Meetings Compliance and Administration - Notes.
Meetings Compliance and Administration - Notes.
Meetings Compliance and Administration - Notes.
UNIT DESCRIPTION
This paper is intended to equip the candidate with the knowledge, skills and attitudes that will
enable him/her to comply with legal requirements for conducting meetings in both public and
private sectors
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
Demonstrate an understanding of the law and procedure of meetings
Develop an agenda and prepare the relevant documentation for various meetings
Plan and manage meetings in various environments.
Relate effectively with various stakeholders during meetings.
Develop a compliance strategy and plan
Conduct a compliance assessment/compliance health check
UNIT DESCRIPTION
This paper is intended to equip the candidate with the knowledge, skills and attitudes that will
enable him/her to comply with legal requirements for conducting meetings in both public and
private sectors
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
Demonstrate an understanding of the law and procedure of meetings
Develop an agenda and prepare the relevant documentation for various meetings
Plan and manage meetings in various environments.
Relate effectively with various stakeholders during meetings.
Develop a compliance strategy and plan
Conduct a compliance assessment/compliance health check
CONTENT
1. Introduction to Meetings
1.1 Legal and regulatory frameworks for different kinds of entities
1.2 Meaning of a meeting
1.3 Types of meetings; private and public sector meetings
1.4 Maintaining order at meetings
1.5 Police powers in relation to public and private meetings
1.6 Meetings held in public places
1.7 Meetings held in private places
1.8 Convention, constitution and conduct of meetings
1.9 Complying with requirements of various meetings
1.10 Elections
1.11 Resolutions
1.12 Adjournments and postponement
1.13 Role of the chair, secretary and members before, during and after meeting
1.14 The meeting chairperson; qualifications, qualities and effectiveness, appointment
and removal
1.15 Law of defamation; nature and scope, defamatory statements, defences and legal
remedies
4. Members’ Meetings
4.1 Meaning, nature and scope of members‟ meetings
4.2 Statutory meeting
4.3 Annual general meeting
4.4 Special general meeting
4.5 Extraordinary general meeting
4.6 Class meeting
4.7 Meeting of debenture holders
4.8 Duties of the corporate secretary before, during and after a general meeting
4.9 Methods of holding company meetings
4.10 Requirements for a valid physical, virtual and hybrid members‟ meeting
4.11 Requirements for circulation of resolutions
4.12 Requirements for keeping records of corporate resolutions and meetings
In the phrase "have a meeting", a meeting is an arranged event at which a group of people come
together to discuss a particular topic. The phrase is most commonly used to refer to business
meetings, at which a group of employees discuss, for example, the work they intend to do on a
particular project.
Statutory Meeting
Every company limited by shares and every company limited by guarantee and having a share
capital shall, within not less than one month and not more than six months from the date at which
the company is entitled to commence a business, hold a general meeting of the members of the
company.
This meeting is called the ‗statutory meeting.‘ This is the first meeting of the shareholders of a
public company and is held only once in the lifetime of a company.
Statutory report: The Board of directors shall, at least 21 days (based on Companies Act) before
the day on which the meeting is to be held, forward a report, called the ‗statutory report,‘ to every
member of the company.
List of members,
Discussion of matters relating to a formational aspect,
Adjournment.
1. To put the members of the company in possession of all the important facts relating to the
company.
2. To provide the members an opportunity of meeting and discussing the management, methods,
and prospects of the company.
3. To approve the modification of the terms of any contract named in the prospectus.
There shall not be more than 15 months between one annual general meeting and the other. But the
first annual general meeting should be held within 18 months from the date of its incorporation.
The Registrar may, for any special reason, extend the time for holding an annual general meeting by
a period not exceeding 3 months. But no extension of time is granted for holding the first annual
general meeting.
Every annual general meeting shall be called during business hours on a day that is not a public
holiday.
It shall be held either at the registered office of the company or at some other place within the city,
town, or village in which the registered office of the company is situated.
As regards holding of the annual general meeting, no distinction is made between a public company
and a private company.
A general meeting of a company may be called by giving not less than 21 days‘ notice in writing.
Annual general meeting a statutory requirement: The annual general meeting of a company is a
statutory requirement. It has to be called even where the company did not function during the year.
Canceling or postponing of convened meeting: Where an annual general meeting is convened for
a particular date, and notice is issued to the members, the Board of directors can cancel or postpone
the holding of the meeting on that date provided power is exercised for bona fide and proper
reasons.
Canceling of failure to hold an annual general meeting: If a company fails to hold an annual
general meeting:
Any member can apply to the Company Law Board for calling the meeting.
The company and every officer who is in default shall be punishable with a fine.
Powers of Company Law Board to call an annual general meeting: If a company makes the
default in holding an annual general meeting, any member of the company may apply to the
Company Law Board for calling such a meeting.
Penalty for default: If a company makes the default is holding a meeting by Company Law or in
complying with any direction of the Company Law Board is calling a meeting, the company, and
every officer of the company who is in default, shall be punishable with fine.
A statutory meeting and an annual general meeting of a company are called ordinary meetings.
Any meeting other than these meetings is called an extraordinary general meeting. It is called for
transacting some urgent or special business which cannot be postponed till the next annual general
meeting.
It may be convened. (1) By the Board of directors On its own or on the requisition of the members;
or (2) by the requisitionists themselves on the failure of the Board of directors to call the meeting.
a. The extraordinary meeting convened by the Board of directors. The Board of directors may
call an extraordinary general meeting:
o On its own.
o On the requisition of the members.
Class Meetings
Under the Companies Act, class meetings of various kinds of shareholders and creditors are required
to be held under different circumstances.
Class meetings of the holders of different classes of shares are to be held if the rights attaching to
these shares are to be varied.
A meeting can validly transact any business if the following requirements are satisfied;
Any police officer may prevent the holding of, stop, or disperse any public meeting or public
processions not having been notified to, or contravening of any conditions imposed by, the
Commissioner of Police.
For public meetings of less than 50 people and public processions of less than 30 people, of which
prior notification needs not be served to the Commissioner of Police, the Commissioner may still
exercise his general power to control meetings, processions and gatherings.
control and direct the conduct of all public gatherings and specify the route by which, and
the time at which, any public procession may pass;
control and direct the extent to which music may be played, or to which music or human
speech or any other sound may be amplified, broadcast, relayed, or otherwise reproduced by
artificial means in public places or towards public places.
prevent the holding of, stop, disperse or vary the route of any public gathering whether or not
notification to the Commissioner of Police was given.
stop or disperse any public gathering exclusively for religious purpose, or any meeting not in
a public place, or any type of gathering at any time, if reasonably believes a breach of the
peace may result.
In preventing the holding of, stop, disperse, or vary the route of any public gathering, a police
officer may give order as he considers necessary and may use reasonable force and enter any
premises or place which the meeting takes place. The police would normally communicate such
orders to the public by raising a flag or announcements through loudhailers or speakers.
A police officer of at least the rank of inspector may by exhibiting notices, erecting physical
barriers, by oral announcements, or reasonably necessary force to bar any person‘s, or any class of
person‘s, access to any public place in order to prevent any un-notified public meeting or public
procession from taking place.
Public meetings bring diverse groups of stakeholders together for a specific purpose. Public
meetings are held to engage a wide audience in information sharing and discussion. They can be
used to increase awareness of an issue or proposal, and can be a starting point for, or an ongoing
means of engaging, further public involvement. When done well, they help build a feeling of
community.
Meetings can be virtually any size and can be used for any purpose from providing information up
to consensus building. Public meetings are familiar, established ways for people to come together to
express their opinions, hear a public speaker or proposed plan, engage in shared learning about a
topic, or work together to develop solutions. Public meetings do not have to follow any specific
script or agenda. They can be designed to meet the specific needs of the project, agency, and
stakeholders. The main advantage of public meetings is the ability for stakeholders to listen to and
talk to each other, not just the agency.
