Companies face Sh1m fine as virtual AGMs deadline lapses Tuesday

Public firms whose financial year ended last December have up to Tuesday to hold their Annual General Meetings (AGMs) or risk up to Sh1 million fines if their officials will have not sought for an extension.

Business Registration Service director-general Keneth Gathuma last month reminded companies of the deadline, asking those wishing to delay AGMs to make formal request for extension or face penalties.

“Public companies in Section 310 of the Act are required to hold an annual general meeting. Failure to comply with this provision is an offence,” said Mr Gathuma.

The Companies Act 2015 requires all companies, with exception of single member companies, to hold AGMs. It requires those asking for postponement to state reasons why and specify the new date which must be communicated to shareholders.

“The company, and each officer of the company who is in default (of holding AGM), commit an offence and on conviction are each liable to a fine not exceeding Sh1 million,” states the Act. AGMs are crucial for protecting shareholders since the gatherings provide avenue for clarifying pertinent issues about the companies.

Many firms have had to contend with holding virtual AGMs, a first for corporate Kenya, in the wake of extended State ban on large public gatherings in order to contain spread of Covid-19.

This was after the High Court cleared them for the meetings. The same window was opened to private companies.

Listed firms were the first to hold virtual AGMs with many changing their Articles of Association to allow for a combination of physical and virtual meetings in future.