ACTS, 2015 - Kenya Law Reportskenyalaw.org/kl/fileadmin/pdfdownloads/AmendmentActs/...SPECIAL ISSUE Kenya Gazette Supplement No. 160 (Acts No. 19) REPUBLIC OF KENYA KENYA G.A.ZETTE

SPECIAL ISSUE

Kenya Gazette Supplement No. 160 (Acts No. 19)

REPUBLIC OF KENYA

KENYA G.A.ZETTE SUPPLEMENT

ACTS, 2015

NAIROBI, 15th September, 2015

CONTENT

Act —

PAGE

The Companies and Insolvency Legislation (Consequential

Amendments) Act, 2015 ......................................................................... 1503

INGkfL POW LA kEP09T

RE 0 ^!VE D0 2 OCT 1015

NhV1Z081, KEWATEL: T^ 1 FA X: 2711-^ --- 1?694

PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTER, NAIROBI

1503

THE COMPANIES AND INSOLVENCY LEGISLATION(CONSEQUENTIAL AMENDMENTS) ACT,

No. 19 of 2015

Date of Assent: I I th September, 2015

Date of Commencement: By Notice

AN ACT of Parliament to make amendments tovarious Acts consequential on the enactment ofthe Companies Act, 2015 and the Insolvency Act,2015

ENACTED by the Parliament of Kenya, as follows-

1. (1) This Act may be cited as the Companies and Slorlitleand

Insolvency Legis lation (Conse uential Amendments) Act, commencement.

^q2015.

(2) The provisions of this Act shall come intooperation on such date or such d

. ifferent dates as theCabinet Secretary may by notice in the Gazette, appoint.

2. The Records Disposal Act is amended in the Amendment to

Schedule by deleting the words "Companies Act (Cap. Schedule to Cap 14.

486 section 382" appearing in relation to the Re istrar of1 9Companies and substituting therefor the words "CompaniesAct, 2015—section 844".

3. Section 46 of the Advocates Act is amended by Amendmentof

section 46 of Capdeleting paragraph (e) and substituting therefor the

1 6.

following new paragraph-L-

(e) any disposition, contract, settlement,conveyance, delivery, dealing or transferthat is, under the Insolvency Act, 2015, voidor ineffective against the Official Receiveror a bankruptcy trustee or an interim trusteein proceedings under that Act.

4.The Chattels Transfer Act is amended by repealing Ropealof section B

section 13 and replacing it with the following new of Cap 28.

section-

Unregistered instruments

to be void in certain 13.(1) In this section-

cases. "the relevant chattels", in relation to an

instrument, are the chattels referred to insubsection (2); and

1504

No. 19 Companies and Insolvency Legislation (Consequential Amendments) 2015

"the relevant event", in relation to aperson who owns or has an interest in therelevant chattels', means-

(a) if the person is adjudged bankruptthe commencement of thebankruptcy;

(b) if the person has entered into avoluntary arrangement—the dateon which the arrangement takeseffect;

(c) if the person has assigned therelevant chattels to creditors orentered into a composition withcreditors—the date on which theassignment or composition takeseffect;

(d) if a summary instalment order hasbeen made in respect of theperson—the date on which ordertakes effect; or

(e) if the person is subject to anexecution process—the date on

A

which the process takes effect.

(2) An instrument relating to chattelsthat is not registered before the deadline isvoid as against the persons specified insubsection (3) in so far as the property in, orthe right to the possession of, those chattelsis after the relevant event in the possessionor apparent possession of —

(a) the person making or giving theinstrument; or

(b) any person against whom theprocess was issued under or in theexecution of which the instrumentwas made or given.

(3) The persons referred to insubsection (2) are as follows:

(a) the Official Receiver or thebankruptcy trustee in respect of the

1505

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19estate of the person to whom therelevant chattels belong;

(b) the supervisor of any voluntaryarrangement entered into by thatperson, or the trustee acting underany composition or otherarrangement entered into for thebenefit of the creditors of thatperson;

(c) any person who seizes the relevantchattels in the course of executingthe process of a court authorizingtheir seizure;

(d) every person on whose behalf thatprocess was issued.

(4) For the purposes of subsection (2),the deadline for the registration of aninstrument to which this section applies is —

(a) the period within which theinstrument may be registered inaccordance with section 6; or

(b) if the High Court extends theperiod for registration, the expiry ofthat extended period.

(5) So long as an instrument continuesto be registered under this Act, the chattelscomprised. in that instrument are, for thepurposes of the Insolvency Act, 2015, to betreated as being not owned by, or in thepossession or at the disposal of, the personwho made or gave the instrument.

5. The Arbitration Act is amended by repealing Repeal of section 38


section-

Effect of bankruptcy on 38. (1) Ifagreement to settledifferences byarbitration. (a) it is provided by a term in a

contract to which a bankrupt is aparty that any differences arisingout of or in connection with the

1506


contract are to . be referred toarbitration; and

(b) the bankruptcy trustee adopts thecontract,

the term is enforceable by or against thattrustee so far as relates to those differences.

(2) Subsection (3) applies if —

(a) a person who has been adjudgedbankrupt had, before , thecommencement of the bankruptcy,become a party to an arbitrationagreement;

(b) any matter to which the agreementapplies requires to be deterrmi ned inconnection with or for the purposesof the bankruptcy proceedings; and

(c) the case is one to which subsection(1) does not apply.

(3) When this subsection applies, anyother party to the agreement or-

(a) if there is no creditors' committee,the bankruptcy trustee; or

(b) if there is a creditors' committee,the bankruptcy trustee with the consent ofthe creditors' committee,

may apply to the High Court for an orderdirecting the relevant matter to be referredto arbitration in accordance with theagreement.

(4) On the hearing of an applicationmade under subsection (3), the High Courtmay, if of the opinion that that matter oughtto be determined by arbitration, make anorder to that effect.

(5) This section applies if —

(a) the arbitration is a domestic one;

(b) the bankrupt is a citizen of , orordinarily resides in, Kenya; or

1507

2015 Companies and Insolvency Legislation (Consequential Amendments) NO.19

(c) the law of Kenya is applicableaccording to the rules relating tothe conflict of laws.

6. The Prevention of Fraud (Investments) Act is Repeal of section I I

amended by repealing section I I and replacing it with the ofCap.65B.

following new section —Guarantee in connectionwith principal's licence. (1) Subject to this section, a

principal's licence may be granted to aperson only if a guarantee, in the prescribedform, is provided by such guarantor as theCabinet Secretary approves to the effectthat, if an insolvency event involving theapplicant occurs during the currency of thelicence, the guarantor will pay to thebankruptcy trustee or the liquidator the sumof one million shillings or such other sum asthe Cabinet Secretary determines from timeto time.

(2) The bankruptcy trustee or liquidatormay recover from the guarantor a sum thatbecomes payable to a bankruptcy trusteeunder a guarantee given in accordance withsubsection (1).

(3) If any such sum exceeds the amountrequired to satisfy the debts and liabilities(including the costs and expenses of thebankruptcy administration, the amount ofthe excess or the amount of the sum(whichever is the less) is repayable by thebankruptcy trustee or liquidator to or inrelation to the guarantor.

(4) In this section-

"company includes a body corporatethat is not a company registered under theCompanies Act, 2015;

"insolvency event" means-

(a) in relation to a natural person-

(i) the making of a bankruptcyorder in respect of the person;

1508


(ii) the entering into by the personof a deed of composition or avoluntary arrangement withthe person's creditors;

(iii) the making of a summaryinstalment order in respect ofthe person; or

(iv) the entry of the person into theno assets procedure; or

(b) in relation to a company —

(i) the making of a liquidationorder or an administrationorder in respect of thecompany;

(ii) the passing of a resolution forthe voluntary liquidation ofthe company; or

(iii) the entering into a voluntaryarrangement with the creditorsof the company.

7. Section 17 of the Prevention of Fraud (Investments) Amendment ofsection 17 of Cap

Act is amended — 65B .

(a) in subsection (3) by deleting paragraph (c) andsubstituting therefor the following newparagraph-(c) made or given by or on behalf of a corporation

to holders of securities of, or to personsemployed by, or to creditors of, thecorporation or any other corporation that, inrelation to the first-mentioned corporation, is asubsidiary company with respect to securitiesof either such corporation; or;

(b) by inserting the following new subsectionimmediately after subsection (7)—

(8) In this section, "subsidiary company" has themeaning assigned to it in section 4 of the Companies Act,2015."

8.The Societies Act is amended in section 2— Amendment ofsection 2of Cap. 108.

(a) by inserting the following new definitions inproper alphabetical sequence-

1509

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19"Cabinet Secretary" means the Cabinet Secretary for

the time being responsible for matters relating to societies;"liquidator" means a liquidator appointed under

section 33;(b) by deleting paragraph (a) of the definition of

"society" and substituting therefor the followingnew paragraph —"(a) a company or foreign company registered

under the Companies Act, 2015".9. Section 4 of the Societies Act is amended by Amendment of

section 4 ofdeleting the expression "Minister" and substituting therefor Cap.

1 08.

the expression "Cabinet Secretary".

10. Section 7 of the Societies Act is amended bydeleting the expression "Minister" and substituting thereforthe expression "Cabinet Secretary".

11. Section 8 of the Societies Act is amended bydeleting the expression "Minister" and substituting thereforthe expression "Cabinet Secretary'.





16. The Societies Act is amended by repealing section33 and replacing it with the following new section-

Liquidation of certain 33. (I)The Cabinet Secretary may, bysocieties.

order published in the Gazette-

(a) appoint a person to be theliquidator of a society that is anunlawful society, or that has had itsregistration cancelled or itsexemption rescinded under Part IIIor has otherwise ceased to exist;and

Amendment ofsection 7 ofCap. 108.

Amendment ofsection 8 ofCap. 108.

Amendment ofsection 10 ofCap.108.

Amendment ofsection I I ofCap.108.

Amendment ofsection ' 3 ofCap.108.


Repeal of section of33Cap.108.

1510


(b) vest in the liquidator all property(both movable and immovable) ofthe society.

(2) As soon as practicable after thepublication of an order under subsection (1),the liquidator shall proceed to liquidate theaffairs of the society.

17. The Societies Act is amended by repealing section 34 Repeal of section 34

and replacing it with the following new section—of Cap. 108.

Procedure when the 34. (1) If, after all the debts andSociety is solvent.liabilities of the society of which theliquidator has notice and the costs of theliquidation have been satisfied or providedfor, there are any surplus assets, theliquidator shall prepare and submit to theCabinet Secretary a scheme for the disposalof those assets.

(2) If, after making such amendments(if any) as the Cabinet Secretary considersappropriate, the Cabinet Secretary approvesa scheme submitted to the Cabinet Secretaryunder subsection (1), the Cabinet Secretaryshall endorse the approval on theamendments.

(3) As soon as practicable after theCabinet Secretary has endorsed the scheme,the liquidator shall distribute the surplusassets in accordance with the scheme.

18. The Societies Act is amended by repealing section Repeal of section 35

35 and replacing it with the following new section—of Cap. 108.

Procedure if society is 35. (1) If the assets of the society. areinsolvent.insufficient to enable the debts andliabilities of which the receiver has noticeand the costs of the liquidation to besatisfied in full, the liquidator shall —

(a) set aside an amount sufficient tomeet the costs of the liquidation;and

(b) after doing so, divide the balance

1511

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19

among the creditors who haveproved their debts in proportion tothe size of their claims.

(2) Except as provided by this Act, theprovisions of the Insolvency Act, 2015,relating to the liquidation of a companyapply to the liquidation of a society as theyapply to the liquidation of a company.

19. The Societies Act is amended by repealing section lepeal of section 36

36 and replacing it with the following new section— of Cap. 108.

Supplementary 36. (1) Stamp duty is not be payableprovisions relating to theliquidation of society. on an order made under section 33, and so

far as the order affects registered land-(a) the liquidator shall lodge it with the

relevant registrar for registration,who shall register it accordinglywithout charge; and

(b) on the registration of the document,the land vests in the liquidator.

(2) For the purpose of discovering,taking possession of, recovering andrealising the property of the society, theliquidator has all the powers vested in theOfficial Receiver or a liquidator by theInsolvency Act, 2015.

(3) Before distributing any assets underthis Part, the liquidator shall-

(a) fix a date by which the creditors ofthe society are required to provetheir claims or be excluded fromany distribution made before theyhave proved their claims; and

(b) shall publish in the Gazette a noticeof that date, and notify that date tothose creditors individually so faras it is practicable to do so.

(4) The liquidator may charge fees forliquidating a society at the rate prescribedfor the liquidation of companies under theInsolvency Act, 2015, or such other fees as

1512


the Cabinet Secretary may in any particularcase or kind of case order.

(5) If an order has been made inrespect of a society under section 33, theCabinet Secretary may, by a further orderpublished in the Gazette, suspend theoperation of the order for such period asseems to the Cabinet Secretary to benecessary for the purpose of enabling thesociety to liquidate its own affairs.

20. Section 38 of the Societies Act is amended b y Repeal of section 38

deleting subsection (4) and substituting therefor the of Cap. 108.

following new subsection-(4) If any person does or omits to do an act that

constitutes an offence under subsection (2), the requiringofficer may, if of the opinion that it would be advisable tobe able to identify the person in the future, order that aphotograph and impressions of fingerprints of the personbe taken, in which case section 55 of the National PoliceService Act, 2011, applies as though the person were inlawful custody.

21. Section 53 of the Societies Act is amended b y Amendment ofsection 53 of

deleting the expression "Minister" and substituting therefor C.p-108.


22. The Societies Act is amended by inserting the Amendment ofsection 55 of

following new section immediately after section 54— Cap. 108.

Savings and transitional 55. If-provision.(a) any act or thing that was done or

omitted to be done by or to theCabinet Secretary under this Actbefore the commencement of theCompanies and InsolvencyLegislation (ConsequentialAmendments) Act 2015 had effectimmediately before thatcommencement; and

(b) that act or thing could be done or beomitted to be done by or to theCabinet Secretary under this Actafter that commencement, ,

1513

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19

that act or thing is taken to have been doneor omitted to be done by or to the CabinetSecretary.

23. Section 49 of the Methylated Spirits Act is Amendment ofsection 49 of

amended in subsection (1) by deleting paragraph (d) and Cap. 120.

substituting therefor the following paragraph-

(d) by a bankruptcy trustee in respect of spiritsforming part of the bankrupt's estate.

24. The Law of Succession Act is amended b y Repeal of section 89

repealing section 89.of Cap. 160

25. The Industrial Training Act is amended by Repeal of section 27

repealing section 27 and replacing it with the following of Cap.237

new section —

Effect of bankruptcy on 27. (1) If a contract of apprenticeshipcontract ofapprenticeship or or indentured learnership is discharged by aindentured learnership. bankruptcy trustee in accordance with

. section 69 (2) of the Insolvency Act, 2015,the bankruptcy trustee shall, within onemonth after discharging the contract, notifythe discharge to the Director-General.

(2) A bankruptcy trustee who, withoutreasonable excuse, fails to comply withsubsection (1) commits an offence and onconviction is liable to a fine not exceedingtwo hundred thousand shillings.

(3) A failure to comply withsubsection (1) does not prevent thedischarge of the contract from taking effect.

piC Amendment of26. Section 31 of the Narcotic Drugs and Psychotro section 31 ofSubstances (Control) Act is amended by deleting Cap.245.

subsection (4) and substituting therefor the following newsubsection-

(4) On taking custody and control of a person'sproperty in accordance with a restraint order, the OfficialReceiver becomes be entitled to receive, in respect of theperformance of the Official Receiver's functions in relationto the property, fees equal to the fees that that would bepayable if the Official Receiver were carrying out thefunctions of a bankruptcy trustee under the Insolvency Act,2015.

1514


27. Section 2 of the Land Control Act is amended by Amendment of

section 2 ofdeleting the definition of the term "private company" and Cap.302.

substituting therefor the following new definition-4cprivate company" means a private company within

the meaning of section 9 of the Companies Act, 2015.

28. Section 42 of the Wildlife (Conservation and Amendment ofsection 42 of Cap

Management) Act is amended by deleting subsection (2) 346.

and substituting therefor the following new subsection-

1 .(2) This section does not apply to the possession of atrophy by a person who is in possession only because theperson is —

(a) the liquidator or administrator of a company that isin liquidation or under administration; or

(b) the bankruptcy trustee or interim trustee of abankrupt person's estate; or

(c) the personal representative of a deceased person's,estate.

29. Section 3 of the Uplands Bacon Factory Act is Amendment ofsection 3 of

amended by deleting subsection (3). Cap.362.

30. The Insurance (Motor Vehicle Third Party Risks) Repeal of section 15

Act is amended by repealing section 15 and replacing it of Cap.405.

with the following new section-

Contracts of insurance 15. (1) In this section-against liabilities to third66parties. company" includes a body corporate

that is not a company registered under theCompanies Act, 2015;

"insured person" means a person whois insured under a contract of insuranceagainst liabilities to third parties; and

"insolvency event" means-(a) in relation to a natural person-

(i) the making of a bankruptcyorder in. respect of the person;

(ii) the entering into by the personof a deed of composition or avoluntary arrangement withthe person's creditors;

(iii) the making of a summary

1515

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19instalment order in respect ofthe person; or

(iv) the entry of the person into theno assets procedure; or

(b) in relation to a company —

(i) the making of a liquidationorder or an administrationorder in respect of thecompany;

(ii) the passing of a resolution forthe voluntary liquidation ofthe company; or ,

(iii) the entering into a voluntaryarrangement with the creditorsof the company.

"liabilities to third parties", in relationto an insured, does not include any liabilityof -the insured in the capacity of insurerunder some other contract of insurance.

(2) If an insured person, either beforeafter the occurrence of an insolvency event,incurs liability to a third party, the person'srights against the insurer under the contractare transferred to and vest in the third party.

(3) If —

(a) an order is made under Part V ofthe Insolvency Act, 2015 for theadministration of the estate of adeceased debtor in accordance withthat Part; and

(b) a debt provable in bankruptcy isowing by the deceased in respect of aliability against which the deceased wasinsured under a contract of' insurance againstliabilities to third parties,

the deceased debtor's rights against theinsurer under the contract in respect of thatliability are, irrespective of anything in that

1516


Act, transferred to and vest in the person towhom the debt is owing.

(4) In so far as a contract of insurancemade in respect of any liability of theinsured to third parties purports (eitherdirectly or indirectly) to avoid the contract,or to alter the rights of the parties under it-

(a) on the happening of an insolvencyevent involving the insured; or

(b) on the making of an order underPart V of the Insolvency Act, 2015in respect of the insured's estate,

the contract is void.(5) On a transfer under subsection (2)

or subsection (3), the insurer becomes underthe same liability to the third party as theinsurer would have been under to theinsured, but-

(a) if the liability of the insurer to theinsured exceeds the liability of theinsured to the third party, nothingin this section affects the rights ofthe insured against the insurer inrespect of the excess; and

(b) if the liability of the insurer to theinsured is less than that liability,nothing in this section affects therights of the third party against theinsured in respect of the balance.

(6) This section does not apply to acompany that is in voluntary liquidationonly for the purposes of reconstruction, orof amalgamation or merger with anothercompany.

31. Section 2 of the Insurance Act is amended-

(a) by deleting the definition of "auditor" andsubstituting therefor the following newdefinition —

"auditor" has the meaning assigned to it under

Amendment ofsection 2

of Cap

487.

