Company dissolution. Photo | AI generated.
Kenyan government is set to dissolve 164 companies in three months time due to tough economic hardships.
A Gazette Notice dated March 28, 2025, confirmed the dissolution of 70 companies after a three-month notice period while 94 more are facing deregistration.
Some of the companies facing shutdown include Ara Technologies Kenya Limited, Ase Africa Ecommerce Limited, Bazik Properties Limited, and Baafadal Trading Company Limited.
The process of dissolving a company
A special resolution must be passed by the Board of Directors of the company for its affairs to be wound up. The resolution should be constituted in the prescribed form.
A written application is made to the registrar of companies in the prescribed form stating the intention of the company to wind up its affairs.
The application should be accompanied by the resolution, minutes of the meeting where the resolution was passed and copies of all the outstanding company returns.
Upon the satisfaction of the registrar, the application will be published in the Kenya Gazette for a period of 3 months by the registrar.
At the pleasure of the registrar, the company shall be removed from the register of companies.
Instances when a company maybe dissolved
According to the companies Act of 2015, on the dissolution/deregistration of restoration of a company, cites that a company maybe dissolved from several instances where a company is not carrying out business or it’s not operational.
Secondly, a company that is in liquidation, In the case of a company that is in liquidation and where the Registrar reasonably believes that the affairs of the company are fully wound up or that no liquidator is acting, the registrar may strike the company’s name off the Register.
Thirdly, where a company applies to the Registrar that it be struck off the register the registrar may also strike the company’s name off the Register on application by a company Such an application is effective only if it is made on behalf of the company by its directors or by a majority of them.
Restoration of a company
Administrative restoration (restoration by the Registrar), An application may be made to the Registrar to restore a company that has been struck off the Register under section 894 or 897.
Such an application may be made even where the company has been dissolved.The application may only be made by a former director or former member of the company.and not after the expiry of six years from the date on which the company was dissolved.
Court ordered restoration (Application to Court for restoration), An application may also be made to the Court to restore to the Register a company that has either been dissolved after being liquidated under the law relating to insolvency, that is taken to have been dissolved following administration under that Act; or that has been struck off the Register under section 894 or 895; or under section 897.
Effects of dissolving a company
Employees may lose jobs, customers and suppliers may face disruptions to their business relationships, shareholder May lose their investment depending on the company’s financial situation and the distribution of assets.
A dissolved company can no longer carry on business, enter into contracts, or engage in any legal activities.Its name is removed from the register of companies. Shares, if any, are removed from the stock exchange.
