The government has announced plans to close down hundreds of companies dealing in a wide range of products and services, putting hundreds of Kenyan jobs at risk as economic pressures continue to bite.
The government announced through the Registrar of Companies, Damaris Lukwo, in a gazette notice published on Friday that 742 companies are set for dissolution.
The Registrar gave a three-month notice, with most of the companies set for closure in February next year, unless valid objections are raised.
"Pursuant to section 897 (3) of the Companies Act, the Registrar of Companies gives notice that the names of the companies specified hereunder shall be struck off from the Register of Companies at the expiry of three months from the date of this publication and invites any person to show cause why the companies should not be struck off from the Register of Companies," the notice read in part.
According to the notice, some companies will be dissolved due to the completion of their purpose or inactivity. This, under business law, occurs mainly when a company has achieved its objectives or become dormant, when members decide to formally wind it up to avoid unnecessary obligations and costs.
Additionally, some of the companies will face dissolution due to their inability to pay debts and sustain operations.
Further, the dissolutions have been necessitated by shareholder stalemate, mismanagement, and breaches of statutory obligations.
The notice added that the strike-off process will occur three months from the date of publication unless valid objections are raised.
Upon lapse of the three months, the companies will be struck off the Register of Companies and will no longer be allowed to conduct business, enter into legal contracts, or operate bank accounts under their previous names.
Under the law, companies can be deregistered for various reasons ranging from failure to file annual returns to non-compliance with statutory requirements.
Companies are legally required to file annual returns and financial statements with the Registrar each year. If a company repeatedly fails to submit these documents, the Registrar may assume it is no longer active and initiate the strike-off process.
Typically, the dissolution process begins with warning letters, which include a 14- or 28-day ultimatum, followed by a gazette notice announcing the intended dissolution, and finally the formal strike-off.