While most public meetings are larger and are intended to attract the full range of stakeholders in a
community, smaller public meetings can also be held with like-minded stakeholders. Focus groups
or dialogue meetings can be made up of people with common concerns who may not feel confident
speaking up in a larger public gathering (e.g. women, those who speak English as a second
language, indigenous groups). By creating a safe venue, these people can speak comfortably
together, share common issues and a common purpose. The findings from smaller meetings can be
presented at larger public meetings or in summary reports, giving a ―voice‖ to those in the
community who are unable to speak up in a larger setting.
Advantages
Challenges to Consider
Unless carefully planned and well facilitated, those perceived as having the most power
within the community, or those who are most articulate and domineering in their verbal style
can dominate the meeting and overwhelm the ability of other voices to be heard
Even when well attended, meetings will only reach a very small segment of the community
that require information and whose input could be extremely valuable in crafting solutions
Participants may not come from a broad enough range of interests to represent the entire
community, providing a skewed view of what the public really thinks
Unless well designed and facilitated, conflicts may be deepened rather than explored and
potentially resolved
Community members may not be willing to work together
The conventions of a meeting are like a set of rules which people have to follow in order to play the
game correctly. These rules are designed to ensure structure, fairness and accountability.
The conventions of a meeting help to ensure that a meeting follows an approved, formal structure.
Having a formal structure at meetings can help to ensure that the things which need to be addressed
in a meeting will be covered before the end of the session. They also aim to ensure that all of the
participants are given a fair chance to enter into the debate.
Legal Conventions – Legal conventions are those conventions of a meeting which are required by
law at a formal meeting of an organisation or business group. Depending on your locality, these can
include the preparation of an agenda before the meeting, the presence of a chairperson at the
meeting and an official set of minutes to be produced after the meeting.
Informal Conventions – These conventions have been decided on by the group and are personal to
the group which is running the meeting. They may include things like each member of the meeting
having to introduce themselves formally to the group at the beginning of each session. These
conventions are open to debate if the group thinks that they need to be changed
1.9 Complying with requirements of various
meetings
After all, failure to achieve, maintain, and demonstrate compliance with applicable regulations can
be extremely costly. For example, the penalty for non-compliance with the pending European Union
General Data Protection Regulation (the GDPR is slated to go into effect in May 2018), could
potentially cost a company $27 million or 4% of their global annual turnover, whichever is greater.
With this in mind, it‘s easy to understand the concern over compliance, particularly by a company‘s
executive management team.
Ensuring that your team understands the importance of compliance to your business is key. How do
you make sure everyone is onboard in meeting compliance controls and processes? A mindset of
proper management is the first step.
Achieving compliance is no easy task; your team must be prepared to do the following:
Each compliance standard has its own set of requirements. In order to make sure your business
passes all levels of an audit, it‘s important to understand what the requirements really mean.
Additionally, you must make sure every element has security standards in place to protect your
consumers and their data. You must have knowledgeable team members who can fully decipher
what is needed, not leaving anything subject to interpretation. The best thing is to work on meeting
all the required regulations while adopting an actionable framework that can be used for future
reference.
Set a Budget
Meeting compliance standards may have significant related expenses. There are direct, indirect, and
opportunity costs involved. The key is in having a workable budget in place to meet those
expenditures without jeopardizing business operations. Consider the cost of an analysis, which could
climb upwards of $20,000, while certification costs could range between $40,000 and $60,000.
Personnel, training, and implementation are also considerations that involve some form of
budgeting.
You must make the investment to get the best results. That includes having the right team in place to
ensure you meet compliance standards. The compliance process could take up to a year. It requires
input from members across the organization. The team charged with compliance tasks must be
adequately prepared and have enough time to see the project through to completion. Below are some
key roles which will need to be defined within the compliance team:
A dedicated project manager, or more than one, can help keep things in order. They should
be detail-oriented and ready to address hard facts. They should be intimately involved with
the business on all levels and understand the rules of compliance.
You should also have human resources personnel who can assist in reviewing current
policies and procedures and adjust them to meet any new requirements. This role will be
time-consuming, and all supervisors should be aware and in agreeance on the time
commitment.
The CFO, or a designated person from the finance department, should be on board to ensure
the costs of compliance are met on all levels.
Once you have those key elements in place, you‘ll be able to put together a working model on
verifying your compliance controls and processes.
1.10 Elections
Election, the formal process of selecting a person for public office or of accepting or rejecting a
political proposition by voting. It is important to distinguish between the form and the substance of
elections. In some cases, electoral forms are present but the substance of an election is missing, as
when voters do not have a free and genuine choice between at least two alternatives.
1.11 Resolutions
A resolution during a meeting is any type of action taken by the members of the board that will
apply to a certain action. Resolutions differ from bylaws in that the latter are rules that regulate
the affairs of an organization and serve as its governing principles
The Secretary is crucial to the smooth running of a Management Committee meeting. This involves
activities before, during and after Committee meetings.
In order to be effective, the Secretary of the Management Committee should ensure that they carry
out the following activities:
Consult with the Chairperson on the order of business for the meeting, and the way
in which it should be dealt with on the agenda. Decide what business requires
discussion and what requires a decision by the Management Committee;
Ensure that the notice of the meeting is given, that suitable accommodation is
arranged and confirmed, and that copies of the agenda is prepared;
Circulate to all members (a) any papers to be discussed at the upcoming meeting
and (b) a copy of the agenda, minutes of the previous meeting; and
Make sure that any reports or information requested at the last meeting is available
or that there is a good reason why not.
At the Meeting
Arrive in good time before the meeting with the minutes and with all the relevant
correspondence and business matters for that meeting, in good order. Record
the names of those who are present, and convey and record apologies received
from those who are absent;
Read the minutes of the previous meeting, and if they are approved, obtain the
Chairperson's signature on them;
Report on action or matters arising from the previous minutes. Read any important
correspondence that has been received;
Unless there is a Minutes Secretary, take notes of the meeting, recording the key
points and making sure that all decisions and proposals are recorded, as well as
the name of the person or group responsible for carrying them out. Make sure
action points are clear; and
Make sure that the Chairperson is supplied with all the necessary information for
items on the agenda, and remind the Chairperson if an item has been
overlooked.
Prepare a draftof the minutes (unless there is a minutes secretary) and consult the
Chairperson and most senior staff member (where relevant) for approval;
Send a reminder notice of each decision requiring action to the relevant person;
this can be done by telephone, or by an ‗action list' with the relevant action for
each person duly marked; and
Promptly send all correspondence as decided by the Management Committee.
1.14 The meeting chairperson; qualifications, qualities
and effectiveness, appointment and removal
Characteristics of a Good Chairperson
The chairperson plays a key role on any voluntary management committee. Below are summarised
some of the key qualities, skills and knowledge that are characteristic of an effective chairperson.
Appointment of Chairman:
A Chairman is Usually Appointed by Election. Every organisation, while electing the office-bearers,
decides at a meeting who will hold what post. The Chairman of a Board of Directors of a company
The promoters of a company may decide beforehand who shall be the chairman of the company.
The Government nominates a chairman for a public body like a Port Trust, Tea Board, the Board of
Trade ate. A chairman may be temporarily elected for a casual meeting or in place of a fixed
chairman temporarily.
Removal of Chairman:
A chairman elected for the meeting on the spot, may be removed or suspended by the participants of
the meeting if the person concerned is found incapable of conducting the meeting. A chairman
nominated by the Government cannot be removed by the members.
1.15 Law of defamation; nature and scope, defamatory
statements, defences and legal remedies
Tort Law- defamation-libel-threshold of serious harm- reference only to the inherent tendency of
the words vis-à-vis investigation of the facts on the actual impact of the statement- what was the
threshold that statements had to meet so as to cause serious harm to a person‘s reputation or body
trading for profit – Defamation Act, 2013, section 1(1).
Tort Law- defamation-libel-statements that were actionable per se vis-à-vis those that were not-
what was the effect of the distinction between a statement that was actionable per se from that which
was not actionable per se.
Tort Law- defamation-libel-repetition rule- impact on threshold of seriousness- what was a
repetition rule in determining threshold of seriousness in defamatory statements and the policy
behind it.
Tort Law- defamation-libel- Dingle rule-effect of-what was the effect of the Dingle rule on
defamatory statements.
Tort Law- defamation-libel- assessment of the harm to the claimant‘s reputation- readers or hearers
who had never heard of a claimant at the time- what was the impact of publications on those who
did not know a claimant but might get to know them in future.
