Corporate Restructuring

Companies with significant international operations have found Kenyan companies useful when restructuring their operations globally. A Kenyan company can hold certain assets or liabilities when it is desirable from the parent’s perspective to separate and insulate such assets or liabilities from the rest of the corporate group. This insulation structure has facilitated the granting of security interests to lenders thereby protecting the assets from other lenders of the parent company. Separating out such assets or liabilities into a Kenyan Company that operates in a sophisticated yet tax neutral environment, free from exchange controls, is attractive to banks and other lenders offering financing to corporations involved in restructuring their businesses or debt arrangements.

The added advantages offered by this structure are the ease in making share transfers of Kenyan companies in the event the Kenyan company or parent company is sold, and the fact that payments may be made from Kenya to lenders without restrictions of any kind. In any corporate restructuring involving a Kenyan Company, security interests may be registered in Kenya on assets whether located in or outside of Kenya and priority is granted from the date of registration of the security interest.

Continuation into Kenya

Continuation into or from Kenya is now permitted under the Companies Act. A foreign corporation may apply to be ‘continued’ into Kenya as a foreign upon providing satisfactory proof that the foreign corporation has obtained all necessary authorizations’ required under laws of the country in which it was incorporated, and the filing in Kenya of its current financial statements.

Once the registration is granted, the foreign corporation may, within twelve months of the grant or renewal of the consent, register the Memorandum or Continuance with the Registrar of Companies who then issues a Certificate of Registration as a Foreign Company, making the company subject to Kenyan law. The foreign corporation will become a company to which the Companies Act and any other laws of Kenya shall apply as if it had been incorporated in Kenya on the date of the registration.

The foreign corporation is required to adopt bye-laws which conform to the requirements of the Companies Act and any other law of Kenya.