Introduction

The Business Laws (Amendment) (No.2) Act of 2021 (the Act) came into force on 31 March 2021 seeking to facilitate ease of doing business in Kenya. In this first part of the series, we highlight the key changes to the laws listed below. The second part will address the effect of the Act on the Insolvency Act, 2015.

Law of Contract Act (Cap 23 Laws of Kenya) (the LCA)

The meaning of “signing” as defined under the LCA has been expanded to clarify that contracts entered into by companies should be executed according to the Companies Act. Recently, the Companies Act was amended to delete the use of a common seal as means through which a company signs contracts. Therefore, contracts entered into by companies should be executed (i) by two authorised signatories, (ii) by a director of a company in the presence of a witness who attests the director’s signature, or (iii) by a duly appointed attorney.

National Social Security Fund Act, 2013 (the NSSF Act)

The Act amends the NSSF Act to:

• require employers to pay the employee’s contribution to the NSSF on the 9th day of each month (or on such later date as the Board may, in consultation with the Cabinet Secretary, prescribe); and
• delete the one-month period afforded for late payments to the NSSF (before the 5% penalty kicks in). The 5% penalty will apply from the date the payment is due (as set out above).

Companies Act, 2015

In light of the COVID-19 pandemic, various government agencies including the Business Registration Service and the Capital Markets Authority (among other institutions) issued guidelines on the conduct of hybrid and virtual general meetings by companies.

The Act now seeks to incorporate such guidelines into law as follows:

• the definition of a “general meeting” under the Companies Act has been expanded to confirm that it may take place as either a physical, virtual or hybrid meeting. The terms “hybrid meeting” and “virtual meeting” are also defined for clarification purposes;
• it amends the Companies Act by requiring that a notice of a general meeting must, in addition to all previous requirements, specify the means of joining and participating in the meeting.

Apart from the provisions relating to general meetings, the Act repeals the provisions which gave effect to common seals of companies that existed before the enactment of the Companies Act. The intention is to make it clear that companies are no longer required to use common seals to execute documents.

Stamp duty Act (Cap 480 Laws of Kenya)

The Stamp Duty Act, among other things, lists the documents and transactions that are exempt from stamp duty. The Act amends the Stamp Duty Act to include contracts, chargeable as conveyances on sale and that attract a fixed duty of KES 100, to the list of  documents that are exempt from stamp duty.

Industrial training Act (Cap 237 Laws of Kenya)

The Act prescribes the period within which businesses that pay the training levy must remit the levy to the National Industrial Training Authority. They must remit the training levy at the end of the financial year of the business, but not later than the 9th day of the month following the end of the financial year.

Small claims court Act, 2016 (the SCCA)

The Act amends the SCCA to provide that all proceedings before the small claims court must be heard and determined on the same day or, if heard on a day-to-day basis, must be finalised within 60 days from the date of filing the claim. This now clarifies the maximum period for finalisation of matters before the small claims court.