hundred and fifty thousand shillings.

If a company does business or borrows in breach of section 516 the company and each defaulting officer commit an offence and, on conviction, are each liable to a fine not exceeding one million shillings; if the company enters into a transaction in breach and fails to comply with related obligations within twenty-one days after being called on to do so, the directors are jointly and severally liable to indemnify other parties for losses.

Section 1010 permits service of a document on a company registered under the Act by leaving it at, or sending it by post to, the company’s registered office; alternatively by leaving it with or posting it to the company’s local representative in Kenya; or, if there is no local representative or service cannot be effected, by leaving it at or posting it to any place of business of the company in Kenya.

A document may be served on a person to whom this section applies by leaving it at, or sending it by post to, the person's registered address.

Defines 'service address' and says the regulations may set conditions that a service address must meet; clarifies that a requirement to provide an address under the Act means providing a service address unless stated otherwise.

The Cabinet Secretary must make Companies Communication Regulations governing how documents or information are sent to or by companies.

Members or debenture holders who received company information other than in hard copy may require the company to send a hard copy; the company must send it within twenty-one days of request; the company may not charge for providing the hard copy; failure and continuing failure are offences punishable by fines.

A hard-copy document or information sent or supplied to a company is sufficiently authenticated if it is signed by the person sending or supplying it; alternative authentication is set out when the company specifies a manner or when the communication contains a statement of the sender's identity and the company has no reason to doubt it.

Documents or information sent or supplied by a company are treated as received in set ways: posted items to Kenyan addresses are taken as received 48 hours after posting if the company can establish proper addressing, prepayment and posting; electronic items are taken as received when first made available on the company website or when the recipient receives notice that they are available, provided the company can show proper addressing; calculation of hours excludes non-working days; the section is subject to contrary provisions in company articles, debenture documents or relevant agreements.

Sections 1018 to 1021 apply to the valuation and report required by sections 73, 368 and 374.

Valuations and reports for the purposes of sections 73, 368 or 374 must be made only by a qualified valuer, except as subsection (2) provides.

Section 1019 lists categories of persons and entities (officers, employees, partners, related undertakings, associates, parent/subsidiary undertakings, and auditors) referenced in relation to the valuer independence requirement.

Defines “associate” for the purposes of section 1019 and lists who counts as an associate (spouse, minor or step-child, bodies corporate connected by directorship or group membership, employees, partners, and associations linked to partnerships and limited liability partnerships).

Valuers are entitled to full disclosure; persons who knowingly or recklessly make materially false or misleading statements to a valuer or person making a report commit an offence punishable by a fine up to one million shillings or imprisonment up to two years, or both.

Grants the Cabinet Secretary power to make regulations for carrying out this Act and lists matters the regulations may address.

The Cabinet Secretary may appoint dates by notice for repealing provisions of the Companies Act; when bringing this Act into operation the Cabinet Secretary must ensure corresponding Companies Act provisions are repealed contemporaneously, and may combine repeals in the commencement notice. The Companies Regulations are revoked on repeal of section 402(4).

When a provision of the repealed Act is re-enacted by this Act its effect continues under this Act, with various savings, transitional rules and interpretive references to preserve how matters started or relating to the repealed Act are dealt with under this Act.

The savings and transitional provisions in the Sixth Schedule have effect.

The Cabinet Secretary may make regulations of a savings or transitional nature to manage the transition from the repealed Act to this Act.

A company may subdivide or consolidate all or part of its share capital in accordance with section 405.

Companies that subdivide, consolidate or divide shares must keep the same paid-to-unpaid proportion on resulting shares; a company may exercise powers under this section only if authorised by an ordinary resolution; contravention by a company or defaulting officers is an offence punishable by a fine not exceeding one million shillings.

A company must, within one month after subdividing, consolidating or dividing its shares, lodge with the Registrar for registration a written notice specifying the affected shares and a statement of capital complying with subsection (2).

A limited company that has a share capital may reduce its share capital by special resolution.

