In response to the COVID-19 outbreak, the government adopted a severe lockdown policy, including suspending all public gatherings and stopping movement of persons across certain counties, in order to curb or otherwise contain the spread of the virus. In particular, Rule 7 of the Public Health (Covid-19/ Restriction of Movement of Persons and Related Measures} Rules, 2020 expressly prohibits any public gathering during the ongoing pandemic.

As a result, it has not been possible for companies, who so desire, to hold an AGM with its members being physically present.

On 15th May 2020, Mr Nicholas Alexander Nesbitt, instructed us to move the court in HC Comm. Misc. E721 of 2020 Nicholas Alexander Nesbitt And Registrar of Companies to allow AGMs to be conducted virtually. The Application, inter alia, sought leave to conduct virtual or hybrid meetings on the basis of the impracticability to hold physical general meetings due to the ongoing novel Coronavirus 2019 (COVID-19) pandemic and the related Public Health Regulations and Directives passed by the Government of Kenya precluding public gatherings. 

A consent order was entered on 9th June 2020, before Hon Justice David Majanja, allowing all companies to hold virtual or hybrid AGMS. This order sets a precedent that will ease the doing of business in Kenya during this COVID-19 period.

Leave has now been granted to companies, to hold general meetings employing the use of technology or any other hybrid means necessary to facilitate the running of the general meeting and all related business thereto, subject to compliance with the provisions of the Companies Act, the regulations and the guidelines issued by the Registrar ‘Guidelines on the Conduct of Hybrid and Virtual General meetings by Companies’ published on the Business Registration Service website, www.brs.go.ke.

Section 275A (1) of the Companies Act, 2015 requires all Companies except single member companies to hold Annual General Meetings. Without such meetings, the shareholders and the companies would be prejudiced as it would handicap the business undertaken at a typical annual general meeting. It also exposes Companies and individual directors to various civil and criminal sanctions for non-compliance.

Any meeting convened, held and conducted in accordance with this order shall be taken for all purposes to be a general meeting of the company properly convened.

The order once extracted shall be published on the Business Registration Service website www.brs.go.ke

Meetings are not only a question of decision taking by members but they are required by law as a form of compliance and reporting. Under Section 310 of the Companies Act 2015, public companies must hold an Annual General Meetings and file the annual returns to the Registrar of Companies. Further, for public listed companies, paragraph 1.8 of Capital Markets Act Guidelines on Corporate Governance Practices by Public Listed Companies in Kenya requires annual reports where they must disclose their activities and accounts for the financial year in question. Private companies, however, are bound by their Memorandum and Articles.

We are pleased to have represented Alexander Nesbitt on this matter and to have facilitated a solution to this problem for all companies.

For further advice and assistance in compliance while conducting virtual and hybrid AGMs kindly get in touch with our commercial and corporate governance experts Allen Waiyaki Gichuhi, Charles Wamae, Melanie Munyori, and Ambrose Waigwa.

 

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This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary as set out in the article should be held without seeking specific legal advice on the subject matter. If you have any query regarding the same, please do not hesitate to contact the following: Allen Waiyaki Gichuhi; Charles Wamae; Melanie Munyori or Ambrose Waigwa vide allen@wamaeallen.com; charles@wamaeallen.com; melanie@wamaeallen.com; or ambrose@wamaeallen.com respectively.

Senior Partner at Wamae & Allen

Allen Waiyaki Gichuhi, our Senior Partner, is an experienced and widely respected litigator with over 20 years experience in complex commercial litigation. He is actively involved in legal industry reforms and is ranked in Dispute Resolution Band 2 by Chambers Global. Learn more

Managing Partner at Wamae & Allen

Charles is an experienced transactional advocate with over 17 years experience in the legal industry. He is the Managing Partner at Wamae and Allen, an Entrepreneur and a proponent of the Adaptability Quotient(AQ) theory.

Melanie is a transactional advocate specializing in real estate, securitization, banking and finance

Associate

Ambrose is a civil and commercial litigator who has keen interest in commercial law, recoveries litigation, labour and employment disputes, banking law, tax law, company law, public policy and legislative development

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