1517

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19section 3(l) of the Companies Act, 2015;";

(b) by inserting the following new definition in theproper alphabetical sequence-

"Cabinet Secretary" means the Cabinet Secretary forthe time being responsible for the National Treasury;

(c) by deleting the definition of "subsidiary" andsubstituting therefor the following newdefinition —

"subsidiary" means a subsidiary company asdefined by section 4 of the Companies Act, 2015.


(a) by deleting subsection (2) and substituting therefor thefollowing new subsection-

(2) As soon as reasonably practicable after each yearending on 3 1 st December, the Board shall providethe Cabinet Secretary with a report on theoperation of this Act during that year, togetherwith summaries of returns and documentsdeposited with the Cabinet Secretary inaccordance with Part VI during that year.

(b) by inserting the following new subsectionimmediately after subsection (2)—

(3) Within one month after receiving the report andsummaries under subsection (2), the Cabinet Secretaryshall arrange for them to laid before the NationalAssembly.

Amendment ofsection 5of Cap487.

33. Section 16 of the Insurance Act is amended by Amendment ofsection 16 of

deleting the expression "Minister" substituting therefor the Cap487

expression "Cabinet Secretary".

34. Section 17 of the Insurance Act is amended— Amendment ofsection 17 of Cap

(a) by deleting subsection (4) and substituting therefor the 487.

following new subsection-

(4) If a body corporate in respect of whom a directionhas been given under subsection (1), (2) or (3) isplaced in liquidation, the direction ceases to haveeffect unless the court directs otherwise.

(b) by deleting subsection (5) and substituting thereforI

the following subsection-

1518


(5) If the person under investigation is a bodycorporate and-

(a) as a result of a report by an investigator, theCommissioner considers that it would be in theinterests of policy holders for the body to beplaced in liquidation; or

(b) the body has failed, or is failing, to comply with adirection issued under this section,

the Commissioner may, after giving the body a reasonableopportunity of making representations, apply to the courtfor an order for the liquidation of the body, in which casethe provisions of Part VI of the Insolvency Act, 2015 (asmodified by Part XII of this Act) apply to the body."

Repeal of section 1935. The Insurance Act is amended by repealing ofCap.487

section 19 and replacing it with the following newsection —

Only authorized persons 19. (1) Except as otherwise provided into carry on insurancebusiness or under this Act, only a person registered

under this Act may carry on insurancebusiness-

(a) in Kenya (whether in respect ofKenya insurance or reinsurancebusiness or otherwise); or

(b) outside Kenya in respect of Kenyabusiness, except Kenya businessthat is solely reinsurance business.

(2) A person resident in Kenya or anassociation of persons or body corporateestablished in Kenya who or which carrieson insurance business in any part of theworld other than Kenya is, for the purposesof this Act, taken to be an insurer carryingon that business within Kenya.

(3) A person who carries on insurancebusiness in contravention of subsection (1)commits an offence and on conviction isliable to a fine not exceeding five millionshillings.

(4) If, after being convicted of anoffence under subsection (3), a person

I -

1519


continues.to carry on insurance business incontravention of subsection (1), the personcommits a further offence on each day onwhich the contravention continues and onconviction is liable to a fine not exceedingfive hundred thousand shillings for eachsuch offence.

(5) If a person found guilty of anoffence under subsection (3) is a naturalperson, the person is liable, in addition to, orinstead of, a fine, to imprisonment for aterm not exceeding two years.

(6) If a body corporate is convicted ofan offence under subsection (3), thecommission of the offence constitutesgrounds on which the Commissioner mayapply to the court for the liquidation of thebody corporate."

36. The Insurance Act is amended by repealing Repeat of section 21

section 21. of Cap 487.

37. The Insurance Act is amended by repealing Repeal of section 22

section 22 and replacing it with the following new of Cap. 487

section —

Prohibition ofregistration of certain 22. Subject to section 23, a person maypersons.

be registered as an insurer under this Actonly if-

(a) the person is a body corporateregistered under the CompaniesAct, 2015; and

(b) at least one third of the controllinginterest in the body (whether interms of shares, paid up sharecapital or voting rights) is whollyunder the control of —

(a) citizens of a Partner State ofthe East African Community;

(b) a partnership whose partnersare all citizens of a PartnerState of the East AfricanCommunity; or

1520


(c) a body corporate whoseshares are wholly owned bycitizens of a Partner State ofthe East African Communityor the Government, or acombination of them."

38. Section 23 of the Insurance Act is amended bydeleting the expression "Minister" substituting therefor theexpression "Cabinet Secretary".

39. Section 24 of the Insurance Act is amended bydeleting the expression "Minister" substituting therefor theexpression "Cabinet Secretary".

Amendment ofsection 23 of Cap.487.


40. Section 25 of the Insurance Act is amended in Amendment of

subsection (4) by deleting the words "Companies Act" and section 25 Cap. 487.

substituting therefor the words "Companies Act, 2015".

41. Section 28 of the Insurance Act is amended b y Amendment ofsection 28 of Cap.

deleting the expression "Minister" substituting therefor the 487.


42. Section 29 of the Insurance Act is amended by Amendment ofsection 29 of Cap.



43. Section 31 of the Insurance Act is amended b y Amendment ofsection 3 1 of Cap.








expression "Cabinet Secretary

46. Section 41of the Insurance Act is amended b y Amendment ofsection 41 of Cap.



47. Section 41 of the Insuranc e Act is amended b y Amendment ofsection 41 of Cap.

deleting subsection (5) and substituting therefor the 487.


(5) An insurer that fails to comply with therequirements of subsection (1), (2) or (3) is taken to be

1521

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19unable to pay its debts within the meaning of section384 of the Insolvency Act, 2015.








(a) in subsection (4) by deleting paragraph (i) andsubstituting therefor the following newparagraph-

(i) promissory notes, bills of exchange or otherinstruments issued by a company registeredunder the Companies Act, but only if they areguaranteed by a bank licensed under theBanking Act.";

(b) in subsection (8) by deleting the expression"Minister" substituting therefor the expression"Cabinet Secretary".

(c) by deleting subsection (11) and substitutingtherefor the following new subsection-

(11) Subsection (9) does not apply to aninvestment made by an insurer in the shares ofanother insurer if that other insurer is a companyregistered under the Companies Act, 2015, andcarries on insurance or reinsurance business inKenya."

51. Section 56 of the Insurance Act is amended bydeleting subsection (4) and substituting therefor thefollowing new subsection-

(4) Every insurer shall, for the purposes of thissection, appoint annually an auditor who is approved by theCommissioner.

52. Section 67C of the Insurance Act is amended insubsection (1) by deleting paragraph (g) and substitutetherefor the following new paragraph-

(g) if an insurer is unable to pay its debts within themeaning of section 384 of the Insolvency Act,2015.



Amendment ofsection 67C of Cap.487.

1522


53. The Insurance Act is amended by repealing Repeal of section 71

section 71 and replacing it with the following new. of Cap. 487.

section —

Restrictions on providing 71. (1)An insurer shall not infinancial accommodation ,by insurers. Kenya-

(a) grant financial accommodation onthe security of its own shares; or

(b) grant, or permit to be outstandingwithout adequate security, otherfinancial accommodation (notbeing a loan) on and within thesurrender value on a policy of lifeassurance issued by the insurer-

(i) to a shareholder, officer oremployee of the insurer or to afamily member of such ashareholder, officer oremployee; or

(ii) to a company of which theshareholder, officer oremployee or family member is

a shareholder, director, officer 4

or employee.

(2) An insurer may, on compassionategrounds, grant to an officer or employee ofthe insurer an unsecured loan or advance notexceeding one hundred thousand shillingson condition that the officer or employeereceive no further loan or advance from theinsurer unless the officer or employee hasfully repaid any previous loan or advancegranted to the officer or employee by theinsurer.

(3) Sections 165, 166, 168 and 169 ofthe Companies Act, 2015 do not apply to aloan granted to a director of an insurer if-

(a) the loan is one granted on thesecurity of a policy of lifeassurance on which the insurerbears the risk; and

1523

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19(b) the policy was issued to the director

on the director's own life and theloan is within the surrender valueof the policy.

(4) In this section, "financialaccommodation" includes a loan, anadvance and a financial guarantee.

54. Section 79 of the Insurance Act is amended b y Amondmentofsection 79 of Cap.

deleting the expression "Minister" substituting therefor the 487


55. Section 95 of the Insurance Act is amended by Amendment ofSection 95 of Cap.

deleting subsection (3) and substituting therefor the 487


(3) If, during a child's lifetime, a personeffecting a policy in respect of the child dies or isadjudged bankrupt before the child has reachedthe vesting age, the representative of the personholds the policy in trust for the child until thechild reaches the vesting age or dies beforereaching that age, subject to any dealings otherthan testamentary ones by the person beforedeath or bankruptcy.

(3A) The representative may assign,mortgage, charge, surrender, vary or otherwisedeal with the policy and apply the proceeds (ifany) as the representative believes to beappropriate for the maintenance or benefit of thechild and the continuation of the policy.

(3B) The insurer issuing the policy is underno obligation to ensure that the proceeds of thepolicy (if any) are applied for the maintenance orbenefit of the child.

(3C) In subsections (3) and (3A), "therepresentative", in relation to-

(a) a deceased, means the executor or administrator ofthe deceased's estate; or

(b) in relation to a person who has been adjudgedbankrupt, means the bankruptcy trustee of theperson's estate or the Official Receiver."

1524


Repeal of section56. The Insurance Act is amended by repealing 120

of Cap. 487

section 120 and replacing it with the following newsection —

Voluntary liquidation 120. An insurer carrying on long termbusiness cannot be liquidated voluntarily,despite Part VI of the Insolvency Act, 2015.

57. The Insurance Act is amended by repealing Repeal of section

section 121 and replacing it with the following new 121 of Cap 487.

section —

Liquidation by the court. 121. (1) If an application for theliquidation of an insurer is presented by aperson other than the Commissioner, theapplicant shall serve a copy of theapplication on the Commissioner.

(2) On being served with a copy suchan application, the Commissioner becomes aparty to the proceedings and is entitled to beheard at the hearing of the application.


section 122 and replacing it with the following new 122 of Cap 487

section —

Insolvency of insurer. 122. For the purpose of section 384 ofthe Insolvency Act, 2015, an insurer is takento be unable to pay its debts if at any timethe requirements of section 41 (which relateto margins of solvency) are not observed bythe insurer."


section 123 and replacing it with the following new 123 of Cap. 487

section-

Application for the 123. (1) The Commissioner may, withliquidation of insurer bythe court. the prior approval of the Board, make an

application to the court for the liquidation ofthe insurer in accordance with Part VI of theInsolvency Act, 2015 in any of thefollowing circumstances:

I

1525


(a) as provided by section 19(5) or67(3) of this Act;

(b) on the ground that the insurer isunable to pay the insurer's debtswithin the meaning of section 384of the Insolvency Act, 2015;

for a period of six months after notice of thefailure or contravention has been given tothe insurer by the Commissioner;

(c) on the ground that the insurer isunable to fulfil the reasonableexpectations of policy-holders orpotential policy-holders;

(d) on the ground that it is just andequitable in the interests of thepolicy holders that the insurershould be wound up;

(e) on the ground that the insurer hasfailed to pay tax that is due andoutstanding;

(f) on any other ground prescribed byregulations made for the purposesof this section under section 180 ofthis Act.

(2) Subsection (1) does not apply to aninsurer that is already being liquidated bythe court.

(3) The court may, after consideringthe application made by the Commissioner,order the liquidation of the insurer if it issatisfied that-

(a) there are sufficient grounds formaking the order; and

(b) it is just and equitable for theinsurer to be liquidated."

(c) on the ground that the insurer-

(i) having failed to comply with arequirement of this Act, hascontinued that-failure; or

1526


(ii) having contravened a provisionof this Act, has continued thatcontravention.


section 124 and replacing it with the following new 124 of Cap. 487.

section —

Transfers of insurance 124. (1) In this section-bus inesses.

(a) "transferee insurer" means theinsurer to which an insurancebusiness (or part of it) is transferredas referred to in subsection (2); and

(b) "transferor insurer" means theinsurer or insurers that havetransferred that business or part.

(2) If an insurer transfers its insurancebusiness, or any part of it, to another insurerunder an arrangement in accordance withwhich the insurer or its creditors -haveclaims against the other insurer, then, if theother insurer is being liquidated by thecourt, the court shall, subject to theprovisions of this section, order thetransferor insurer to be liquidated inconjunction with the other insurer.

(3) The court may by the same or asubsequent order appoint the same person tobe liquidator for the two insurers and makeprovision for such other matters as the courtconsiders necessary, with a view to theinsurers being liquidated as if they were asingle insurer.

(4) The commencement of theliquidation of the transferee insurer is,unless the court otherwise orders, thecommencement of the liquidation of thetransferor insurer.

(5) In adjusting the rights and liabilitiesof the members of the several insurersbetween themselves, the court shall haveregard to —

1527


(a) the constitution of the insurers; and

(b) the arrangements entered intobetween the insurers in the samemanner as the court has regard tothe rights and liabilities of differentclasses of contributories in the caseof the liquidation of a single insureror as near as possible as thecircumstances allow.

(6) If the transferor insurer is not in theprocess of being liquidated at the same timeas the transferee insurer, the court may orderthe liquidation of the transferor insurer onlyif satisfied, after hearing any objections thatmay made by or on behalf of that insurer toits being liquidated, that it would be just andequitable for it to be liquidated.

(7) An application may be made for theliquidation of the transferor insurer inconjunction with the transferee insurer byany creditor of, or person interested in,either of the insurers.

(8) If —(a) an insurer is the transferee insurer

in relation to one insurer and as thetransferor insurer in relation toanother insurer; or

(b) several insurers are transferorinsurers in relation to a singletransferee insurer,

the court may deal with any number of thoseinsurers together or in separate groups, as itconsiders most appropriate in accordancewith the principles set out in this section."



section —

Insurers that are 125. (1) If an insurer is a subsidiary ofsubsidiaries of non-insurers.

a company that is not an insurer and thecompany is liquidated under the Insolvency

1528


Act, 2015, the subsidiary may be liquidatedonly on the basis of a separate applicationfor winding up.

(2) If the subsidiary carries on longterm insurance business (whether with orwithout other classes of insurance business)and is ordered to be liquidated, thefollowing assets of the subsidiary are to bereserved exclusively for the benefit of thepolicy holders of long term insurancebusiness:

(a) all the admitted assets of thestatutory funds;

(b) any other assets of the subsidiarythat have been included in aseparate balance sheet relating tothe long term insurance business; '

(c) any assets that, though not shownagainst the statutory funds or in thatbalance sheet, should in the opinionof the court be equitablyapportioned to the long term policyholders.

(3) The assets referred to in subsection(2) may be used for a purpose other than forthe benefit of the long term insurance policyholders only if the rights of those policyholders have been fully satisfied orotherwise provided for."

62. The Insurance Act is amended by repealing Repealofsection


section —

Evidence in proceedings 126. (1) If, on the hearing of an applicationfor liquidation of insurer. for liquidating an insurer made by theCommissioner under section 123(l),evidence is given that the insurer wasinsolvent at the close of the period to whichthe accounts and balance sheet of theinsurer last deposited under section 61relate, or at any date as at which aninvestigation was last made under section

1529


57 or 58, is, unless the contrary is proved,evidence that the insurer continues to beunable to pay its debts.

(2) Rules made under section 697 ofthe Insolvency Act, 2015 may regulate theprocedure and the practice to be followed inproceedings with respect to the liquidationof insurers under this Act."

63. Section 147 of the Insurance Act is amended b y Amen1menlofsection 147 of Cap




deleting subsection (2) and substituting therefor the 487.


(2) A broker shall be registered under this Act only ifregistered as a company under the Companies Act, 2015and if the company has a paid up capital of not less thanone million shillings of which not less than sixty percent isowned-

(a) by Kenya citizens;

(b) by a partnership whose partners are all citizens ofKenya;or

(c) by a corporate body whose shares are whollyowned by citizens of Kenya or which is whollyowned by the Government.

This subsection is subject to subsection (3) and haseffect despite any other provision of this Act to thecontrary.

65. Section 168 of the Insurance Act is amended b y Amendment ofsection 168 of Cap



66. Section 169 of the Insurance Act is amended by Amendment ofsection 169 of Cap


expression "Cabinet Secretary'.

67. Section 179 of the Insurance Act is amended by Amendment ofsection 179of Cap.



1530


Repeal of section68. The Insurance Act is amended by repealing 180 of Cap. 487section 180 and replacing it with the following newsection —

Power of CabinetSecretary to make 180. The Cabinet Secretary may makeregulations for purposes regulations providing for all matters that areof this Act. required or permitted to be prescribed by

this Act, or that are necessary, desirable orconvenient to be prescribed for giving effectto this Act."

y Amendment of69. Section 181 of the Insurance Act is amended b section l8lofCap.deleting the expression "Minister" substituting therefor the 487


70. Section 187 of the Insurance Act is amended by Amendment of

deleting the expression "Minister" substituting therefor the section 187 Cap. 487

expression "Cabinet Secretary


deleting the words "Companies Act" and substituting 487

therefor the words "Companies Act, 2015



(a) by deleting the expression "Minister" wherever itoccurs and substituting the expression "Cabinet Secretary";

(b) by deleting subsection (5) and substituting thereforthe following new subsections-

(5) After the expiry of six months from the date onwhich the cancellation of registration of an insurer hastaken effect under this section, the Commissioner may,with the prior approval of the Cabinet Secretary, apply tothe court for a liquidation order in respect of the insurer.

(5A) Subsection (5) does not apply if-

(a) the registration of the insurer has been revivedunder subsection (4); or

(b) an application for a liquidation order has already. been made to the court in respect of the insurer".

Insertion of section73. The Insurance Act is amended by inserting the 205 into Cap. 487

1531

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19following new section immediately after section 204—

Transitional and savings 205. If —provision.(a) any act or thing that was done or

omitted to be done by or to theMinister under this Act before thecommencement of the Companiesand Insolvency Legislation(Consequential Amendments) Act,2015 had effect immediately beforethat commencement; and

(b) that act or thing could be done or beomitted to be done by or to theCabinet Secretary under this Actafter that commencement,

that act or thing is taken to have been doneor omitted to be done by or to the CabinetSecretary".

74. Section 7 of the Banking Act is amended by Amendment ofsection 7 of

deleting the expression "Minister" and substituting therefor Cap.488.


75. Section 8A of the Banking Act is amended by Amendment ofsection 8A of









78. Section 24 of ttdeleting subsection (1)following new subsections

Amendment ofBanking Act is amended by section 24 of

and substituting therefor the C.p.488.

(1) Subject to subsection (7), every institutionshall appoint annually an auditor (within the meaningof section 3(l) of the Companies Act, 2015) andapproved by the Central Bank.

(lA)An auditor appointed under subsection (1)shall audit and report on the annual balance sheet andprofit and loss account required to be submitted to the

1532


Central Bank in accordance with section 23 (1).










82. Section 34A of the Banking Act is amended by Amendment ofsection 34A of

deleting subsection (5) and substituting therefor the Cap.488.

following new subsections-

(5) While the institution is in liquidation underthis section, the liability of the shareholders of theinstitution for uncalled subscriptions to the capitalstock of the institution continues;

(6) The institution shall discharge its liability toits depositors as soon as practicable after thecommencement of the liquidation and shall then rankall other creditors in accordance with the InsolvencyAct, 2015.

