Company law to be effected in stages, says AG in printed rules


Attorney-General Githu Muigai has published regulations that bring parts of the company law into force.

The Companies (General) Regulations, 2015, will make sections of the law that are not in contention take full force by the end of the month.

Parts of the 760-page Act became applicable in November 6 and the new set of regulations is meant to enforce them.

“The Attorney-General has published the Regulations for the operationalization of phase I in a special issue of the Kenya Gazette and will come into force 14 days after the publication,” reads a statement to newsrooms.

The Registrar of Companies has also prepared the Registrar’s Rules, which prescribe the forms to be used under the Act.

Prof Muigai said the law had been staggered into phases to allow time for enough consultation on the new concepts under the regulation.

The AG suspended a clause in the law requiring foreign companies operating in Kenya to transfer 30 per cent of their shares to a Kenyan by birth.

The business community was concerned about the clause in Section 975(2b), saying it would hurt investments because it will make it difficult for foreigners to set up shop in Kenya.

The local ownership rule sparked protests from foreign firms, which were facing problems securing local partners with the right expertise and financial muscle to support their businesses.

It was tried out in the telecoms industry and failed.


However, the clause can only be amended six months after it comes into force, which means the business community will only have a go at the clause in May next year.

The old Companies Act, Cap 486 has been in operation since President Uhuru Kenyatta signed the new law in September 11.

Prof Muigai said the new provisions would come into effect in two phases, through legal notices.

The Companies Act is expected to herald radical reforms, including allowing one person to form a company offering him/her legal backing to go it alone and form a private firm as the sole member and director, and hence enjoy the advantage of the limited liability aspect of registered companies.

Industrialisation Cabinet Secretary Adan Mohamed said the laws are aimed at giving start-ups a smooth entry into the business space and allowing them to conveniently scale up.

Companies with less than Sh5 million in capital can operate without a company secretary. However public entities are required to have at least one.

The law has also introduced changes in how firms are named; a public company registered with a name that ends with the words “public limited company” (PLC) while a private company simply ends with the name “Limited” or “Ltd”.