MasiboLaw LLP

When you start a business you never anticipate that you may have conflicts with co-founders or see a need to take different directions business-wise. However, this happens more often than you might think. When it does, many founders are stuck on how to go about restructuring the shareholding in their business. If the business is registered as a company, you will need to take certain steps to change who holds which shares and remove a director.

Here is how to transfer shares in a company in Kenya in 2024. 

1. Determine the number of shares you want to transfer. It is important to determine both the quality and quantity of shares you wish to transfer. Consider how the share transfer will change your company, for instance, you don’t want to lose control over your company by issuing too many high-quality shares to another person. In such a situation it may be wise to issue non-voting shares instead. In another situation, you may want to entice investors with preference shares which ensures that they are paid their share of profits ahead of other shareholders.
2. Prepare the Minutes of the Shareholders’ Meeting approving the Share Transfer.
3. Prepare the Transfer Deed for the transaction. Sign it together with the person you are transferring shares to. Have it properly witnessed. Also, fill out Form D (one of the forms attached to the Companies Act), it should be filled and signed by your Company Auditor or a Company Secretary.
4. It is also important to have a Share Purchase Agreement between you and the person purchasing the shares in question. It is important to get legal advice on this depending on the context, for example, a Share Purchase Agreement between you and an investor is different compared to one between you and an employee. For instance, you will want to have a dispute resolution clause that ensures all the disputes you have with an investor are settled in Kenya under Kenyan laws to avoid having to travel to where the Investor is from to settle a dispute.
5. File the Deed, Form D and Minutes with the Lands Registry and have the Stamp Duty Assessed and paid. Also, attach a copy of your Company’s interim annual returns to support the transfer request.
6. Once you get a copy of the assessed and franked (payment confirmed) documents from the Lands Registry, file them with the Companies Registry on the e-citizen platform. If the Companies Office is satisfied that you have met the requirements, they will make the changes on the company’s e-citizen platform and update the company’s records.
7. You will have successfully transferred your shares and now you can amend your Shareholders Agreement accordingly.

You can read about how we have helped other companies with share transfers and restructuring here. In case you need further assistance, do not hesitate to reach us at info@masibolaw.co.ke