Company Constitution (Kenya)

A Company Constitution in Kenya records the company constitution and the particulars that give it legal effect.

The Companies Act No. 17 of 2015 replaced the Companies Act (Cap. 486) and renamed the founding governance document from 'Articles of Association' to 'constitution'. The Act's Third Schedule provides a model constitution that applies by default to any private limited company that does not adopt its own constitution. In practice, most professionally advised companies adopt a bespoke constitution tailored to their specific shareholding structure, board composition, share transfer restrictions, and dividend policy — rather than relying on the default model, which may not adequately protect minority shareholders or reflect the parties' commercial intentions.

Section 32 of the Companies Act No. 17 of 2015 gives the constitution contractual effect: it binds the company and each member to the same extent as if the constitution had been signed and sealed by each member, and contained a covenant by each member to observe all the provisions of the constitution. This means the constitution is enforceable by and against each member and the company in Kenyan courts, including the High Court of Kenya (Commercial Division) for corporate disputes and the Court of Appeal on appeal.

A Kenya company constitution must address a number of mandatory and discretionary matters. Mandatory elements under the Companies Act No. 17 of 2015 include: the company's name; whether liability is limited by shares or by guarantee; the authorised and issued share capital and classes of shares; the restrictions (if any) on the transfer of shares; the number and powers of directors; the procedures for general meetings (Annual General Meetings and Extraordinary General Meetings); the appointment and removal of directors; the position of the company secretary; and the procedure for amending the constitution.

The Company Constitution is distinct from the Shareholders Agreement. The constitution is a public document enforceable by statute — any amendment requires a special resolution of the members (75% majority) under Section 36 of the Companies Act, or an ordinary resolution (simple majority) for certain specific amendments. A Shareholders Agreement, by contrast, is a private contract between shareholders that cannot bind the company as such but creates enforceable personal obligations between the signatories. The two documents are complementary: the constitution provides the publicly enforceable governance framework, while the Shareholders Agreement adds confidential commercial protections.

Under the Companies Act No. 17 of 2015, every private limited company registered in Kenya must appoint a company secretary if its annual turnover exceeds KES 5 million, or if it has more than one class of shares, under the requirements of Section 221. The company secretary must be a member of the Institute of Certified Secretaries of Kenya (ICSK), a body established under the Institute of Certified Secretaries of Kenya Act No. 8 of 2018. The constitution should specify the role, appointment procedure, and responsibilities of the company secretary in maintaining the register of members, filing annual returns with BRS, and maintaining the company's statutory books.

A Kenya Company Constitution is required at the time of incorporating a company under the Companies Act No. 17 of 2015, and several circumstances make adopting a bespoke constitution — rather than the default model constitution in the Third Schedule of the Act — particularly important.

At incorporation of a new company: Every private limited company incorporated in Kenya must file its constitution with the Business Registration Service (BRS) via the eCitizen portal as part of the incorporation process, which currently takes 3 to 7 business days. Without a bespoke constitution, the Act's default model applies — a generic framework that provides minimal share transfer restrictions, no weighted voting rights, and no special protections for minority shareholders. A bespoke constitution confirms the governance arrangements agreed between founders are legally embedded from day one.

When the company has multiple classes of shares: A company that issues preference shares, non-voting shares, or shares with special rights — for example, preference shares with a fixed cumulative dividend or shares carrying enhanced voting rights on specific matters — must have a constitution that accurately describes the rights attached to each class. Class rights are enforceable against the company and can only be varied by a special resolution of the class affected, as provided in Section 85 of the Companies Act No. 17 of 2015. The BRS will not register a class of shares unless the constitution describes the rights attaching to that class.

When transfer restrictions are required: A private limited company typically restricts the free transfer of its shares to prevent unwanted third parties from becoming shareholders. The Companies Act No. 17 of 2015 does not impose transfer restrictions by default on private companies — they must be included in the constitution. Without explicit transfer restriction provisions in the constitution (backed by a Shareholders Agreement), a shareholder could in principle transfer shares to any person, including a competitor or hostile party.

When the company is being restructured or re-registered: Companies converting from a public company to a private company, or vice versa, must amend their constitution by special resolution under Section 36 of the Companies Act No. 17 of 2015 and file the amended constitution with BRS. A re-registration or conversion typically requires a complete restatement of the constitution to confirm it is consistent with the new corporate form.

When admitting investors or expanding the board: External equity investors — whether angel investors, venture capital funds, or private equity firms investing in a Kenyan company — will require the constitution to be amended or restated as a condition of investment to incorporate investor consent rights, reserved matters, pre-emption rights on new share issuances, and board representation rights. The amended constitution must be filed with BRS by special resolution of the members.