83. The Banking Act is amended by repealing section Repeal of section 35

35 and replacing it with the following new section—of Cap.488.

Liquidation of insolvent 35. (1) If satisfied on reasonableinstitutions.grounds that an institution has becomeinsolvent, the Central Bank may appoint theBoard to be a liquidator of the institution.

(2) Such an appointment has the sameeffect as the appointment of a liquidator bythe High Court under Part VI of theInsolvency Act, 2015, and for that purpose,references in that Act to "the relevant date"and "commencement of the liquidation" aretaken to be references to the date on whichthe Board is appointed as liquidator.

(3) A person may not be appointed asliquidator of an institution under Part VI ofthe Insolvency Act, 2015—

(a) if the Board has already been

1533


appointed as its liquidator; or

(b) if the Board has not already been soappointed without the approval ofthe High Court.

(4) The Court may give approval undersubsection (3)(b) only if the Central Bank-

(a) has certified that it does not intendto exercise its powers under thissection; or

(b) has failed to exercise its powerswithin such period, not exceedingthree months, as the High Courtmay specify.

(5) When a liquidator (other than theBoard) has been appointed as liquidator ofan institution, the Central Bank may, at anytime, apply to the High Court for an orderthat the liquidator be removed and the Boardbe appointed as liquidator instead.

(6) If the High Court appoints theBoard instead of the liquidator, theprovisions of the Insolvency Act, 2015,apply to a liquidation by the Board but onlyto the extent that they are not inconsistentwith this Act and any regulations madeunder it.

(7) When the Board is appointed asliquidator of an institution, it may do all orany of the following-

(a) carry on the business of theinstitution so far as may benecessary for its beneficialliquidation;

(b) appoint an advocate to assist it inthe performance of its functions;

(c) pay any classes of creditors in full;

(d) enter into any compromise orarrangement with creditors orpersons claiming to be creditors;

1534


(e) compromise-

(i) all calls and liabilities to call,debts and liabilities capable ofresulting in debts, and allclaims (whether present orfuture, certain or contingent, orascertained or sounding only indamages) subsisting or allegedto be subsisting between theinstitution and a contributory orother person who may have aliability to the institution; and

(ii) all questions affecting the assetsor liquidation of the institution,

on such terms as may be agreed;

(f) take security for the discharge ofany such call, debt, liability orclaim and give a completedischarge for it.

(8) In addition to the powers conferredby subsection (7), the Board may whenacting as a liquidator of an institution-

(a) set off payment made to a protecteddepositor out of the fund againstany dividend subsequentlydetermined as payable to suchdepositor;

(b) recover interest payable to theinstitution on loans, overdrafts andother credit facilities outstanding asat the date of liquidation;

(c) offset deposits and any otherliabilities to the institution'scustomers against any loans ordebts owed to the institution as atthe date of liquidation;

(d) invest surplus funds in theliquidation account that are notimmediately required for thepurpose of financing day to day

1535

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19operations in short-term placementswith reputable institutionsapproved by the Board or in suchGovernment securities as the Boardmay determine.

(9) In the exercise of its powers as aliquidator, the Board may, by notice inwriting, require any person who is or has atany time been a director, managing director,secretary, principal officer, manager, officeror employee, agent, accountant or auditor ofthe institution or any person who hascustody of any funds or other assets of theinstitution being liquidated to-

(a) give to the liquidator all reasonableassistance in connection with theliquidation;

(b) appear before the liquidator forexamination concerning mattersrelevant to the liquidation;

(c) produce any records or documentsthat relate to the affairs of theinstitution being liquidated.

(10) In performing its functions underthis section, the Board is subject to thesupervision of the Central Bank.

(11) When the Board has beenappointed as liquidator in respect of aninstitution, the powers of the Board areexercisable only if and to the extentauthorised by the Central Bank.

(12) When the High Court hasappointed a liquidator in respect of aninstitution, the powers of the liquidator areexercisable only if and to the extentauthorised by the High Court.

(13) On the application of anyinterested party, the High Court may, if itconsiders it appropriate to do so, appoint aliquidation committee having the same

1536


powers as a liquidation committee appointedunder Part VI of the Insolvency Act, 2015.

(14) The Cabinet Secretary may makeregulations generally for carrying out theliquidation of an institution under thissection, and in doing so may —

(a) apply relevant provisions of theInsolvency Act, 2015, with orwithout modifications; and

(b) include provision as to the mannerand time in which depositors andother creditors of the institution(preferential or otherwise) arerequired to submit proofs of theirdebts to the Board.

(15) For the purpose of this section, aninstitution becomes insolvent if —

(a) it is unable to pay its debts withinthe meaning of section 383 of theInsolvency Act, 2015;

(b) a liquidation order is made againstit, or a resolution for creditors'voluntary liquidation is passed,under Part VI of the InsolvencyAct, 2015;

(c) it is unable to pay amounts due andpayable to its depositors; or

(d) the Central Bank determines oninvestigation that the value of itsassets is less than the amount of itsliabilities".

84. The Banking Act is amended by inserting the Insertion of section35B , 35C, 35D in

following new sections immediately after section 35A— Cap 488.

PoWcr to place 35B. (1) The Central Bank may appointinstitutions inadministration in certain the Board as administrator to manage tocircumstances. manage the institution's affairs and

property, but only it is satisfied that-

1537

2015 Companies and Insolvency Legislation (Consequential Amendrnents) No.19(a) the institution is or is, likely to

become unable to pay its debts, and(b) the administration order is

reasonably likely to achieve at leastone of the objectives ofadministration.

(2) For the purpose of subsection(1)(b), the objectives of administration arethe following:

(a) to maintain the institution as agoing concern-,

(b) to achieve a better outcome for theinstitution's creditors as a wholethan would likely to be the case ifthe institution were liquidated(without first being underadministration);

(c) to realise the property of theinstitution in order to make adistribution to one or more securedor preferential creditors.

(3) The appointment of the Board asadministrator of an institution -has the sarneeffect as the appointment by the High Courtof an administrator of a company underDivision 3 of Part VIII of the InsolvencyAct, 2015.

(4) A person may not be appointed asadministrator of an institution under PartVIII of the Insolvency Act 201.5.

(a) if the Board has already beeiiappointed as its administrator; or

(b) if the Board has not already been soappointed without the approval of the HighCourt.

(5) The Court may give approval undersubsection (4)(b) only if the Central Bank-

1538


(a) has certified that it does not intendto exercise its powers under thissection; or

(b) has failed to exercise its powerswithin such period, not exceeding threemonths, as the High Court may specify.

(6) When an administrator (other thanthe Board) has been appointed in respect ofan institution, the Central Bank may, at anytime, apply to the High Court for an orderthat the administrator be removed and theBoard be appointed as administrator instead.

(7) If the High Court removes theadministrator and appoints the Boardinstead, the provisions of Part VIII of theInsolvency Act, 2015, apply to anadministration by the Board but only to theextent that they are not inconsistent with thisAct and any regulations made under it.

(8) A receiver or receiver and managermay not be appointed in respect of aninstitution and any provision purporting toconfer power to appoint such a receiver or areceiver and manager is taken to be a powerto appoint an administrator under Part VIIIof the Insolvency Act, 2015.

(9) If, before the commencement of theCompanies and Insolvency Legislation(Consequential Amendments) Act, 2015, areceiver or receiver and manager of aninstitution has been appointed in respect ofan institution, the receiver, or receiver andmanager, is taken to be an administratorappointed under Part VIII of the InsolvencyAct, 2015.

(10) When the Board is appointed asadministrator in respect of an institution areexercisable only if and to the extent

1539

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19authorised by the Central Bank.

(11) The powers of an administrator(other than the Board) appointed or taken tohave been appointed in respect of aninstitution are exercisable only if and to theextent authorised by the High Court.

(12) In the exercise of its powers as anadministrator, the Board may, by notice inwriting, require a person to whomsubsection (13) applies-

(a) to give to the liquidator allreasonable assistance in connectionwith the administration;

(b) to appear before the Board forexamination concerning mattersrelevant to the administration;

(c) to produce any records ordocuments that relate to the affairsof the institution underadministration.

(13) This subsection applies to thefollowing persons-

(a) any person who is or has at anytime been a director, managingdirector, secretary, principalofficer, manager, officer oremployee, agent, accountant orauditor of the institution;

(b) any person who has custody offunds or other assets of theinstitution under administration.

(14) The Cabinet Secretary may makeregulations generally for carrying out theadministration of an institution under thissection, and in doing so may apply relevantprovisions of the Insolvency Act, 2015, withor without modifications.

Right of appeal inrespect of Board's 35C. (1) Any interested person who is

1540


exercise of powers under dissatisfied with the exercise by the Boardsection 35 or 35AA.

of a power conferred on it by section 35 or35AA may apply to the High Court for anorder or orders under subsection (2).

(2) On the hearing of an applicationmade under subsection (1), the High Courtmay either dismiss the application or, if itconsiders that that the Board has exercisedthe power unfairly or unreasonably inrelation to the applicant, make either or bothof the following orders:

(a) an order quashing any decision of

the Board purporting to be made inthe exercise of the power, and anyaction taken as a result of thatdecision,

(b) an order directing the Board toexercise the power in such a w a-y asthe Court determines, subject tosuch terms as the Court considersappropriate.

(3) The Board is entitled to be servedwith a copy of an application made undersubsection (1) and to appear as respondentat the hearing of the application.

Offences under sections 35D. (1) A person who —35 and 35B.

(a) refuses or fails to comply with arequirement of a liquidatorappointed under section 35, or ofan administrator appointed undersection 35B, that is applicable tothe person, to the extent to whichthe person is able to comply with it;

(b) obstructs or hinders such aliquidator or administrator in theexercise of the powers conferredunder this Act;

(c) provides information, or makes a

1541

2015

Companies and Insolvency Legislation (Consequential Amendments) NO.19

false statement, to such a liquidator

or administrator knowing it to be

false or misleading in any material

respect', or

(d) when appearing before such a

liquidator for examination in

accordance with such a

requirement ^ makes a statement

knowing it to be false or misleading

in a material respect,

commits an offence and on conviction isliable to a fine not exceeding one million

shillings, or to imprisonment for a term not

exceeding three years, or to both.

(2) If, after being convicted of an

offence under subsection (1)(a), a person

continues to refuse or fail to comply with

the relevant requirement, the personcommits a further offence on each day or

part of a day on which the refusal or failure

continues and on conviction is liable to a

fine not exceeding one hundred thousand

shillings for each such offence.

Amendment of85. Section 37 of the Banking Act is amended in section 37 of Cap

subsection (1) by deleting the expression "Minister" and 488.

substituting therefor the expression "Cabinet Secretary.

86. Section 38 of the Banking Act is amende^

subsection (2) by deleting the expression "Minister"

substituting therefor the expression "Cabinet Secretary",

87. Section 39 of the Banking Ac is amended

deleting subsection (6) and substituting therefor


in Amendment ofsection 3 8 of Cap

and 488.

by Amendment ofsection 39 of

the Cap,488.

(6)An institution becomes insolvent for the purposes

of this Part if —

(a) a liquidator or provisional liquidator is appointed

in respect of the institution under Part VI of the

Insolvency Act, 2015;

(b) a liquidator or interim liquidator is appointed in

respect of the institution under this Act; or

(c) a liquidation order or administration order is made

1542


in respect of it, or a resolution for creditors'voluntary - liquidation is passed, under theInsolvency Act, 2015.

88. Section 40A of the Banking Act is, amended by Amendment ofsection 40A of

deleting subsection (1) and substituting therefor the Cap.488.


(1) The liquidator may assign the assets or liabilitiesof an institution or of a customer under this Act, theInsolvency Act, 2015, or under any other written law tothird parties for the benefit of the creditors and depositorsof the institution under liquidation.

89. Section 41A of the Banking Act is amended-

(a) by deleting the expression "Minister" andsubstituting therefor the expression "CabinetSecretary".

(b) by deleting subsection (1) and substituting thereforthe following new subsection-

(1) The Board shall hold, manage anddispose of all the assets of an institution remainingunsold at the time of the institution's liquidation."

Amendment ofsection 41 A ofCap.488.

90. Section 42 of the Banking Act is amended in Amendment ofsection 42 of

subsection (1) by deleting the expression "Minister" and Cap.488.

substituting therefor the expression "Cabinet Secretary".

91. Section 45 of the Banking Act is amended bydeleting the expression "Minister" and substituting thereforthe expression "Cabinet Secretary".






Amendment ofsection 53ofCap.488.

Amendment ofsection 55of Cap488.


inserting the following new subsection immediately after Cap.488.

subsection (2)—

1543

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19(3) If —(a) any act or thing that was done or omitted to be

done by or to the Cabinet Secretary under this Actbefore the commencement of the Companies andInsolvency Legislation (ConsequentialAmendments) Act, 2015 had effect immediatelybefore that commencement; and

(b) that act or thing could be done or be omitted to bedone by or to the Cabinet Secretary under this Actafter that commencement,

that act or thing is taken to have been done or omitted to bedone by or to the Cabinet Secretary.

96. The Third Schedule to the Banking Act is Amendment ofThird Schedule to

amended by deleting the expression "Minister" and C.p.488.


97. Section 2 of the Co-operative Societies Act is Amendment ofsection 2 of Cap

amended by — 490.

(a) inserting the following new definitions in properalphabetical sequence —

"Cabinet Secretary" means the Cabinet Secretary forthe time being responsible for co-operative development;";

"liquidator" means a liquidator appointed undersection 65;";

(b) deleting the definition of the expression"Minister".

98. Section 9 of the Co-operative Societies Act is Amendment of

section 9 ofamended by deleting the expression "Minister" and C.p-490.

substituting therefor the expression "Cabinet Secretary".99. Section 16 of the Co-operative Societies Act is Amendment of

section 16 ofamended by deleting the words "Companies Act" and Cap.490.


100. Section 22 of the Co-operative Societies Act is Amendment ofsection 22 of

amended by deleting the expression "bankruptcy" Cap.490

appearing in paragraph (c) and substituting therefor theexpression "insolvency".

101. Section 29 of the Co-operative Societies Act is Amon1mcnt ofsection 29 of

amended in subsection (10) by deleting the expression C.p.490

"Minister" and substituting therefor the expression"Cabinet Secretary".

1544


,,,nl,,n, of102. Section 30 of the Coôperative Societies Act is section 30 of Cap

amended— 490.

(a) in subsection (8) by deleting the expression"Registrar" and substituting therefor theexpression "Commissioner";

(b) in subsection (10) by deleting the expression

"Minister" and substituting therefor the expression

"Cabinet Secretary"; .

103. Section 36 of the Coôperative Societies Act is Repeal of section 36

amended by repealing section 36 and replacing it with the of Cap 490,

following newsection ^

Member's share not 36.(1 1) Subject to section 34, thesubject to attachment.

share or interest of a member in the capital

of a coôperative society is not liable to

attachment or sale under a judgment or

order of a court in respect of a debt or

liability incurred by the member.

(2) if such a member is adjudged

bankrupt under the Insolvency Act, 2015,

the bankruptcy trustee appointed in respect

of the member's estate does not have a

claim on the member's share or interest, but

if such a member is adjudged bankrupt

under that Act and the society is dissolved,

the share or interest of the member vests in

the bankruptcy trustee appointed in respect

of the member's estate.

104. Section 51 of the Co-operative Act is amended Amen1mont ofsection 51 of Cap

by deleting subsection (2) and substituting therefor the 490.

following n ew subsections-

(2)If, within thirty days after creating a charge in

accordance with section 49, a coôperative society fails to

register the charge with the Commissioner, each officer of

the society who is in default commits an offence and on

conviction is liable to a fine not exceeding two hundred

thousand shillings."

(3) Subsection (2) does not apply if registration of the

charge was effected by a person other than the society."

(4) If, after an officer of a co-operative society isconvicted of an offence under subsection (2), the failure to

1545


register the charge continues, each officer of the societywho is in default commits a further offence on each day onwhich the failure continues and on conviction is liable to afine not exceeding twenty thousand shillings for each suchoffence."

105. Section 57 of the Co-operative Societies Act is Imendment ofsection 57 of Cap

amended by deleting subsection (2) and substituting 490.

therefor the following new subsections-

(2) An officer of a co-operative society who preventsor obstructs a person from inspecting the society's registerof charges, or copies of the documents by the society hascreated charges as provided by subsection (1) commits anoffence and on conviction is liable to a fine not exceedingfive hundred thousand shillings".

(3) On convicting an officer of a co-operative societyof an offence under subsection (2), the court may order theofficer to facilitate the inspection of the society's registerof charges and the copies of the relevant documents."

In,e,tion of Part106. The Co-operative Societies Act is amended by X11A into Cap 490.inserting the following new Part immediately after section60A.

PART XIIA SPECIAL POWERS OF THE COURT TO. SET ASIDE CERTAIN TRANSACTIONS

Irsenion of section107. The Co-operative Societies Act is amended by 60B,60C,60D,60E,inserting the following new sections immediately after Part 60F, 60G in

XIIA— Cap.490.

Power of the Court to set 60B. (1) This section applies to a co-aside transaction that isunder value.

operative society in respect of which aliquidator is appointed.

(2) In this section, "relevant time" hasthe meaning given by section 60D.

(3) If the liquidator reasonably believesthat the society has at a relevant timeentered into a transaction with a person at anundervalue, the liquidator may apply to theCourt for an order under subsection (4).

(4) If, on the hearing of an applicationmade under subsection (3), the Court findsthat the transaction was undervalue, it shall

1546


make an order setting aside the transactionand restoring the position to that whichwould have existed if the society had notentered into the transaction.

(5) For the purposes of this section andsection 60E, a co-operative society entersinto a transaction with a person atundervalue if-

(a) the society makes a gift to theperson or otherwise enters into atransaction with the person onterms that provide for the society toreceive no consideration; or

(b) the society enters into a transactionwith the person for a consideration the valueof which, in money or money's worth, issignificantly less than the value, in moneyor money's worth, of the considerationprovided by the society.

(6) The Court may not make an orderunder subsection (4) in respect of atransaction at an undervalue if it issatisfied-

(a) that the society that entered into thetransaction did so in good faith andfor the purpose of carrying on itsbusiness; and

(b) that at the time when the societydid so there were reasonablegrounds for believing that it wouldbenefit from the transaction.

Power of the Court to 60C. (1) In this section, "relevant time"void preference.has the meaning given by section 60D.

(2) If of the view that a co-operativesociety has at a relevant time given apreference to a person, the Commissionermay apply to the Court for an order undersubsection (3).

(3) If, on the hearing of an applicationmade under subsection (2), the Court is

1547


satisfied that the society has at a relevanttime given a preference to a person, it shallmake an order voiding the act constituted bygiving the preference and restoring theposition that which would have existed ifthe preference had not been given.

(4) For the purposes of this section andsection 60E, a co-operative society gives apreference to a person if-

(a) the person is one of the society'screditors or a surety or guarantorfor any of the society's debts orother liabilities; and

(b) the society does any act or allowsan act to be done that (in eithercase) has the effect of placing theperson in a position that, if thesociety were in insolventliquidation, is better than theposition the person would havebeen in had that act not been done.

(5) The Court may not make an orderunder subsection (3) in respect of apreference given to a person unless it issatisfied that the society that gave thepreference was influenced in deciding togive it by a wish to produce in relation tothat person the effect referred to insubsection(4)(b).