When a company passes a resolution to reduce its share capital, it must apply to the Court for an order confirming the reduction.

Each creditor of the company is entitled to object to a reduction of the company’s capital.

The Court may confirm a reduction of capital on terms it considers appropriate and, in special cases, may order a company to add the words "and reduced" to its name for a specified period.

The Registrar must register a Court order and the approved statement of capital when produced and lodged.

After a company's capital is reduced, members remain liable for (a) the nominal amount of the share as notified to the Registrar in the statement of capital delivered under section 411, and (b) the amount paid on the share or the reduced amount treated as paid; this section is subject to section 411 and does not affect the rights of contributories among themselves.

Members of a company who were on the register when a capital reduction took effect are liable to contribute toward applicable creditor debts up to the amount they would have been liable for if liquidation had begun the day before the reduction.

It is an offence to conceal the name of a creditor entitled to object to the reduction of capital.

Holding shares is not a bar to claiming damages against the company.

Directors of a public company must convene a general meeting if net assets are half or less of called-up share capital, issue a notice within 28 days of a director becoming aware, and set the meeting date within 56 days; failure to comply is an offence with fines.

If a public company would reduce its capital below the authorised minimum, either the Court may direct it, or the company may first convert into a private company and apply to the Registrar for registration of the conversion.

Sets an expedited Court procedure allowing conversion of a public company into a private company and describes Registrar actions for registering that conversion.

Directors must prepare and distribute a solvency statement for a private company supported by a solvency statement before passing a resolution, register the resolution and statement, and make the statement available to members depending on how the resolution is proposed.

A solvency statement is a director-made opinion about the company’s ability to pay its debts now and, if liquidation is intended within 12 months, to pay in full within twelve months; directors must take into account all liabilities; making such a statement without reasonable grounds and lodging it with the Registrar is an offence punishable by a fine not exceeding one million shillings.

Companies must lodge specified documents with the Registrar within 14 days after passing a resolution to reduce share capital; the Registrar must register them, and failure to comply attracts fines (up to 500,000 shillings and daily fines up to 20,000 shillings).

The regulations may make further provision for the implementation of this Part.

Defines "distributable profits", links "distribution" to Part XVII, and treats a director as an employee for pension and employees' share scheme purposes.

Limited companies are prohibited from acquiring their own shares except as allowed in this Part; some limited exceptions permit acquiring fully paid shares otherwise than for valuable consideration; contraventions are void and can be criminal with fines.

Shares to which this section applies are taken to be held by the nominee on the nominee's own account and the company has no beneficial interest in them.

The Court may relieve a subscriber or director from liability wholly or partly if they acted honestly and reasonably and ought fairly to be relieved; a subscriber or director may apply to the Court for such relief; the section does not apply where the company has no beneficial interest in shares acquired by a nominee.

Section 427 sets out duties and consequences concerning shares of a public company held by or for the company, including cancellation, restrictions on voting rights, and directors' powers to take measures to comply.

A company that cancels shares must, within one month, lodge with the Registrar a notice giving details of the cancelled shares and include a statement of capital complying with subsection (3).

If a public company is required to convert to a private company to comply with section 427, the directors may resolve that the company be converted.

The Registrar must register conversions of a company into a private limited company and perform related actions (allocate a unique number if needed, issue and detail a certificate, sign and authenticate it) when the statutory conditions are met.

If a public company required by section 427 to apply to the Registrar for registration of conversion into a private company fails to apply before the subsection (3) deadline, Part XIX applies to it as if it were a private company.

It is an offence for a company to fail to cancel specified shares or to fail to apply for registration of conversion into a private company; continuing failure after conviction is a daily offence attracting a fine.

If a private company’s conversion into a public company is registered, sections 427–432 apply to that company as if it had been a public company, and the deadline in section 427(3)(a)–(c) runs from the registration date.

A company must not distribute amounts transferred to reserve on acquisition of its own shares; contraventions by the company or defaulting officers are offences punishable by fines.

