Voluntary Striking Off of a Company in Kenya: Legal Requirements and Step-by-Step Process

Where a company has ceased operations and no longer intends to carry on business, it may apply to the Registrar of Companies to have its name removed from the Register of Companies. This process is known as voluntary striking off.

Voluntary striking off is a statutory process under the Companies Act, 2015 through which a company is formally dissolved without undergoing liquidation. It is most suitable for companies that are dormant, inactive, have concluded their affairs, and have no outstanding liabilities, assets, insolvency proceedings, or unresolved disputes.

Legal Basis for Voluntary Striking Off

Section 897 of the Companies Act, 2015 allows a company to apply to the Registrar to have its name struck off the Register. The application must be made on behalf of the company by its directors or by a majority of them.

Once the application is received, the Registrar is required to publish a notice in the Kenya Gazette indicating the intention to strike off the company and inviting any person to show cause why the company should not be struck off. The Registrar may only strike off the company after the expiry of three months from the date of publication of the Gazette Notice.

Upon publication of the final notice confirming that the company has been struck off, the company is dissolved and ceases to exist as a legal entity.rtions that must be capable of objective verification. From an enforcement perspective, this is a logical evolution in a digital economy where most transactions leave traceable footprints.

When a Company Should Not Apply for Striking Off

A company should not apply for voluntary striking off where it is involved in pending legal, insolvency or restructuring proceedings. An application should not be made where the company is under administration, in liquidation, subject to a pending liquidation application, or involved in a compromise, arrangement or voluntary arrangement that has not been concluded.

The directors must therefore confirm, before lodging the application, that the company is not involved in any pending court, insolvency, administration or liquidation proceedings.

Key Requirements Before Applying

Before applying for voluntary striking off, the company should ensure that:

1. the company has ceased carrying on business;
2. the directors have approved the striking-off application;
3. all debts, taxes and other liabilities have been settled;
4. all assets have been transferred, distributed or otherwise dealt with;
5. there are no pending court cases, insolvency proceedings, liquidation proceedings or restructuring arrangements;
6. shareholders, creditors, employees and other affected persons can be notified of the application; and
7. the company’s statutory records are available and can be retained for at least seven years after striking off.

The company must deal with all property before dissolution. Under the Companies Act, any property that remains undistributed at the time of dissolution may vest in the State.

Step-by-Step Process for Voluntary Striking Off

Step 1. Confirm that the company is eligible

The company should first confirm that it has ceased operations, has no outstanding liabilities, has dealt with its assets, and is not involved in any court, insolvency, liquidation or administration proceedings.

Step 2. Obtain directors’ approval

The directors should pass a resolution approving the application for voluntary strike-off and authorising the filing of the application with the Business Registration Service.

Step 3. Prepare the application

The prescribed application should be prepared and signed by the directors or by a majority of the directors, together with any supporting information required by the Registrar.

Step 4. Lodge the application with BRS

The application is then lodged with the Registrar of Companies through the Business Registration Service.

Step 5. Notify affected persons

Within seven days after the application is made, a copy of the application must be given to the shareholders, employees, creditors, directors who were not parties to the application, and any trustees or managers of employee pension schemes.

Step 6. Gazette Notice by the Registrar

The Registrar publishes a notice in the Kenya Gazette stating that the company may be struck off and inviting objections from any person who may have grounds to object.

Step 7. Wait for the statutory objection period

The law requires a three-month waiting period from the date of publication of the Gazette Notice. During this period, any interested person may object to the proposed strike-off.

Step 8. Avoid trading or new business activity

Once the application has been made, the company should not resume trading, change its name, dispose of property for value except where necessary to conclude its affairs, or engage in activities inconsistent with the striking-off process. If such an event occurs, the directors are required to withdraw the application without delay.

Step 9. Final Gazette Notice and dissolution

If no valid objection is received, the Registrar may strike the company off the Register and publish a final notice in the Kenya Gazette confirming the striking off. Upon publication of that notice, the company is dissolved.

Step 10. Retain company records

After striking off, the company’s officers are required to retain the company’s statutory records for at least seven years from the date of striking off.

Effect of Striking Off

Once the company is struck off and dissolved, it ceases to exist as a legal entity. However, dissolution does not automatically extinguish the liability of directors, officers or members. Any liability that existed before dissolution may still be enforced as if the company had not been dissolved.

Conclusion

Voluntary striking off is a practical and cost-effective option for closing a company that has ceased operations and has no outstanding liabilities or ongoing proceedings. However, the process should be handled carefully to ensure full compliance with the Companies Act, 2015.

Before applying, directors should ensure that the company has settled all debts, dealt with all assets, notified the relevant persons, and maintained proper records. This helps avoid objections, delays, penalties and potential liability after dissolution.

By: Caroline Rotich