When the company wishes to change its name or objects clause: Any change to the company's registered name or to an objects clause in the constitution requires a special resolution under Section 36 of the Companies Act No. 17 of 2015, filed with BRS within 14 days of passing the resolution. The constitution therefore directly governs the company's formal identity and business scope.

A Kenya Company Constitution under the Companies Act No. 17 of 2015 must contain the following essential elements to be compliant, effective, and enforceable before the High Court of Kenya (Commercial Division) and the Business Registration Service (BRS).

Company Name and Type: The full registered name of the company, confirming it ends with 'Limited' (for a private company limited by shares) or 'PLC' (for a public company), in compliance with Section 24 of the Companies Act No. 17 of 2015. The BRS Registration Number and registered office address in Kenya must also be stated. The registered office determines the jurisdiction of the courts applicable to the company and the physical location at which statutory notices may be served.

Objects Clause: A statement of the company's principal objects or business activities. The Companies Act No. 17 of 2015 allows a company to have unrestricted objects (a general commercial company clause), which is the most flexible approach and avoids the risk of acting ultra vires. However, companies in regulated sectors — financial services, banking, insurance, and healthcare — often adopt specific objects clauses to satisfy the requirements of sector regulators such as the Central Bank of Kenya (CBK), the Capital Markets Authority (CMA), and the Insurance Regulatory Authority (IRA).

Share Capital and Classes: The total authorised share capital; the number, class, and par value of each class of shares; and the rights attached to each class — including dividend rights, voting rights, and rights on a winding-up. Preference shares carrying a fixed cumulative dividend of a specified percentage per annum, non-voting deferred shares, and multiple voting ordinary shares must each be described with precision. Share transfers attract stamp duty at 1% of the consideration under the Stamp Duty Act (Cap. 480), payable to the Kenya Revenue Authority (KRA) within 30 days.

Transfer Restrictions: Provisions restricting the transfer of shares — including pre-emption rights (right of first refusal) requiring a selling shareholder to offer their shares to existing shareholders before transferring to a third party; Board discretion to decline registering a transfer; and the procedure for valuing shares in a compulsory transfer situation. Transfer restrictions distinguish a private limited company (Ltd) from a public limited company (PLC) and are essential for maintaining control over the shareholder register.

Board of Directors: The minimum and maximum number of directors; the qualification requirements for directors; the procedure for appointing and removing directors; the powers of the Board under Sections 128 to 135 of the Companies Act No. 17 of 2015; the chairman's casting vote (or exclusion thereof); the frequency and procedure for Board meetings; quorum requirements; and the remuneration and expenses of directors.

General Meetings: The procedure for Annual General Meetings (AGMs) required under Section 158 of the Companies Act No. 17 of 2015 — to be held within 6 months after the end of each financial year; the procedure for Extraordinary General Meetings (EGMs); notice periods (not less than 21 days for AGMs and special resolutions, or 14 days for ordinary resolutions, under Section 163); voting by show of hands and by poll; proxies; and the threshold for passing ordinary resolutions (simple majority) and special resolutions (75% majority) under Section 37 of the Companies Act.

Company Secretary: The obligation to appoint a qualified company secretary in accordance with Section 221 of the Companies Act No. 17 of 2015 — who must be a member of the Institute of Certified Secretaries of Kenya (ICSK) under the Institute of Certified Secretaries of Kenya Act No. 8 of 2018 — and their responsibilities for maintaining the register of members, the register of directors, the minutes of meetings, and annual return filings with BRS via eCitizen.

Dividends and Distributions: The Board's power to recommend dividends and the members' power to declare them in general meeting; restrictions on distributions confirming compliance with Sections 185 to 196 of the Companies Act (dividends may only be paid from distributable profits); and the withholding tax obligations of the company as a withholding tax agent under the Income Tax Act (Cap. 470), with dividends to resident shareholders subject to 5% withholding tax remitted to KRA.

Winding-Up and Dissolution: The procedure for voluntary winding-up under the Insolvency Act No. 18 of 2015; the distribution of surplus assets among members on a winding-up; and the rights of creditors and members in insolvency proceedings.

Amendment Procedure: The requirement that any amendment to the constitution be approved by special resolution (75% of votes cast) under Section 36 of the Companies Act No. 17 of 2015, filed with BRS within 14 days, and that class rights be varied only with the consent of the affected class.

Forms-legal.com provides this Kenya Company Constitution template as a practical starting point for private limited companies being incorporated or restructured under the Companies Act No. 17 of 2015. Companies with complex shareholding structures, multiple share classes, or institutional investors should retain a Kenya Advocate and a member of the Institute of Certified Secretaries of Kenya (ICSK) to draft and file a fully tailored constitution.