Kenya Company Law: Companies Limited by Guarantee

Under the Kenya company law,a company limited by guarantee may be formed either with or without a share capital, but is usually formed without a share capital. Under Section 5 (3) of the Companies Act, the memorandum of a company limited by guarantee must state that each member undertakes to contribute a specified sum towards the assets of the company in the event of its being wound up while he is a member, or within one year after he ceases to be a member.The amounts which the members have agreed to contribute in a winding up cannot be mortgaged or charged while the company is a going concern.Every company limited by guarantee, whetherit has a share capital or not, is obliged to register articles of association with the memorandum.The memorandum or articles of a company limited by guarantee and not having a share capital cannot give any person a right to participate in the divisible profits of the company, except than as a member, and every provision in the memorandum or articles purporting to divide the undertaking of the company into shares or interests is treated as a provision for share capital, notwithstanding that the nominal amount or number of the shares is not specified.If the company has a share capital, it must make an annual return like any other limited liability company. If it has no share capital, it must make an annual return stating (under Section 126 of the Companies Act)-*.The address of the registered office.*.If the register of members is not kept at the registered office, the address of the place where it is kept.*.The particulars of the directors and the secretary, which are required to be kept in the register of directors and secretaries.*.Particulars of the total amount of the company’s indebtedness in respect of all mortgages and charges required to be registered with the Registrar.Such companies are usually formed to incorporate professional, trade and research associations, and clubs supported by annual subscription. They can also be utilized for registration of charitable and not for profit organizations.As a matter of administrative practice, the Registrar of Companies will not incorporate companies which are limited by guarantee without prior clearance from Special Branch (a police department under the Office of the President). The process for obtaining this clearance is time-consuming and uncertain, and as a result very few of such companies, if any at all, have been registered as such.