Insolvency Act

Directors (and in one case the monitor) may apply to the Court to replace a monitor in specified circumstances; on hearing such an application the Court may order replacement by another authorised insolvency practitioner; an authorised insolvency practitioner can only be appointed if they have lodged written consent with the Court.

Section 663 has been repealed.

Section 664 has been repealed.

Section 665 was repealed by ActNo. 1 of 2021, s. 41.

Section 666 was repealed by Act No. 1 of 2021, s. 42.

Section 667 was repealed by ActNo. 1 of 2021, s. 43.

Section 668 has been repealed by Act No. 1 of 2021, section 44.

The Court may extend a moratorium for at least thirty days on the application of the directors if the Court believes the extension is desirable to achieve the aims for which the moratorium was originally obtained.

An authorised insolvency practitioner may be appointed as a replacement monitor only if they have lodged a written consent with the Court.

When the Court extends or further extends a moratorium, the monitor must, within seven days of the order, lodge a copy of the order with the Registrar for registration.

Section 672 was repealed.

Section 673 has been repealed by ActNo. 1 of 2021, s. 51.

Members or creditors may apply to challenge acts or omissions of company directors during a moratorium; the Court may make orders, adjourn, regulate management, require meetings, or end the moratorium and must have regard to protecting persons who dealt with the company in good faith and for value.

Companies in respect of which a moratorium has or had effect must not carry out certain acts listed in subsection (4) (for example concealing or fraudulently disposing of company property); doing those acts (or being privy to others doing them) is an offence and, on conviction, attracts a fine up to five million shillings or imprisonment up to five years (or both). There are specific defences for lack of intent in certain cases.

Section 676 has been deleted by Act No. 13 of 2017, Schedule.

This Part defines terms used in Part V, including "administrator", "beneficiary", "estate", "executor", and "trustee".

The Court may order that an estate be administered under this Part.

The executor, administrator, or a person applying for probate or letters of administration may ask the Court to order that the estate be administered under this Part if they consider the estate funds (including convertible assets) will not be sufficient to meet claims against the estate.

A creditor of the deceased's estate or a beneficiary may apply for an order under this Part; the creditor's application is subject to the creditor's debt reaching the bankruptcy-application threshold.

Notice of application by a creditor or beneficiary to the executor or administrator.

The Court may order that the Official Receiver or the Public Trustee administer an estate instead of the executor or administrator if an application is made and the Court believes administration would be better by them; if so, the executor/administrator must stop and the Official Receiver or Public Trustee must assume administration.

The Public Trustee may lodge a certificate under this section; lodging the prescribed certificate has the effect of both an application and an order that the estate be administered under this Part; the certificate is to be lodged in the Court registry from which the grant was issued.

When an application for the order under this Part is lodged, the whole estate vests in the person appointed by the Court to administer it as trustee.

The trustee must, as soon as practicable after the estate vests in them, realise, administer and distribute the assets according to bankruptcy law and practice, subject to modifications in this Part.

If the insolvent deceased's estate includes necessary household furniture and effects that would have passed to the surviving spouse, the surviving spouse may select and retain as their own so much of those goods as the trustee determines, and must make that selection within the time the trustee allows; selection does not affect rights under valid charges or credit purchase transactions.

The trustee may make an allowance from the estate for the surviving spouse or other relatives or dependants for their support, but the trustee must first obtain the consent of the creditors expressed as an ordinary resolution.

Division 3 applies when the Court has ordered that a deceased person's estate be administered under this Part.

The trustee has, in relation to the deceased's estate, the same functions and powers that a bankruptcy trustee has in relation to the property of a bankrupt.

When an insolvent deceased's estate is distributed, payments are made in the following order: (a) payment of all proper costs, charges, debts and expenses of the due administration of the estate (whether incurred before or after the order); (b) payment of the deceased's reasonable funeral expenses; (c) medical expenses and reasonable expenses for hospital care provided for the deceased, so far as those expenses are lawfully recoverable; and (d) payment of other claims and interest in accordance with the Second Schedule (with the Second Schedule's reference to commencement of the bankruptcy read as a reference to the date of the deceased's death).

Any surplus from an insolvent deceased's estate is to be applied to pay debts due by the deceased, the administration costs under this Part, and any other money payable as in bankruptcy; if there is an executor or administrator that surplus is to be paid to them, otherwise the surplus is to be distributed in accordance with the Court's directions, and the Court may approve or later vary such distribution.

