MasiboLaw

By Betty Jepchumba

A director is a person or a corporate entity appointed or elected to manage the daily affairs of a company. Every registered private company must have at least one director who is a natural person. On the other hand, a public company must have at least two directors, one can be a natural person and the other a corporate entity. Appointment of a new company director in Kenya is governed by the Companies Act 17 of 2015.

Here are different ways in which a director can be appointed for both Private and Public Companies:

1. During the Formation of a Company

A director can be appointed during the incorporation of the company by listing their name, occupation and residential as well as postal addresses in the relevant documents. You can either appoint a Director who is not a shareholder or appoint a Shareholder as a Director. The difference is that a Shareholder/Director is a part owner of the business while a Director is an appointed official who can be easily ejected from the Company. When you want to remove a Shareholder/Director you will have to ask them to forfeit their shares or transfer them to other shareholders which can complicate the process.

2. Appointment by an Ordinary Resolution

The shareholders in a company can appoint a new director by passing an ordinary resolution stating the same. The appointment must be supported by a majority of the shareholders in the company. The director appointed must then consent to the appointment by writing a letter to the Companies’ Office in the prescribed form. These changes are done on the e-citizen platform.

3. By a Decision of other Directors

At times there can be a vacancy for a director or the existing directors need to add another director. In such a case, a meeting of the board of directors is held and the existing directors appoint a director to fill the vacancy. This decision has to be ratified by the Companies’ shareholders by a majority vote. In all these instances, The Act requires that the company notifies the Registrar of Companies of the appointment within 14 days after the appointment.

In conclusion, you can appoint a director in several ways, either at the formation of the company, by a majority decision of the shareholders or by a majority decision of the board of directors that is later ratified by the shareholders.

The writer is a legal assistant at MasiboLaw. You can reach her through info@masibolaw.co.ke/intern@masibolaw.co.ke

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(This article is informative and should not be considered to be legal advice or to create a client-attorney relationship with the author. In case you need specific advice, please speak to a legal professional.)