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Understanding Share Registration in Kenya

by | Dec 15, 2021

With the ever-evolving investment options in Kenya and globally, the demand and attention towards investment in shares is growing rapidly. Ownership of both public and private companies is usually through shareholding issued to subscribers in return for their investment. The shareholders have the right to dispose or acquire ownership at any time.

Unlike public companies, private companies are restricted from offering and trading their shares to the public. However, private companies can have up to 49 members and the shareholders can transfer their shares in accordance the Company’s articles of association and shareholder agreements (if any).

Public companies can offer their shares to the public and any individual or corporation can acquire shares. The Company is required to maintain a register of members and to make it available for inspection by any member, as may be requested. Public listed companies trade in the stock exchange while public unlisted companies trade over the counter.

Public companies are required to appoint an independent Share Registrar to maintain the register, process share transfers and any actions as may be required by the Company. The appointment of an independent Share Registrar is imperative since the shareholding information and records should be maintained objectively and the same should not be interfered by any party.

The share registrars are also responsible for the distribution of dividends and maintaining the dividend records, registration of members during general meetings, communication of key information to shareholders, allotment of shares, issue of bonus shares, filing share registration reports with the regulators (if any) and the Company, shareholder relations and dispute resolution, among other roles.

Some public companies have put in place an internal share registrar to maintain the shareholder records. This may however impact shareholder confidence since management should be distinct from the ownership of the Company. For this reason, it is recommended that both public and private companies should appoint external independent share registrars.

Mr Collins Masai and Mr Washington Otambo specialize in Share Registration and Company secretarial services as Scribe Services