If an order to administer a deceased's estate under this Part is notified to the deceased's executor or administrator, the executor or administrator may obtain a proper discharge for any payment or disposition of property only if that payment or disposition is consistent with the order.

Trustees may exercise certain bankruptcy-like powers (e.g., cancel irregular transactions) as if the deceased had been bankrupt; trustees cannot cancel gifts or voluntary settlements without Court approval; the Court may make orders or give approval only if satisfied recovery is necessary to pay the estate's debts in full (including interest).

The trustee may cancel an execution against an insolvent deceased debtor's estate, except where the execution was completed more than three months before the date of the order that the estate be administered under this Part.

Payments or acts (including omissions) done in good faith by an executor or administrator before they had notice of an intention to apply for administration under this Part are not invalidated by other provisions of the Act.

This Part applies to the liquidation of a company registered under the Companies Act (Cap. 486); it covers voluntary liquidations under Divisions 2 to 5, court-ordered liquidation under Division 6, and generally relates to liquidation in this Division and Divisions 7 to 10 unless otherwise stated.

A liquidation is a "members' voluntary liquidation" if the directors' statutory declaration under section 398 has been made.

Section 383 defines who is treated as a contributory for Part VI and authorises the Cabinet Secretary to fix the "official rate" of interest by order published in the Gazette.

Specifies when a company is "unable to pay its debts": (1)(a) a creditor owed "hundred thousand shillings or more" leaves a written demand at the registered office and the company fails for "twenty—one days" to pay or to secure or compound to the creditor's reasonable satisfaction; (1)(b) execution or other process on a judgment is returned unsatisfied in whole or in part; (1)(c) it is proved to the Court that the company cannot pay debts as they fall due; (2) assets are worth less than liabilities (including contingent and prospective liabilities).

When a company is being liquidated, every present and former member must contribute to the company's assets to cover debts, liquidation expenses and to adjust contributories' rights; several exemptions and limits apply to former members and members of certain company types.

Persons from whom a company redeemed or purchased shares must contribute up to the amount of the relevant payment made in respect of their shares; directors are jointly and severally liable for that amount; contributors may apply to Court for orders against others.

Former members who were members when the company changed from unlimited to limited are required to contribute to company assets for debts contracted before re-registration if liquidation begins within three years of re-registration.

A former member who ceased to be a member before the company's re-registration as unlimited is not liable to contribute to the company's assets beyond what would have applied if the company had not been re-registered.

A contributory's liability is an ordinary contract debt owed by the contributory from when the liability began, payable when calls are made to enforce it.

When a contributory dies, the contributory's personal representatives are liable to contribute to the company's assets to discharge that contributory's liability and are treated as contributories.

The contributory's bankruptcy trustee represents the contributory in the liquidation and is treated as a contributory for this Part.

Contributories of a company in liquidation that was registered but not formed under the Companies Act must pay or contribute to: (a) any debt or liability contracted by the company; (b) amounts for adjusting members' rights in respect of such debts; and (c) expenses of liquidation related to those debts. A contributory must contribute during liquidation all amounts due from them in respect of such liabilities. If a contributory dies or becomes bankrupt, the Act's provisions about personal representatives and bankruptcy trustees apply.

Before a company passes a resolution for voluntary liquidation it must give notice to any holder of a qualifying floating charge; the company may pass the resolution after seven days from the date the notice was given or earlier if the holder consents in writing. Voluntary liquidation can occur when the articles' duration expires and the company in general meeting passes a resolution, or when the company resolves by special resolution.

Section 394. Notice of resolution to liquidate Section 394(1)(a) once in the Gazette ; Section 394(1)(b) once in at least two newspapers circulating in the area in which the company has its principal place of business in Kenya; and Section

Voluntary liquidation of a company begins when a resolution for voluntary liquidation is passed.

When a company begins voluntary liquidation it must stop carrying on its business except to the extent necessary for beneficial liquidation.

Any transfer of the company's shares after a liquidation resolution is void, except transfers made to or with the sanction of the liquidator.

Directors must make a solvency declaration including specified statements; the company must lodge a copy with the Registrar within 14 days after the liquidation resolution.

In a members' voluntary liquidation the company in general meeting must appoint one or more liquidators.

If a vacancy arises in a company-appointed liquidator, the company in general meeting must appoint another authorised insolvency practitioner, subject to any arrangement with its creditors.

Liquidators must present an annual account of their acts and the liquidation at the company meeting each year within specified three-month periods; failure is an offence punishable by a fine up to five hundred thousand shillings; the Cabinet Secretary may extend the three-month period for extenuating circumstances.

