Change of Company Directors in Kenya: Step by Step guide
Directors are important in the running of a company.
Change of company directors is usually lodged at the company registry on behalf of the directors of the company by a Certified Public Secretary of Kenya.
In Kenya, there are requirements and procedures followed under the Companies Act 2015.
The subscribers to the company’s memorandum of organization normally appoint the company’s first directors in writing.
Following that, a person interested in serving as a director may be appointed by ordinary resolution or by a decision of the directors, as permitted by the company’s articles of organization.
A private company must have at least one director or as many as the company’s articles of incorporation specify.
If more than one director is chosen, at least one must be a natural person.
There is no limit on the number of directors unless the articles of incorporation state otherwise.
When a company is in administration, the administrator has the authority to nominate and dismiss directors.
The Registrar of Companies must be notified of a director’s appointment within 14 days after the appointment.
Criteria for changing a director.
Before changing a director, the organization must make sure that he or she satisfies at least one of the following criteria:
• Resigns and sends a letter of resignation to the firm.
• Is declared bankrupt or enters into any type of creditor agreement
• Is dismissed from office under Table “A” Part I Regulation 96 or Article 32
• Becomes afflicted with a mental illness
• For the reasons indicated in Section 189 of the Act, he is unable to serve on the board of directors.
How to change directors of a company in Kenya.
In Kenya, a director is appointed during the company’s incorporation, during the Annual General Meeting, or by an Ordinary Resolution of the company.
The Company’s Articles of Association control how directors are appointed, dismissed and retired in Kenya.
This is especially true for businesses with Kenyan-registered Memorandum and Articles of Association.
Change of company directors has the right to resign at any moment. Within fourteen (14) days after the resignation, the Company must notify the Registrar.
Requirements:
• A letter of resignation from a director expressing his or her desire to quit the organization.
• The Registrars of Companies demand an Affidavit of Resignation.
• In the minutes of a board of directors meeting, the resignation was disclosed (notice that all directors must sign the extract of the meeting minutes).
Removal of a Company Director in Kenya.
The change of company directors may remove a director from office by ordinary decision at a meeting before the end of the director’s term of office, subject to the director’s ability to challenge removal under Section 139 of the Companies Act.
The company’s members and the delinquent director must be given special notice of the resolution.
The director may submit written representations to the company regarding the motion within twenty-one days of receiving the notification and request that the members of the business be told of the representations.
Every member of the firm who receives notice of the meeting receives a copy of the representations. A resolution to remove the director is then passed and a new director may be appointed at the meeting to fill the vacant position.
When a director is removed from the office in Kenya?
A director can be removed from office in Kenya by a Special General Meeting.
An Extraordinary General Meeting with Additional Notice is required as a result of this (28 days). All shareholders and directors must receive the notice.
Following that, the meeting will vote on a Special Resolution to remove the director from his position.
The corporation must make certain that the notice of the meeting reaches the departing director.
This can be done through registered mail or with a regular email account.
What happens if a director passes away?
You’ll need the meeting minutes to show that the firm was informed of the director’s death.
You’ll need to create the minutes and upload the death certificate to file the revisions.
A person may retire or be removed from office during an Annual General Meeting.
At the Annual General Meeting, a company’s director may be removed from office by retirement (being eligible but does not offer themselves for re-election).
Shareholders can also remove a director by refusing to re-elect an eligible director who has expressed interest in remaining on the board.
Documents to file for removal of change of company directors in Kenya.
1. Resignation from office
You must submit the following documentation within fourteen (14) days:
(a) Letter of resignation;
b) A statutory declaration that the director is resigning freely;
c) An example from a Board of Directors meeting minutes that mention the resignation;
d) Notice of Directorship Termination (Form CR 9).
