When registering a private company limited by shares in Kenya, its nominal share capital must be clearly stated. There is no minimum amount of share capital stipulated by the law except for specified regulated entities such as banks. However, it is important to state an adequate minimum capital preferably from Ksh 100,000 going upwards. According to Company’s Act 2015, section 243, private Companies that have  a paid up capital of Ksh 5,000,000 or more must have a certified company secretary. The nominal capital can be later increased as allowed by the company act 2015, section 404. The increased share capital is then allotted. Importantly the new issued shares should either be allotted as paid up or unpaid.

Factors that may necessitate a private company to increase its share capital in Kenya.

Corporations may choose to increase their share capital for various reasons, but ultimately, such a decision is made only if it is expected to enhance financial stability and growth prospects without adversely impacting shareholders.

• Opportunities for expansion.

A company may be planning to expand its business through entering new markets, scaling existing operations and coming up with new projects. Expansion requires significant amount of capital which can be difficult to get especially in the capital markets which is highly regulated. Alternatively, a company can get new capital through increase of share capital which is a simpler option.

• Debt repayment.

A company can decide to pay existing debt through proceeds from newly issued shares after increase of share capital. This option of repaying debts has less consequences because there are no interests unlike getting a loan to repay debts.

• Wider investor base

Issuing new shares can allow the company to reach a wider investor base by giving new shareholders the opportunity to acquire ownership. A well-managed capital increase, backed by a strong growth strategy, signals financial health and potential returns, which can attract more investors to the company.

• Regulatory requirements.

Some companies in some sectors are required to maintain a specific minimum share capital. Hence must take the necessary steps to ensure they adhere to such regulation. This is especially the case for companies operating in the banking and finance sector, where regulatory capital requirements are strict.

Requirements and procedure of increasing share capital for private companies in Kenya.

Amending Articles of Association

A company can only increase its share capital if its articles of association allows so if not, it should be amended through a special resolution. Thereafter a copy of the amended articles should be filed with the registrar within 14 days after the resolution containing the amendment passed.

Passing the resolution

A resolution for increasing nominal capital can either be ordinary or special. The resolution authorized under the articles of association should be passed by the shareholders in the general meeting of the company.

Preparing the minutes of the meeting

The minutes of the meeting in which the resolution to increase the share capital was passed should be prepared by the designated officials of the company and signed by the members.

Preparing statement of increase of nominal capital

The form should be drafted and stamp duty of 1 % of the additional share capital is paid.

Notice increases of nominal capital (Form 204)

Form 204 should be filled and signed by a director or secretary of the company. The form is to notify the company registrar of the increase of share capital. Moreover, form 204 should be filed with the registrar within 30 days after passing such a resolution.

Where is the application done?

The above documents are uploaded through e -citizen in the BRS portal. Once uploaded an application fee is paid and submitted for review. If everything is okay the BRS effects the share capital changes.

Is the process of increasing your company’s share capital feeling overwhelming? At Anziano Consultants, we specialize in guiding businesses through this critical phase with ease and expertise. Our team ensures a seamless process tailored to your needs, all within the shortest timeline.

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