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Section 640 of The Companies Act No. 17 of 2015: Exemption for company included in group financial statement of larger group

    

(1) A company that is itself a subsidiary undertaking is exempt from the requirement to prepare a group financial statement in the following cases—
(a) if the company is a wholly-owned subsidiary of that parent undertaking;
(b) if that parent undertaking holds more than fifty percent of the allotted shares of the company and notice requesting the preparation of a group financial statement has not been served on the company by shareholders holding in total—
(i) more than half of the remaining allotted shares in the company; or
(ii) five percent or more of the total allotted shares in the company.
(2) Such a notice is not effective unless it is served not later than six months after the end of the financial year before that to which it relates.
(3) An exemption under this section is subject to compliance with the following conditions—
(a) that the company and all of its subsidiary undertakings are included in a consolidated financial statement for a larger group made up to the same date, or to an earlier date in the same financial year, by a parent undertaking;
(b) that the group financial statement are audited by one or more persons authorised to audit financial statements under the law under which the parent undertaking that prepares them is established;
(c) that the company's individual financial statement discloses that the company is exempt from the obligation to prepare and deliver a group financial statement;
(d) that the company's individual financial statement states the name of the parent undertaking that prepares the relevant group financial statement and—
(i) if the parent undertaking is incorporated outside Kenya—the country in which it is incorporated; or
(ii) if the parent undertaking is unincorporated—the address of its principal place of business;
(e) that the company lodges with the Registrar, within the period for lodging its financial statement and directors' report for the relevant financial year—copies of—
(i) the group financial statement; and
(ii) if appropriate, the consolidated annual report, together with the auditor's report on them;
(f) that any requirement of Part XXXI relating to the lodgement with the Registrar for registration of a certified translation into the English language is satisfied in relation to any document included in the documents lodged in accordance with paragraph (e).
(3) For the purposes of subsection (1)(b), shares held by a wholly-owned subsidiary of the parent undertaking, or held on behalf of the parent undertaking or a wholly-owned subsidiary, are to be attributed to the parent undertaking.
(4) Shares held by directors of a company for the purpose of complying with any share qualification requirement are not to be taken into account for the purpose of determining whether the company is a wholly-owned subsidiary.
(5) If a condition of an exemption is not complied with by or in relation to a company, the company, and each director of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding five hundred thousand shillings.

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

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