Registering a company is the dream of many entrepreneurs, which is considered a milestone that comes with new responsibilities and opportunities for growth.
However, during operation, the owner could decide to shut down the company due to financial constraints, unfavourable business conditions, and changes in the entrepreneur's interests.
A limited liability company is required to be registered through the Business Registration Services (BRS). BRS is also involved in the process of winding up a company.
To avoid facing hurdles, Kenyans.co.ke explains the step-by-step legal process of closing a company. The process includes:
According to Section 141 of the Companies Act (2015), a special resolution must be supported by at least three-quarters of the board who must vote in person or by proxy.
A notice to pass a special resolution must be given prior to the meeting. Additionally, a copy of the special resolution must be delivered to the registrar within thirty days of the meeting.
“A Special resolution, constituted in the prescribed form must be passed by the Board of the company for the affairs of the company to be wound up,” explained Company Secretaries Africa, a consulting firm that offers company secretary services.
In Nairobi, the office of the Business Registration Service (BRS) is based at Sheria House along Harambee Avenue in the Nairobi Central Business District (CBD).
At this point, the business owner(s) applies to the Registrar of Companies seeking to strike out their name from the Registrar of Companies.
The special resolution confirming the decision to wind up a company is also attached to the written application.
Additionally, minutes of the special resolution and outstanding company returns must also be attached.
In this process, a notice of dissolution is published in the Kenya Gazette.
Before publication, the business registrar ensures that the proper documents have been attached and other processes duly followed.
A dissolution notice published on a gazette notice stays there for three months.
When the three months lapse, the Registrar of Companies shall strike out the company from the Register of Companies.
Besides voluntary liquidation, creditors can petition a court of law to wind up a company.
Before liquidation, all charges and financial liabilities of the company should be cleared.