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Kenya Companies Act 2015

This morning, a session was held by the law firm of  Anjarwalla & Khanna in Nairobi to advise stakeholders abount the new Companies Act and Insolvency Act that are now law.

The Cabinet Secretary for Industrialisation, Adan Mohamed, said that the day when President Uhuru Kenyatta signed 4 bills into law – the companies act, insolvency act, special economic zones act and business registration act – was his proudest day in two years in the Cabinet.

Partners at the law firm explained various sections of the new companies act including:
  • It makes businesses easy to register and operate – and one person can form a company.
  • Memo (can be one page long) & articles are simpler
  • Role of the company secretary has been clarified. Corporate governance has been clarified with penalties for directors and management including for conflict of interest.
  • 30% local shareholding in a foreign company. Adan said this was a mistake that the government would rectify. The team from Anjarwalla & Khanna said that while the 30% rule  is probably constitutional it’s impractical, and the AG & government agree. They also explained that it is for new branches only – and does not apply to existing branches, or to any subsidiaries of foreign companies
  • It gives minority shareholders court powers if main shareholder/management are prejudicial or make bad decisions / transactions on behalf of the company
  • New company is able to do anything including borrow unless if it restricted
  • PE Investor oversight: Investors can attend board meetings as observers  and  without being directors or  legally bound by decisions
  • A company must have at least one natural person as a director (all companies have 6 months to rectify this)
  • Companies can buy back shares from other shareholders
  • Kshs. 6.75 million (~$67,500) is the minimum paid-up share capital for a public company (this will affect some land owning companies and large property developers)
  • Public companies need to know who beneficially owns their shares (the true owners behind proxies)
  • Companies are required to have websites and to publish financial statements online
  • Share buy backs are now allowed.
  • All shareholders have rights to preemption when companies create new shares – (and this can only be from profits, not new money)
  • MBO and LBO: Banks could not finance acquisitions, but now they can. e.g. Management can to a  bank and use the assets of the company secure financing to buy it or pay off foreign outgoing shareholders – (this opens another exit opportunity for investors)
Adan also said that the insolvency law, which previously was aimed on recoveries for secured creditors, is now focused on bringing insolvent companies back to life.
November 9, 2015.

Farewell Dubai Bank

Kenya’s smallest bank Dubai Bank was placed into receivership about two weeks ago. It took control and suspended all operations of the bank except to ask borrowers to continue servicing their loans.

A few days after taking charge, the Kenya Deposit Insurance Corporation  (KDIC) as receiver revised its role and announced that Dubai bank would be liquidated, with each depositor paid a statutory maximum of Kshs 100,000 (~$1,000) once they file a claim that’s proven, and any larger deposit customers  would share in the proceeds of the liquidation equitably.

In the past, banks that have been put into receivership rarely ever come back. From Euro Bank, Daima Bank, and even a (strong) Charterhouse Bank never reopened their doors after receivership. This is because banking relies on trust and confidence, and if the public have no faith in an institution, it’s difficult for it to operate, attracting deposits from customers, and entering into settlement transactions with other banks.

For Book Lovers Redux

It’s been a few years since I wrote this post to celebrate the concept of Book Villa which was a combination of library and a book shop. But while it’s sad that the Book Villa has recently gone out of business, that does not mean that are less reading books to be found in Nairobi.

5. There are book torrents..

4. There’s the Kindle and other book readers, tablets, and software platforms that bring new or obscure books within easy reach for those who have e-reader devices and credit cards.
3. There are regular established book shops like Prestige (Mama Ngina St), Bookpoint (Moi Ave), Text Book Centre (Sarit Centre) and BookStop (Yaya Centre)

2. The above bookshops carry many local books, but not all as there are many more rare biographies and history books in university libraries or sitting in publishers vaults. Sadly for many researchers, some new books published locally don’t contain indexes & references.

1. There are also local street vendors and book shops who collect and sell old & used books at very low prices. But searching for a specific book is not easy, and it takes many hours or days to visit all the shops. For a real treat, books vendors in India are a better experience, as a pal easily found this rare book that I had been scouring for many years.