Public companies must not have a lien or other charge on their own shares, except where this section expressly permits such a charge.

When determining for the purposes of this Part whether a company has a beneficial interest in shares, the interests referred to in sections 437, 438 and 439 are to be disregarded.

When shares are held in trust for a pension scheme or an employees’ share scheme, any residual interest of the company that has not vested in possession is to be disregarded.

Section 438 describes (1)(a) a charge or set-off against scheme benefits to enable an employer or former employer to recover a monetary obligation from a member; (1)(b) a right to receive or retain amounts recoverable under prescribed pension enactments as reimbursement; and (2) disregards such charges or set-offs where shares are held in trust for an employees' share scheme and the charge is designed to enable the employer or former employer to recover a monetary obligation from the employee.

If a company (the company whose shares are the subject of a takeover offer) is an executor, administrator or trustee, any rights it has in that capacity (including rights to recover expenses or be remunerated, and rights to be indemnified out of the estate or trust property) are to be disregarded.

Defines what counts as “financial assistance” for this Part to include gifts; guarantees, securities or indemnities (except indemnities for the indemnifier's own neglect or default); releases or waivers; loans or agreements contingent on another party's unfulfilled obligation; novation or assignment of such loans or agreements; reducing the company's net assets to a material extent by giving assistance; and the company having no net assets.

Section 441 has been repealed by ActNo. 28 of 2017, s. 27.

A public company whose shares are the subject of a takeover offer, and its subsidiaries, must not give financial assistance (directly or indirectly) for the purpose of acquiring those shares before or at the same time as the acquisition.

A public company that is a subsidiary must not give financial assistance for the purpose of acquiring shares in a private company in certain circumstances, and must not give assistance to reduce or discharge acquisition-related liabilities, subject to specified exceptions.

A company that contravenes sections 442 or 443, and any officer in default, commit an offence; companies face a fine up to one million shillings, and defaulting officers face a fine up to five hundred thousand shillings or up to two years' imprisonment, or both.

Certain transactions are excepted unconditionally from sections 442 and 443; for example, a dividend lawfully made.

Section 446 lists specific categories of transactions that are excepted from sections 442 and 443, including: lending in the ordinary course of the company's business; financial assistance in good faith for employees' share schemes; assistance to bona fide employees or certain relatives; and loans to employees (other than directors) to enable acquisition of fully paid shares.

A limited company may not purchase its own shares if the purchase would leave no issued shares except redeemable or treasury shares.

A limited company may not buy its own shares unless the shares are fully paid; if it does buy them it must pay on purchase; any purchase contrary to the section is void.

A private limited company may buy back its own shares out of capital; any premium payable on such a purchase must be paid out of distributable profits, subject to subsection (3).

Specifies approval routes for a company to purchase its own shares: (1)(a) an off‑market purchase under a contract approved in advance in accordance with section 451; or (1)(b) a market purchase approved in accordance with section 458. Also defines "approved securities exchange" as one approved by the Capital Markets Authority under the Capital Markets Act.

A company must have the contract terms for off‑market purchases approved by a special resolution before entry, or the contract must require such approval before any purchase; the company may become entitled or obliged to purchase shares under such contracts; approvals may be varied, revoked or renewed only by special resolution; public company approvals must expire no later than eighteen months after passage.

Section 452 sets rules about who may vote on a written resolution and treats certain votes and proxy acts as exercising voting rights for resolutions to confer, vary, revoke or renew an approval under section 451.

When a company passes a resolution under this section it must include, in a memorandum of contract terms made available to members, the names of members whose shares the contract relates to, and it must attach to the copy of the contract a written memorandum listing any such names not appearing in the contract.

A company may agree to a variation of a contract approved under section 451 only if the variation is approved in advance under this section; terms take effect only if approved by special resolution; the approval itself may be varied, revoked or renewed by special resolution.

Defines how voting rights operate for members on resolutions approving variation of a contract under section 454, including who is eligible to vote and that members may demand a poll.

