Many strides have been made in the ease of incorporating companies in Kenya. Kenyan company law was modernised in 2015 when the old Companies Act was replaced.
Following the enactment of this new law, several regulations have followed, making the process of filing statutory documents easier.
The game changer in incorporating companies came when the processes were digitised and it became possible for the first time, to file incorporation documents digitally. It is possible to receive some company services in real time.
Digitising company services through the e-citizen platform eliminates most of the bottlenecks like corruption and inefficiencies with the manual processes.
While the developments in company law have provided major gains for companies, there is a gap that companies face when it comes to seeking legal redress on small disputes.
Take an example where you have applied for a company name and the name is rejected at the companies registry, what recourse would you have?
The major recourse such an applicant would have if negotiations fail, is to seek redress from the High Court in the form of a judicial review.
There are many examples of minor disputes that are company related. The unfortunate fact that companies have to contend with, is the lack of an independent specialised tribunal to hear minor company disputes.
A lot of discretion has been given to the Registrar of Companies under the Companies Act to make decisions as mandated in the law. However, when it comes to companies, these discretionary powers are not enough.
There is a need for an independent Companies Tribunal to hear and decide on minor company disputes. An independent tribunal would save companies the hustle of having to go through mainstream litigation process through the courts.
Court litigation is not only complex affair but also costly and time consuming. Some companies opt to let go of minor disputes due to the cost involved.
This is why we need to seriously consider the need for a Companies Tribunal that would provide companies with an optional avenue of seeking redress for minor matters.
Some of the minor matters that can be brought before the tribunal include issues of name disputes, transfer of share, forensic investigations and even some director disputes.
While the Registrar of Companies has discretionary power to handle some of these disputes, a tribunal has the added advantage of independence and neutrality.
There are many jurisdictions that have independent Companies Tribunals. South Africa is one of the countries that has an independent Companies Tribunal formed under the Companies Act No. 71 of 2008, to hear issues like company name and director disputes.
Decisions have been passed by this tribunal including in the case of Brenda Rawlines V Diederich Smit which was a case on a directorship dispute.
The United Kingdom has a Company Name Tribunal which handles company name disputes.
The National Company Law Tribunal of India hears cases on shareholder disputes, insolvencies among other company matters. Appeals are made to the National Company Law Appellate Tribunal.
Having an independent Company Tribunal is a win-win. Company disputes would be determined faster, and it would also be cheaper to seek legal redress.
Tribunals being specialised courts, would be headed by experts on company law. A Companies Tribunal would ease pressure off the commercial courts and would help solve the issue of case backlogs.
Ms Mputhia is the founder of C Mputhia Advocates. Email: [email protected].
