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Section 403 of Insolvency Act CAP 53: Effect of company’s insolvency

    

(1) This section applies if the liquidator is of the opinion that the company will be unable to pay its debts in full (together with interest at the official rate) within the period stated in the directors' declaration under section 398.
(2) On forming the view that the company is or will be unable to pay its debts, the liquidator shall—
(a) convene a meeting of creditors for a date not later than thirty days after the day on which the contributory formed that opinion;
(b) send notices of the creditors' meeting to the creditors by post at least seven days before the day on which that meeting is to be held;
(c) publish notice of the creditors' meeting—
(i) once in the Gazette;
(ii) once in at least two newspapers circulating in the area in which the company has its principal place of business in Kenya; and
(iii) on the company's website (if any); and
(d) advertise the meeting in such other manner and place as the liquidator considers desirable in the interests of the creditors;
(e) during the period before the day on which the creditors' meeting is to be held, provide creditors, free of charge, with such information concerning the affairs of the company as they may reasonably require; and
(f) specify in the notice of the creditors' meeting the duty imposed by paragraph (e).
(3) The liquidator shall also—
(a) prepare a statement setting out the financial position of the company that complies with subsection (4);
(b) lay that statement before the creditors' meeting; and (c) attend and preside at that meeting.
(4) A statement complies with this subsection if it— (a) specifies—
(i) the prescribed details of the company's assets, debts and liabilities;
(ii) the names and addresses of the company's creditors;
(iii) the securities (if any) respectively held by them and the dates on which they were respectively given; and
(iv) such other information (if any) as may be prescribed by the insolvency regulations; and
(b) is verified by a statutory declaration signed by the liquidator.
(5) If the company's principal place of business was located in different places at different times during the relevant period, the duty imposed by subsection (2)(c) applies separately in relation to each of those places.
(6) If the company had no place of business in Kenya during the relevant period, the references in subsections (2)(c) and (5) to the company's principal place of business are taken to be references to its registered office.
(7) In this section, "the relevant period" means the period of six months immediately preceding the day on which were sent the notices convening the company meeting at which it was resolved that the company be liquidated voluntarily.
(8) A liquidator who, without reasonable excuse, fails to comply with this section commits an offence and on conviction is 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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