Defamation in Kenya is governed by the Defamation Act of Kenya, Cap 36 Laws of Kenya.
However case law on defamation has been more jurisprudential in evolving the law of defamation.
The Court of Appeal has established precedence in matters defamation in a number of judgments.
In S M W v Z W M [2015] eKLR, it was held that a statement is defamatory of the person of whom
it is published if it tends to lower him/her in the estimation of right thinking members of society
generally or if it exposes him/her to public hatred, contempt or ridicule or if it causes him to be
shunned or avoided.
The elements of the tort of defamation were set out in Nation Media Group Limited and 2 Others v
John Joseph Kamotho and 3 Others (Civil Appeal No 284 of 2005 (unreported)), as that the
statements complained have to be defamatory in character, secondly that the statements referred to
the claimant or that he could be identified, and thirdly, that the statements were published or
communicated to someone other than claimant.
The Court of Appeal in Musikari Kombo v Royal Media Services Limited [2018] eKLR went
further and even held that a party can bring an action for defamation if the published words
concerned the party by inference. This was after the court also found that the offending words
referred to the appellant‘s wife who filed a separate claim and succeeded. However the Court found
that the broadcasts were also concerning the appellant to a certain extent. That was because his
name and his status were clearly mentioned in both broadcasts.
A defamatory statement is a false statement of fact that exposes a person to hatred, ridicule, or
contempt, causes him to be shunned, or injures him in his business or trade. Statements that are
merely offensive are not defamatory (e.g., a statement that Bill smells badly would not be sufficient
(and would likely be an opinion anyway)). Courts generally examine the full context of a statement's
publication when making this determination.
In rare cases, a plaintiff can be ―libel-proof‖, meaning he or she has a reputation so tarnished that it
couldn‘t be brought any lower, even by the publication of false statements of fact. In most
jurisdictions, as a matter of law, a dead person has no legally-protected reputation and cannot be
defamed.
Defamatory statements that disparage a company's goods or services are called trade libel. Trade
libel protects property rights, not reputations. While you can't damage a company‘s "reputation,"
you can damage the company by disparaging its goods or services.
There are a number of important defenses in a defamation lawsuit that could either eliminate the
plaintiff's claim entirely or weaken it significantly.
Absolute Defenses
First and foremost, truth is an absolute defense to a defamation lawsuit. If the statement that is the
subject of the suit is true, and you can prove it, your attorney can move to have the plaintiff's claim
dismissed. No one is punished for speaking the truth, even if it is an ugly truth.
Absolute privilege is also a complete defense to a lawsuit. Some types of statements -- or the
settings in which they are made -- are privileged no matter how negative they may be. For example,
arguments that lawyers make in court, comments judges make, and testimony given by witnesses in
a trial are all absolutely privileged. There is a strong interest in promoting vigorous advocacy from
attorneys and truthful testimony from witnesses, so people cannot be punished for things they say in
those contexts. Also, the fact that witnesses testify under oath lends credence to what they are
saying, and that testimony is always protected.
Qualified Privilege
Qualified privilege is another common defense to a defamation action. Sometimes, even if a
statement is not absolutely privileged, the context in which it was made means that it should be
privileged anyway. An example might be statements a reporter makes about a matter of public
interest in the community. Even if the information puts a person in a negative light, some subjects
are so important to the public in general that they will be protected.
Opinion
Another defense you may be able to raise is that you were speaking an opinion, not a fact.
Defamation claims must involve false statements of fact -- that is, statements that are made as if they
are fact and not merely opinion.
The difference would be something like this: If a person says, "The judge took a bribe," that is
presented as if it were fact, and it would be actionable if it is false. But, if a person says "I think that
judge is crooked," that seems more like an opinion and it might not be actionable because opinions
generally are protected speech under the law.
Another example of opinion may be a political cartoon. While the artist may be speaking about
some factual situation, the presentation of the material is almost always an opinion because most
people know that is the nature of political cartoons.
Whether your statement is considered opinion or not is largely dependent upon the context in which
you made it. You will need to ask yourself whether a person hearing or reading the statement would
think it was a fact based on your presentation of it, or based on how well you know the subject or
person about which you are speaking or writing.
Public Interest
Similar to opinion is the defense of "fair comment on a matter of public interest." If, for example,
someone makes a statement about the actions of people on a school board, the statement might be
protected because there likely is a strong public interest in the activities of the school board. These
types of statements tend to involve local politics or community activity. Similar to the opinion
defense, whether this defense is available to you depends on the subject matter and the context in
which it was made.
Innocent Dissemination
Innocent dissemination is slightly less common, but still may be a viable defense. For example, a
newsletter printer or publisher may raise this defense if the newsletter contains a defamatory
statement. The writer of the material in the newsletter made the statement, and the publisher or
printer may or may not have read the material. Therefore, they may not be responsible for the
contents of the newsletter.
Poor Reputation
Lastly, a common defense is that the plaintiff already had a poor reputation. While this does not
necessarily mean the suit will be dismissed in its entirety, it can reduce the credibility of the
plaintiff's claims and affect a jury's decision if evidence of the plaintiff's reputation comes in at trial.
It could also make the plaintiff more likely to settle and/or reduce his or her recovery.
CHAPTER 2
Professional framework of the corporate
secretarial profession
The company secretary is generally considered the chief administrative officer, with
responsibility for specified tasks as outlined in the Companies Act. Long regarded as
subservient to the board, the role has sometimes been viewed as little more than a clerical
position, with an obligation to ensure reporting requirements are met and board procedure
is adhered to. Of course, the company secretary also provides a vital link between the
chairman and the CEO and the board, and this certainly remains true today. Yet many of
the traditional role requirements have evolved in recent years, and today‟s company
secretaries often behave rather differently to their counterparts of 25 years ago.
In most organizations, the company secretary has become the primary link between the
executive management and the board and other key stakeholders, and they will act as the
key point of liaison for regulators and major shareholders. Although their impartiality
remains crucial, today‟s company secretaries frequently identify themselves as the third
member of the triumvirate at the head of the company, along with the CEO and chair. And
in this role, they must bring a strategic outlook and a level of commercial understanding
that was rarely seen in company secretaries of 10 or 20 years ago.
According to company law, when appointing a company secretary, the directors must
ensure the person has “the requisite knowledge and experience to discharge the functions
of secretary of the company”. Yet today‟s company secretaries must possess a broad
range of attributes. They must be talented leaders, with the confidence and ability to
influence their chairman and senior board members. They must possess strong
commercial acumen together with well-developed technical knowledge relevant to their
industry. They must also be skilled communicators, able to effortlessly engage with their
executive board, NEDs and regulatory bodies. And they must be able to combine sharp
intelligence with broad experience to make sound, well-informed decisions.
2.2 Legal and regulatory framework
CS Executive Company Law : A profession is all that you need to hold yourself high. Does all jobs
termed as profession? What does the term infer on and unique feature to get differentiated from a
job/employment. The significance is that, a Job is a role/ work that a person undertakes and perform
in a society whereas, a Profession is a vocation founded upon specialized educational training.
A professional is one who earns his/her living from performing an activity that requires a certain
level of education, skill or training. There is typically a requirement to have a defined standard of
competency, expert knowledge or education at the same time adhering to codes of conduct and
ethical standards. It is widely related to professionals who serve the vital aspect of protecting the
interest of the public at large.
Now getting into the need for professionals in corporate regime, the recent turbulence in the
corporate ethics has quivered the trust of stakeholders of the company. There is a desperate demand
for exhibiting the corporate credibility and transparency by the company in their business conduct
and managing affairs. There is also a need to retain the confidence of various stakeholders.
Considering the business priorities that keep the top-level management occupied, the task of
managing the governance needs to be borne by some highly qualified and competent professionals.
Here comes the role of a Company Secretary (CS) to fit in this position.
Earlier, the role of a company secretary was limited to providing assistance to the board of directors
and managing administrative affairs of the company. In the recent past, the scope of their roles and
responsibilities has expanded exponentially. Apart from their traditional tasks, company secretaries
act as Those Charged with Governance. A CS not only hold a high position in the management
hierarchy but also vested with accountability to those within and outside your organisation.