(6) A co-operative society that hasgiven a preference to a person connectedwith the society (otherwise than by being itsemployee) at the time when the preferencewas given is presumed, in the absence ofevidence to the contrary, to have beeninfluenced in deciding to give it by such awish as is referred to in subsection (5).

(7) The fact that action has been takenin accordance with the order of a Court doesnot, without more, prevent the doing orsuffering of that action thing from

1548


constituting the giving of a preference.What "relevant time" 60D. (1) Subject to subsection (2), themeans in sections 60Band 60C. time at which a co-operative society enters

into a transaction at an undervalue or gives apreference is a relevant time if thetransaction is entered into, or the preferenceis given —

(a) in the case of a transaction at anundervalue or of a preference thatis given to a person who isconnected with the society(otherwise than through being itsemployee)—at a time during thetwo years immediately precedingthe appointment of the liquidator;or

(b) in the case of a preference that isnot such a transaction and is not sogiven—at a time during the sixmonths immediately preceding thatappointment.

(2) If a co-operative society enters intoa transaction at an undervalue, or gives apreference at a time referred to in subsection(1)(a) or (b), that time is a relevant time forthe purposes of section 60B or 60C only ifthe society-

(a) is at that time unable to pay itsdebts; or

(b) becomes unable to pay its debts inconsequence of the transaction orpreference.

(3) However, the conditions insubsection (2) are, in the absence ofevidence to the contrary, presumed to existin relation to a transaction at undervalue thatis entered into by the society with a personwho is connected with it.

Orders under sections 60E. (1) An order under section 60B60B and 60C ancillaryprovisions.

or section 60C with respect to a transactionor preference entered into or given by a co-

1549

2015 Companies and Insolvency Legislation (Consequential Amendments) No . 19

operative society may, subject to subsection(2)—

(a) require property transferred as partof the transaction, or in connectionwith the giving of the preference, tobe vested in the society;

(b) require the property to be so vestedif it represents the applicationeither of the proceeds of sale ofproperty so transferred or of moneyso transferred;

(c) release or discharge (in whole or inpart) any security given by thesociety;

(d) require any person to pay, inrespect of benefits received fromthe society, such amounts to theliquidator as the Court may specify;

(e) provide for any surety or guarantorwhose obligations to a person werereleased or discharged (in whole orin part) under the transaction, or bythe giving of the preference, to besubject to such new or revivedobligations to the person as theCourt considers appropriate;

(f) provide —

(i) for security to be provided forthe discharge of an obligationimposed by or arising underthe order;

(ii) for such an obligation to becharged on specified property;and

(iii) for the security or charge tohave the same priority as asecurity or charge released ordischarged (in whole or inpart) under the transaction orby the giving of thepreference; and

1550


(g) provide for the extent to which aperson whose property is vested bythe order in the society, or onwhom obligations are imposed bythe order, is to be able to prove inthe liquidation of the society fordebts or other liabilities that arosefrom, or were released ordischarged (in whole or in part)under or by, the transaction or thegiving of the preference.

(2) An order under section 60B or 60Cmay affect the property of, or impose anobligation on, a person whether or not theperson is the one with whom the relevantco-operative society entered into thetransaction, or the person to whom thepreference was given.

(3) However, such an order-

(a) may not detrimentally affect aninterest in property that-

(i) was acquired from a personother than the society; and

(ii) was acquired in good faith andfor value, or detrimentallyaffect any interest that isderived from such an interest;and

(b) may not require a person whoreceived a benefit from thetransaction or preference in goodfaith and for value to pay anamount to the liquidator, unless —

(i) the person was a party to thetransaction; or

(ii) the payment is to be in respectof a preference given to thatperson at a time when theperson was a creditor of thesociety.

(4) If a person has acquired an interest

1551

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19in property from a person other than therelevant co-operative society, or hasreceived a benefit from the transaction orpreference and, at the time of the acquisitionor receipt, the person-

(a) had notice of the relevantsurrounding circumstances and ofthe relevant proceedings; or

(b) was connected with, or was anassociate of, either the relevant co-operative society or the person withwhom that co-operative societyentered into the transaction or towhom that co-operative societygave the preference,

then, for the purposes of paragraph (a) orparagraph (b) of subsection (3), the interestis presumed to have been acquired, or thebenefit to have been received, otherwisethan in good faith.

(5) For the purposes of subsection(4)(a), the relevant surroundingcircumstances, in relation to a co-operativesociety, are —

(a) the fact that the society entered intothe transaction at an undervalue; or

(b) the circumstances that amounted tothe giving of the preference by thatco-operative society,

and subsection (6) has effect to determinewhether, for those purposes, a person hasnotice of the relevant proceedings.

(6) For the purposes of subsection (5),a person has notice of the relevantproceedings if the person has notice of thefact that a liquidator has been appointed inrespect of the society.

(7) Nothing in this section or sections60B to 60D affects the availability of anyother remedy, even in relation to atransaction or preference that the society had

1552


no power to enter into or give.

(8) Nothing i [ subsection (1) limitsthe Court's powers under sections 60B (4)and 60C (3).

Power of the Court to set OF (1) This section applies to aaside certain extortionatecredit transactions. transaction to which a co-operative society

is, or has been, a party to a transaction for,or involving, the provision of credit to thesociety.

(2) The Commissioner may apply tothe Court for an order under subsection (3)if the Commissioner believes that such atransaction-

(a) is or was extortionate; and

(b) was entered into during the threeyears immediately preceding thedate on which the society enteredadministration or on which aliquidator was appointed in respectof the society.

(3) If, on the hearing of an applicationmade by the Commissioner undersubsection (2), the Court is satisfied that thetransaction is or was extortionate and wasentered into within the period referred to insection (b) of that subsection, it shall makeone or more of the following orders:

(a) an order setting aside the whole orpart of an obligation created by thetransaction;

(b) an order otherwise varying theterms of the transaction or varyingthe terms on which any security forthe purposes of the transaction isheld;

(c) an order requiring a person who isor was a party to the transaction topay to the Commissioner anyamounts paid to that person by the

1553

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19 -society in accordance with thetransaction;

(d) an order requiring a person tosurrender to the Commissionerproperty held by the person assecurity for the purposes of thetransaction;

(e) an order directing accounts to betaken between the specifiedpersons.

(4) For the purposes of this section, atransaction is extortionate if, having regardto the risk accepted by the person providingthe credit-

(a) the terms of it are or were such asto require grossly exorbitantpayments to be made (whetherunconditionally or in certaincontingencies) in respect of theprovision of the credit; or

(b) it otherwise grossly contravenedordinary principles of fair dealing.

(5) A transaction with respect to whichan application is made under subsection (2)is, in the absence of evidence to thecontrary, presumed to be or to have beenextortionate.

(6) The powers conferred by thissection are exercisable in relation to atransaction concurrently with any powersexercisable in relation to the transaction asone at an undervalue.

Circumstances in whichfloating charge on co- 60G. (1) Except as otherwiseoperative society's provided by this section, a floating chargeundertaking or propertyto be invalid. on a co-operative society's undertaking or

property created at a relevant time is invalidexcept to the extent of the aggregate of-

(a) an amount equal to the value of somuch of the consideration for thecreation of the charge as consists ofmoney paid, or goods or services

1554No. 19 ' Companies and Insolvency Legislation (Consequential Amendments) 2015

supplied, to the society at the sametime as, or after, the creation of thecharge;

(b) an amount equal to the value of somuch of that consideration asconsists of the discharge orreduction, at the same time as, orafter, the creation of the charge, ofany debt of the society; and

(c) the amount of such interest (if any)as is payable on the amountreferred to in clause (a) or (b) inaccordance with an agreementunder which the money was sopaid, the goods or services were sosupplied or the debt was sodischarged or reduced.

(2) Subject to subsection (3), the timeat which a floating charge is created by a co-operative society is a relevant time for thepurposes of this section if the charge iscreated-

(a) in the case of a charge which iscreated in favour of a person who isconnected with the society—withinthe two years immediatelypreceding the Appointment of aliquidator in respect of the society;

(b) in the case of a charge that iscreated in favour of any otherperson—at a time within the periodof twelve months ending with thedate of that appointment.

(3) If a co-operative society creates afloating charge at a time referred to insubsection (2)(b) and the person in favour ofwhom the charge is created is not connectedwith the society, that time is not a relevanttime for the purposes of this section unlessthe society-

(a) is at that time unable to pay its

1555


debts; or

(b) becomes unable to pay its debts inconsequence of the transactionunder which the charge is created.

(4) For the purposes of subsection(1)(a), the value of any goods or servicessupplied as consideration for a floatingcharge is the amount in money that, at thetime they were supplied, could reasonablyhave been expected to be obtained forsupplying the goods or services in theordinary course of business and on the sameterms (apart from the consideration) as thoseon which they were supplied to the society".

108. The Co-operation Societies Act is amended by Repeal of section 64

repealing section 64 and replacing it with the following new of Cap 490,

section-

Liquidation of co- 64. The First Schedule has effect withoperative society whoseregistration is cancelled respect to the liquidation of a co-operativeunder section 61 or 62 society whose registration has been

cancelled under section 61 or 62.

109. The Co-operative Societies Act is amended by Repeal of section 65

repealing section 65 and replacing it with the following new of Cap 490.

section-

Appointment of 65. (1) If the registration of a co-liquidators.operative society is cancelled under section61 or 62, the Commissioner may appointone or more authorised insolvencypractitioners to be the liquidator orliquidators of the society.

(2) The property of the society vests inthe liquidator or liquidators from andincluding the date on which the cancellationof registration took effect.

(3) In this section, 'authorisedinsolvency practitioner' means aninsolvency practitioner authorised underPart H of the Insolvency Act, 2015".

1556


110. The Co-operative Societies Act is amended by Repeal of section 71

repealing section 71 and replacing it with therefor the of Cap.4. 90.

following new section-

Offences relating to the 71. (1) The Third Scheduleliquidation of co-operative society. prescribes offences relating to conduct

before and during liquidation and providesfor criminal proceedings relating to thoseoffences.

(2) If the liquidator of a co-operativesociety whose registration has beencancelled reasonably suspects that anoffence specified in the Third Schedule hasor may been committed during or before theliquidation of the society, the liquidatorshall report the matter to the Commissioner.

(3) As soon as practicable after asuspected offence is reported in accordancewith subsection (2), the Commissioner shalltake such action (including prosecution ofthe offence) as the Commissioner considersappropriate."

111. Section 72 of the Co-operative Societies Act is Arnerilmen, ofsection 72 of Cap

amended by deleting the word "Companies Act", wherever 490.

it appears and substituting therefor the word "CompaniesAct, 2015".

i S Arnencintent of112. Section 77 of the Co-operative Societies Act section 77 of Capamended by deleting the expression "Minister" and 490.

substituting therefor the expression "Cabinet Secretary.

i S Antendment of113. Section 84 of the Co-operative Societies Act section 84 of

Capamended by deleting the expression "Minister" and 490.


is Amendment of114. Section 85 of the Co-operative Societies Act section 85 ofamended by deleting the expression "Minister" and Cap.490.


115. Section 90A of the Co-operative Societies Act is Arnendment ofsection 90A of

amended by deleting the expression "Minister" and Cap.490.

substituting therefor the expression "Cabinet Secretary".i S Amendment of116. Section 91 of the Co-operative Societies Act section

91 of

1557

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19amended— Cap.490.

(a) by deleting the expression "Minister" andsubstituting therefor the expression "CabinetSecretary".

(b) in subsection (2) by inserting the following newparagraph immediately after paragraph (r)—

"(ra) provide for societies that become insolventto be placed under administration instead ofliquidation if it appears that it may bepossible for them to recover from theirinsolvency;"

(c) by inserting the following . new subsectionimmediately after section (2)—

(2A) In making rules for the purpose ofsubsection (2)(ra), the Cabinet Secretary may applysuch provisions of the Insolvency Act, 2015, relatingto the administration of insolvent companies as theCabinet Secretary considers appropriate and, inapplying those provisions for that purpose, maymake such modifications to them as appear to theCabinet Secretary to be necessary.

117. Section 94 of the Co-operative Societies Act is Arnonlrnenl ofsection 94

of Cap

amended by deleting subsection (2) and substituting 490.

therefor the following new section-

(2) A co-operative society, an officer or member ofsuch a society, or other person who is convicted of anoffence under subsection (1) is liable to a fine not exceedingfive hundred thousand shillings.

118. The Co-operative Societies Act is amended by lepealing of section

repealing section 95 and replacing it with the following new 95 of Cap 490.

section-

Certain laws not to apply 95. Except as expressly provided byrules made under section9l, the CompaniesAct, 2015, the Insolvency Act, 2015 and theRegistration of Business Names Act do notapply to a co-operative society.

is A,e,l,, of119. Section 96 of the .Co'operative Societies Act section 96 of Capamended by inserting the following new subsection 490.

1558


immediately after subsection (2)—

(3) If —

(a) any act or thing that was done or omitted to bedone by or to the Cabinet Secretary under this Actbefore the commencement of the Companies andInsolvency Legislation (ConsequentialAmendments) Act, 2015 had effect immediatelybefore that commencement; and



120. The Co-operative Societies Act is amended by lepealing of FirstSchedule to

repealing the Schedule and replacing it the following new Cap.490.

Schedule-----------------

FIRST SCHEDULE (S. 64)LIQUIDATION OF CO-OPERATIVE SOCIETIES

Interpretation: this (1) In this Schedule-Schedule.

"contributory", in relation to a co-operative society in respect of which aliquidator is appointed, means a member orpast member of the society in respect ofwhom the liquidator has made adetermination that the member or pastmember is liable to make a contribution tothe funds of the society;

"deliver", in relation to documents orother property, includes surrender andtransfer;

"inability to pay its debts", in relationto a co-operative society, has the meaninggiven by paragraph 2;

"past member" includes a deceasedmember.

The circumstances in 2. (1) For the purposes of thiswhich co-operativesociety is unable to pay Schedule, a co-operative society is unable toits debts. pay its debts —

1559

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19(a) if a creditor (by assignment or

otherwise) to whom the society isindebted for hundred thousandshillings or more has served on thesociety, by leaving it at thesociety's registered office, a writtendemand requiring the society to paythe debt and the society has fortwenty-one days afterwards failedto pay the debt or to secure orcompound for it to the reasonablesatisfaction of the creditor;

(b) if execution or other process issuedon a judgment, decree or order ofany court in favour of a creditor ofthe society is returned unsatisfiedin whole or in part; or

(c) if it is proved to the satisfaction ofthe High Court that the society, isunable to pay its debts as they falldue.

(2) A co-operative society is alsounable to pay its debts for the purposes ofthis Schedule if it is proved to thesatisfaction of the High Court that the valueof the society's assets is less than theamount of its liabilities (including itscontingent and prospective liabilities).

(3) The regulations may increase orreduce the amount specified in subparagraph(1)(a).

Dispositions of property 3. After the Commissioner hasby co-operative societyafter commencement of cancelled the registration of a co-operativeliquidation to be voidunless the High Court society under section 61 or 62—otherwise orders.

(a) any disposition of the society'sproperty; and

(b) any transfer of shares, or alterationin the status of the society'smembers,

made after the cancellation is void, unless

1560


the High Court otherwise orders.

Attachments and other 4. After the registration of a co-forms of execution

against co-operative operative society is cancelled under sectionsociety in liquidation to

be void. 6Y or 62, any attachment, sequestration,

distress or execution instigated against the

-assets ol-the society is void.

Liquidator may require5. (1) YVhen a liquidator is appointe

co-operative society tod in

submit statement of respect of a 'to-operative society, theaffairs.

liquidator may require' some or all of the

persons to whom this paragraph applies to

make out and submit to the liquidator a

statement concerning the affairs of the

society.

(2) The persons requir^ to submit

such a statement shall-verify/it by statutory

declaration and shall include,(in it—,I I

(a) such particulars of the society's

assets, 'debts and liabilities as' are

prescribed by the . re; gulation§ for

the purposes of this paragraph;

(b)the names and addresses of the

socliety'.^ creditors;

(c) the securities (if any) held by themI respectively;

(d)the dates when the securities were

, Z respectively given; and

(e) such further or other information as

the liquidator may reasonably

require.

(3) This paragraph applies to thefollowing persons:

(a)those who are or have been officers

of the society;

(b)those who have taken part in the

formation of the society at any time

during the twelve months before

the cancellation of the society's

registration;

(c)those who —

1561

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19(i) are in the society's

employment, or have been inits employment during thatperiod; and *

(ii) are in the liquidator's opinioncapable of giving theinformation required.

(4) , A prescribed person who isrequired' under this paragraph to submit astatement of affairs to the liquidator shall,subject to subparagraph (5), do so withintwenty-one days from and including the dateon which notice of the requirement wasgiven to the person by the liquidator.

(5) The liquidator may-

(a) at any time release a person froman obligation imposed on the

!person under subparagraph (1) orby subparagraph (2); or

(b) either when giving the noticereferred to in subparagraph (4) orsubsequently —extend the periodreferred to in that subparagraph.

(6) If the liquidator has declined toexercise a power conferred by subparagraph(5), the High Court may, on the applicationof the Attorney General or a person who isdissatisfied with the liquidator's decision,exercise the power if it considers itappropriate to do so.

(7) A person who, without reasonableexcuse, fails to comply with an obligationimposed by or under this paragraph commitsan offence and on conviction is liable to afine not exceeding five hundred thousandshillings.

(8) If, after being convicted of anoffence under subparagraph (8), a person,without reasonable excuse, continues to failto comply with the relevant obligation, the

0

1562

No. 19 Companies and Insolvency Legislation (Consequential Amendments) - 2015

person commits a further offence on eachday on which the failure continues and onconviction is liable to a fine not exceedingfifty thousand shillings for each suchoffence.

. (9) In this paragraph, "employment"includes employment under a contract forservices.

Duty of Commissioner 6. As soon as practicable afterto conduct investigationinto failure of co- cancelling the registration of a co-operativeoperative society.

society, the Commissioner shall conduct aninvestigation

(a) if the society has failed—todiscover why the society failed;and

(b) generally, to investigate thepromotion, formation, business,dealings and affairs of the society.

Public examination of 7.(1) When a . liquidator isofficers and past officersof co-operative society. appointed in respect of a co-operative

society, the liquidator may apply to the HighCourt for the public examination of anyperson who —

(a) is or has been an officer of thesociety;

(b) has acted as provisional liquidator,liquidator or administrator of thesociety; or

(c) not being a person referred to inparagraph (a) or (b)—is or has beenconcerned, or has taken part, in thepromotion, formation ormanagement of the society.

(2) Unless the High Court otherwiseorders, the liquidator shall make anapplication under subparagraph (1) onreceiving a written request to do so from-

(a) creditors of the society holding notless than one-half in value of the

1563

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19total amount of the society's debts;or

(b) contributories of the societyholding not less than three-quartersof the voting rights at generalmeetings of the society.

(3) If, on the hearing of an applicationmade under subparagraph (1), the HighCourt is satisfied that a public examinationof the person to whom the applicationrelates is warranted, it shall make an orderdirecting such an examination to be held ona date and at a time and place specified inthe order.

(4) On being served with a copy of anorder made under subparagraph (3), theperson concerned shall attend on the dateand at the time and place specified in theorder and be publicly examined-

(a) about the promotion, formation ormanagement of the society; or

(b) about the conduct of its affairs, orconduct or dealings in relation tothe society.

