Business & Corporate Law

Caption Placed Here

Concept of Company Law in Kenya

Section 2(1) of the Kenyan Companies Act, Cap 486, provides a vague definition of a “company” as a legal entity formed and registered under the Act or an existing company. The term “company” is not a precise legal term, and its legal attributes depend on the specific legal system in question. In legal theory, a “company” refers to an association of individuals who contribute money or assets to a common stock for a shared purpose, typically related to economic gain. Kenya’s legal system recognizes three types of associations: companies, partnerships, and cooperative societies. Company law, a branch of law distinct from partnership law, comprises common law and statutory rules, with the Companies Act (Cap 486) serving as a crucial legislative source. It’s important to note that the Kenyan Companies Act is not a comprehensive code but was borrowed from the English Companies Act of 1948, primarily a consolidating act, requiring interpretation through common law principles.

Fundamental Concepts of Company Law in Kenya include the legal personality of a company, treating it as a separate legal entity from its members, whether human or non-human. Legal persons are not exclusively human; they can include entities like corporations, created by law rather than natural birth. These non-human legal persons are often called artificial persons, not fictitious persons. Limited liability is another vital concept in company law, denoting the extent to which a person is legally accountable for debts. Under the Companies Act, liability in a company can be limited either by shares or by guarantee. In companies limited by shares, members’ liability to contribute is limited to the amount paid on their shares. In companies limited by guarantee, members agree to contribute a specified amount to the company’s assets if it’s wound up.

Company law in Kenya primarily serves the protection of the company’s creditors and investors (the members), forming the foundation of the legal framework. To form a limited company in Kenya, individuals wishing to do so must prepare and register specific documents, including the Memorandum of Association, the Articles of Association, and a Statement of Nominal Capital (if the company has a share capital). The Memorandum outlines the company’s objectives and constitution, while the Articles of Association detail the rules governing the company’s internal affairs. These documents must be signed by a specific number of individuals and attested by a witness. If the company has a share capital, each subscriber must specify the number of shares they are taking, with a minimum of one share.

Get in touch for more insight

Businesses and corporations have a wide variety of legal needs throughout their existence, from assistance with entity formation to matters concerning employment law, regulatory compliance, mergers and acquisitions, and dispute resolution. 

Let us help you!

If you need any helps, please feel free to contact us. We will get back to you with 1 business day. Or if in hurry, just call us now.

Call : (1)2345-2345-54

law@doadvocates.com Any time

Firm’s Profile