Registration of Certified Public Secretaries Board is established under the Certified Public
Secretaries of Kenya Act Cap 534 of the laws of Kenya.
The mandate of the Board is to register qualified secretaries and issue practicing certificates
to those registered Secretaries who are eligible to offer services to the public as Certified
Public Secretaries.
The other mandate of the Board is a regulatory role which is to de-register members out of
their professional misconduct or any other reason as stipulated in the Certified Public
Secretaries Act Cap 534, Section 24.
Roles
1. Receive, consider and approve applications for registration as a certified
secretary and grant of practicing certificates in accordance with the provisions
of this Act.
2. Advice the Institute on matters pertaining to monitoring compliance with
professional, quality assurance and other standards published by the Institute
for observance by its members.
3. Prescribe regulations to govern the qualification and application for
membership of the Institute, including actions necessary to rectify deviations
from published regulations.
4. Maintain the register of certified public secretaries and in so doing, effect such
necessary changes as may arise from time to time;
5. Advise the Institute on matters pertaining to professional and other standards
necessary for the achievement of quality assurance;
6. Advise the Examination Board on matters pertaining to development,
maintenance and continuous improvement on examination standards, including
the contents of the syllabus and accreditation of training institutions.
7. Perform any other functions incidental to the fulfillment of its objectives under
this Act.
Personal qualities: Being a person and a high administrative officer of the company, the company
secretary should have the following personal qualities:
Honesty,
Loyalty,
Tactfulness,
Courteous,
Punctual,
Cooperative minded,
Strong personality, etc.
A company secretary has to contract with many people of name and prominence. So s/he
must have higher education for better perceptive.
S/He represents the company to the outside world and therefore he should have language
adeptness to be well acquainted.
S/He should be efficient with extensive common knowledge related to run the company
activities.
Professional qualification: The functions of a company secretary are mostly professional. These
professional functions require specialized education, training and statutory qualifications as
prescribed in Companies Act.
A Company Secretary has to keep a lot of balls in the air at the same time: preparing for meetings
while making sure that corporate governance compliance is up to date; supporting communications
between management and the board of directors, etc. ―It‘s very important to be able to juggle
priorities,‖ writes one UK company secretary, ―along with collaborating with a lot of people.
Because the job does tend to be quite varied, you have a number of tasks on your desk at any one
time, so you need to be able to keep it all going at the same time. But you also need to communicate
well so that the people you‘re working with understand what you have got on your plate and that
they let you know what‘s most important to get done first.‖
2 Organisational knowledge.
The Company Secretary must understand the business and the context of their organisation. They
must be able to translate governance theory into the appropriate frameworks, policies and processes
for their organisation. The chairperson will not only depend on the Company Secretary to bring
compliance issues to the attention of the board of directors at meetings, but also to provide solutions
for implementing actions. The Company Secretary must be able to develop and implement these in a
way that their organisation can readily understand and comply with, ICSA comments.
3 Planning skills
A good Company Secretary must be ahead of the game, with plans in place at all times. This is
essential, given that board and committee meeting cycles are schedule-driven and external and
internal compliance obligations must be met on time. ―This means you have to be good at project
managing, because there are always several ongoing projects that will require your attention at the
same time,‖ the UK Company Secretary says.
4 An eye for detail. A ‗command of the detail‘is required. A Company Secretary must ensure that
the work of the board, in particular, as well as that of the larger organisation is executed correctly,
without mistakes or omissions. For example, the Company Secretary acts as the shareholders‘ first
point of contact with your company. Circulation of announcements, correspondence regarding
dividends, registration of share ownership, transfers and all areas relating to shareholdings must all
be managed seamlessly, as Deloitte writes in a recent report.
Company secretaries work with senior people – board members or directors, CEOs, senior
executives and often many senior external stakeholders (including regulators, investors and
funders). They must possess discretion, diplomacy, tact, emotional intelligence and good negotiation
skills. They must be able to listen well and effectively communicate both orally and in written form.
The Company Secretary should build effective working relationships with all board members,
offering impartial advice and acting in the best interests of the company. In promoting board
development, the Company Secretary should assist the chairman with all development processes,
including board evaluation, induction and training. This should involve implementing a rigorous
annual board, committee and individual director assessment and ensuring that the actions arising
from the reviews are completed, Deloitte continues.
6 Sound judgement
The ability to assess and make sound judgements, often in circumstances involving conflicting
issues and ends, is a key requirement for a company secretary. This is especially so given the senior
people with whom a Company Secretary has to deal. The Company Secretary also has an important
role in communicating with external stakeholders, such as investors, and is often the first point of
contact for queries. The Company Secretary should work closely with the chairman and the board to
ensure that effective shareholder relations are maintained.
o Issue Notice of Board Meeting to all the Directors of Company at their addresses
registered with the Company, at least 7 days before the date of Board Meeting. A
shorter notice can be issued in case of urgent business.
o Attach Agenda, Notes to Agenda and Draft Resolution with the Notice.
o Hold a meeting of Board of Directors and pass a Board Resolution
to approve the appointment of Whole-Time Company Secretary on the
recommendation of the Nomination and Remuneration Committee and Audit
Committee, where Company is required to constitute such Committees.
to authorize Chief Financial Officer or any Director of the Company to file
the requisite Form and Return with ROC.
o Issue Appointment letter to the newly appointed Whole-Time Company Secretary.
o Listed Company shall submit the disclosure of such appointment to the Stock
Exchange within 24 hours from the date of the Board Meeting and post the same on
the website of the Company within 2 working days.
o Prepare and Circulate Draft Minutes within 15 days from the conclusion of the
Board Meeting, by Hand/Speed Post/Registered Post/Courier/E-mail to all the
Directors for their comments.
o Company shall file the particulars of appointment of Whole-Time Company
Secretary to ROC in Form DIR-12 within 30 days of such appointment along with
the following documents
The company secretary shall cease to be the secretary of the company 30 days from the date of
notice lodged. This will not relieve the company secretary from liability for any act or omission
done before the company secretary vacated that office.
Many people mistakenly believe a Corporate Secretary‘s primary role is to take and record meeting
minutes. While doing so is, indeed, one of the Corporate Secretary‘s responsibilities, this task is
nowhere near the entirety of this pivotal corporate role.
Typically, a Corporate Secretary's job description would include:
Board meetings: The Corporate Secretary plans and executes all Board of Director meetings
and committee meetings, including strategic planning; creating agendas; inviting the
appropriate attendees; reserving the meeting space and covering all possible logistical issues.
He/she also oversees the corporation‘s shareholder meetings.
Record Keeping: The Corporate Secretary is not only responsible for taking meeting
minutes but also for the substance and dissemination of them. The meeting minutes must
accurately describe and effectively communicate the final decisions of the Board of
Directors. Much more than just a scribe, the Corporate Secretary is the officer who
implements all of the board‘s pronouncements.
The Corporate Secretary also retains and organizes all of the corporation‘s significant
documents as well as records; some of these might include its Certificate of Good Standing,
business licenses, SEC compliance paperwork, stock transfers, proxy statements, shareholder
correspondence, contracts and the corporation‘s Capitalization Table.
Advisor: A Corporate Secretary should be willing and able to advise a Board of Directors on
its goals and duties as well as the officers‘ individual roles. If the corporation owns any
subsidiaries, the Corporate Secretary will often counsel the board on how to manage and
govern them.
Trainer: When new board members are brought on to a corporation‘s Board of Directors, it
is the Corporate Secretary who is tasked with overseeing their orientation, training and
briefings.
compliance with the provisions of the Companies Act such as taxation laws, shareholder‘s rights,
business structure, statutory laws, industrial and economics laws applicable to the company namely;
1. Ensures effective and efficient implementation and execution of the management policies
decided by the Board.
2. Acts as a communicating channel between the top management i.e. board and the executives
and coordinates the actions of the executives according to the directions given by the Board.
3. Ensures the company works in accordance with the rules and regulations of the company‘s
policy.
4. Ensures corporate governance norms are being complied with.
5. Formulates decisions on which the structure of the company administration is constructed.
6. Act as a secretary to the audit committee; ensure compliance with statutory filing
requirements.
