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Section 158 of The Companies Act No. 17 of 2015: Substantial property transactions: requirement of members’ approval

    

(1) A company may not enter into an arrangement under which—
(a) a director of the company or of its holding company, or a person connected with such a director, acquires or is to acquire from the company (directly or indirectly) a substantial non-cash asset; or
(b) the company acquires or is to acquire a substantial non-cash asset (directly or indirectly) from such a director or a person so connected, unless the arrangement has been approved by a resolution of the members of the company or is conditional on such an approval being obtained.
(2) If the director or connected person is a director of the company's holding company or is a person connected with such a director, the arrangement also needs to have been approved by a resolution of the members of the holding company or be conditional on such an approval being obtained.
(3) A company is not subject to a liability only because it has failed to obtain an approval required by this section.
(4) An approval is not required to be obtained under this section from the members of a body corporate—
(a) that is not a company registered under this Act; or
(b) that is a wholly-owned subsidiary of another body corporate.
(5) For the purposes of this section—
(a) an arrangement involving more than one non-cash asset; or
(b) an arrangement that is one of a series involving non-cash assets, is to be treated as if it involved a non-cash asset of a value equal to the aggregate value of all the non-cash assets involved in the arrangement, or the series.
(6) This section does not apply to a transaction so far as it relates—
(a) to anything to which a director of a company is entitled under the director’s service contract; or
(b) to payment for loss of office as defined in section 180.
(7) For the purpose of this section, an asset is a substantial non-cash asset if its value—
(a) exceeds ten per cent of the company’s asset value and is more than five million shillings; or
(b) exceeds ten million shillings.
(8) For the purpose of subsection (7), a company's asset value at any time is—
the value of the company's net assets determined by reference to its most recent statutory financial statement; or
(b) if no such statement has been prepared—the amount of the company's called-up share capital.
(9) For the purpose of subsection (8)—
(a) a company's statutory financial statement is its annual financial statement as prepared in accordance with Part XXV; and
(b) its most recent statutory financial statement is that in relation to which the time for sending it to members is most recent.
(10) Whether a non-cash asset is substantial for the purposes of this section is to be determined as at the time when relevant arrangement is entered into.

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Disclaimer: This document is not to be taken as legal advise.

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