(5) The persons - specified insubparagraph (6) may-

(a) participate in the publicexamination of a person under thisparagraph; and

(b) may question the personconcerning the matters referred toin subparagraph (4).

(6) The following persons arespecified for the purpose of subparagraph(5):

(a) the Commissioner;

(b) the liquidator of the society;

(c) any person who has been appointed

1564


as special manager of the society'sproperty or business;

(d) any creditor of the society who hassubmitted a proof;

(e) any contributory of the society.Consequences of failing 8. (1) A person who, withoutto attend publicexamination. reasonable excuse, fails at any time to attend

the person's public examination underparagraph 7 is guilty of a contempt of Courtand is liable to be punished accordingly (inaddition to any other punishment to whichthe person may be subject).

(2) If a person fails without reasonableexcuse to attend the person's examinationunder paragraph 7, or there are reasonablegrounds for believing that a person hasabsconded, or is about to abscond, with aview to avoiding or delaying theexamination, the High Court may issue awarrant to be issued to a police officer or aprescribed officer of that Court-

(a) for the arrest of that person; and

(b) for the seizure of any documents orproperty in that person'spossession.

(3) In such a case, the High Court mayauthorise the person arrested under thewarrant to be detained in custody, andanything seized under it to be kept, inaccordance with the directions of that Court,until such time as that Court orders.

Power of the High Court 9.(l) When a liquidator isto halt liquidation. appointed in respect of a co-operativesociety, the liquidator, the Commissioner orany creditor or contributory of the society,and on proof to the satisfaction of the HighCourt that all proceedings in the liquidationought to be halted, that Court may make anorder halting the liquidation proceedings,either permanently or for a specified period,

1565

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19on such terms as that Court considersappropriate.

(2) Before making an order undersubparagraph (1), the High Court mayrequire the liquidator to provide it with areport on any facts or matters that appear tothe liquidator to be relevant to theapplication.

(3) The liquidator shall comply withsuch a requirement within such period as theHigh Court specifies.

Payment of expenses ofliquidation. 10. (1) If, in the case of a co-

operative society in respect of which aliquidator is appointed, the assets of thesociety are insufficient to satisfy itsliabilities, the liquidator-

(a) may direct the expenses incurred inthe liquidation to be paid out of thesociety's assets; and

(b) may direct that that payment begiven such of priority as theliquidator considers appropriate.

(2) A direction under subparagraph (1)has effect irrespective of the provisions ofthis Act relating to preferential debts.

Power to arrestabsconding contributory. 11. (1) This paragraph applies when

the Commissioner has cancelled theregistration of a co-operative society.

(2) On the application of theCommissioner made either before or afterthe registration of the society is cancelled,the High Court may, if satisfied onreasonable grounds that a contributory is-

(a) about to quit Kenya or otherwise toabscond; or

(b) has concealed or removed, or isabout to conceal or remove, any ofthe contributory's property for thepurpose of evading payment of

1566


calls,issue a warrant authorising the contributoryto be arrested and the contributory'sdocuments and moveable personal propertyto be seized.

(2) In such a case, the High Court mayauthorise the person arrested under thewarrant to be detained in custody, andanything seized under the warrant to bekept, in accordance with the directions ofthe High Court, until such time as that Courtorders.

Preferential debts 12. (1) The liquidator of a co-(general provision).

operative society shall distribute the assetsof the society available for the payment ofcreditors in accordance with the SecondSchedule.

(2) Subparagraph (1) is subject to theprovisions of this Schedule.

Preferential charge on 13. (1) This paragraph applies to a co-property of co-operativesociety distrained within operative society in respect of which athree months beforeappointment of liquidator is appointed.liquidator. (2) If a person (whether or not a

landlord or person entitled to rent) hasdistrained on the property of the societyduring the three months immediatelypreceding the date on which a liquidator wasbeen appointed, that property, or theproceeds of its sale, is charged for thebenefit of the society with the preferentialdebts of the society to the extent that thesociety's assets are for the time beinginsufficient to satisfy them.

(3) If, because of a charge undersubparagraph (2), a person surrendersproperty to the society or pays money to thesociety, the person.ranks, in respect of theamount of the proceeds of sale of theproperty by the liquidator, or the amountmoney paid, as a preferential creditor of the

1567

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19society, except as against so much of thesociety's property as is available for thepayment of preferential creditors because ofthe surrender or payment.

(4) This paragraph does not limit theeffect of paragraph 4 (avoidance ofattachments, etc.).

Expenses of liquidationto have priority over 14. (1) The expenses of liquidating aclaims under floating. co-operative society, so far as the assets of

the society available for payment of generalcreditors are insufficient to meet thoseexpenses, have priority over any claims toproperty comprised in or subject to anyfloating charge created by the society andare to be paid out of any such propertyaccordingly.

(2) In subparagraph (1), the referenceto claims to property comprised in or subjectto a floating charge is to the claims of-

(a) the holders of debentures securedby, or holders of, the floatingcharge; and

(b) any preferential creditors entitled tobe paid out of that property inpriority to them.

(3) Provision may be made restrictingthe application of subparagraph (1), in suchcircumstances as may be prescribed by theregulations, to expenses authorised orapproved-

(a) by the holders of debenturessecured by, or holders of, thefloating charge and by anypreferential creditors entitled to bepaid in priority to them; or

(b) by the High Court.

(4) References in this paragraph to theexpenses of the liquidation are to allexpenses properly incurred in theliquidation, including the remuneration of

1568


the liquidator.

Power of liquidator to 15. (1) The liquidator of a co-disclaim onerousproperty. operative society may, by the giving such

notice as may be prescribed by theregulations, disclaim any onerous propertyand may do so even if the liquidator hastaken control of it, tries to sell it, orotherwise exercised rights of ownership inrelation to it.

(2) The following is . onerous propertyfor the purposes of this paragraph:

(a) an unprofitable contract;

(b) other property of the society that isunsalable or not readily saleable oris such that it may give rise to aliability to pay money or performany other onerous act.

(3) A ' disclaimer under thisparagraph-

(a) operates so as to determine, as fromthe date of the disclaimer, therights, interests and liabilities of thesociety in or in respect of theproperty disclaimed; but

(b) does not, except so far as isnecessary for the purpose ofreleasing the society from anyliability, affect the rights orliabilities of any other person.

(4) A notice of disclaimer may not begiven under this paragraph in respect of anyproperty if-

(a) a person interested in the propertyhas applied in writing to theliquidator, or a predecessor of theliquidator, requiring the liquidatoror liquidator's predecessor todecide whether the property will bedisclaimed or not; and

1569

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19(b) twenty-eight days from and

including the date on which thatapplication - was made (or suchextended period as the High Courtmay allow) has expired without anotice of disclaimer having beengiven under this paragraph inrespect of the property.

(5) A person who has sustained loss ordamage in consequence of the operation of adisclaimer under this paragraph is a creditorof the society to the extent of the loss ordamage and accordingly may prove for the.loss or damage in the liquidation.

Special provisionsrelating to disclaimer of 16. (1) The disclaimer underleascholds. paragraph 15 of any property comprising a

leasehold interest does not take effect unlessa copy of the disclaimer has been served (sofar as the liquidator is aware of theiraddresses) on every person claiming underthe society as under-lessee or mortgagee andeither-

(a) an application under paragraph 18(general powers of the High Courtin respect of disclaimed property)has not been made with respect tothat property within fourteen daysfrom and including the date onwhich the last notice served underthis subparagraph was served; or

(b) if such an application is made-that Court makes an order directingthe disclaimer to take effect.

(2) If the High Court makes an orderunder subparagraph (1)(b) it may also,instead of or in addition to any order itmakes under paragraph 18, make suchorders with respect to fixtures, tenant'simprovements and other matters arising outof the lease as it considers appropriate.

Effect of disclaimer in 17. (1) If, as a result of therelation to land subject to

1570


rentcharge. disclaimer under paragraph 15 of landsubject to a rentcharge, the land vests byoperation of law in a person, the person isnot subject to any liability in respect ofamounts becoming due under the rentchargeexcept amounts that become due after theproprietor (or some person claiming underor through the proprietor) has takenpossession or control of the land or hasoccupied it.

(2) The reference in'subparagraph (1)to a person includes the State and to any asuccessor in title to the person.

General powers of the 18. (1) This paragraph andHigh Court in respect ofdisclaimed property. paragraph 19 apply to property that the

liquidator of a co-operative society hasdisclaimed in accordance with paragraph 15.

(2) An application to the High Courtfor an order under subparagraph (3) may bemade by-

(a) any person who claims an interestin the disclaimed property; or

(b) any person who is under a liabilityin respect of the disclaimedproperty, other than a liabilitydischarged by the disclaimer.

(3) On the hearing of an applicationmade under subparagraph (2), the HighCourt may make an order, on such terms asit considers appropriate, for the vesting ofthe disclaimed property in, or for itsdelivery tom-

(a) a person entitled to it or a trusteefor such a person; or

(b) a person subject to such a liabilityas is referred to in subparagraph(2)(b) or a trustee for such a person.

(4) The High Court may make anorder under subparagraph (3)(b) only if itappears to that Court that it would be just todo so for the purpose of compensating the

1571

2015 Companies and insolvency Legislation (Consequential Amendments) No . 19

person subject to the liability in respect ofthe disclaimer.

(5) The effect of an order made underthis paragraph is to be taken into account inassessing for the purpose of paragraph 15(6)the extent of any loss or damage sustainedby a person in consequence of thedisclaimer.

(6) It is not necessary for an orderunder this paragraph vesting property in aperson to be completed by transfer.

Powers of the High 19. (1) The High Court may not makeCourt in respect of an order under paragraph 18 vesting aleascholds held by co-operative society in leasehold interest in a person claiming underliquidation.

the society as underlessee or mortgageeexcept on terms making the person-

(a) subject to the same liabilities andobligations as the society wassub . ect to under the lease at the9time of the liquidator 'sappointment; or

(b) if that Court considersappropriate—subject to the sameliabilities and obligations as theperson would be subject to if thelease had been assigned to theperson at that time.

(2) For the purposes of an order underparagraph 18 relating only to the part of theproperty comprising a lease, therequirements of subparagraph (1) apply as ifthe lease was the only property to which theorder relates.

(3) If subparagraph (1) applies and'hoperson claiming under the society asunderlessee or mortgagee is willing toaccept an order under paragraph 18 on theterms required under that subparagraph, theHigh Court may make an order vesting thesociety's interest in the lease in any personwho is liable (whether personally or in a

1572


representative capacity, and whether aloneor jointly with the society) to perform thelessee's covenants under the lease.

(4) The High Court may vest thatestate and interest in such a person freed anddischarged from all estates, encumbrancesand interests created by the society.

(5) If subparagraph (1) applies and aperson claiming under the society asunderlessee or mortgagee declines to acceptan order under paragraph 18, that person isexcluded from all interest in the property.

Creditor not entitled toretain benefit ofexecution or attachmentagainst liquidator unlesscreditor completesexecution or attachmentbefore commencementof liquidation.

20. (1) If —(a) a creditor-

(i) has issued execution against theproperty of a co-operativesociety; or

(ii) has attached any debt due to it;and

(b) a liquidator is subsequentlyappointed in respect of the society,

the creditor is not entitled to retain thebenefit of the execution or attachmentagainst the liquidator unless the creditor hascompleted the execution or attachmentbefore the commencement of theliquidation.

(2) However

(a) a person who, under a saleconducted by the enforcementofficer or other officer chargedwith the execution of the writgoods of a co-operative society onwhich execution has been levied,purchases the goods in good faithacquires a good title to them asagainst the liquidator; and

(b) the High Court may set aside therights conferred on the liquidatorby subparagraph (1) in favour of

1573

2015

Companies and Insolvency Legislation (Consequential Amendments) No.19

the creditor to such extent andsubject to such terms as it considersjust.

(3) For purposes of this Act-

(a) an execution against goods iscompleted by seizure and sale;

(b) an attachment of a debt iscompleted by receipt of the debt;and

Duties ofjudicialenforcement officerscharged with executionof writs and otherprocesses involving co-operative societies inliquidation.

(c) an execution against land iscompleted by its seizure or by anyother event prescribed by theregulations for the purposes of thisparagraph.

21. (1) This paragraph applies if —

(a) a co-operative society's goods aretaken in execution; and

(b) before their sale or the completionof the execution (whether by thereceipt or recovery of the fullamount of the levy)—notice isserved on the judicial enforcementofficer charged with execution ofthe writ or other process that aliquidator has been appointed inrespect of the society.

(2) If so required, the judicialenforcement officer concerned shall deliverthe goods and any money seized or receivedin part satisfaction of the execution to theliquidator.

(3) However, the costs of executionare a first charge on the goods or money sodelivered, and the liquidator may sell thegoods, or a sufficient part of them for thepurpose of satisfying the charge.

(4) If, under an execution in respect ofa judgement for an amount exceeding fiftythousand shillings, a co-operative society's

1574


goods are sold or money is paid in order to

avoid sale, the judicial enforcement shall-

(a) deduct the costs of the execution

from the proceeds of sale or the

money paid; and

(b)retain the balance for not less than

fourteen days.

(5) If, within that fourteen-day

period-

(a) notice is served on the judicial

enforcement officer to the effect

that-

(i)an application'l, for the

liquidation of tAe society , has

been made; or ^ 1 1 i

1. . I J

(ii)a meeting has t been convened a

I t

which there is to'be proposed a

resolution for voluntar^

liquidation; and

(b) an order is made or a resolution'

passed,

that officer shall pay the balance 'to theliquidator, who is entitled to retain , it as

against the execution creditor.

(6) The rights conferred by^ this

paragraph on the liquidator may be set', aside

by the High Court in favour of the creditor

to such extent and subject to such terms as

that Court considers appropriate. i.

(7) The regulations may provide for the

amount specified in subparagraph (4) to be

increased or reduced.

Power of the High Court 22. (1) A person who is, as againstto rescind contracts

entered into by co- the liquidator of a co-operative society,operative society in

respectofwhich entitled to the benefit or subject to theliquidator is appointed. burden of a contract made^with the society,

may make an application for an order undersubparagraph (2).

1575

2015

Companies and Insolvency Legislation (Consequential Amendments) No. 19

(2) On the hearing of an applicationmade under subparagraph (1), the HighCourt may make an order rescinding thecontract on such terms as to payment by orto either party of damages for the non-performance of the contract, or otherwise, asthat Court considers appropriate.

(3) Damages payable to a personunder the order are provable by the personas a debt in the liquidation.

Co-operative society inliquidation required tostate that it is inliquidation in allinvoices, letters andother communications.

23. (1) A co-operative society inrespect of which a liquidator is appointedshall ensure that-

(a) every invoice, order for goods orservices, business letter or orderform (whether in hard copy,electronic or any other form) issuedby or on behalf of the society, or aliquidator, of the society or areceiver or manager of the society'sproperty; and

(b) each of the society's websites,

states that the society is in liquidation.

(2) If the society fails to comply witha requirement under subparagraph (1), thesociety, and each officer of the society whois in default, commit an offence and onconviction are each liable to a fine notexceeding five hundred thousand shillings.

(3) If, after a co-operative society orany of its officers is convicted of an offenceunder subparagraph (2), the societycontinues to fail to comply with the relevantrequirement, the society, and each officer ofthe society who is in default, commits afurther offence on each day on which thefailure continues and on conviction is liableto a fine not exceeding fifty thousandshillings for each such offence.

1576


Interest on debts to be . 24. (1) When a liquidator ispaid if surplus permits. appointed in respect of a co-operativesociety, interest is payable in accordancewith this paragraph on any debt proved inthe liquidation of the society's assets,including so much of any such debt asrepresents interest on the remainder.

(2) The liquidator shall, beforeapplying any surplus remaining after thepayment of the debts proved in theliquidation for any other purpose, apply thesurplus in paying interest on those debts inrespect of the periods during which theyhave been outstanding since the liquidatorwas appointed.

(3) All interest under this paragraphranks equally (whether or not the debts onwhich it is payable rank equally).

(4) The rate of interest payable underthis paragraph in respect of a debt is the ratefor the time being prescribed by theregulations for the purposes of thisparagraph.

Certain documentsrelating to co-operative 25. When a liquidator is appointed insociety in liquidation to respect of a co-operative society, thebe exempt from stampduty.

following documents are exempt fromstamp duty:

(a) every transfer relating solely tofreehold or leasehold property, orto any interest in, any real orpersonal property, that forms partof the society's assets and that,after the execution of the transfer,either at law of in equity, is orremains part of those assets; and

(b) every writ, order or other documentrelating solely to the property of thesociety, or to any proceedingrelating to its liquidation.

Records of co-operativesociety in liquidation to 26. When a co-operative society is inbe evidence. liquidation, all records of the society and of

1577

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19the liquidator are evidence of the truth of allmatters purporting to be recorded in them,until the contrary is proved.

Liquidator to lodge 27. (1) If the liquidation of a co-periodic statements withCommissioner of Co- operative society is not completed withinoperative societies withrespect to current twelve months after its commencement, theposition of liquidation. liquidator shall, at such intervals as may be

prescribed by the regulations and until theliquidation is completed, lodge with theCommissioner a statement containing theparticulars so prescribed with respect to theproceedings in, and position of, theliquidation.

(2) A liquidator who fails to lodge astatement as required by subparagraph (1)commits an offence and on conviction isliable to a fine not exceeding five hundredthousand shillings.

(3) If, after being convicted of anoffence under subparagraph (2), a liquidatorcontinues to fail to lodge a statement asrequired by subparagraph (1), the liquidatorcommits a further offence on each day onwhich the failure continues and onconviction is liable to a fine not exceedingfifty thousand shillings for each suchoffence.

Court may order 28. (1) The High Court may —meetings to be held toascertain wishes ofcreditors or (a) as to all matters relating to thecontributories. liquidation of a co-operative

society, have regard to the wishesof the creditors or contributories (asproved to it by any sufficientevidence); and

(b) if it considers appropriate, for thepurpose of ascertaining thosewishes-

(i) direct meetings of the creditorsor contributories to beconvened, held and conductedin such manner as that Courtdirects; and

1578


(ii) appoint a person to act aschairperson of any suchmeeting and report the result ofit to that Court.

(2) In the case of creditors, the HighCourt shall take into account the value ofeach creditor's debt.

(3) In the case of contributories, theHigh Court shall take into account thenumber of votes conferred on eachcontributory.

Judicial notice to be 29. In all proceedings under thistaken of documents ofthe High Court. Schedule, all courts and tribunals, all judges

and persons acting judicially, and allofficers of a court or tribunal, or employedin enforcing the process of a court ortribunal, are required to take judicial noticeof —

(a) the signature of an officer of theHigh Court; and

(b) the official seal or stamp of thatCourt affixed to or impressed onany document made, issued orsigned under a provision of thisAct, or any official copy of such adocument.

Affidavits required to be 30. (1) An affidavit required to besworn for purposes ofthis Schedule.

sworn under or for the purposes of thisSchedule may be sworn in Kenya-

(a) before any court, tribunal, judge orperson lawfully authorised to takeand receive affidavits; or

(b) before any of any diplomatrepresenting the Government ofKenya in any place outside Kenya.