7. Ensures compliance with listing agreements and responsible for monitoring the transfer of
shares and reporting them to the Board in its meeting.
8. Identify strengths and weaknesses of the functional executives and can apply them to the
benefit of the company.
9. Arrange and manage the process of conducting the Annual General or Extra Ordinary
General meetings and advise the matter of concerns to be raised at the board meetings for
shareholder‘s support and vote.
Stay up to date with the latest trends and learn new skills;
Improve their performance at work;
Boost their self-confidence;
Enhance their professional reputation and future job prospects;
Obtain concrete proof of their professionalism and commitment.
Formal CPD: This type of CPD involves active and structured learning that is usually done
outside the organisation for which you work. Formal CPD usually consists of more than one
professional, however in some cases it could just involve a single professional. Some
activities in this form of structured learning include:
o Offline and online training programmes;
o Learning-focused seminars and conferences;
o Workshops and events;
o Lectures.
Informal CPD: Informal CPD is also known as self-directed learning, in which the
professionals carry out development activities according to their own choice and without a
structured syllabus. This form of learning usually consists of:
o Studying publications written by industry experts;
o Perusing relevant case studies and articles;
o Listening to industry-specific podcasts and following industry-specific news;
o Studying and revising for professional exams.
―Education is not the learning of facts, but the training of the mind to think‖ – Albert Einstein.
In order to improve their skills and knowledge while working, professionals usually opt for
continuous professional development programmes. This is because at this level, they have already
earned academic qualifications and are now working in the industry of their choice. CDP helps
business professionals learn in a structured and practical format that boosts their overall skills and
knowledge. It also helps them ascertain the knowledge and skills they need to obtain within a short
time period, so the improvement can be recognisable.
Continuous professional development programmes provide two-fold benefits — for the learner and
for the employer. Let‘s take a look at the benefits of CPD for the learner:
A company can only bring in these benefits if it supports the professional development of its
employees.
If you are a working professional who wants to keep up with the changes in your field, taking up a
continuous professional development course could help you revitalise your career and improve
future employment prospects. London School of Business and Finance offers a variety of continuous
professional development courses that are suited to a number of industries.
Under section 9 the Company Secretaries Act, the Council of the Institute is mandated to manage
the affairs of the Institute and discharge the functions assigned to it under the Act. The Council has
authority to exercise disciplinary powers by instituting inquiry into cases where it is prima facie of
the opinion that a member is guilty of professional or other misconduct.
The Act and Regulations of the Company Secretaries Regulations lay down the procedure to be
followed in an enquiry to know that for the purpose of disciplinary proceedings, 'member of the
Institute' includes a person who was a member of the Institute on the date of the alleged misconduct
although he has ceased to be a member at the time of enquiry.
(1) allows any person to practice in his name as a Company Secretary unless such person is also
a Company Secretary in practice and is in partnership with or employed by him;
(2) pays or allows or agrees to pay or allow, directly or indirectly, any share, commission or
brokerage in the fees or profits of his professional business, to any person other than a member of
the Institute or a partner or a retired partner or the legal representative of a deceased partner, or a
member of any other professional body or with such other persons having such qualifications as
may be prescribed for the purpose of rendering such professional services from time to time in or
outside India.
Explanation. – In this item, ―partner‖ includes a person residing outside India with whom a
Company Secretary in practice has entered into partnership which is not in contravention of item (4)
of this Part;
(3) accepts or agrees to accept any part of the profits of the professional work of a person who is
not a member of the Institute:
Provided that nothing herein contained shall be construed as prohibiting a member from
entering into profit sharing or other similar arrangements, including receiving any share commission
or brokerage in the fees, with a member of such professional body or other person having
qualifications, as is referred to in item (2) of this part;
(4) enters into partnership, in or outside India, with any person other than a Company Secretary
in practice or such other person who is a member of any other professional body having such
qualifications as may be prescribed, including a resident who but for his residence abroad would be
entitled to be registered as a member under clause (e) of sub-section (1) of section 4 or whose
qualifications are recognized by the Central Government or the Council for the purpose of
permitting such partnerships;
(5) secures, either through the services of a person who is not an employee of such company
secretary or who is not his partner or by means which are not open to a Company Secretary, any
professional business:
(i) any company secretary from applying or requesting for or inviting or securing
professional work from another company secretary in practice; or
(ii) a member from responding to tenders or enquiries issued by various users of professional
services or organizations from time to time and securing professional work as a consequence;
(7) advertises his professional attainments or services, or uses any designation or expressions
other than Company Secretary on professional documents, visiting cards, letterheads or sign boards,
unless it be a degree of a University established by law in India or recognized by the Central
Government or a title indicating membership of the Institute of Company Secretaries of India or of
any other institution that has been recognized by the Central Government or may be recognized by
the Council:
(8) accepts a position as a Company Secretary in practice previously held by another Company
Secretary in practice without first communicating with him in writing;
(9) charges or offers to charge, accepts or offers to accept, in respect of any professional
employment, fees which are based on a percentage of profits or which are contingent upon the
findings, or result of such employment, except as permitted under any regulation made under this
Act;
(10) engages in any business or occupation other than the profession of Company Secretary unless
permitted by the Council so to engage:
Provided that nothing contained herein shall disentitle a Company Secretary from being a
director of a company except as provided in the Companies Act, 1956;
(11) allows a person not being a member of the Institute in practice, or a member not being his
partner to sign on his behalf or on behalf of his firm, anything which he is required to certify as a
Company Secretary, or any other statements relating thereto.
CHAPTER 3
Governance standards and guidelines
3.1 GS 001: General Meetings
The General Meeting is the Company's highest decision-making body, at which the shareholders
exercise their voting rights. At the General Meeting decisions are taken regarding matters such as
the annual accounts, dividend, election of the Board of Directors and auditor and remuneration to
Board members and auditor
Board meetings may take place in-person or over a virtual board meeting. Today, as organizations
gradually return to headquarters and offices, an increasing number of board meetings are taking
place over video conferencing equipment or meeting room systems, since the technology delivers
incredible clarity and makes the meeting more impactful for everyone involved. As you can
imagine, nonverbal communication is incredibly important in these types of meetings.
Meeting minutes are commonly used during shareholders' and directors' meetings of corporations.
These minutes record what is happening during the meeting, such as any decisions related to
financial, tax, or legal requirements. Additionally, the meeting minutes should include any votes that
may have been taken during the meeting that disapprove or approve decisions. The minutes are the
legal and official record of the board of directors meeting.
These minutes may include:
Meeting minutes should be complete, accurate, and clear with detailed information about the
business transactions that took place during the meeting. The wording should unambiguous and
simple to understand. Minutes are considered to be legal evidence of any facts presented and are
presumed to be accurate from a legal standpoint. The document should contain plenty of detail,
ensuring that they are accurate and useful if they need to be used as evidence or for reference of any
actions taken, particularly by the directors who are responsible for fulfilling certain fiduciary tasks.
When recording meeting minutes, make sure to include a record of whether anyone introduced a
resolution or motion as well as any meeting participant(s) who seconded the resolution or motion.
Any votes taken during the meeting should be noted. It's important for the person taking the notes
during the meeting to keep the information general and focused on any actions being taken, rather
than writing any specific information or quotes. Maintaining accurate records is crucial for
shareholders and directors of corporations.
In most cases, the meeting minutes, also called minutes of the meeting, will be distributed to all
directors and/or shareholders following the meeting. Since meeting minutes carry so much legal
weight, all organizations must have policies in place to record minutes during every meeting. The
minutes should be recorded accurately and in a way that accurately reflects the actions and wishes of
the members of the board of directors. Any language that could later be used against the company
should not be included in the minutes.
(5) Anything that may be done by ordinary resolution may also be done by special
resolution if the company's so provide.
(2) A written resolution is passed by a majority of not less than seventy-five percent if it is
passed by members representing not less than seventy-five percent of the total voting rights
of eligible members (see Division 2).