The liquidator must prepare an account of the liquidation, convene a general meeting to present and explain it, lodge a copy and return with the Registrar within seven days after the meeting, and faces fines for failure to lodge.

If the liquidator believes the company cannot pay its debts within the directors' declared period, the liquidator must convene and advertise a creditors' meeting, provide creditors free information before the meeting, prepare and present a verified financial statement, and attend and preside over the meeting; failure without reasonable excuse is an offence liable to a fine not exceeding five hundred thousand shillings.

Section 404. Conversion to creditors' voluntary liquidation

Except as provided by subsection (2), this Division applies in relation to a creditors' voluntary liquidation; subsections 406 and 407 do not apply if, under section 404, a members' voluntary liquidation has become a creditors' voluntary liquidation.

A company must convene and notify creditors of a meeting for voluntary liquidation and publish notices (Gazette, newspapers, website) and make certain information available; failures attract fines.

Directors must prepare and lay before creditors a statement of the company's financial position (with prescribed details) and appoint a director to preside; the appointed director must attend and preside; failures without reasonable excuse are offences punishable by fines.

Creditors and the company may each nominate an authorised insolvency practitioner as liquidator; the creditors' nominee is the liquidator unless they fail to nominate; if conflicting nominations occur, directors, members or creditors may apply to the Court within seven days, and the Court may order that the company's nominee be liquidator or appoint another person.

Creditors may appoint a liquidation committee of not more than five persons; the company may also appoint up to five committee members; creditors can resolve to disqualify company-appointed persons, in which case they cease to be members unless the Court quashes the resolution; the Court may appoint replacement members on application by creditors.

If a liquidation under section 404 is converted to a creditors' voluntary liquidation and a creditors' meeting is held under section 403, any appointment or committee made by that meeting is treated as having been made by a meeting held under section 406.

When a liquidator is appointed, the directors' powers cease unless the liquidation committee or, if none, the creditors allow them to continue.

If a vacancy arises in the office of liquidator, the creditors may fill it; but subsection (1) does not apply to a liquidator appointed by, or by the direction of, the Court.

The liquidator must present an annual account at each meeting, meetings of the company and its creditors are to be held every twelve months with specified three-month windows, the Cabinet Secretary may extend those three-month periods, and a liquidator who fails without reasonable excuse commits an offence liable to a fine up to one million shillings.

A liquidator must prepare an account and explanation after liquidation, convene meetings within thirty days by notice published as required, make specified returns, and faces fines for failing to lodge returns or convene meetings.

After liabilities are satisfied, a company’s property is to be distributed among its members according to their rights and interests, subject to preferential payment rules and any contrary articles.

The Court may appoint or, on cause shown, remove and replace a liquidator; only an authorised insolvency practitioner is eligible for appointment; acts of a court-appointed liquidator are valid despite defects in appointment or qualifications.

A liquidator must publish the appointment notice in specified venues and lodge a copy with the Registrar within fourteen days; failure is an offence subject to fines.

Liquidator has the power to accept shares or membership rights as consideration when selling a company's property.

A dissenting member may require the liquidator either not to give effect to the resolution or to buy that member's shares (price by agreement or arbitration); related payment and funding provisions and arbitration treatment are set out.

Liquidator, a contributory or creditor may apply to Court to determine liquidation questions; the Court may order as it sees fit if satisfied; Registrar of the Court must forward the order to the Registrar of Companies for registration.

Directors may appoint or nominate a company liquidator only with the Court's approval or, in a creditors' voluntary liquidation, as needed to secure compliance with sections 406 and 407 before appointment; directors who, without reasonable excuse, fail to comply with subsection (1) commit an offence and on conviction may be fined up to five hundred thousand shillings.

Saving for certain rights

Only the High Court has jurisdiction to supervise the liquidation of companies registered in Kenya.

The Court has the power to liquidate a company when any of the listed circumstances apply, including by special resolution, lack of trading certificate, failure to commence or continuous suspension of business, reduction of members (except certain private companies), inability to pay debts, expiry of certain moratoriums, or when the Court considers it just and equitable; the Attorney-General may also apply under section 425(6).

Lists who may apply to the Court for the liquidation of a company (various persons including the company or its directors, creditors, contributories, provisional liquidator or administrator, liquidator in voluntary liquidation; plus special provisions for persons liable under section 386, creditors for certain grounds, the Attorney-General after receiving an inspector's report, and the Official Receiver or authorised person in voluntary liquidation).

