Removal of a director from a Kenyan company is often a sensitive and complex matter. However, with the right understanding of the legal procedures, the process can be managed effectively. This guide aims to clarify the process, highlight the reasons for removal, and outline the rights of both the company and the director.
When Is It Necessary to Remove a Director?
There are several situations that may prompt the removal of a director from a Kenyan company. The most common reasons include:
1. Breach of Fiduciary Duty
Directors must always act in the best interest of the company and its shareholders. Consequently, any breach of this duty, such as self-dealing or a conflict of interest, is a valid reason for removal.
2. Misconduct or Negligence
Furthermore, if directors engage in activities that harm the company’s reputation or finances, or if they consistently fail to perform their duties, they may face removal.
3. Insolvency or Bankruptcy
Additionally, if the company becomes insolvent or bankrupt, directors can be held accountable for their actions, leading to their removal.
4. Deadlock or Inability to Perform Duties
In some cases, if a director becomes incapacitated or causes a deadlock in decision-making, removal might be necessary to restore effective governance.
Legal Procedures for Removing a Director in Kenya
The Companies Act, 2015, alongside the company’s Articles of Association or (Table A), governs the process of removing a director. Below are the main methods available:
1. Removal by Ordinary Resolution
Firstly, this method involves calling a shareholders’ meeting. A simple majority vote can remove the director. However, the company must follow strict notice requirements, and the director has the right to defend their case.
Notifying the Business Registration Service (BRS)
Once the director is removed, the company must notify the Business Registration Service (BRS) within 14 days. This step is critical to ensure the company’s records are up-to-date. For more information, you can visit the BRS website.
2. Removal by Special Resolution
For more serious offenses, or as stipulated in the Articles of Association, a special resolution may be required. This involves a three-quarters majority vote of shareholders.
Expert Legal Support
Clearly, navigating the complexities of director removal requires expert advice. Therefore, it is essential to seek professional guidance to avoid legal pitfalls. Contact Mich&Ronia Consultants for tailored legal assistance. Our experienced team will ensure compliance with Kenyan law and help you through the process smoothly.
For assistance, reach out to Mich&Ronia Consultants:
- Phone: 0745 359397
- Email: info@michroniaconsultants.co.ke