When a company passes a resolution under section 454 to vary an existing contract, the company must make copies or a memorandum of the original contract and any prior variations available to members, include the names of members holding the shares affected in the memorandum of the proposed variation, and attach a written memorandum of any names not appearing in the variation.

A company's agreement to release its rights under a contract approved under section 451 is void unless the release terms are approved in advance in accordance with this section.

A company may only make a market purchase of its own shares if the purchase has been approved by a resolution of the company; the company may vary, revoke or renew that approval only by a further resolution.

The company whose shares are the subject of a takeover offer must keep a copy of the approved contract (or, if not in writing, a written memorandum of its terms) available for inspection at its registered office, except as regulations otherwise provide.

Section 460 creates offences and fines for failure to comply with section 459, allows an aggrieved person to apply to the Court for an order compelling inspection, and entitles the company to be heard as respondent.

A company may not assign its rights under a contract authorised by section 451 or 458.

Where subsection (1) concerns specified contingent-purchase arrangements, the company may not make purchases of its own shares under this Division in the cases described and any purported release of obligations in those cases is void.

If section 458 applies, the shares are to be held and dealt with in accordance with Part XXI.

A company must, within fourteen days after purchasing shares under this Division, lodge with the Registrar a return complying with subsections (2) to (4) stating specified particulars; failure to do so is an offence with fines.

When a company’s shares are treated as cancelled or immediately cancelled, the company must, within one month after receiving the shares, lodge with the Registrar a notice specifying the cancelled shares and attach or enclose a statement of capital containing specified particulars; failure is an offence with fines.

A reference to “payment out of capital” includes any payment made as such, whether or not it would otherwise be treated as a payment out of capital.

A private limited company may, in accordance with this Division and subject to any restriction or prohibition in its articles, make a payment to redeem or purchase its own shares out of capital rather than out of distributable profits or proceeds of a fresh issue.

The permissible capital payment Section available profits of the company

For the purposes of this Division, a company’s available profits for redeeming or purchasing its own shares are its profits that are available for distribution (within the meaning of Part XVII), and whether such profits exist and their amount are to be determined in accordance with section 480 rather than Part XVII.

Section 470 defines how to determine a company's available profits; it lists items to account for and states that the resulting figure is the amount of available profits, and defines "the relevant period" as three months ending on the directors' statement date under section 472.

A private company must not make a payment out of capital to redeem or purchase its own shares unless the requirements of sections 472, 474, 477 and 478 are satisfied.

Directors must prepare a statement meeting subsection (2) requirements, include specified information about solvency, management intentions and available financial resources, attach an auditor’s report, and when forming the solvency opinion must take into account all liabilities.

Directors who make a statement under sections 468–471 without reasonable grounds commit an offence and on conviction may be fined up to 500,000 shillings or imprisoned for up to 12 months, or both.

A payment out of capital is invalid unless approved by a special resolution of the company that complies with this section.

Members who hold shares to which a resolution relates are not eligible members for that resolution; such members are treated as having exercised voting rights, members may demand a poll, and proxy votes/demands count the same as the member's.

Resolutions under section 474 must be disclosed to members as described (sent/submitted to eligible members for written resolutions; made available for inspection at meetings for resolutions at a meeting); the resolution is void if the subsection (2) disclosure requirement is not complied with.

When a company first publishes the notice required about a capital payment to acquire its own shares, it must lodge with the Registrar a copy of the directors' statement and auditor's report required by section 472.

When a company passes the relevant resolution it must keep the directors' statement and auditor's report available for inspection during the relevant period; it must provide inspection without charge on request by a member and must supply copies within seven days subject to any prescribed fee; refusal or default can lead to fines and court orders to compel inspection or copies.

Members (except those who consented or voted for it) and creditors may apply to the Court to cancel a resolution; the Court must hear the application and may cancel or confirm the resolution and may make orders, including directing purchases of shares or restricting amendments to articles.

