The Business Laws (Amendment) Act introduced sweeping changes to director duties, beneficial ownership disclosure, and AGM procedures. We break down the critical compliance implications.
The Business Laws (Amendment) Act and subsequent regulatory instruments have reshaped the obligations of company directors in Kenya in ways that many boards are yet to fully appreciate. As corporate secretaries, legal counsel, and company directors navigate 2026, compliance with the Companies Act 2015 (as amended) is no longer optional — the Registrar of Companies has demonstrated a clear willingness to enforce penalties.
This article examines the three most consequential changes and provides a practical compliance road map for directors and senior officers of companies registered in Kenya.
1. Heightened Director Duties and Personal Liability
Section 143 of the Companies Act 2015 codifies general duties of directors — including the duty to act within powers, to promote the success of the company, and to exercise independent judgment. The amendments have sharpened the personal liability exposure for directors who breach these duties, with the Business Registration Service (BRS) now empowered to pursue civil recovery directly.
Critically, "shadow directors" — persons in accordance with whose instructions the board is accustomed to act — are now expressly captured within the statutory framework. Non-executive directors who are found to have exercised de facto control are equally at risk.
- Duty to act within the powers granted by the articles of association
- Duty to promote the success of the company for the benefit of its members as a whole
- Duty to exercise independent judgment, free from undisclosed conflicts of interest
- Duty to exercise reasonable care, skill, and diligence at all times
- Duty to avoid conflicts of interest and to declare any personal interest in a proposed transaction
- Duty not to accept benefits from third parties by reason of being or acting as a director
2. Beneficial Ownership Register: Mandatory Disclosure
Kenya's Beneficial Ownership Regulations 2020 (made under the Companies Act) require all companies incorporated in Kenya to maintain a register of beneficial owners — that is, natural persons who ultimately own or control 10% or more of the company's shares or voting rights, or who otherwise exercise ultimate effective control over the management of the company.
The register must be filed with the Registrar of Companies through the BRS online portal. Failure to file or to update the register within 30 days of any change carries a fine of up to KES 500,000 for the company and KES 250,000 for each responsible officer.
- Identify all persons holding 10% or more of shares, voting rights, or economic interest
- Disclose persons with the right to appoint or remove the majority of the board
- Update the register within 30 days of any material change in ownership or control
- File the register with the Registrar via the BRS portal
- Make the register available to the Registrar, the Kenya Revenue Authority (KRA), and law enforcement on demand
3. Annual General Meeting (AGM) Procedures
The amendments permit public companies and private companies with more than one member to hold AGMs through electronic means, provided all participants can hear and be heard in real time. Resolutions passed at virtual or hybrid AGMs are fully valid under the Act.
Notice periods and the required content of notices for special resolutions remain unchanged — 21 clear days for public companies. However, the BRS has issued guidance clarifying that notice sent by email is valid where the member has consented to electronic communications. Companies should review and update their articles of association and shareholder registers accordingly.
Written Resolutions
Private companies may continue to pass written resolutions in lieu of a general meeting, subject to the unanimous consent requirement for special resolutions. The amendment removes the requirement to circulate a physical document — a circulation by email is sufficient where electronic consent has been obtained.
What Directors Must Do Now
- Conduct a directors' duties audit: review board minutes, contracts, and disclosure registers for potential gaps
- Verify the beneficial ownership register is up to date and filed with the Registrar
- Amend the company's articles of association to permit electronic meetings and digital notices if not already done
- Train non-executive directors on their personal liability exposure under the amended Act
- Engage legal counsel before approving any related-party transaction to ensure proper conflict-of-interest procedures are followed
- Review the company's insurance policy to confirm directors' and officers' (D&O) liability cover is adequate
Non-compliance with the Companies Act 2015 can expose directors to criminal prosecution, personal financial liability, and disqualification from holding office. As enforcement by the BRS and the Directorate of Criminal Investigations (DCI) intensifies, proactive legal review is the most cost-effective risk management tool available to boards.