(4) A resolution passed at a meeting on a show of hands is passed by a majority of not less
than seventy-five percent if it is passed by not less than seventy-five percent of— (a) the
members who, being entitled to do so, vote in person on the resolution; and (b) the persons
who vote on the resolution as duly appointed proxies of members entitled to vote on it.
(5) A resolution passed on a poll taken at a meeting is passed by a majority of not less than
seventy-five percent if it is passed by members representing not less than seventy-five
percent of the total voting rights of the members who (being entitled to do so) vote in
person or by proxy on the resolution.
(6) If a resolution is passed at a meeting, the resolution is a special resolution only if the
notice of the meeting— (a) included the text of the resolution; and (b) specified an
intention to propose the resolution as a special resolution, but if the notice of the meeting
specified such an intention, the resolution may be passed only as a special resolution.
Board papers are critical part of the governance process and are used to describe the business items
for a board meeting.
This document focuses on decision papers, but some of the same principles can be applied to other
types of board papers.
1. Board resolution. The resolution you are asking the board to pass (this is the decision you
would like them to make). Officially this is a draft only, but should be written in a way that it
can be accepted as it is by the Board. An example is: ―The Board of Sports Organisation
resolves to approve the construction of a new sporting facility at 123 The Place, New Town
for the purposes of playing sport at an estimated cost of $500,000.‖
2. Executive summary. The executive summary should specify the purpose of the Board paper
- information only, discussion or seeking a decision and specify the recommendation. The
executive summary should be no more than a single paragraph of 4 – 5 lines.
3. Recommendation. As the writer of a Board Paper, it is important you provide a very clear
and concise recommendation to the Board. The recommendation should include:
- The recommendation you are making to the Board, essentially that they pass the
resolution ( make the decision)
- The reason why the Board should accept the recommendation
- Summary of alternatives (where relevant), and therefore why the recommendation is
the best option.
4. Background. The background section should provide enough information to enable a Board
member to understand the resolution and to form an opinion on the correct outcome. Board
members do not normally work in the organisation on a day-to-day basis and therefore their
knowledge of the detailed operation needs to be considered.
The background should also indicate if there are previous Board Papers on similar subjects
that Board members can refer to.
If there is more background information than can fit within approximately one page, the
information should be summarised in this section and provided as appendices to the Board
paper.
5. Issues and Risks. Issues are any general factors that will affect the proposal that the Board
should be aware of in making their decision. For example, in deciding to build a new facility
an issue may be that the City Council has not approved the car parking area as planned.
Risks, unlike issues are factors that MAY occur and MAY have an impact on the intended
outcome. Risks if they do occur may have a significant impact and therefore considerable
thought should be put into identifying the possible risks and how best to manage these.
Consultation. The consultation section should include details of who has been involved in
developing the Board paper. This will include other people from within your organisation
and may include external people used as advisers. The consultation section should provide
the Board with assurance that all key stakeholders have been involved in the development of
the Board paper.
Other elements that could be included, depending on the decision required are:
1. Financial summary. A financial summary is required if the decision will have any financial
impact on the organisation.
Ideally, your organisation will have a standard way to summarise financial information.
The most common is a profit and loss statement. This is useful if the decision is likely to
impact the income you receive or your expenses. For example, changing membership fees,
taking part in a new competition, or securing a new sponsor.
If the decision requires a significant capital investment then it may be necessary to identify
both profit and loss impact and the cash flow impact (the actual money you spend). There
are a number of methods for identifying the cash flow impact based on considering the
length of time until the money invested is returned to the organisation. These include cost
benefit analysis, net present value and internal rate of return. The following link provides
more information and guidance on these terms
1. Include managers and other key people in your organisation in the development of the Board
paper. This will ensure you have identified the widest scope of the decision and can
confidently present all the required information to the Board.
2. Consider informal discussions with some of the Board members while developing the Board
paper. This will help to ensure you capture the information the Board will require and give
those spoken to an opportunity BEFORE the Board meeting to consider their views. If the
decision is going to be complex for the Board, discussions prior to the Board meeting can be
invaluable.
Depending on the Board process, it may be necessary to provide a presentation to the Board as well
as the written Board paper. If this is the case the Board paper needs to stand alone as a document
with all the information necessary for the Board to make a decision. The presentation is only to
provide an opportunity to present a summary of the information and respond to questions. You
should not include any new factual information in the presentation, as some Board members may
not be able to attend the presentation and the Board paper is an official document of record for the
organisation.
When you have completed your Board Paper ask yourself the following questions:
The Companies Act 2006, as amended by section 94 and schedule 5 of the Small Business,
Enterprise & Employment Act 2015, also allows private companies to keep their statutory registers
at Companies House.
Company records are generally taken to mean a company's statutory registers as well as additional
company records. A non-exhaustive list may include:
Statutory registers - register of members, directors, directors' residential addresses, secretaries (if
applicable) and people with significant control (PSCs).
Thereafter, the company has to file annual returns every other one year. Returns are filed by filling
out a Form 1.Annual return form. The form should then be certified by the company secretary and
uploaded to ecitizen.
1. The situation of the registered office of the company and the company‘s registered postal
address;
2. If the register of members is, under the provisions of the Companies Act, kept elsewhere
than at the registered office of the company, the address of the place where it is kept;
3. If any register of holders of debentures of the company or part of any such register is, under
the provisions of the Companies Act, kept elsewhere than at the registered office of the
company, the address of the place where it is kept;
4. A summary, distinguishing between shares issued for cash and shares issued as fully or
partly paid up otherwise than in cash, specifying the following particulars—
5. The amount of the share capital of the company and the number of shares into which it is
divided;
6. The number of shares taken from the commencement of the company up to the date of the
return;
7. The amount called up on each share;
8. The total amount of calls received;
9. The total amount of calls unpaid;
10. The total amount of the sums (if any) paid by way of commission in respect of any shares or
debentures;
11. The discount allowed on the issue of any shares issued at a discount or so much of that
discount as has not been written off at the date on which the return is made;
12. The total amount of the sums (if any) allowed by way of discount in respect of any
debentures since the date of the last return;
13. The total number of shares forfeited;
14. The total amount of shares for which share warrants are outstanding at the date of the return
and of share warrants issued and surrendered respectively since the date of the last return,
and the number of shares comprised in each warrant.
15. Particulars of the total amount of the indebtedness of the company as at the date of this
return in respect of all mortgages and charges which are required to be registered with the
registrar under the Companies Act.
16. A list:
17. Containing the names and postal addresses of all persons who, on the fourteenth day after the
company‘s annual general meeting for the year, are members of the company, and of persons
who have ceased to be members since the date of the last return or, in the case of the first
return, since the incorporation of the company;
18. Stating the number of shares held by each of the existing members at the date of the return,
specifying shares transferred since the date of the last return (or, in the case of the first
return, since the incorporation of the company) by persons who are still members and have
ceased to be members respectively and the dates of registration of the transfers; and
19. If the names aforesaid are not arranged in alphabetical order, having annexed thereto an
index sufficient to enable the name of any person therein to be easily found. [/su_list]
What happens when annual returns are not filed?
Where a company annual returns are not filed in time. The registrar levies and Penalty on the
company. In the event of any changes in the company structure or in case of any business that
requires the registrar to register any external documents like charges, mortgages etc. Where an
annual returns is not filed. The registrar shall not process such requests. The company also risks
being struck off the register of companies.
The intention behind this is to do away with the expensive and cumbersome process of having a
sealing device and red wafers on documents that have to be embossed and then witnessed by two
directors or one director and the company secretary. It also reflects the increasing use of technology
to enable execution of documents. These changes are in line with global practice and make doing
business in Kenya that much easier.
The effect of the amendments in the Amendment Act are that Section 35 of the Companies Act,
Number 17 of 2015 (the Companies Act) now provides that a contract may be made ―by a company
in writing‖ or ―on behalf of a company, by a person acting under its authority, express or implied.‖
Section 37 the Companies Act now specifies that a document is validly executed by a company if it
is signed on behalf of the company:
Though the change in law did not expressly provide for a requirement for companies to alter their
articles of association in order to delete any reference to execution by way of a common seal, our
view is the articles of association cannot supersede the Companies Act and we recommend that
companies should now review their articles of association to conform to the law.
