Although not mandatory, the Act previously allowed a Company to use its seals (that is, official and common seals) to among others, enter into contracts, execute documents and deeds, and seal securities issued by the company or documents creating or evidencing the securities so issued.

1. Amends sections 35 and 37 to provide that companies will no longer require a company seal to enter into contract and they will no longer have the option of executing their documents by affixing their common seal (if any) and having the document witnessed by a director.

2. Deletes sections 38, 42 and 43 which related to the use of a common seal for execution of documents, an official seal for agreements entered into outside Kenya and to s3al share certificates.

1. The repealed Companies Act, Chapter 486 allowed companies to issue bearer shares.

2. The Companies Act, 2015 prohibited companies from issuing bearer shares after the commencement of the Act.

Note: A bearer share refers to an equity security owned by the person who holds the physical share warrant. The shares would be transferred by delivery of the warrant. Any dividends on the shares would be paid to the person holding the warrant at the time.

1. Amends section 504 to allow for the conversion of bearer shares that were issued under the old Companies Act (Chapter 486) into registered shares.
2. It is the duty of a company to ensure that a bearer share is converted into a registered share.
3. Requires a company to notify the Registrar within thirty (30) days of the conversion of a bearer share into a registered share.
4. The holder of a bearer share cannot exercise the rights attached to a bearer share unless the bearer share is converted into a registered share.A company which fails or refuses to ensure that a bearer share is converted into a registered share within nine (9) months of the coming into operation of the Amendment Act, commits an offence and is liable on conviction, to a fine not exceeding Kenya Shillings five hundred thousand shillings (Kshs 500,000 approximately US$5,000).
5. Deletes paragraph 21 of the sixth schedule which recognized the continuity of bearer shares issued under the old Act

As discussed in our previous update, the Companies Act, through the Statute Law (Miscellaneous Amendments) Act, No. 12 of 2019, reduced the threshold for “squeezing-in” and “selling-out” of shares in a company to control of at least fifty percent (50%) of the shares of the company from control of at least ninety percent (90%) of the shares.

1. Amends section 611 to allow an offeror holding at least ninety percent (90%) of the shares of the company (whether in relation to the value of the shares or voting rights), to squeeze out minority shareholders during takeovers.

Previously, the Act only allowed the members of a company entitled to receive a notice of a General Meeting to require a company to circulate a statement with respect to:

(a) a matter referred to in a proposed resolution to be dealt with at that meeting; or

(b) other business to be dealt with, at that meeting.

1. Members entitled to receive a notice of a General Meeting now have the power to require a company to circulate a statement in relation to, and in the case of a quoted company, a new item to be put in the agenda of the general nature of business to be dealt with at the meeting. This amendment is included under Section 289(1)(b).

In relation to the above amendment, a company can only circulate the said statement if requested to do so by members representing at least five percent of the paid up capital of the company. This amendment is included under Section 289(2)(c).

Previously, the court only had to consider the following when lifting a moratorium:

• the statutory purpose of the administration;

• the impact of the approval on the applicant particularly whether the applicant is likely to suffer significant loss;

• the legitimate interests of the applicant and the legitimate interest of the creditors of the company, giving the right of priority to the proprietary interest of the applicant; and

• the conduct of the parties.

1. Deletes section 560A (d) and inserts the following additional factors for the court to consider when lifting a moratorium. These factors are:

• whether the value of the secured creditor’s claim exceeds the value of the encumbered asset (an asset that is the subject of a charge etc.);
• whether the secured creditor is not receiving protection for the loss in value of the encumbered asset;
• whether the provision of protection to the secured creditor may be feasible or overly burdensome to the estate of the Company;
• whether the encumbered asset is not needed for the reorganisation or sale of the company as a going concern;
• whether relief is required to protect or preserve the value of assets such as perishable goods; and
• whether in reorganisation of the company, a plan is not approved within six (6) months.

2. An approval to lift a moratorium shall be for a period of not more than twenty-eight (28) days.

Previously, the Insolvency Act did not contain any provision for the manner of processing requests of information by creditors from an insolvency practitioner.

1. Inserts section 723A which requires an insolvency practitioner to provide information requested by a creditor within five (5) business days after receiving such request or within the period agreed by the parties.
2. An insolvency practitioner can only extend the period for providing the information after issuing a notice to the creditor.
3. The notice must specify the reasons for such extension and period within which the requested information shall be provided.

Previously, the First Schedule to the Excise Duty Act did not provide for the taxation imported glass bottles.

1. In a bid to encourage local manufacturing of glass bottles, the Amendment Act has imposed excise duty at the rate of twenty-five percent (25%) for imported glass bottles.

Please note that the above rate does not apply to imported glass bottles for packaging of pharmaceutical products.