(2) All courts, tribunals, judges andother persons acting judicially are requiredto take judicial notice of the seal or stamp orsignature of any such court, tribunal, judge,person or diplomat affixed to, impressed on,

1579


or subscribed to any such affidavit, or to anyother document to be used for the purposesof this Schedule.

Realising property of co- 31. (1) This paragraph applies to aoperative society inrespect of which a co-operative society in respect of which aliquidator is appointed. liquidator is appointed.

(2) If a person has control over money,documents or other property to which thesociety appears to be entitled, the HighCourt may require that person immediately,or within such period as that Court maydirect, to pay the money or deliver thedocuments or other property documents tothe liquidator.

(3) Subparagraph (4) applies if theliquidator-

(a) seizes or disposes of property thatis not property of the society; and

(b) at the time of seizure or disposalbelieves on reasonable grounds thatthe liquidator is entitled (whetherunder an order of that Court orotherwise) to seize or dispose ofthat property.

(4) When this subparagraph applies,the liquidator-

(a) is not liable to any person inrespect of any loss or damageresulting from the seizure ordisposal except in so far as that lossor damage is caused by theliquidator's own negligence; and

(b) has a lien on the property, or theproceeds of its sale, for suchexpenses as were incurred inconnection with the seizure ordisposal.

Duty of certain persons 32. (1) When a liquidator isto co-operate withliquidator. appointed in respect of a co-operative

1580


society, this paragraph applies to thefollowing persons-

(a) those who are or have at any timebeen officers of the society;

(b) those who have taken part in theformation of the society at any timewithin the twelve monthsimmediately preceding theeffective date;

(c) those who are in the employment ofthe society, or have been in itsemployment (includingemployment under a contract forservices) within that period, and arein the liquidator's opinion capableof giving the required information;

(d) those who are, or have within thatperiod been, officers of, or in theemployment of, another co-operative society that is, or withinperiod was, an officer of therelevant co-operative society.

(2) A person to whom this paragraphapplies shall-

(a) give to the liquidator suchinformation concerning the societyand its promotion, formation,affairs or property as the liquidatormay reasonably require; and

(b) appear before the liquidator at suchtimes as the liquidator mayreasonably require.

(3) A person who, without reasonableexcuse, fails to comply with a requirementimposed by this paragraph commits anoffence and on conviction is liable to a finenot exceeding five . hundred thousandshillings.

(4) If, after being convicted of anoffence under subparagraph (3), the person

1581


continues to fail to comply with the relevantrequirement, the person commits a furtheroffence on each day on which the failurecontinues and on conviction is to fine notexceeding fifty thousand shilling for eachsuch offence.

(5) In this paragraph, "employment"includes employment under a contract forservices.

Lien in respect of co-operative society's 33. (1) This paragraph applies to adocuments co-operative society in respect of which aunenforceable if it woulddeny their possession to liquidator is appointed.Commissioner.

(2) A lien or other right to retainpossession of any of the documents of thesociety is unenforceable to the extent that itsenforcement would deny possession of anyof the documents to the liquidator.

(3) Subparagraph (2) does not apply toa lien on documents that confer a title toproperty and are held as such.

Supply of utility servicesto companies in 34. (1) This paragraph applies to aliquidation or under co-operative society in respect of which aadministration, etc.

liquidator is appointed.

(2) If a request is made by or with theconsent of the liquidator for the giving, afterthe date on which liquidator is appointed, ofany of the supplies specified insubparagraph (3), the supplier-

(a) may make it a condition of thegiving of the supply that theliquidator personally guarantees thepayment of any charges in respectof the supply; but

(b) may not make it a condition forproviding the supply, or take anyaction that has the effect of makingit a condition for providing thesupply, that any outstanding

1582


charges are to be paid in respect ofa supply provided to the societybefore the effective date.

(3) The supplies referred to insubparagraph (2) are-

(a) a supply of gas by a gas supplier;

(b) a supply of electricity by anelectricity supplier ;

(c) a supply of water by a water supplier;and

(d) a supply of communicationsservices by a provider of a publictelecommunication or electroniccommunications service".

In,,Iion of Second121. The Co-operative Societies Act is amended by Schedule and Third

inserting the following new Schedules immediately after Schedule in

the First Schedule—Cap.490.

SECOND SCHEDULE (FIRST SCH.)

PREFERENTIAL DEBTSPriority of payments to 1. The debts of a co-operative societypreferential creditors.

in respect of which a liquidator is appointedare payable in the order of priority in whichthey are listed in paragraphs 2, 3 and 4.

First priority claims. 2. (1) The expenses of theliquidation have first priority and arepayable in the order in which they are listedin subparagraph (2)(a) to (c).

(2) For the purposes of subparagraph(1), those expenses are as follows:

(a) the remuneration of the liquidator,and the fees and expenses properlyincurred by the liquidator inperforming out the duties imposed,and exercising the powersconferred, by or under this Act;

(b) to any creditor who protects orpreserves assets of the society for

1583

2015

Companies and Insolvency Legislation (Consequential Amendments) No.19the benefit of the creditors of thesociety by the payment of money orthe giving of an indemnity —

(i) the amount received by theliquidator by the realisation ofthose assets, up to the value ofthat creditor's unsecured debt;and

(ii) the amount of the costs incurredby that creditor in protecting orpreserving those assets.

Second priority claims. 3. (1) After the claims referred to inparagraph 2 have been paid, claims inrespect of the following debts have secondpriority to the extent that they remainunpaid:

(a) all wages or salaries payable toemployees in respect of servicesprovided to the society during thefour months before the date ofappointment of the liquidator;

(b) any holiday pa) payable toemployees on the termination oftheir employment before thatappointment or during theliquidation;

Cap. 470

(c) any compensation for redundancyowed to employees that accruesbefore that appointment or duringthe liquidation ;

(d) amounts deducted by the societyfrom the wages or salaries ofemployees in order to satisfy theirobligations to other persons(including amounts payable to theKenya Revenue Authority inaccordance with Income Tax Act);

No. 12 of 2007 (e) any reimbursement or paymentprovided for, or ordered by theIndustrial Court under the Labour

1584

No. 19 Companies and Insolvency Legisiation (Consequential Amendments) 2015

Institutions Act, 2007 to the extentthat the reimbursement or paymentdoes not relate to any matter

No. 14 of 2007specified in the Labour RelationsAct, 2007 in respect of wages orother money or remuneration lostduring the four months before thatappointment or during theliquidation;

(f) all amounts that are by any otherwritten law required to be paid inaccordance with the priorityestablished by this subclause paidby the buyer to a seller on accountof the purchase price of goods.

(2) The total amount to which priorityis to be given under any, or all, ofsubparagraphs (1)(a) to (e) may not, in thecase of any one employee, exceed twohundred thousand shillings as at thecommencement of the liquidation.

(3) The amount specified insubparagraph (2) is subject to adjustment asfollows:

(a) subj ect to subclause (d)—theCabinet Secretary shall, by orderpublished in the Gazette, make anadjustment that has effect for thethree-year period from andincluding I July 2015 and for eachsubsequent three-year period;

(b) subject to subclause (d)—theCabinet Secretary shall make suchan order within three months afterthe end of an adjustment period;

(c) each adjustment is required toreflect any overall percentageincrease, over the relevantadjustment period, in averageweekly earnings (total, privatesector), calculated by reference to

1585

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19the last Employment Survey orsimilar employment indexpublished by Kenya Bureau ofStatistics (or, if that survey ceasesto be published, a survey certifiedby the Government Statistician asan equivalent to that survey) withinthe relevant adjustment period;

(d) if, in an adjustment period, there isno change, or an overall decrease,in the percentage movement inaverage weekly earnings (total,private sector), as so calculated, theCabinet Secretary may not make anadjustment for that adjustmentperiod;

(e) if, in accordance with subclause(d), no adjustment is made, theCabinet Secretary shall ensure thatthe next adjustment made for anylater adjustment period reflects anyoverall percentage increase inaverage weekly earnings (total,private sector) between the date ofthe last adjustment and the end ofthe adjustment period for which thesubsequent adjustment is to bemade;

(f) all adjustments are cumulative andare to be rounded to the nearestshilling (with fifty cents beingrounded to one shilling); and

(g) any correction to the QuarterlyEmployment Survey on which anadjustment is based is to bedisregarded until the adjustmentthat takes effect in the subsequentadjustment period, which mustreflect the corrected information inthe calculation of that adjustmentand must otherwise be made inaccordance with this subparagraph.

1586


(4) The amount specified insubparagraph (2), or that amount as adjustedunder subparagraph (3), on the date ofcommencement of the liquidation, continuesto apply to that liquidation regardless of anychange to that amount that is prescribedafter the date of commencement of theliquidation.

(5) In this paragraph-

"adjustment period" means the three-year period beginning on 1 July 2012 andeach subsequent three-year period.

66. employee" means a person employedby an employer for wages or a salary undera contract of service; and includes a homeworker specified in of the Employment Act,2007, but does not include a person who is,or was at any time during the twelve monthsbefore the appointment of the liquidator ofthe society, a' member of the committee ofthe society, or a nominee or relative of, or atrustee for, such a member;

64wages or salaries", in relation to anemployee, includes-

(a) remuneration in the form ofcommission or payable for time orfor piece work; and

(b) remuneration payable to anemployee as holiday or sicknesspay or in respect of absence fromwork for any other good reason.

Third priority claims. 4. After the claims referred to inparagraphs 2 and 3 have been paid, theclaims in respect of the following debts havethird priority to the extent that they remainunpaid:

(a) tax deductions made by the societyunder the pay as you earn rules ofthe income Tax Act;

1587

2015 Companies and Insolvency Legislation(Consequential Amendments) No. 19Cap. 470 (b) non-resident withholding tax

deducted by the society under theCap.110 Income Tax Act;

(c) resident withholding tax deductedby the society under the IncomeTax Act;

(d) duty payable within the meaning ofsection 2(l) of the Customs and Excise Act.

Unsatisfied claims of the 5. Claims having the same priority ranksame priority to abateequally. equally among themselves and, subject to

any maximum payment level prescribed byor under any written law, are payable in full,unless the property of the society isinsufficient to meet them, in which casethey abate in equal proportions.

THIRD SCHEDULE (s. 71)OFFENCES RELATING TO CONDUCT BEFOREAND DURING LIQUIDATION AND CRIMINAL

PROCEEDINGS RELATING TO THOSE OFFENCESOffence involving (1) This paragraph applies incommission offraudulent acts in relation to a co-operative society in respectanticipation ofliquidation. of which a liquidator is appointed.

(2) An officer or past officer of thesociety commits an offence if, within thetwelve months immediately preceding theappointment of the liquidator, the officer orpast officer-

(a) concealed any part of the society'sproperty to the value of fiftythousand shillings or more; orconcealed any debt due to or fromthe society;

(b) fraudulently removed any part ofthe society's property to the valueof fifty thousand shillings or more;

(c) concealed, destroyed, mutilated orfalsified any document affecting orrelating to the society's affairs orproperty;

1588


(d)made any false entry in anydocument affecting or relating to the

society's affairs or property;

(e)fraudulently parted with, altered or

made any omission in any documentaffecting or relating to the society'saffairs or property; or

(f)pawned, pledged or disposed of anyproperty of the society that has been

obtained on credit and has not been

paid for.

(3) Subparagraph (3)(f) does not applyif the pawning, pledging or disposal wasdone in the ordinary course of the society's

business.

(4)An officer or past officer of the

society also commits offence----^-

(a)if, within the twelve months periodreferred to in subparagraph (2), the

officer or past officer has been privyto the doing by others of any of the

acts referred to in clauses (c), (d)and (e) of that subparagraph; or

(b)if, at any time after thecommencement of the liquidation,the officer or past officer-

(i)does any of the acts referred to inclauses (a) to (f) of thatsubparagraph; or

(ii)is privy to the doing by others of

any of the acts referred to in

clauses (c) to (e) of thatsubparagraph.

(4) In a prosecution for an offenceunder-

(a)clause (a) or (f) of subparagraph (2);or

(b)subparagraph (4) in respect of an actreferred to in either of those two

clauses,

1589

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19it is a defence to prove that the officer orpast officer had no intention to defraud.

(5) In a prosecution for an offenceunder-

(a) clause (c) or (d) of subparagraph(2); or

(b) subparagraph (4) in respect of an actreferred to in either of those twoclauses,

it is a defence to prove that the officer orpast officer had no intention to conceal thestate of affairs of the society or to defeat thelaw.

(6) If property is pawned, pledged ordisposed of in circumstances that constitutean offence under subparagraph (2)(f), aperson who takes in pawn or pledge, orotherwise receives, the property knowing itto have been pawned, pledged or disposed ofin such circumstances, commits an offence.

(7) A person found guilty of an offenceunder this paragraph is liable on convictionto a fine not exceeding two million shillingsor to imprisonment for a term not exceedingfive years, or to both.

(8) The regulations may increase orreduce the amounts specified insubparagraph (2)(a) and (b).

Offences involving2. (1) This paragraph applies in

transactions to defraud relation to a co-operative society in respectcreditors of C?-operative society in of which a liquidator is appointed.respect of whichliquidator is appointed. (2) An officer or past officer of the

society commits an offence if the officer orpast officer-

(a) has made or caused to be made agift or transfer of, or charge on, orhas caused or connived at thelevying of execution against, thesociety's property; or

1590


(b) has concealed or removed any partof the society's property since, orwithin the two months preceding,the date of any unsatisfied judgmentor order for the payment of moneyobtained against the society.

(3) A person is not liable to be chargedwith an offence under subparagraph (2) if theconduct alleged to constitute the offenceoccurred more than five years before thecommencement ofthe liquidation.

(4) In a prosecution for an offenceunder subparagraph (2)(a), it is a defence toprove that the officer or past officer did not,at the time of the alleged offence, have anyintent to defraud the society's creditors.

(5) An officer or past officer of co-operative society who is found guilty of anoffence under this paragraph is liable onconviction to a fine not exceeding onemillion shillings or to imprisonment or a finenot exceeding two years, or to both.

Offence involvingmisconduct committed 3. (1) This paragraph applies inin course of liquidation relation to a co-operative society for which aof co-operative society. liquidator is appointed.

(2) An officer or past officer of thesociety commits an offence if the officer orpast officer-

(a) does not to the best of the officer'sor past officer's knowledge andbelief fully and truly disclose to theliquidator all of the society'sproperty, and how and to whom andfor what consideration and when thesociety disposed of any part of thatproperty (except such part as hasbeen disposed of in the ordinarycourse of the society's business);

(b) does not deliver up to the liquidator,or in accordance with the directionsof the liquidator, all such part of the

1591


society's property as is under thecontrol of the officer or past officer,and that the liquidator is required bylaw to deliver up;

(c) fails to deliver up to the liquidator(or as the liquidator directs) alldocuments under the control of theofficer or past officer that belong tothe society and that the officer orpast officer is required by law todeliver up;

(d) knowing or believing that a falsedebt has been proved by any personin the liquidation, fails to inform theliquidator of that knowledge orbelief as soon as practicable; or

(e) after the appointment of theliquidator—prevents the productionof any document affecting orrelating to the society's affairs orproperty.

(3) An officer or past officer alsocommits an offence if, after the liquidator isappointed, the officer or past officer attemptsto account for any part of the society'sproperty by means of fictitious losses orexpenses.

(4) An officer or past officer ispresumed, in the absence of evidence to thecontrary, to have committed an offenceunder subparagraph (3) if the officer or pastofficer has made an attempt of the kindreferred to in that subparagraph at a meetingof the society's creditors held within thetwelve months immediately preceding theappointment of the liquidator.

(5) In a prosecution for an offence undersubparagraph (2)(a), (b) or (c), it is a defenceto prove that the officer or past officer hadno intention to defraud.

(6) In a prosecution for an offenceunder subparagraph (2)(e), it is a defence to

1592


Offence to falsifydocuments in relation to 4.(1) This paragraph applies inco-operative society in relation to a co-operative society in respectrespect of whichliquidator is appointed. Of which a liquidator is appointed.

(2) An officer or contributory of thesociety commits an offence if, during theliquidation, the officer or contributory, withintent to defraud or deceive the society orany other person-

(a) destroys, damages, alters or falsifiesa security or other document of thesociety; or

(b) makes or is privy to the making of afalse or fraudulent entry in anyrecord or other document of thesociety.

(3) A person who is found guilty of anoffence under subparagraph (1) is liable onconviction to a fine not exceeding twomillion shillings or to imprisonment for aterm not exceeding five years, to both.

Offence to make 5. (1) This paragraph applies to amaterial omission fromstatement relating to co-operative society in respect of which aaffairs of co-operativesociety in respect of liquidator is appointed.which liquidator isappointed (2) An officer or past officer of the

society commits an offence if, while theliquidator is appointed, the officer or pastofficer makes a material omission from astatement relating to the society's affairs.

(3) An officer or past officer of thesociety is also taken to have committed anoffence under subparagraph (2) if, before theappointment of ' the liquidator, the officer orpast officer has made any material omissionfrom a statement relating to the society'saffairs.

(4) In a prosecution for an offenceunder this paragraph, it is a defence to provethat the officer or past officer had nointention to defraud.

1593

2015

Companies and Insolvency Legislation (Consequential Amendments) No. 19

(5) A person who is found guilty of anoffence under this paragraph is liable onconviction to a fine not exceeding onemillion shillings or to imprisonment fortwelve months, or to both.

Offence to make false 6. (1) This paragraph applies to a co-representations tocreditors of co- operative society in respect of which aoperative society inrespect of which a liquidator is appointed.liquidator is appointed. (2) An officer or past officer of the

society commits an offence if-

(a) the officer or past officer makes afalse representation; or

Power of the HighCourt to make ordersagainst delinquentcommittee members,liquidators, etc.

(b) does any other fraudulent act,for the purpose of obtaining the consent ofthe society's creditors or any of them to anagreement relating to the society's -affairs orto its liquidation.

(3) An officer or past officer of thesociety is also to be taken to have committedan offence under subparagraph (2) if, beforethe commencement of the liquidation, theofficer or past officer-

(a) made any false representation; or

(b) did any other fraudulent act,for the purpose of obtaining that consent.

(4) An officer or past officer personwho is found guilty of an offence under thisparagraph is liable on conviction to a fine notexceeding two million shillings and toimprisonment for a term not exceeding fiveyears, or to both.

7. (1) This paragraph applies to thefollowing persons:

(a) an officer or past officer of a co-operative society , - that is inliquidation (whether by the HighCourt or voluntarily);

(b) a person who is or has acted as theliquidator of such a co-operativesociety;

1594


(c) not being a person referred to inparagraph (a) or (b)—a person whohas been concerned in thepromotion, formation ormanagement of such a co-operativesociety.

(2) If, during the course of theliquidation of a co-operative society, itappears that a person to whom this paragraphapplies has or may have-

(a) misapplied or retained, or becomeaccountable for, money or propertyof the society; or

(b) committed misfeasance or a breachof any fiduciary or other duty inrelation to the society,

the Commissioner, the liquidator of thesociety or a creditor or contributory of thesociety may make an application to thatCourt to conduct an examination undersubparagraph (6).

( 3) The reference in subparagraph (2) tomisfeasance or a breach of any fiduciary orother duty in relation to the society includes,in the case of a person who has acted asliquidator of the society, any misfeasance orbreach of any fiduciary or other duty inconnection with the carrying out of theliquidator's functions as liquidator of thesociety.

(4) An application under subparagraph(2) may be made in relation to a person whohas acted as liquidator of the society onlywith the leave of the High Court given afterthe person has been released from theresponsibilities of liquidator.