While there are laws that still require or permit the affixing of common seals, such as the Law of
Contract Act (Chapter 23, Laws of Kenya) or various statutory forms under the Land Registration
(General) Regulations, 2017 (pursuant to the Land Registration Act, Number 3 of 2012), we
recommend that using a common seal is no longer required or permitted.
These amendments apply to all forms of companies formed and registered under the Companies
Act, including private companies and public companies. The amendments do not apply to foreign
companies registered under the Companies Act. Registered foreign companies may therefore
continue to execute (including by way of common seals) as provided for in their constitutions
lodged with the Registrar of Companies in Kenya and the laws of their jurisdictions of
incorporation.
Within any organization, a Corporate Secretary‘s duties include ensuring the integrity of the
governance framework, being responsible for the efficient administration of a company, ensuring
compliance with statutory and regulatory requirements and implementing decisions made by the
Board of Directors.
The Institute of Certified Secretaries (ICS) has issued Governance Guideline for Virtual Meetings
(the Guidelines). All virtual meetings must be permitted and organisations must document policies
and procedures guiding virtual meetings. Organizations can opt for hybrid meetings, proxy forms
and circular resolutions where they are unable to hold a fully virtual meeting to allow for full
participation.
The Capital Markets Authority also published a circular on the requirements for convening and
conducting virtual general meetings by issuers of securities to the public (the Circular) pursuant to
Section 11(3) of the Capital Markets Act, Section 280 of the Companies Act and High Court Order
under Miscellaneous Application No. E680 dated and delivered at Nairobi on the 29th April 2020
(where the High Court ordered and directed that issuers be allowed to hold general meetings through
virtual/electronic means or any hybrid means subject to a request for a ―no objection‖ from the
Capital Markets Authority.
CHAPTER 4
Members’ Meetings
4.1 Meaning, nature and scope of members’ meetings
The word ―meeting‖ is not defined anywhere in the Companies Act. Ordinarily, a company may be
defined as gathering, assembling or coming together of two or more persons (by previous notice or
by mutual arrangement) for discussion and transaction of some lawful business.
2. The assembly of persons must be for discussion and transaction of some lawful business.
However, certain events may require shareholders to come together on short notice to deal with an
urgent matter, often concerning company management. The extraordinary general meeting is used as
a way to meet and deal with urgent matters that arise in between the annual shareholders' meetings.
For example if a company has Ordinary A shares and Ordinary B shares and the company wants to
change the voting rights of only the Ordinary B shares, a meeting would be called for the Ordinary
B shareholders. The Ordinary B shareholders could then vote on the variation, but would not be able
to make a decision on other matters relating to the company.
People other than the shareholders are able to attend and speak at a class meeting, such as the
company‘s directors and the company‘s auditors. However, if these parties are not members of the
particular share class, they would not be able to vote at the meeting.
A company having power to borrow money may do so, subject to its memorandum and articles, in
any way in which an individual can borrow. Where it wishes to operate with borrowed money
forming part of its permanent capital structure, the borrowing, however, is usually effected by
means of the issue of debentures or debenture stock.
The term of issue of debentures frequently and trust deeds invariably contain provisions
for meetings of the debenture-holders or debenture stockholders. Such meetings are desirable not
merely for the discussion of the debenture-holders‘ interests, and the ascertainment of their wishes
at a time of crisis or when some modification or rearrangement is proposed by the company, but also
to give effect to those wishes by means of resolutions binding on the whole body of debenture-
holders.
One of the most common purpose for which the machinery of debenture-holders‘ meetings
is employed is to effect a modification or compromise of rights between the company and
the debenture-holders. From time to time occasions arises which call for some renunciation
or modification by the debenture-holders of their strict rights. It may be desirable or expedient, for
example, to release particular property from the specific charge (with or without the substitution of
other property), or to reduce the amount of the debenture interest, or to defer its payment for a time,
or to allow the creation of debentures ranking in priority to the existing debentures, or pari passu
with them ,or to release the company for a limited period from all obligations to set apart profits
towards a sinking fund, or to effect an exchange of debentures for equity or preference shares. To
facilitate this, there is commonly inserted in trust deeds, and often in simple debenture, a clause
enabling a specified majority of the debenture-holders or debenture stockholders, by resolution, to
bind the whole body to a compromise with the company in respect of their rights, or in respect of the
subject-matter of the security. The convenience of such a clause is obvious; in respect of the
subjected-matter of the security. The convenience of such a clause is obvious; or it enables the
company to deal with the debenture, holders as a class, and prevents a few perverse or adversely
interested debenture holders from obstructing a necessary or desirable arrangement.
The Secretary is crucial to the smooth running of a Management Committee meeting. This involves
activities before, during and after Committee meetings.
In order to be effective, the Secretary of the Management Committee should ensure that they carry
out the following activities:
Consult with the Chairperson on the order of business for the meeting, and the way
in which it should be dealt with on the agenda. Decide what business requires
discussion and what requires a decision by the Management Committee;
Ensure that the notice of the meeting is given, that suitable accommodation is
arranged and confirmed, and that copies of the agenda is prepared;
Circulate to all members (a) any papers to be discussed at the upcoming meeting
and (b) a copy of the agenda, minutes of the previous meeting; and
Make sure that any reports or information requested at the last meeting is available
or that there is a good reason why not.
At the Meeting
Arrive in good time before the meeting with the minutes and with all the relevant
correspondence and business matters for that meeting, in good order. Record the
names of those who are present, and convey and record apologies received from
those who are absent;
Read the minutes of the previous meeting, and if they are approved, obtain the
Chairperson's signature on them;
Report on action or matters arising from the previous minutes. Read any important
correspondence that has been received;
Unless there is a Minutes Secretary, take notes of the meeting, recording the key
points and making sure that all decisions and proposals are recorded, as well as the
name of the person or group responsible for carrying them out. Make sure action
points are clear; and
Make sure that the Chairperson is supplied with all the necessary information for
items on the agenda, and remind the Chairperson if an item has been overlooked.
Prepare a draft of the minutes (unless there is a minutes secretary) and consult the
Chairperson and most senior staff member (where relevant) for approval;
Send a reminder notice of each decision requiring action to the relevant person;
this can be done by telephone, or by an ‗action list' with the relevant action for
each person duly marked; and
Promptly send all correspondence as decided by the Management Committee.
Meetings are an important part of the operations of any effective not-for-profit community
organization. Depending on the size and structure of your community organization, there are a
number of different meetings that may be held including:
There are quite a few legal issues that can arise out of the holding of a meeting! It is important for
your organisation to conduct meetings in accordance with the requirements set out in any legislation
(For example, societies must comply with the Societies Act (Cap 311) and companies limited by
guarantee must comply with the Companies Act and any other applicable legislation. For trusts
please refer to the Trust deed and seek legal advice before proceeding. However, for many
organisations, much of the details of the requirements for holding valid meetings will be set out in
an organisation's rules or constitution.)
The main legal issues that can arise around meetings involve:
Proceedings and decisions of board meetings should be minuted and circulated to the whole board
as soon as practicable.
In addition to complying with the legal requirements for running a meeting there are also a number
of 'best practice' procedures that can be followed. These are designed to ensure meetings are run
efficiently and in a way that assists the organisation to achieve its objects!
Holding annual general meetings (AGMs)
This page is about the legal requirements for non-profit organisations which need to hold annual
general meetings. This is a requirement for companies limited by guarantee only. Societies and
trusts are not required by law to hold AGMs.
The information on this website is intended as a guide only and is not legal advice. If you or your
organisation has a specific legal issue you should seek advice before making a decision about what
to do.
to elect new management committee members or directors and possibly new office-bearers
(that is, the president/chairperson, treasurer and secretary) for the following 12 months;
to report to members on the year, including financial performance and events;
to propose and decide on any changes to the organisation‘s constitution; and
to discuss any significant issues relevant to members.
A meeting will only be productive if it is being held for the right reasons. Meetings should only
occur when a group is having discussion, debate and making decisions. If the meeting is just to
share status updates, you‘re better off skipping the meeting and doing the updates in writing.
To structure the meeting properly, only include a small set of people that have a genuine interest and
stake in what you are discussing. If there are too many passive meeting attendees, things get
unproductive quickly.