Applications for liquidation of a company on public interest grounds may be made on the bases listed in subsection (1); subsection (2) excludes companies already being liquidated by the Court.

The Court may not refuse to make a liquidation order solely because the company's assets are mortgaged equal to or in excess of those assets or because the company has no assets; applicants are entitled to relief by liquidation or other means.

When an application for liquidation has been made, the Court may, on hearing an application, order that pending proceedings against the company be stayed or restrained; subsection (1) provides for applications to the Court to stay or restrain proceedings, and subsection (3) extends this section to any contributory where a creditor makes the application for a company registered but not formed under the Companies Act (Cap. 486).

After liquidation starts, dispositions of the company's property and transfers or alterations in membership are void unless the Court orders otherwise; subsection (1) does not apply to actions by an administrator while a liquidation application is suspended under section 558(1)(b).

If a company is being liquidated by the Court, any attachment, sequestration, distress or execution instigated against the assets of the company after the commencement of the liquidation is void.

Liquidation by the Court begins in three situations: (a) at the passing of the resolution; (b) subject to the Court directing otherwise on proof of fraud or mistake, voluntary liquidation proceedings are to be regarded as validly taken; (2) when the Court makes a liquidation order under section 534 the liquidation commences on making of the order; (3) in other cases liquidation by the Court commences when the application for a liquidation order is made.

A company must lodge a copy of a liquidation order with the Registrar for registration and with the Official Receiver within seven days after the order is made; the order operates for the benefit of all creditors and contributories as if made on their joint application.

The Official Receiver may require prescribed persons to submit a verified statement of the company's affairs; prescribed persons must comply within 21 days unless released or extended by the Official Receiver; failure without reasonable excuse is an offence with fines.

The Official Receiver must investigate a company's failure (to find out why it failed) and generally investigate its promotion, formation, business, dealings and affairs; the Official Receiver's report is evidence in legal proceedings unless disproved.

Court must order a public examination if satisfied an application is warranted; certain creditors and contributories may apply; specified parties may participate and question the person.

A person who, without reasonable excuse, fails to attend their public examination under section 435 is guilty of contempt of Court and liable to punishment; the Court may order arrest, seizure of documents or property, and detention or custody and retention of seized items until the Court orders otherwise.

The Court may appoint a provisional liquidator before, on, or after a liquidation order; only the Official Receiver or an authorised insolvency practitioner are eligible; a provisional liquidator must perform functions and may exercise powers specified by the Court; acts of a provisional liquidator are valid despite defects in appointment.

When the Court orders liquidation, the Official Receiver becomes liquidator; the Official Receiver may convene creditors' and contributories' meetings to choose a liquidator, must decide within three months whether to call such meetings and must give notice if deciding not to, and must convene meetings if requested by creditors holding at least one quarter in value.

The Official Receiver may appoint a qualified person as liquidator in court-ordered liquidations, must decide and (if deciding to appoint) must appoint and notify, and must notify creditors or advertise as directed.

Creditors and contributories at their respective meetings may each nominate a person to be the liquidator when a company is being liquidated by the Court.

The Court may appoint as liquidator either the former administrator whose appointment has ceased to have effect when a liquidation order is made immediately on the administrator's cessation, or the supervisor of an approved voluntary arrangement if a liquidation order is made while that supervisor is in office.

After a liquidation order, separate meetings of creditors and contributories may establish a liquidation committee; the liquidator (unless the Official Receiver) must convene a meeting if creditors holding not less than one-tenth in value of the company's debts request it; a liquidation committee may not perform its functions while the Official Receiver is liquidator (except as insolvency regulations may provide).

When a company is liquidated by the Court the liquidator must realise and distribute the company's assets to creditors, distribute any surplus to those entitled, and must provide information, records and other assistance to the Official Receiver.

When a liquidation order is made, the liquidator must assume control of the company's property.

The Court may order that company property (or property held by trustees for it) vest in the liquidator; once such an order is made the property vests in the liquidator; after giving any indemnity the Court directs, the liquidator may start, defend or continue proceedings to recover that property.

If a court-liquidated company's liquidation is effectively complete and the liquidator (other than the Official Receiver) is satisfied, the liquidator must convene a final general meeting of the company's creditors and must retain sufficient funds to cover its costs; the liquidator may, if appropriate, give the meeting notice at the same time as notice of any final distribution.