(5) A contributory may make anapplication under subparagraph (2) only withthe leave of the High Court.

(6) On the hearing of an applicationmade under subparagraph (2), the High

1595


Court may undertake an examination into theconduct of the person in relation to whomthe application was made.

(7) If, at the conclusion of theexamination, the High Court finds that theperson examined has engaged in conduct ofa kind referred to in subparagraph (2), it maymake an order compelling the person-

(a) to repay, restore or account for themoney or property or any part of it,with interest at such rate as thatCourt considers appropriate; or

(b) to contribute such amount to thesociety's assets as compensation forthe misfeasance, breach of fiduciaryor other duty as the High Courtconsiders fair and reasonable.

Power of the High 8. (1) A liquidator of a co-operativeCourt to make ordersagainst officers of co- society may make an application to the Highoperative society andothers found to have Court for an order under subparagraph (2)participated in if-fraudulent trading byco-operative society (a) in the course of the liquidation of

the society, the liquidator forms theview that a business of the societyhas been carried on with intent todefraud creditors of the society orcreditors of any other person, or forany fraudulent purpose; and

(b) the liquidator believes that specifiedpersons participated (directly orindirectly) in the business with theknowledge that the business wasbeing carried on in that manner.

(2) If, on hearing an application madeunder subparagraph (1), the High Court findsthat the persons specified in the applicationdid in fact participate (directly or indirectly)in a business of the society with theknowledge that it was being carried on in themanner referred to in subparagraph (1)(a), itmay order those persons (or any of them) to

1596


Power of the HighCourt to make ordersagainst officers of co-operative societyengaging in wrongfultrading.

make such contributions to the society'sassets as the High Court considers fair andreasonable.

(3) The persons specified in anapplication made under subparagraph (2) areentitled to be served with a copy of theapplication and to appear and be heard asrespondents at the hearing of the application,

(4) If the High Court makes an orderagainst a person under subparagraph (2), itmay also make an order disqualifying theperson from-

(a) being or acting as a member of thecommittee of a co-operative society;

(b) being or acting as a liquidator,provisional liquidator oradministrator of a co-operativesociety;

(c) being or acting as a supervisor of avoluntary arrangement approved bythe society; or

(d) in any way (whether directly orindirectly) being concerned in thepromotion, formation ormanagement of a co-operativesociety,

for such period, not exceeding fifteen years,as may be specified in the order.

9. (1) This paragraph applies

(a) to a co-operative society in respectof which a liquidator is appointed;and

(b) to a person who, at a time before theliquidator was appointed, was anofficer of the society.

(2) For the purposes of thisparagraph-

(a) a co-operative society is in insolventliquidation if, at the time the

:1

1597

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19liquidation commences, its assetsare insufficient for the payment ofits debts and other liabilities and theexpenses of the liquidation; and

(b) the person in respect of whom anapplication is made undersubparagraph (3) is the respondentto the application.

(3) If, in the course of the liquidationof a co-operative society, it appears to theliquidator that a person to whom thisparagraph applies knew or ought to haveknown that there was no reasonable prospectthat the society would avoid being placed ininsolvent liquidation, the liquidator maymake an application to the High Court for anorder under subparagraph (5).

(4) The High Court may hear anapplication made under subparagraph (2)only if the person in respect of whom theapplication was made has been served with acopy of the application.

(5) If, on the hearing of an applicationmade under subparagraph (3), the HighCourt may, if satisfied that, at the relevanttime, the respondent knew or ought to haveknown that there was no reasonable prospectthat the society would avoid being placed ininsolvent liquidation, make an orderdeclaring the respondent to be liable to makesuch contribution (if any) to the society'sassets as that Court considers appropriate.

(6) However, the High Court may notmake such an order if satisfied that therespondent took such steps to avoid potentialloss to the society's creditors as (assumingthe respondent to have known that there wasno reasonable prospect that the societywould avoid going into solvent liquidation)the respondent ought reasonably to havetaken.

1598


(7) Nothing in this paragraph affectsthe operation of paragraph 8 (fraudulenttrading by co-operative society inliquidation).

(8) If the High Court makes an orderagainst a person under subparagraph (5), itmay also make an order disqualifying theperson from-

(a) being or acting as a member of thecommittee of a co-operative societyor a director of a company;

(b) being or acting as a liquidator,provisional liquidator oradministrator of a co-operativesociety;

(c) being or acting as a supervisor of avoluntary arrangement approved bythe society; or

(d) in any way, whether directly orindirectly, being concerned in thepromotion, formation ormanagement of a co-operativesociety or a company, - .

for such period, not exceeding fifteen years,as may be specified in the order.

Supplementary 10. (1) On the hearing of anprovisions relating toproceedings under application under paragraph 8 (fraudulentparagraphs 8 and 9. trading by co-operative society in

liquidation) or paragraph 9 (wrongfultrading), the liquidator may personally giveevidence or call witnesses.

. (2) If the High Court makes an orderunder paragraph 8 or 9, it may make suchfurther orders as it considers appropriate forgiving effect to the order.

(3) In particular, the High Court may-

(a) provide for the liability of anyperson under the order to be acharge-

1599

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19(i) on any debt or obligation due

from the society to the person; or

(ii) on any mortgage or charge orany interest in a mortgage orcharge on assets of the societyheld by or vested in the person,or any other person on theperson's behalf, or any otherperson who claims as anassignee from or through theperson liable or any personacting on that person's behalf;and

(b) from time to time make such furtherorder as may be necessary forenforcing a charge imposed underparagraph (a).

(4) For the purposes of subparagraph(3)(a)(ii), "assignee"—

(a) includes a person to whom or inwhose favour, by the directions ofthe person made liable, the debt,obligation, mortgage or charge wascreated, issued or transferred or theinterest created; but

(b) does not include an -assignee forvaluable consideration (notincluding consideration by way ofmarriage) given in good faith andwithout notice of any of the matterson the ground of which the order ismade.

(5) If the High Court makes an orderunder paragraph 8 or 9 in relation to a personwho is a creditor of the society, it may directthat the whole or any part of any debt owedby the society to that person, and any intereston the debt, ranks in priority after all otherdebts owed by the society and after anyinterest on those debts.

1600


(6) The High Court can make an orderunder paragraph 8 or 9 even if the personconcerned may be criminally liable inrespect of matters giving rise to the makingof the order.

Member of thecommittee of co-operative society ininsolvent liquidationprohibited from beingmember of thecommittee of, or beinginvolved with, anyother co-operativesociety that is known bya prohibited name.

11. (1) This paragraph applies to aperson if —

(a) a co-operative society is in insolventliquidation on or after thecommencement of this paragraph;and

(b) the person was a member of thecommittee of the society at any timeduring the twelve monthsimmediately preceding the date onwhich the liquidation of the societycommenced.

(2) For the purposes of this paragraph, aname is a prohibited name in relation to sucha person if- 11

(a) it is a name by which the societywas known at any time during thatperiod of twelve months; or

(b) it is a name that is so similar to aname of the kind referred to inparagraph (a) as to suggest anassociation with the society.

(3) Except with leave of the High Court,or in such circumstances as may beprescribed by the regulations, a person towhom this paragraph applies shall not at anytime during the five years from andincluding the date on which the liquidationof the society commenced-

(a) be a member of the committee ofany other co-operative society thatis known by a prohibited name;

(b) in any way (directly or indirectly)be concerned or take part in thepromotion, formation ormanagement of any such society; or

1601

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19(c) in any way (directly or indirectly)

be concerned or take part in thecarrying on of a business carried on(otherwise than by a co-operativesociety) under a prohibited name.

(4) A person who contravenes thisparagraph commits an offence and onconviction is liable to a fine not exceedingone million shillings or to imprisonment fora term not exceeding twelve months, or toboth.

(5) A reference in this paragraph, inrelation to a time, to a name by which a co-operative society is known is a reference tothe name of the society at that time or to anyname under which the society carried onbusiness at that time.

(6) For the purposes of this paragraph, aco-operative society is in insolventliquidation if, at the time the liquidationcommences, the society's assets areinsufficient for the payment of its debts andother liabilities and the expenses of theliquidation.

Circumstances in whichpersons are personally 12. (1) A person is personallyliable for debts ofco- responsible for all the relevant debts of a co-operative society.

operative society if at any time the person-

(a) is involved in the management ofthe society in contravention ofparagraph 11; or

(b) while is involved in themanagement of the society—acts oris willing to act on instructionsgiven (without the leave of the HighCourt) by a person whom the personknows to be subject to a person towhom subparagraph (2) applies.

(2) This subparagraph (1) applies to thefollowing persons:

1602


(a) a person who is involved in themanagement of the company incontravention of paragraph 11;

(b) a person who is subject to adisqualification order ordisqualification undertaking, or toforeign restrictions, under Part X ofthe Companies Act, 2015, or

(c) a person who is subject to any otherrestriction or disability of a kindprescribed by regulations made forthe purpose of this section.

(3) If, because of subparagraph (1), aperson is personally responsible for therelevant debts of a co-operative society, theperson is jointly and severally liable forthose debts with the society and any otherperson who, whether under this paragraph orotherwise, is so liable.

(4) For the purposes of this paragraph,the relevant debts of a co-operative societyare-

(a) in relation to a person who ispersonally responsible under clause(a) of subparagraph (I)—such debtsand other liabilities of the society asare incurred at a time when theperson was involved in themanagement of the society; and

(b) in relation to a person who ispersonally responsible under clause(b) of that subparagraph—suchdebts and other liabilities of thesociety as are incurred at a timewhen the person was acting or waswilling to act on instructions givenas referred to in that paragraph.

(5) For the purposes of this paragraph, aperson is involved in the management of aco-operative society if the person-

1603

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19(a) is a member of the committee of the

society; or

(b) is concerned, whether directly orindirectly, or takes part, in themanagement of the society.

(6) For the purposes of this paragraph, aperson who, as a person involved in themanagement of a co-operative society, has atany time acted on instructions given (withoutthe leave of the High Court) by anotherperson whom the person knew at that time tobe a person to whom subparagraph (2)applies is presumed, unless the contrary isshown, to have been willing at any later timeto act on any instructions given by thatperson.

Prosecution of 13. (1) This paragraph applies to a co-delinquent officers andmembers of co- operative society that is being liquidated byoperative society inliquidation by the High the High Court.Court.

(2) If the High Court concludes that aperson who was at the relevant time anofficer or past officer, or member, of thesociety may have committed an offence inrelation to the society for which the person iscriminally liable, the High Court may (eitheron the application of a person interested inthe liquidation or on its own initiative) directthe liquidator to report the matter to theCommissioner.

(3) If, while the society is beingliquidated by the High Court, it appears tothe liquidator that a person who, at therelevant time was an officer or past officer,or a member, of the society, may havecommitted an offence in relation to thesociety for which the person is criminallyliable, the liquidator shall report the matter tothe Commissioner.

(4) In making a report undersubparagraph (2) or (3), the liquidator shallprovide the Commissioner with-

1604


(a) such information; and

(b) such access to and facilities forinspecting and taking copies ofdocuments,

as the Commissioner reasonably requiresand the liquidator is able to reasonably giveor provide.

(5) As soon as practicable afterreceiving a report under subparagraph (2) or(3), the Commissioner shall forward thereport to the Attorney General for furtherinvestigation, together with —

(a) the information and documents (ifany) given or provided inaccordance with subparagraph (4);and

(b) such observations on the report,information and documents as theOfficial Receiver considersrelevant.

(6) On receiving a report undersubparagraph (5), the Attorney General shallinvestigate the matter concerned and suchother matters relating to the affairs of thesociety as appear to the Attorney General torequire investigation.

(7) For the purpose of an investigationunder subparagraph (6), the AttorneyGeneral may exercise any of the powersconferred on inspectors by Part XXX of theCompanies Act, 2015 as if the society were acompany.

Obligations arising 14. (1) For the purpose of anunder paragraph 13.

investigation by the Attorney General underparagraph 13(6), a person has the sameobligation to produce documents or giveinformation, or otherwise assist the AttorneyGeneral, as the person would have in relationto an inspector appointed under Part XXX ofthe Companies Act, 2015.

1605


(2) An answer given by a person to aquestion put to the person in exercise of thepowers conferred by paragraph 13(7) may beused in evidence against the person.

(3) However, in criminal proceedingsin which that person is charged with anoffence to which this paragraph applies-

(a)evidence relating to the answer maynot be adduced; and

(b) questions relating to it may not beasked, by or on behalf of theprosecution,

unless evidence relating to it is adduced, ora question relating to it is asked, in theproceedings by or on behalf of that person.

(4) This paragraph applies to alloffences other than an offence under sections107 and 114 of the Penal Code (falsestatements made on oath otherwise than injudicial proceedings or made otherwise thanon oath).

(5) If criminal proceedings are begun bythe Director of Public Prosecutionsfollowing a an investigation under paragraph13(6), the liquidator and every officer andagent, and past officer and agent, of thesociety (other than the defendant) shallprovide the Director of Public Prosecutionsand the Attorney General with suchassistance in connection with the prosecutionas the liquidator, officer or agent or pastofficer or agent is reasonably able to give.

(6) In subparagraph (5), 44agent"includes any bank or advocate of the societyand any person employed by the society asauditor, whether that person is or is not anofficer of the society.

(7) If a person fails to provideassistance as required by subparagraph (5),the High Court may, on the application of

1606


the Director of Public Prosecutions or theAttorney General, make an order directingthe person to comply with that subparagraph.

(8) If the application is made withrespect to a liquidator, the High Court mayalso make an order directing the costs to behome by the liquidator personally.

(9) However, the High Court may notmake such an order if it is established thatthe failure to comply was due to theliquidator having insufficient assets of thesociety to enable the liquidator to provide therequired assistance."

122. The Registration of Business Names Act is Amendmentof,ectio. 4 of

amended in section 4 by deleting paragraph (d) and Cap.499.

substituting therefor the following new paragraph-

(d) every corporation having a place of businessin Kenya and carrying on business under abusiness name that is not its corporate namewithout any addition is required to beregistered as provided by this Act, exceptthat —

(i) if two or more individual partners havethe same surname, the addition of an49s" at the end of that surname does notof itself render registration necessary;

(ii) if the business is carried on by abankruptcy trustee or an administratorappointed by the court, registration isnot necessary; and

(iii) a purchase or acquisition of property bytwo or more persons as joint tenants ortenants in common does not of itselfconstitute the carrying on of a business,even if the owner shares any profitsfrom the sale of the property.

123. The Transfer of Business Act is amended by Repeal of Section 7

repealing section 7 and replacing it with the following new of Cap 500.

section —

1607


Act not to apply to 7. (1) This Act does not apply to thetransfers of certainbusinesses. transfer of a business or part of a business of15 of 2008. a company if the transfer-

(a) involves or is a result of thereconstruction, amalgamation,merger or division of the companyin accordance with the CompaniesAct, 2015 or the administration orliquidation of the company inaccordance with the InsolvencyAct, 2015;

(b) relates to the creation of a genuinesecurity; or

(c) relates to a genuine realisation of asecurity.

(2) A transfer relating the realisation ofa security (other than one resulting from asale by public auction) is not effectiveunless an accountant registered under theAccountants Act has certified in writing tothe Registrar-General-

(a) the amount to be realised from thetransfer; and

(b) the accountant's opinion that theamount is the best price obtainablefor the realised security.

124. The Hire Purchase Act is amended by repealing Repeal of section 30


section —

Agreement binding on 30. (1) If-trustee or liquidator ofowner.

(a) in the case of a natural person, theowner is adjudged bankrupt; or

(b) in the case of a company, the owneris placed in liquidation, a hire-purchase agreement entered into bythe person or company as owner

1608


continues in effect after thecommencement of the bankruptcyor liquidation and is binding on thebankruptcy trustee or liquidator,but without affecting the right ofthe bankruptcy trustee or liquidatorto disclaim.

(2) Subsection (1) does not affect thepowers of the court to set aside anydisposition of property that is an unduepreference.

125. Section 2 of the Central Depositories Act is Amondmenlofsection 2 of No.4 of

amended— 2000.

(a) by deleting the words "Companies Act" whereverthey appear and substituting therefor the words"Companies Act, 2015";

(b) by deleting the definition of the term "Minister"and substituting therefor the following newdefinition —

"Cabinet Secretary means the CabinetSecretary for the time being responsible forFinance."

126. Section 14 of the Central Depositories Act is Amendmenlofsection 14 of No4

amended— of 2000.

(a) by deleting subsection (5) and substitutingtherefor the following new subsection —

(5) Section 508 of the Companies Act, 2015does not apply to a transfer that is required to beregistered by an issuer under this section andsection 15(4), but if an issuer refuses registrationof such a transfer, it shall serve on the transferorand the central depository (being the tr ' ansferee) anotice giving the reasons for the refusal.

(b) by deleting subsection (6) and substituting theforethe following new subsection —

(6) An instrument of transfer lodged with anissuer under subsection (1) can be registered in

I

1609

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19the name of a central depository or its nomineecompany if it has been certified by a centraldepository agent instead of being executed by thecentral depository or its nominee company. Thissubsection applies despite section 512 of theCompanies Act, 2015."

127. Section 21 of the Central Depositories Act is Amendment ofsection 21 of No.4

amended by deleting the words "Companies Act", and of 2000.


128. Section 25 of the Central Depositories Act is Amendment ofsection 25 of No.4

amended by deleting subsection (3) and substituting of 2000.

therefor the following new subsection-

(3) Despite section 93 of the Companies Act, 2015, acentral depository shall ensure that a record of depositorsmaintained in accordance with subsection (2) —

(a) contains information in computerised record form;

(b) is not distinguished by means of a share number;and

(c) contains such other information as may be requiredunder the CDS rules."

129. The Central Depositories Act is amended by Repeal of section 27

repealing section 27 and replacing it with the following of No.4 of 2000.

new section —

References to the 27.(l) With effect from theCompanies Act, 2015. dernaterialisation date and irrespective ofanything in the Companies Act, 2015, orany provision of the issuer's constitution, areference in relation to a dernaterialisedsecurity, to —

(a) a register of members, or ofdebenture holders, (includingbranch registers) kept by acompany under the Companies Act,2015, is taken to be a reference tothe record of depositors maintainedby the central depository;

(b) a transfer of shares or debenturesfrom a transferee under theCompanies Act is taken to be a

1610


reference to a book-entry transferperformed by the centraldepository; and

(c) any certificate, instrument oftransfer or any movable propertyrepresenting any security that isused as evidence of ownership ofthe security is taken to be areference to a statement of accountissued by the central depository.

(2) Section 505 of the Companies Act,2015 does not apply to a dernaterialisedsecurity.

130. Section 29 of the Central Depositories Act is Amen1mon, ofsection 29 of No.4

amended by deleting the words "Companies Act", of 2000.

wherever it appears and substituting therefore the words"Companies Act, 2015".

131. Section 37 of the Central Depositories Act is Amendment tosection 37 of No.4

amended by deleting the word "Companies Act", and of 2000.


132. Section 66 of the Central Depositories Act is Amendment tosection 66 of No.4

amended by deleting the word "Companies Act", and of 2000.


Arnedment ofsection 2 of No. 12of 200 1.

133. Section 2 of the Copyright Act is amended —

(a) by inserting the following new definition in properalphabetical sequence-

"Cabinet Secretary" means the Cabinet Secretary forthe time being responsible for matters relating to copyrightand related rights;

(b) by deleing the definition of "Minister".

