A. CORPORATE AND COMMERCIAL

The Companies Act

The stake required for an acquiring party to purchase, before enforcing a squeeze-out, has been restored to 90% from the current stake of 50%. This increase in the squeeze-out threshold seeks to restore the protection of the rights of minority shareholders, especially in listed companies.

Companies no longer require to use a common seal in executing contracts.  Contracts entered into by companies may be executed by persons acting under the company’s authority such as the directors, the company secretary or a person holding a power of attorney.

Holders of bearer shares have documentation of share ownership but are not recorded as members in the register of members of the company. Bearers of share warrants are now required to convert their warrants into registered shares within 9 months of enactment of the Act and to notify the Registrar of such conversion within 30 days.

Insolvency Act

The courts will consider additional factors when seeking to lift a moratorium in insolvency. These include the perishability of a movable asset (and whether or not it is being used to maintain the company as a going concern), whether the value of the secured creditor’s claim exceeds the value of the encumbered asset, whether the secured creditor is not receiving protection for the diminution in the value of the encumbered asset, whether the encumbered asset is not needed for the re-organisation or sale of the company as a going concern.

The Act gives creditors the right to request for information from the insolvency practitioner in respect of the insolvency process. This provision will provide more transparency in relation to the insolvency process.

B. CONVEYANCING AND REAL ESTATE

The Law of Contract Act

The Act recognizes the use of advanced electronic signatures and electronic signatures (the forms of signatures are defined in the Act) as a valid mode of execution of documents in Kenya.

The Stamp Duty Act

The Act provides that documents can be electronically stamped, adding on the initial provision which only recognized stamping by a franking machine or an adhesive stamp.

Registration of Documents Act

The Act has been amended to provide for electronic filing of documents in Nairobi and the Coast Registry. This will ease the process of applying for registration of documents under the RDA, as one may not require to physically present a document for registration at either of the Registries.

 Land Registration Act (LRA)

The Act has abolished the requirement to provide land rate and land rent clearance certificates for effective registration of interest in and. Transferees, therefore, have the responsibility to carry out their own due diligence and satisfy themselves that rent and rates have been paid in order to avoid assuming these liabilities.

The LRA has also been amended to provide for use of electronic signatures and advanced electronic signatures. The LRA now permits electronic processing and execution of instruments relating to land. This will improve the efficiency of land transactions, especially where the parties are outside Kenya at the time of execution.

C. EMPLOYMENT AND LABOUR

The Occupational Safety and Health Act

New businesses, with less than one hundred (100) employees, no longer need to register at the National Council of Occupational Safety and can now operate without registration of a workplace for a period of twelve months from the date of registration of the business. This provision is especially helpful to small and medium-sized enterprises that may need more time to register their workplaces.

D. CONSTRUCTION

National Construction Authority Act

The National Construction Authority (NCA) has been authorised to enforce the Building Code in the construction industry. Moreover, NCA will oversee matters concerning compliance with the Building Code. The NCA will also have the power to promulgate regulations relating to and to conduct mandatory inspections of the construction sites with a view to verify and confirm whether contractors are complying with the construction regulations. The NCA further has the power to punish parties for non-compliance with the set regulations.

E. TAX

Companies that incur a capital expenditure of at least Kenya Shillings Five Billion on the construction of bulk storage and handling facilities with a minimum capacity of one hundred thousand metric tonnes in relation to the Standard Gauge Railway (SGR), will be entitled to investment deductions equal to 150% of the capital expenditure incurred from the year of first use of the facility. Additionally, taxable supplies whether purchased locally or imported for the construction of bulk storage in support of the SGR operations are exempted from paying import declaration fees.

A 25% tax has been imposed on imported glass bottles under the Excise Duty Act.

Note:

The adoption of the above amendments is intended to improve the ease of doing business in Kenya. It is however important to note that their implementation will take quite a while, as for example, the land registry is yet to fully digitize its records, so electronic provisions may take a while to realize. There is need for capacity building of available entities to realize the new provisions.