The Court may stay liquidation proceedings on application and proof; the Official Receiver must provide a report if required; the company must lodge the Court order with the Registrar within seven days; failure attracts fines.

The Court may dispense with settling a list of contributories in some cases, and when settling the list the Court must distinguish between contributories in their own right and those representing or liable for others' debts.

The Court may order a contributory on the contributories list to pay amounts due to the company (excluding call liabilities) at any time after making a liquidation order; contributories are therefore required to pay such amounts.

The Court has power to make calls from contributories to meet the company's debts, liabilities and liquidation expenses, to adjust contributories' rights, and to order payment of calls; in making a call the Court may consider the likelihood that some contributories will partly or wholly fail to pay.

The Court may order persons who owe money to a company to pay that money into the Central Bank of Kenya to the liquidator's account instead of paying the liquidator directly.

A Court order against a contributory is conclusive evidence that money appearing due or ordered to be paid by that contributory is due; other matters stated in the order are to be taken as true; subsection (1) is subject to any available right of appeal.

The Court has the power to set deadlines requiring creditors to prove their debts or claims, and creditors who fail to prove them by those deadlines may be excluded from distributions.

The Court must adjust contributories' rights between themselves and distribute any surplus to those entitled to it.

The Court may order inspection of a company's records after a liquidation order; the company's creditors and contributories are entitled to inspect all records, and no other persons may inspect them except as allowed by other written law.

The Court may (through an order) direct that liquidation expenses be paid out of the company's assets and give those payments such priority as the Court considers appropriate; such an order takes effect irrespective of provisions relating to preferential debts.

The Court may authorise detention of a person arrested under a warrant, and may order that anything seized under the warrant be kept, when a contributory is about to leave Kenya, about to abscond, or has concealed or removed property to evade payment of calls.

Powers conferred on the Court by this Part are additional to any existing powers to bring legal proceedings against a contributory or debtor, or their assets, to recover calls or other amounts.

Insolvency regulations may enable or require specified Court functions or powers (listed in subsection (2)) to be performed or exercised by the liquidator as an officer of the Court and in accordance with the Court's directions.

Liquidators must be styled either as "the liquidator" (if not the Official Receiver) or "the Official Receiver and liquidator" (if the Official Receiver), must not be referred to by their personal name, and failing to take all reasonably practicable steps to ensure those rules are followed is an offence punishable by a fine not exceeding one hundred thousand shillings.

It is an offence for a person to give, agree or offer to give valuable consideration to a member or creditor of a company to influence the appointment or nomination of a company's liquidator; on conviction the person is liable to a fine not exceeding two million shillings.

Rules on a liquidator's functions in voluntary liquidation: the liquidator may exercise specified powers without approval; must pay the company's debts and adjust contributories' rights; must notify the liquidation committee if disposing company property to a connected person; failure to notify (without reasonable excuse) is an offence with a fine up to two hundred thousand shillings.

When a liquidator has been nominated by the company in a creditors' voluntary liquidation, the liquidator must not exercise the powers given by section 462 before the creditors' meeting under section 406 unless the Court sanctions it; the liquidator must attend the creditors' meeting and must report to the meeting on any exercise of the liquidator's powers; failure without reasonable excuse to comply with this section is an offence punishable by a fine of up to five hundred thousand shillings.

The liquidator may exercise specified Third Schedule powers (with court or committee approval where stated), may exercise Part 3 general powers with or without approval, must comply with subsection (2), creditors or contributories may apply to the Court about the exercise of those powers, subsection (2) does not apply if the Official Receiver is liquidator, and breach of subsection (2) without reasonable excuse is an offence punishable by a fine up to two hundred thousand shillings.

Section 465 gives the liquidator powers to convene creditor or contributory meetings and to apply to the Court for directions; the liquidator must use their own discretion in managing and distributing assets; dissatisfied persons may apply to the Court which may make appropriate orders.

The Court may order a liquidator to rectify failures to lodge or publish required returns, accounts or notices within a period specified in the order; the Court may also order that the liquidator bear the costs of the application; other enactments imposing fines or penalties are not limited.

Section 467 describes how a liquidator in a voluntary liquidation may be removed or vacates office: by a specially convened general meeting of members (members' voluntary liquidation) or of creditors (creditors' voluntary liquidation), by the specified member or creditor majorities, automatically if the liquidator loses insolvency practitioner authorisation, by resignation under insolvency regulations via lodging a notice with the Registrar, and upon final meetings held under sections 402 or 463.