Applicants and companies involved in takeover offers must lodge notices or copies of court orders with the Registrar within specified time limits; failure is an offence punishable by fines.

Payment out of capital must be made not earlier than five weeks and no later than seven weeks after the date on which the resolution under section 475 is passed.

When a limited company’s shares are redeemed or purchased out of profits or when share capital is diminished, the company must transfer specified amounts to a capital redemption reserve; the reserve may be used to pay up fully paid bonus shares; failure to comply is an offence attracting a fine up to one million shillings.

When a payment out of capital is made and the permissible capital payment is less than the nominal amount of the shares redeemed or purchased, the company must transfer the difference to its capital redemption reserve; failure to comply creates offences with fines.

A company to which this section applies is not liable in damages for failing to redeem or purchase any of the shares.

Defines "distribution" and lists exceptions where certain transactions are not treated as distributions.

A company may only distribute amounts out of profits available for that purpose; applying unrealised profits to pay up debentures or unpaid share amounts is prohibited and void, and contravention attracts an offence and a fine not exceeding one million shillings.

Public companies may only make distributions if their net assets are at least the aggregate of called-up share capital and undistributable reserves, and any distribution must not reduce net assets below that aggregate; a public company must not include uncalled share capital as an asset in a relevant financial statement; contraventions by the company or officers are offences attracting a fine not exceeding one million shillings.

A company must ensure that the requirements of the Fifth Schedule are complied with, where applicable.

Section 489 lists circumstances relating to distributions and payments by a company whose shares are subject to a takeover offer and defines "financial assistance", "net assets" and "net liabilities".

Amounts shown as development costs in a company’s accounts are to be treated for the purposes of section 486 as a realised loss, except for parts representing unrealised revaluation profits and except where directors, justified by special circumstances (including a company whose shares are the subject of a takeover offer) and noted as required by regulations, decide otherwise.

Section 491. Determination of profit or loss in respect of asset where records incomplete

Rules for calculating the amount when a company distributes an asset in kind: the company must have profits available at the time of distribution and be able to make the distribution without contravening this Part; the amount is nil if consideration is not less than book value, otherwise it is the excess of book value over consideration; profits are increased where consideration exceeds book value; and the asset value is the accounting record value or nil if none is stated.

If a company makes a distribution that includes the sale, transfer or other disposition of a non-cash asset, and any part of the amount at which that asset is stated in the accounts represents an unrealised profit, this section treats that unrealised profit for the purpose of determining the lawfulness of the distribution and for applying regulations under which only realised profits are to be included in the profit and loss account.

If a company makes a distribution to a member in contravention of this Part, the member must repay the amount (or, for non-cash distributions, pay an amount equal to its value); subsection (3) preserves other repayment obligations.

A properly executed share certificate is, unless contradicted by other proof, evidence that the member owns the shares.

A company must issue the certificates for shares, debentures or debenture stock allotted under subsection (1); failure and continuing failure after conviction attract fines.

A company may register a transfer of its shares or debentures only if a proper document of transfer has been delivered; the company also has the power to register persons who acquire rights by operation of law.

If a company that is the subject of a takeover offer refuses to register a transfer, it must provide requested further information about the reasons for the refusal; failure to comply is an offence punishable by fines (up to KSh 500,000, and continuing daily fines up to KSh 50,000).

On application by the transferor, the company must enter the transferee's name in its register of members; failure without lawful justification makes the company liable to pay damages to the applicant.

The deceased member's executor or administrator may make (execute) a transfer of the deceased member's shares even if the executor or administrator is not a member of the company.

A company whose shares are the subject of a takeover offer must accept probate, letters of administration, or confirmation as executor as sufficient evidence of grant; a company refusing to comply is liable for damages to anyone who suffers loss as a result.

A company is treated as representing that documents showing title have been produced when it issues a transfer certificate; if a person relies on a negligently false certificate, the company must pay damages.

A company must issue the certificates for shares, debentures or debenture stock transferred.