2. Removal of a director
You must supply the following documentation within fourteen (14) days:
(a) A copy of the twenty-eight (28)-day special notice served under sections 139(2) and 287 of the Companies Act, or, if that notice is not practicable, a copy of the fourteen (14)-day notice of the resolution advertised in a newspaper with a wide circulation in the area where the company does business, or in any other manner permitted by the articles;
(b) Proof of service to the director of a copy of the company’s special notice, with at least twenty-one (21) days’ notice;
(c) Proof of service of a general meeting notice for at least twenty-one (21) days in the case of a private corporation.
d) Notice of change of company director Termination (Form CR 9),
e) Extract of Minutes Verifying Quorum and Dismissal (Form CR 19).
If a director resigns due to rotation but is not re-elected at a General Meeting, the following happens:
(a) Termination of Directorship Notice (Form CR 9).
(b) A copy of the minutes on Form CR 19 verifying the quorum and status of the meeting.
c)Retirement
The following steps must be undertaken when a director departs the company because he or she has reached retirement age:
(a) Termination of Directorship Notice (Form CR 9).
(b) A copy of the minutes on Form CR 19 verifying the quorum and status of the meeting.
3. Lack of capacity of a director
i)Death
(a) Form CR 9 – Notice of Directorship Termination;
b) A copy of the death certificate that has been certified;
(ii) Insanity
(a) Form CR 9 – Termination of Directorship
(b) Report on the Mental Health Act (Mental Health Act needs to be reviewed further).
(iii) Bankruptcy
(a) Notice of Directorship Termination (Form CR 9).
(b) A copy of the bankruptcy order issued under the Insolvency Act.
There are a few items to consider before applying to remove a director:
• E-citizen stipulates that the enterprise be internet-connected.
• The Beneficial Ownership information must have been updated with the Registrar of Companies.
• The annual returns of the corporation must be current.
• The removal or resignation of a director must meet all of the requirements.
The procedure of the change of directors in Kenya.
Under Kenya’s Companies Act, No. 17, the method for changing directors is as follows:
Requirements for a new director.
• Obtain the consent of the person who has been appointed as the director.
• Obtain the new director’s residential address and file CR 8.
• Obtain the new director’s PIN, National ID, and passport photo.
• CR 6 is the file number.
A director who is leaving
• Obtain a resignation letter from the director in writing.
• CR 9 is the file number.
• An intermediate yearly return is required to be filed in both cases.
How do you distribute shares after the company has been registered?
After the company has been registered, the company secretary will file a return on allocation to allot shares.
A CR 12 form should be kept in the company’s registration.
Once the changes have been made, obtain a new list of shareholders and directors (CR12).
What are the conditions?
Certificate of Incorporation, Memorandum, and Articles of Association of the company
PIN, ID, and passport copies for the new director.
Removal Company directors In Kenya by Ordinary Resolution.
Sections 168 and 169 of the Companies Act 2006 establish a legal method for shareholders to remove a director by ordinary resolution at a general meeting if the company’s articles do not provide for it.
The following procedures should be followed:
• By submitting the business, a ‘Special Notice,’ a shareholder can propose a resolution to remove a director before the end of his or her term of office.
Board of directors.
• The board of directors should call a general meeting of shareholders to vote on the proposed resolution as soon as they receive this notice. The corporation must hold the general meeting at least 28 days after receiving the special notification.
• The general meeting must be announced to all shareholders and the director who is facing dismissal.
• The director has the opportunity to submit written contributions prior to the general meeting.
At the general meeting, change of company directors in question may speak and make additional representations.
• The proposed resolution will be voted on by shareholders, who will either support or reject it.
The motion passes if a simple majority (more than 50%) of the votes cast are in support of the director’s removal.
• It is not required to give a reason for the director’s departure; however, it is common practice.
• If the director is removed in violation of employment law, his or her service contract, or the terms of any shareholders’ agreement, the director may be entitled to damages if the matter is taken to court.
A written decision of the shareholders is not permitted to remove a director.
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For assistance on the appointment, resignation, and removal of a director in Kenya, please contact us at; legal1@companyregistrationkenya.com or call/WhatsApp +254114503453for assistance.