Liquidators may be removed only by the Court or by a general meeting of creditors (for Court-liquidated companies); provisional liquidators only by the Court. Liquidators may resign by notice; former liquidators must lodge notice with the Registrar within seven days, failure to do so is an offence punishable by a fine up to 200,000 shillings.

A liquidator released under subsection (2) is discharged from all liability, effective from the time specified in that subsection.

When released under this section the Official Receiver or a liquidator or provisional liquidator is discharged from all liability from the time specified in subsections (2), (3), (4) or (5); the Court and the Cabinet Secretary may determine the time of release in specified circumstances.

The liquidator of a company in liquidation must distribute the company's assets available for payment of creditors according to the Second Schedule.

If a person distrains on a liquidating company's property within the three months before the liquidation order, that property (or sale proceeds) is charged with the company's preferential debts; if that person surrenders the property or pays money because of that charge, the person ranks as a preferential creditor (subject to an exception in respect of property made available by that surrender or payment).

If company assets available to pay general creditors are insufficient to meet liquidation expenses, those expenses take priority over claims on property subject to any floating charge and are to be paid from that property.

Where a floating charge relates to a company's property, certain persons (including the liquidator, administrator or provisional liquidator) may apply to Court and the Court may order adjustments to subsection (2); the section defines "company's net assets" and "floating charge."

The Court may appoint a special manager to manage a company's business or property when the company is in liquidation or a provisional liquidator has been appointed, on application by the liquidator or provisional liquidator; the special manager must give prescribed security and keep and produce prescribed accounting records, and failure to comply with record obligations is contempt of Court.

The liquidator may disclaim any onerous property by giving the notice prescribed by the insolvency regulations; a person who suffers loss from such a disclaimer may prove for that loss in the liquidation.

Section 477 sets special provisions about disclaimer of leaseholds, including a 14-day condition for applications under section 479 and the Court's power to make orders directing disclaimer to take effect and, if it does so under subsection (1)(b), to make orders about fixtures, tenant improvements and other lease matters.

A person who becomes the owner of land by operation of law after a disclaimer of a rentcharge is exempt from liability for amounts under the rentcharge, except for amounts that become due after the proprietor (or someone claiming under the proprietor) has taken possession, control, or occupied the land.

Section 479 governs court powers and who the section applies to for property disclaimed by a liquidator; the Court may order vesting of disclaimed property in certain persons only if it is just to compensate a liable person.

The Court may make orders vesting a company's lease interest in another person (including freeing that interest from encumbrances) when subsection (1) applies and certain persons will not accept the required terms.

A creditor cannot keep the benefit of execution or attachment against the liquidator unless the creditor completes the execution or attachment before the liquidation commences.

Judicial enforcement officers must, if required, deliver goods and money seized under execution to the liquidator; liquidator may sell delivered goods to satisfy execution costs which are a first charge; where execution relates to judgments over fifty thousand shillings the enforcement officer must deduct costs and retain the balance for at least fourteen days; the Court may set aside the liquidator's rights in favour of a creditor; insolvency regulations may change the amount in subparagraph (4).

A person who, against the liquidator, is entitled to or subject to a contract may apply to the Court; the Court may rescind the contract on such terms including damages; damages under the order are provable as a debt in the liquidation.

The liquidator may pay amounts the company decided to pay to employees or former employees on cessation or transfer of business, subject to conditions and Court control when in court liquidation.

A company in liquidation must state that it is in liquidation on all invoices, orders, business letters, order forms and its websites.

The liquidator must use any surplus remaining after paying proved debts to pay interest on those debts before applying the surplus for any other purpose.

Certain documents relating to a company in liquidation are exempt from stamp duty, except where the liquidation is a members' voluntary liquidation.

When a company is in liquidation, the company's records and the liquidator's records (between the contributories) are evidence of the truth of matters recorded in them unless contrary evidence is proved.

If a company's liquidation is not completed within twelve months of commencement, the liquidator must lodge periodic statements with the Registrar at intervals prescribed by the insolvency regulations and until the liquidation is completed.

A resolution passed at an adjourned meeting of a company's creditors or contributories is treated as having been passed on the actual date it was passed, not on any earlier date.

The Court may order and direct meetings of creditors or contributories to ascertain their wishes and may appoint a chairperson; the Court must take into account creditors' debt values and contributories' voting numbers.

Judicial notice is to be taken of documents of the Court; mentions signature of an officer of the High Court.

Courts, tribunals, judges and other persons acting judicially must take judicial notice of seals, stamps or signatures on affidavits or other documents used for the purposes of this Part.