Arnedment of134. Section 9 of Copyright Act is amended by section 9

of No. 12deleting the expression "Minister" and substituting therefor of2ool.


135. Section 16 of the Copyright Act is amended by Arnedment ofsection 16 of No. 12

deleting the expression "Minister" and substituting therefor of200i.


1611


136. Section 18 of the Copyright Act is amended by Amelmen,olsection 18 of No. 12

deleting the expression "Minister" and substituting therefor of 200 1.


137. Section 39 of the Copyright Act is amended b y Atnedmen, ofsection 39 of No.12

deleting the expression "Minister" and substituting therefor of'2001.


138. Section 46 of the Copyright Act is amended by Arnedment ofsection 46 of No. 12

deleting the words "Companies Act" and substituting of 200 1.

therefor the words "Companies Act, 2015".

139. Section 47 of the Copyright Act is amended Arnedment ofsection 47 of No.1 2

deleting subsection (2) by substituting therefor the of 200 1.


(2) The obligations imposed by subsection (1) are inaddition to those imposed by the Companies Act, 2015, inthe case of a collecting society that is a company.

140. Section 48 of the Copyright Act is amended b y Arnedmentoofsection48 fNo.12

deleting the expression "Minister" and substituting therefor of 2001.


141. Section 49 of the Copyright Act is amended b y Arnedment ofsection 49 of No. 12

deleting the expression "Minister" and substituting therefor of 200 1.


142. Section 52 of the Copyright Act is amended b y Arnedment ofsection 52 of No.1 2

inserting the following new subsection immediately after of 200 1.

subsection (2) —

(3) If —

(a) any act or thing that was done or omitted to bedone by or to the Cabinet Secretary under this Actbefore the commencement of the Companies Act,2015, had effect immediately before thatcommencement; and


that act or thing is taken to have been done or omitted to bedone by or to the "Cabinet Secretary".

1612


143. Section 2 of the Employment Act is amended Amendment ofsection 2 of No. 17

(a) by inserting the following new definition in the 2117.

proper alphabetical sequence-

"Cabinet Secretary" means the Cabinet Secretary forthe time being responsible for matters relating tolabour matters;

(b) by deleting the expression "Minister" appearing inthe definition of "industrial undertaking", andsubstituting therefor the expression "CabinetSecretary";

(c) by deleting the definition of "Minister".

144. Section 3 of the Employment Act is amended by Amendment ofsection 3 of No. 17

deleting the expression "Minister" and substituting therefor 2007.

the expression "Cabinet Secretary"

145. Section 19 of the Employment Act is amended Amendment Ofsection 19 of No.1 7

by deleting the expression "Minister" and substituting 2007.

therefor the expression "Cabinet Secretary".




147. Section 31 of the Employment Act is amended Amendment ofsection 31 of No.17


therefor the expression "Cabinet Secretary".Amendment of148. Section 40 of the Employment Act is amended section

40 of No. 17






150. Section 56 of the Employment Act is amended Amendment ofsection 56 OfNo.17



151. Section 59 of the Employment Act is amended Amendment ofsection

59 of No. 17


therefor the expression "'tabinet Secretary".




1613

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19153. Section 66 of the Employment Act is amended Amendment of

section 66 of No. 17by deleting the expression "Minister" and substituting 2007.





155. Section 70 of the Employment Act is amended — Amendment ofsection 70 of No. 17

(a) by deleting the expression "Minister" and 2007.

substituting therefor the expression "CabinetSecretary";


(4) The following are relevant officers for thepurposes of this section-

(a) a bankruptcy trustee or interim trustee holdingoffice under Part III of the Insolvency Act, 2015 —

(b) a liquidator appointed under Part VI of that Act;

(c) an administrator appointed under Part VIII of thatAct;

(d) the Official Receiver or other person responsiblefor supervising the debtor under a deed ofcomposition approved by the Court under Division24 of Part III of that Act;

(e) a supervisor or provisional supervisor under avoluntary arrangement entered into under Part IXor Division 1 of Part IV of that Act;

(f) a trustee under a trust deed for his creditorsexecuted by the employer.




157. Section 72 of the Employment Act is amended— Amendment ofsection 72. of No. 17

(a) by deleting the expression "Minister" wherever it 2007.

appears and substitute therefor the expression"Cabinet Secretary";


1614


(2) If the Cabinet Secretary has, in accordance withsubsection (1), made a payment in respect of a debt, or apart of the debt, the right that become right of the CabinetSecretary because of subsection (1) include a right arisingbecause of the status of the debt, or that part of it as apreferential debt.




159. Section 74 of the Employment Act is amended Amendment ofsection 74 of No.17

by deleting the expression "Minister" and . substituting 2007.

therefor the expression" Cabinet Secretary".



therefor the expression" Cabinet Secretary".

161. Section 85 of the Employment Act is amended Amendment ofsection 85 of No.1 7






163. Section 92 of the Employmen't Act is amended Amendment ofsection 92 of No. 17

by inserting the following new subsection immediately 2007.

after subsection (3)—

(4) If —

(a) any act or thing that was done or omitted to bedone by or to the Cabinet Secretary under this Actbefore the commencement of the Companies andInsolvency Legislation (ConsequentialAmendment) act, 2015, had effect immediatelybefore that commencement; and



164. Section 106 of the Merchant Shipping Act is Amendment ofSection 106 of No.4

amended by deleting the expression "the law relating to of2009.

1615

2015 Companies and Insolvency Legislation (Consequential Amendments) N0.19

bankruptcy" and substituting therefor the expression "thelaw relating to insolvency".

165. The Proceeds of Crime and Anti-Money Repeal of Section 79

Laundering Act is amended by repealing section 79 and of No,9 of 2009.

replacing it with the following new section —

Effect of bankruptcy onrealizable property. 79. (1) When a person who holds

realizable property is adjudged bankrupt-

(a) the property for the time beingsubject to a restraint order madebefore the date of the bankruptcyorder; and

(b) the proceeds of any realizableproperty realized because ofsection 75 and for the time beingunder the control of a receiverappointed under this Part,

does not vest in the Registrar of the HighCourt, Official Receiver or the PublicTrustee.

(2) If a defendant who has directly orindirectly made an affected gift to any otherperson is adjudged bankrupt, the followingprovisions apply:

(a) a court may not set aside thedisposition of that gift under theInsolvency Act, 2015 if —

(i) a prosecution for an offence hasbeen commenced against thedefendant and the proceedingsagainst the defendant have notbeen conclude concluded; or

(ii) the property of any other personis subject to a restraint order;

(b) any court that sets aside adisposition in paragraph (a) afterthe conclusion of the proceedingsagainst the defendant shall take into

1616


account any realization of theproperty of other persons inaccordance with this Part.

(3) If a person has been adjudgedbankrupt, the powers conferred on the courtby sections 64 to 72 and 73(2), or.on areceiver appointed under this Part, may notbe exercised in respect of property that-

(a) forms part of the bankrupt's estate;or

(b) the Official Receiver or abankruptcy trustee is entitled toclaim from the bankrupt under theInsolvency Act, 2015.

(4) Nothing in the Insolvency Act,2015 prohibits a court or a receiverappointed under this Part from exercising apower contemplated in subsection (3) of anyproperty or proceeds referred to insubsection (1)."

166. The Proceeds of Crime and Anti-money Repeal of section 8of No.9 Of 2009.

Laundering Act is amended by repealing section 80 andreplacing it with the following new section-

80. (1) When a court has made an order for theliquidation of any company or other legal entity that holdsrealisable property or a resolution for the voluntaryliquidation of the body has been registered in accordancewith an applicable law, neither-

(a) property for the time being subject to a restraintorder made before the relevant time; nor

(b) the proceeds of any realisable property realisedbecause of section 75 and for the time being underthe control of a receiver appointed under this Part,

forms part of the assets of the body.

(2) If an order referred to in subsection (1) has beenmade in respect of a company or other legal entity or aresolution referred to in that subsection has been registeredin respect of the body, the powers conferred on a court by

1617

2015 Companies and insolvency Legislation (Consequential Amendments) No. 19sections 68 to 73 and 75(2) or on a receiver appointedunder this Part, may not be exercised in respect of anyproperty that forms part of the assets of the body.

(3) Nothing in the Companies Act, 2015, theInsolvency Act, 2015, or any other law relating to legalentities in general or any particular legal entity, prohibits acourt or receiver appointed under this Part from exercisinga power conferred by subsection (2) in respect of propertyor proceeds referred to in subsection (1).

(4) For the purpose of subsection (1), "the relevanttime" means-

(a) if an order for the body corporate has been made,the time when the application to relevant the courtof the application for the liquidation order; or

(b) if no such order has been made, the time when theresolution authorising the voluntary liquidation ofthe body corporate is passed.

(5) Section 79(2), with necessary modifications,applies to a legal entity that has directly or indirectly madean affected gift."

167. Section 2 of the National Payment System Act is Amendment ofsection 2 of No.39

amended by deleting the definition of the expression of 2011.

"Minister" and substituting therefor the following newdefinition in proper alphabetical sequence-

Cabinet Secretary" means the Cabinet Secretary forthe time being responsible for matters relating to finance.

168. The National Payment System Act is amended Repeal of section 16of No.39 of 2011.

by repealing section 16 and replacing it with the followingnew section —

Netting agreements and 16. (1) To the extent that a provision ofrules. Cap. 489, No. 12of 1 997, No- 19 of 2006. the Insolvency Act, 2015, the Banking Act,

the Building Societies Act, the Co-operativeSocieties Act, 1997 or the MicrofinanceAct, 2006 is inconsistent with this section,this section prevails.

(2) This section applies to thefollowing agreements and rules relating to asettlement system participant-

1618


(a) a written netting agreement towhich the participant is a party;

(b) the settlement system rules;

(c) a clearing, netting or settlementagreement to which the participantis a party;

(d) netting rules applicable to theparticipant in relation to asettlement agreement.

(3) If a settlement system participant isplaced in liquidation by the High Court,enters administration or is placed understatutory management, any provisioncontained in an agreement or rules to which.this section applies is binding on theliquidator, administrator or . statutorymanager in respect of a payment orsettlement obligation-

(a) that was determined throughnetting before the liquidation orderor administration order, or theappointment of the statutorymanager, was made but is to bedischarged on or after the date onwhich the order or appointmentwas made; or

(b) the discharge of which was overdueon that date.

(4) An administrator appointed underthe Insolvency Act, 2015, in respect of asettlement system participant shall givewritten notice to the Central Bank towithdraw the participant's participation fromthe Central Bank settlement system, inwhich case the participant ceases to beentitled to participate in that system, otherthan for purposes of —

(a) discharging a payment or settlementobligation in accordance with thesettlement system rules;

1619

2015 Companies and Insolvency Legislation (Consequential Amendments) No.19(b) any clearing, netting or settlement

agreement to which the participantwas a party; or

(c) any netting rules applicable to theparticipant in relation to thoseagreements.

(5) As soon as practicable after anapplication to the High Court for theliquidation of a settlement systemparticipant is made and, if a liquidationorder is made in consequence of theapplication, as soon as practicable after theorder is made, the applicant shall lodge withthe Central Bank a copy of the applicationand a copy of the order.

(6) As soon as practicable afterreceiving a copy of an application for theliquidation of a settlement systemparticipant, the Central Bank shall, if theparticipant is a designated payment systemparticipant, notify the operator of thepayment system of the application.

(7) When a copy of a liquidation orderrelating to a settlement system participanthas been lodged with the Central Bank inaccordance with subsection (5), theparticipant ceases to be entitled to clearpayments or participate in a settlementsystem, other than for purposes ofdischarging a payment or settlementobligation in accordance with-

(a) the rules of the settlement system;or

(b) a clearing, netting or settlementagreement to which the participantis a party; or

(c) any.netting rules applicable to theparticipant in relation to such anagreement.

(8) When a settlement systemparticipant is placed in liquidation or enters

1620


administration, or a statutory manager isappointed in respect of the participant, theliquidator, administrator or manager isbound by any payment or settlement that isfinal and irrevocable as provided by section9(2) or (3).

(9) A court in Kenya may not recogniseor give effect to-

(a) an order of a court exercisingjurisdiction under the law relatingto insolvency in a place outsideKenya;or

(b) an act of a person appointed in aplace outside Kenya to performfunctions under that law,

to the extent that this Act does not authorisea court in Kenya to make such an order, or aliquidator, administrator or statutorymanager, or any other officer havingfunctions under the Insolvency Act, 2015, todo such an act

(10) In this section, a reference tonetting rules includes any recognisedpractices relating to the operation orapplication of those rules."

169. Section 24 of the National Payment System Act Amendment ofsection 24 of No.39

is amended by deleting the expression "Minister" and of 2011.



is amended by deleting the expression "Minister" and of 2011.

substituting therefor the expression "Cabinet Secretary".171. The National Payment System Act is amended by lepeal

of sections

repealing section 28 and replacing it with the following 28 of No.39 of 2011.

new section-

Priority of certain 28. (1) In this section, "priorityinstruments on windingup. payment instruction" means a money order,

bank draft or similar payment instructionissued, directly or indirectly, by aparticipant in a designated payment system,

1621

2015

Companies and Insolvency Legislation (Consequential Amendments) No . 19

but does not include an instrument issued byone such participant to another for thepurpose of effecting a payment betweenthem.

(2) Despite anything to the contrary inthe Insolvency Act, 2015, and subject to thissection, if a participant in a designatedpayment system is a company that isliquidated under the Insolvency Act, 2015,unpaid priority payment instructions thatwere drawn on the participant and clearedthrough the payment system before themaking of the liquidation order-

(a) are payable from the participant'sassets; and

(b) rank in preference above any otherunsecured claim against the assets.

(3) A payment is not payable undersubsection (2) in preference to any otherclaim against assets unless a request for thepayment has been made within sixty daysafter the making of the liquidation order inrelation to the participant concerned.

(4) Subsection (2) does not permit apayment instruction to be settled inpreference to any other claim against anyassets, if the instruction was drawn on orcertified or issued by the participantconcerned with a view to giving the draweeof the instruction a preference over theparticipant's other creditors."


is amended by— of 2011.

(a) renumbering the existing provision as . subsection(1);

(b) inserting the following new subsectionimmediately after the renumbered subsection( 1 ) —

(2) If-(a) any act or thing that was done or omitted to be

done by or to the Cabinet Secretary under this Act

1622


before the commencement of the Companies andInsolvency Legislation (ConsequentialAmendments) Act, 2015 had effect immediatelybefore that commencement; and



173. The Land Registration Act is amended 'b* Repeal of section 27

y of No.3 of 2012.

repealing section 27 and replacing it with the following

new section —

Transfer without 27. (1) A proprietor who hasvaluable consideration.

acquired land, a lease or a charge by transfer

without valuable consideration holds it

subject to — -

(a) any unregistered rights or

interests subject to which the

transferor held it; and

(b) the provisions of the Insolvency,

Act, 2015, so far as they are

applicable in the circumstances.

(2) When registered, such a transfer

has the same effect as a transfer for valuable

consideration."

174. The Land Registration Act is amended by repealing Repeal f,ecti.. 63

section 63 and replacing it with the following new of No.3 of 2012.

section-

Transmission on 63. (1) On production to the Registrarbankruptcy.

of a certified copy of the order of court

adjudging a proprietor bankrupt, or directing

the estate of a deceased proprietor to be

administered in accordance with section 375

of the Insolvency Act, 2015, the Registrar

shall register the bankruptcy ^ trustee, or the

trustee appointed under that section, as

1623

2015 Companies and Insolvency Legislation (Consequential Amendments) No. 19proprietor of any land, lease or charge ofwhich the bankrupt or the deceasedproprietor is proprietor, in place of thatbankrupt. or proprietor.

(2) In making an entry in the registerfor the purpose of subsection (1), theRegistrar shall describe the bankruptcytrustee, or the trustee appointed undersection 375 of the Insolvency Act, 2015, as"trustee of the property of ( .........................a bankrupt.

Amendment of175. Section 71 of the Land Registration Act is section 71 of No.3

amended in subsection (1) by deleting paragraph (c) and f2012.

substitute therefor the following new paragraph-

(c) has made an application for a bankruptcy orderagainst the proprietor of any registered land, lease orcharge.

176. The Land Act is amended by repealing section Repeal of section 52of No.6 of 2012.

52 and replacing it with the following new section-

Transmission on 52.(1) On production to thebankruptcy.

Registrar of a certified copy of the order ofcourt adjudging a proprietor bankrupt, ordirecting the estate of a deceased proprietorto be administered in accordance withsection 375 of the Insolvency Act, 2015, theRegistrar shall register the bankruptcytrustee, or the trustee. appointed under thatsection, as proprietor of any land, lease orcharge of which the bankrupt or thedeceased proprietor is proprietor, in placeof that bankrupt or proprietor.

(2) In making an entry in the registerfor the purpose of subsection (1), theRegistrar shall describe the bankruptcytrustee, or the trustee appointed undersection 375 of the Insolvency Act, 2015 as"trustee of the property of( ......................... ), a bankrupt.

1624


177. Section 53 of the Land Act is amended — Amendment ofsection 53 of No.6

(a) by deleting subsection (1) and substituting therefor of 2012.

the following new subsections-(1) As soon as practicable after being

appointed as liquidator of a company, theliquidator shall-

(a) produce to the Registrar theresolution or order appointing theliquidator; and

(b) satisfy the Registrar that the personhas complied with the requirementsof Part VI of the Insolvency Act,2015.

(I A) When the liquidator has compliedwith subsection (1), the Registrar shall-

(a) record the appointment in respectof any land, lease or charge ofwhich the company is registeredas proprietor; and

(b) register the copy of the resolutionor order.

(b) by deleting subsection (3) and substitutingtherefore the following new subsections-

(3) As soon as practicable after a vesting order hasbeen made under section 444 of the Insolvency Act, 2015,the liquidator shall lodge a copy of the order with theRegistrar for registration under this Act.

(4) On receiving a copy of a vesting order inaccordance with subsection (1), the Registrar shall registerthe liquidator as proprietor of the land, lease or charge towhich the order relates.

1625

2015 Companies and insolvency Legislation (Consequential Amendments) No. 19

178. Section 103 of the Land Act is amended in Amendment ofsection 103 of No.6

subsection (1) by deleting paragraph (e) and substituting of2012.

the following new paragraph-

(e) if the chargor has been adjudged bankrupt, thebankruptcy trustee of the estate of the charger.

179. Section 54 of the Kenya Deposit Insurance Act Amendment ofsection 54 of No. 10

is amended— of 2012.

(a) by deleting subsection (2) and substituting thereforthe following new subsection —

(2) The appointment of the Corporation as theliquidator of an institution shall have the same effect as anappointment of a liquidator by the Court under Part VI ofInsolvency Act, 2015.

(b) by deleting subsection (3) and substitutingtherefor the following new subsection-

(3) No liquidator shall be appointed in respect of aninstitution under Part VI of the Insolvency Act, 2015 if theCorporation has already been appointed as liquidator inrespect of the institution."

Documents

ACTS, 2015 - Kenya Law Reportskenyalaw.org/kl/fileadmin/pdfdownloads/AmendmentActs/...SPECIAL ISSUE Kenya Gazette Supplement No. 160 (Acts No. 19) REPUBLIC OF KENYA KENYA G.A.ZETTE