Companies may not issue share warrants after this section commences; bearer shares must be converted to registered shares, the company must notify the Registrar within thirty days of conversion, rights attached to bearer shares cannot be exercised unless converted, and failure to convert attracts offences and fines.

People affected by a company's failure under section 496(1) may serve a notice requiring rectification; if the company does not comply within ten days the notifier may apply to the Court, which may order the company and its officers to rectify and may allocate costs.

Allows regulations to be made to enable title to securities to be evidenced and transferred without a written document and to prescribe and regulate procedures, persons involved, and rights and obligations related to those procedures.

Authorises regulations to require companies or their members to adopt arrangements enabling title to securities to be evidenced or transferred without a written document, and to regulate issuance or prohibition of certificates, provision of statements to holders, and related evidential matters.

Section 508 grants order-making powers to designate classes of companies and to make specified regulations not apply or apply with modifications; it defines "specified" as "specified in the order."

Regulations made under sections 506 or 507, and orders under section 508, are invalid unless the Cabinet Secretary has previously carried out such consultation as the Cabinet Secretary considers appropriate.

Section 520 allows limited companies with share capital and public limited companies (if authorised by their articles) to issue redeemable shares; private company articles may exclude or restrict redeemable shares; redeemable shares may be redeemed at the option of the company or the shareholder; a company may not issue redeemable shares only if there are no issued non-redeemable shares.

Section describes who may set terms and manner of redemption for redeemable shares (the company via its articles or by resolution), allows an ordinary resolution even if it amends the articles, requires directors to act before shares are allotted, and extends company statement-of-capital obligations to redemption terms.

Redeemable shares of a limited company may only be redeemed if they are fully paid; redemption terms may allow payment after the redemption date by agreement between the company and the holder.

Financing of redemption: premiums payable on redemption must be paid out of distributable profits or by specified amounts from the share premium account; companies may issue replacement shares up to the nominal value of redeemed shares as if they had not been issued.

The shares are cancelled by operation of this section.

A company that redeems any redeemable shares must, within one month, lodge with the Registrar a notice specifying the redeemed shares and must attach a statement of capital complying with subsection (3); failure by the company or any officer in default is an offence punishable by fines.

Where the company holds its own shares as treasury shares in the context of a takeover offer, the company must record itself in its register of members as the member holding those shares.

Companies must ensure treasury shares never exceed ten per cent of issued share capital (by class where applicable); excess shares must be disposed of or cancelled within twelve months.

A company that holds treasury shares must not exercise any rights in respect of those treasury shares (including attendance and voting).

Companies may sell treasury shares for cash or transfer them for an employees' share scheme; "cash" includes foreign currency; after a section 611 notice a company shall not sell or transfer those treasury shares to any other person; contravening that prohibition is an offence punishable by a fine not exceeding five hundred thousand shillings.

When treasury shares are sold or transferred for an employees' share scheme, the company shall lodge with the Registrar for registration a return complying with subsection (2) specifying the number, nominal value and the date of disposal.

Companies holding shares may cancel some or all of those shares; when treasury shares stop being qualifying shares the company must cancel them; directors may take measures to enable cancellation without complying with Part XVI.

The company must attach or enclose with the return a statement of capital that complies with subsection (6).

When a company sells treasury shares, proceeds up to the purchase price are taken as a realised profit; an amount equal to the purchase price is treated as realised profit and any excess must be transferred to the company's share premium account; the purchase price is determined by a weighted average method; fully paid bonus shares have nil purchase price.

If a company that holds or held treasury shares, or any officer in default, fails to comply with a requirement of this Part they commit an offence and may be fined; continuing failure after conviction incurs a daily fine.

This Part applies only to public companies and to issued shares (including treasury shares) that carry rights to vote in all circumstances at general meetings; temporary suspension of voting rights does not affect the Part's application to interests in those or any other shares.

A notice by a public company may require a person to give information about present or past interests in the company's shares, and a person who is given such a notice must provide the required information within a reasonable period (not less than seven days) specified in the notice.