When a liquidator files the final account and return, the Registrar must register them; three months after registration the company is dissolved, but the Court may defer that dissolution; if an applicant fails to lodge a copy of a Court order within seven days they commit an offence with fines specified.

If the Court has ordered a company's liquidation and the Official Receiver is liquidator, the Official Receiver may apply for early dissolution (on grounds including insufficient realisable assets or no further investigation needed) but only after giving at least thirty days' notice to creditors and contributories; on giving that notice the Official Receiver is no longer required to perform other functions except the duty to make the application; the Registrar must register the application and, three months from and including the date of registration, the company is dissolved.

If a notice under section 495(3) has been given, the Official Receiver or any creditor or contributory may apply to the Court for directions; the Court may give directions including deferring dissolution; within seven days after directions are given the applicant must lodge a copy with the Registrar; failure to lodge without reasonable excuse is an offence punishable by fines (up to 200,000 shillings, and continuing failures up to 20,000 shillings per day).

The Registrar must register a lodged notice; the company is dissolved three months after registration; the Court may defer dissolution on application; the applicant must lodge the court order within seven days; failure to lodge without reasonable excuse is an offence with fines.

Makes it an offence for company officers or others to conceal, remove, falsify or improperly dispose of company property or documents in anticipation of liquidation; includes a monetary threshold, an exception for ordinary-course transactions, and penalties up to a fine of two million shillings or five years' imprisonment.

Makes certain conduct by an officer or former officer during liquidation an offence and prescribes penalties; includes a five-year limitation and a defence of no intent to defraud.

Officers or former officers of a company in liquidation commit offences for failing to disclose or deliver company property or documents, preventing production of documents, failing to inform the liquidator of known false debts, or accounting by fictitious losses; defences and penalties apply.

It is an offence for a person, in relation to a company in liquidation, to destroy, damage, alter or falsify company documents or make false or fraudulent entries in company records; on conviction the person may be fined up to two million shillings or imprisoned for up to five years, or both.

Officers or former officers of a company in liquidation commit an offence if they make a material omission from a statement about the company's financial position (including omissions made before liquidation began); it is a defence to show no intention to defraud; penalties include a fine up to one million shillings or up to twelve months' imprisonment, or both.

Officers or former officers of a company in liquidation must not make false representations or commit other fraudulent acts to the company's creditors; doing so is an offence punishable by a fine and/or imprisonment.

The Court may make orders against officers, liquidators or others involved with a liquidated company for misapplication of company money or property or for misfeasance or breaches of duty, including ordering repayment, restoration, accounting with interest, or contribution to company assets as compensation.

If, during liquidation, the liquidator believes the company's business was carried on to defraud creditors and specified persons participated with that knowledge, the Court may order those persons to contribute to the company's assets; those persons are entitled to be served and to appear and be heard.

In liquidation the liquidator may apply to court to order an officer to contribute to the company's assets if the officer knew or ought to have known there was no reasonable prospect of avoiding insolvent liquidation; the court may make such an order when satisfied of that, but must not if satisfied the officer took reasonable steps to avoid creditor loss.

Section 507 provides supplementary powers and procedures for proceedings under sections 505 and 506, including that the liquidator may give evidence, the Court may make further orders to give effect to orders, the Court may alter ranking of a creditor's debt, and the Court may make orders despite possible criminal liability.

Directors of companies that are in insolvent liquidation who were directors during the 12 months before liquidation commencement must not be directors of, or be involved with, other companies or businesses known by a prohibited name.

Persons involved in management in contravention of section 508, or who act or are willing to act on instructions (without Court approval) from persons listed in subsection (2), can be held personally liable for the company's relevant debts.

Liquidators must report suspected offences by past or present officers or members to the Official Receiver; the Court may direct a liquidator to report; the Official Receiver must report to the Attorney-General when appropriate; the Attorney-General shall investigate and may exercise inspector powers.

Section 511 imposes obligations to assist investigations under section 510, restricts prosecution use of answers given under section 510(8), and empowers the Court to order compliance or costs with specified limits.

For this Part, an "unregistered company" includes any association and any company that is not registered under the Companies Act (Cap. 486).

Unregistered companies may be liquidated under Part VI, the liquidation provisions of that Part apply to unregistered companies, and unregistered companies may not be voluntarily liquidated under this Part.

An unregistered company may be liquidated by the Court where specified grounds exist (dissolution, ceased business, carried on only to liquidate affairs, unable to pay debts, or just and equitable), and a creditor seeking liquidation must have served a written demand requiring payment.

A company incorporated outside Kenya that had been carrying on business in Kenya and then ceases to do so can be liquidated as an unregistered company under this Act; this effect applies even if the company has been dissolved or otherwise ceased to exist under its home law.

Each contributory must contribute to the company's debts, adjustments between members, and liquidation expenses.

If a creditor applies to stay or restrain proceedings after an application for liquidation and before a liquidation order, the Part's provisions also apply to proceedings against a contributory of an unregistered company.

If an order has been made for liquidating an unregistered company, no legal proceedings may be begun or continued against a contributory of the company in respect of any debt of the company except by approval of the Court and subject to terms the Court may impose.

Provisions relating to unregistered companies are additional to Part VI, and the Court or liquidator may exercise any powers or do any act in respect of unregistered companies that they could exercise when liquidating a registered company under the Companies Act (Cap. 486).

This Part provides definitions for terms used in Part VIII (administration of insolvent companies), including 'administrator', 'creditors' meeting', 'floating charge', 'market value', and references to related sections for 'enters administration' and 'objective of administration'.

A company is 'under administration' while the appointment of an administrator of the company continues to have effect.

An administrator of a company must perform their functions in the interests of the company's creditors as a whole, subject to subsection (4).

The Court has the power to appoint an administrator by administration order in accordance with Division 3.

The administrator of a company must perform the administrator's functions as quickly and efficiently as is reasonably practicable.

An administrator is an officer of the Court, whether appointed by the Court or not.

A person may be appointed as administrator of a company only if the person is an authorised insolvency practitioner.

A person must not be appointed as administrator of a company that is already under administration, except as provided by subsection (2).

An administrator must not be appointed where the company is in liquidation.

An administrator must not be appointed in respect of (a) a company that is a bank, or (b) a company that enters into contracts of insurance or carries on insurance business; subsection (1) is subject to section 35A of the Banking Act (Cap. 488).

An administration order appoints a person as the administrator of a company and provides for administration of the company by that person.

A condition for making administration orders is that the company is or is likely to become unable to pay its debts.

Lists who may apply to the Court for an administration order in respect of a company: the company; the directors; one or more creditors; combinations of those persons; any prescribed class of persons; persons entitled to appoint an administrator under section 534; and other persons prescribed by the insolvency regulations.

On hearing an application for an administration order, the Court has a range of powers including making the order sought, dismissing the application, adjourning the hearing, making interim or other appropriate orders, treating it as a liquidation application under section 426, and restricting directors' or the company’s powers or conferring discretion on the Court or a qualified insolvency practitioner; timing of orders is either at a time specified in the order or, if none is specified, when the order is made.

The holder of a qualifying floating charge over a company's property may appoint an administrator of the company.

A person may not appoint an administrator under section 534 unless they have given at least three days' notice to the holder of any prior floating charge that meets subsection (2).

A person must not be appointed as administrator under section 534 if the floating charge on which the appointment depends is unenforceable.

The holder of a qualifying floating charge must notify the Court when appointing an administrator by giving a notice of appointment complying with subsection (2) and any other documents prescribed by the insolvency regulations.

An administrator’s appointment under section 534 takes effect when the requirements of section 537 are satisfied.

The person who appointed the administrator must, as soon as reasonably practicable after the requirements of section 537 are satisfied, notify the administrator and any persons prescribed by the insolvency regulations; failure without reasonable excuse is an offence punishable by a fine not exceeding five hundred thousand shillings.

The Court may order a person who purported to appoint an administrator invalidly to indemnify the person appointed for liabilities caused solely by the appointment's invalidity.

A company, and its directors, may appoint an administrator.

Restrictions on power of company or its directors to appoint administrator

If a moratorium for a company ends on a date when no voluntary arrangement is in force, this section applies for the twelve months from and including that date; while it applies, an administrator of the company may not be appointed under section 541.

A company or its directors must not appoint an administrator when an application for the liquidation of the company has been presented and is not yet disposed of.

A person proposing to appoint an administrator under section 541 must give a notice complying with subsection (3) to any person entitled (or who may be entitled) to appoint an administrator under section 534, and must also give such notice to other persons prescribed by the insolvency regulations; the notice must be given at least seven days before the appointment.

A person giving notice of intention to appoint an administrator must lodge certain documents with the Court, including a copy of the notice and any accompanying documents, and a statutory declaration complying with subsection (2).