If a company serves a written notice under section 536 and the recipient fails to supply the required information within the specified time, the company may apply to the High Court for an order imposing restrictions on the relevant shares.

It is an offence for a person to fail to comply with a notice under section 536, or to make (knowingly or recklessly) a materially false statement; a defence exists for subsection (1)(a) if the information requirement was frivolous or vexatious; conviction may attract a fine up to five hundred thousand shillings.

Persons being examined by the Cabinet Secretary are not obliged to comply with a notice given under section 536.

If restrictions are imposed on particular shares, transfers and certain rights related to those shares are void and the shares lose voting rights; further issues or payments on those shares are also prevented except in liquidation, with specified exceptions for certain orders under section 543 and references to directions or interim order terms.

It is an offence for a person to attempt to evade restrictions on shares (for example by disposing of restricted shares or rights, voting or failing to notify) and if shares are issued in contravention the company and defaulting officers may be fined up to five hundred thousand shillings.

If a court order makes shares subject to restrictions, the company whose shares are affected or any person aggrieved may apply to the Court; the Court may, if satisfied, make orders relieving certain acts from being breaches and may attach terms to such orders.

Applications may be made to the Court (normally the High Court) by the company whose shares are the subject of a takeover offer or by any person aggrieved for an order directing that the shares cease to be subject to restrictions; the Court may make such an order if certain conditions in subsection (3) are met, and may continue some restrictions after a transfer under subsection (3)(b); subsection (3) does not apply in relation to applications under subsection (5).

The Court may order the sale of shares subject to restrictions and may make further orders about sale or transfer; only the company may apply for such an order; the Court may order costs to be paid from sale proceeds.

If shares are sold under a court order, the seller must pay the sale proceeds (less sale costs) into court for the benefit of persons with beneficial interests; those beneficiaries may apply to the Court for all or part of the proceeds; an applicant with a court order under section 544(5) is entitled to have the applicant's costs paid from the proceeds before beneficiaries receive any part.

Members of a company may require the company to exercise its powers under section 536; the company must comply when it receives requests from members holding at least ten percent of the paid-up capital conferring voting rights (excluding treasury shares).

Companies required under section 546 must use their powers to obtain information about persons' interests in the company’s shares, in the manner specified in the requests; failure exposes the company and any officer in default to criminal liability and a fine not exceeding five hundred thousand shillings.

When a company completes (or during) an investigation required under section 546 it must prepare reports of information obtained, make them available for inspection within set short timeframes, retain them for six years, and notify requesting members in writing within three days of first making a report available.

If a company fails to comply with the requirements of section 548(1)–(6), the company and each officer in default commit an offence and are liable to fines (up to 500,000 shillings; continued failures after conviction attract daily fines of up to 50,000 or 20,000 shillings as specified).

Companies must make reports (prepared under s.548) available for inspection during ordinary business hours free of charge; must allow inspection on request; must supply copies on payment of any prescribed fee within ten days; refusal or failure is an offence with fines and may lead to court orders.

A company must keep a register of information obtained under a requirement imposed by section 536 and must keep entries alphabetically; failure to comply is an offence with fines up to 200,000 shillings and continuing daily fines of up to 20,000 shillings after conviction.

A company must keep the register required by section 551 available for inspection at its registered office; failure is an offence for the company and any defaulting officer with fines on conviction (up to 200,000 shillings) and continuing daily fines (up to 20,000 shillings).

Companies required to keep a register must keep it open during ordinary business hours for any person to inspect without charge; any person requesting a copy is entitled to one on payment of any prescribed fee; a company may decline requests that do not comply with subsection (4), which lists required requester information.

The company must comply with a request to inspect or copy share-related details if satisfied the request is for a proper purpose, and must refuse if not; a person refused may apply to the Court; applicants must notify the company and the company must notify affected persons; the Court may order the company not to comply and may make further orders where similar requests may be made.

If a company or an officer refuses inspection or fails to provide a copy required under section 553 (other than under a Court order) they commit an offence and are liable to a fine (up to 500,000 shillings); continuing refusal after conviction is a further daily offence with fines up to 50,000 shillings per day; an aggrieved person may apply to the Court which may order inspection or delivery of the copy; the company may appear and be heard.

It is an offence for a person to make a materially false or misleading statement when requesting information under section 553, or to cause or allow disclosure of information knowing it may be used for an improper purpose; offenders face a fine up to one million shillings, imprisonment up to two years, or both.

Companies required to keep a register must not delete entries except under sections 558 and 559; if deleted contrary to that rule they must restore the entry as soon as reasonably practicable. A company and any officer in default commit an offence and on conviction are each liable to fines up to 500,000 shillings; continued failure to restore after conviction attracts a further offence punishable by up to 50,000 shillings for each day the failure continues.

A company may remove an entry from the register kept under section 551 if more than six years have passed since the entry was made.

If a register entry about a third party's share interest was made because of incorrect information, the company must remove it; that third party may apply to the company for removal; if refused, the applicant may apply to the Court, which may order removal.

Allows a person who ceased to be party to a share acquisition agreement to apply to the company to record that fact; the company must record it if satisfied; refusal (except where already recorded) can be taken to the Court which may order inclusion.

A company that stops being a public company must keep the register kept under section 551 for six years after it ceases to be a public company; failure is an offence punishable by a fine up to five hundred thousand shillings.

Section 562 explains when a person is considered to have an interest in shares, including that beneficiaries of a trust are treated as having such an interest and that a person may have rights (for example to call for delivery) or obligations that result in having an interest.

Section 536 applies to persons who have (or had or are entitled to acquire) a right to subscribe for company shares, treating them like persons who hold or held an interest in shares.

Family interests in a public company's shares include the person's spouse and any child or step‑child of the person who has not reached the age of eighteen years.

Section 565. Interest inshares: corporate interests Section 565(1)(a) the body or its directors are accustomed to act in accordance with the person's directions or instructions; or Section 565(1)(b) the person is entitled to exercise or

Defines when an "interest in shares" can arise from an agreement to acquire interests in shares of a particular public company and clarifies related terms such as the "use" of interests and what "agreement" includes.

Each party to an agreement to which section 566 applies is treated as having an interest in all shares of the target company that any other party to that agreement is interested in.

Companies must not include or make available certain protected information in reports; if such information is omitted the company must say so in the report; breach is an offence punishable by a fine not exceeding 500,000 shillings.

When a time period for fulfilling an obligation is given in days, exclude any day that is not a working day when calculating that period.

Section 570 describes perpetual debentures as either irredeemable, redeemable on the happening of a contingency (however remote), or redeemable at the end of a period (however long); subsection (2) makes subsection (1) apply to debentures whenever issued and to deeds whenever executed, despite any equity to the contrary.

A contract to take up and pay for a company's debentures may be enforced by an order for specific performance.

Companies must register allotments of debentures promptly, and no later than two months after the allotment date; failure attracts fines for the company and defaulting officers, and daily fines if the failure continues after conviction.

Companies that allot debentures must establish and maintain a register of debenture holders; copies of the register may be kept at the registered office, another company office, or the office of a person who prepared the register on behalf of the company. Failure to comply is an offence punishable by fines.

Companies must provide copies of their register of debenture holders on request; members may obtain copies without charge, others on payment of any prescribed fee; registers must not be closed for more than thirty days a year.

Companies and defaulting officers who refuse inspection of the register of debenture holders, fail to provide requested copies, or contravene related inspection provisions commit offences and face fines.

Making a request with information known to be false or misleading, causing disclosure of such information, or failing to prevent its disclosure knowing it may be misused, are offences.

Claims arising from entries (or failures to make or delete entries) in a company's register of debenture holders are subject to a time limit; subsection (2) states that subsection (1) does not affect any shorter limitation period prescribed by any other written law.