Meetings need to be kept to a strict time limit to be respectful of every attendee. If the meeting is an
hour, keep it to an hour and structure it accordingly so you can accomplish the agenda in that time
period. Limit the agenda items to align with the allotted time.
5. All other requirements on conduct of meetings must be complied with. That is:
a) A company need to comply with requirements on notice by ensuring that all shareholders entitled
to receive the notice do receive the notice. The notice can be circulated electronically (e-mail,
website, newspaper or other electronic means). The notice to stipulate the aforementioned
information on the manner in which the meeting shall be accessed and conducted. The notice to
advise whether the proceedings of the meeting will be recorded or not, and that attendance at the
meeting would be express permission by the attendees for the recording of their images. The notice
period must be complied with.
b) For a hybrid meeting, the main venue of the physical meeting shall be at the registered office of
the company or a venue determined by the Board of Directors and the following key persons may be
present at the physical location: 5 chairperson, directors, company secretary, external auditor and
executive Management and shall observe any directive or/and protocol on public gatherings as
determined by the Government from time to time. The composition of those attending the meeting
in-person shall be the prerogative of the Chairperson.
c) The quorum requirements of holding a valid meeting must be met. The quorum requirements
must be complied with throughout the meeting.
d) A company must ensure that proper record of the meeting is kept and maintained. Where the
meeting is held on a digital platform, it is encouraged a video/audio record of the meeting be kept.
(5) If a requirement of this section is not complied with, the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.
(6) If, after a company or any of its officers is convicted of an offence under subsection (5), the
company continues to fail to comply with the relevant requirement, the company, and each officer
of the company who is in default, commit a further offence on each day on which the failure
continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each
such offence.
267. Circulation of written resolution proposed by members (1) A company that is required
under section 266 to circulate a resolution shall, subject to section 268, or an application not to
circulate a members' statement, send to every eligible member of the company— (a) a copy of the
resolution; and (b) a copy of any accompanying statement.
(2) The requirement under subsection (1) is subject to sections 268 and 269.
(3) The company shall send or deliver a written resolution to every eligible member— (a) by
sending copies at the same time so far as reasonably practicable to every eligible member in hard
copy form, in electronic form or by posting the resolution on the website of the company;
(b) if it is possible to do so without undue delay—by delivering the same copy to each eligible
member in turn or different copies to each of a number of eligible members in turn; or
(c) by sending copies to some members in accordance with paragraph (a) and delivering a copy or
copies to other members in accordance with paragraph (b).
(4) The company shall send or deliver the copies of the written resolution or, if copies are sent or
delivered to members on different days, the first of those copies not more than twenty-one days after
it receives a request to circulate the resolution.
(5) The company shall attach to, or enclose with, the copy of the resolution that is sent or delivered
to members under this section information specifying— (a) how they are to signify their agreement
(or disagreement) with the resolution; and (b) the deadline, for passing the resolution if it is not to
lapse.
(6) The validity of the resolution, if passed, is not affected by a failure to comply with this section.
(7) If a company fails to comply with a requirement of this section, the company, and each officer of
the company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.
319. (2) The company shall keep the records for at least ten years from the date of the relevant
resolution, meeting or decision.
(3) If a company fails to comply with subsection (1) or (2), the company, and each officer of the
company who is in default, commit an offence and on conviction are each liable to a fine not
exceeding five hundred thousand shillings.
(4) If, after a company or any of its officers is convicted of an offence under subsection (3), the
company continues to fail to comply with subsection (1), the company, and each officer of the
company who is in default, commit a further offence on each day on which the failure continues and
on conviction are each liable to a fine not exceeding fifty thousand shillings for each such offence.
(6) If, after a company or any of its officers is convicted of an offence under subsection (5), the
company continues to fail to comply with subsection (2), or with the relevant request, the company,
and each officer of the company who is in default, commit a further offence on each day on which
the failure continues and on conviction are each liable to a fine not exceeding fifty thousand
shillings for each such offence.
(7) If a company refuses to allow an inspection as requested under subsection (3), or to provide a
copy of a record requested under subsection (4), the Court may, on the application of a person
affected by the refusal, make an order compelling the company to allow an immediate inspection of
the records, or to provide that person with a copy of the requested record.
Present day corporate directors are faced with increasing responsibilities, expectations, and risks.
Over the last twenty years, government standards for board oversight have grown more stringent
than ever as the role of a board of directors evolves.
Ultimately, boards exist to provide strategic oversight for a company and to protect shareholders‘
financial interests.
In order to accomplish those goals, individuals who wish to serve on a board must be willing to take
on the responsibilities expected of a director.
The Board of Directors sets the tone and direction of an organization, thus effective board leadership
and governance is critical in helping to ensure that a civil society organization can operate to its
fullest capacity. Creating an effective board is a continual process that includes recruitment,
engagement and development, as well as striking a balance between providing oversight and support
to the organization‘s leadership.
Given the significant role of the board, it‘s not surprising that many of our partners have asked for
our support in evaluating the role and effectiveness of their board and in helping them to identify
ways to get the most out of their board. In preparation for a workshop with the Kenya Wildlife
Conservancies Association, we developed a list of the 9 primary responsibilities of a board.
Determine mission and strategy. It is the board's responsibility to create and review a
statement of mission and strategy that articulates the organization's goals, and means of
achieving those goals. Boards also provide a mechanism by which constituents, who may
provide the mandate for the organization, have a voice in setting strategy and providing
oversight of programmatic work. Once mission and strategy is determined, it's the board's
role to ensure the organization‘s programs contribute to the laid out strategy. When need for
a change in mission and strategy is identified, the board plays a role in redefining the new
vision.
Select, support and evaluate the CEO. Boards must reach consensus on the CEO's
responsibilities and undertake a careful search to find the most qualified individual for the
position. The board should also develop and maintain a succession plan for replacing an
executive in case of exit. Moreover, the board should ensure that the executive director has
the moral support, as well as the professional skills and training that he or she needs in order
to further the goals of the organization.
Ensure effective planning. Boards must actively participate in an overall planning process in
regards to longer-term strategic planning and annual work planning. The Board should assist
in monitoring the organization‘s performance against planned goals, and adaptively
managing the plan.
Provide oversight of programs and services. The board's responsibility is to determine which
programs are consistent with the organization's mission and monitor their effectiveness,
calling for performance evaluations and improvements as appropriate.
Oversee financial management and protection of assets. The board must assist in developing
and approving an annual budget that supports the organization‘s work plans and ensures that
proper financial controls are in place to protect the assets of the organization. It is the
board‘s responsibility to select an auditor and review and respond to the results of an audit
on an annual or bi-annual basis.
Ensure adequate financial resources. The board has a responsibility to support the executive
team in their efforts to secure adequate resources for the organization to fulfill its mission.
Develop and maintain a competent board. All boards have a responsibility to articulate
qualifications for candidates, assess and maintain desired skill sets on the board, orient new
members, and periodically and comprehensively evaluate their own performance.
Ensure legal and ethical integrity. The board sets the tone of the operations of the
organization, and should articulate the values and principals that set that tone. It is ultimately
responsible for adherence to legal standards and ethical norms.
Enhance the organization's reputation. The board should be ambassadors for the
organization, articulating the importance of the mission and the value of the organization‘
work. The board should work to garner support from the community, including key
stakeholders such as government, like-minded organizations and donors.
Board of Directors can exercise all such powers for which the company is authorised.
Board of Directors can take all actions on matters in which the company has authority.
The Board of Directors shall decide upon the strategic directions for the company‘s activities
and ensure that they are put into practice. Subject to the powers expressly conferred by law
on Shareholders‘ Meetings or the Chairman of the Board of Directors or the Chief Executive
Officer, if the latter‘s duties are not assumed by the Chairman of the Board, and within the
limits of the corporate purpose, it shall deal with all matters relating to the proper
functioning of the company and settle any related decisions through its deliberations. It shall
undertake any checks and verifications that it deems appropriate.
In general, it shall take any decisions and exercise any prerogatives falling within the scope
of its competence by virtue of the laws and regulations in force or these Articles of
Incorporation.
It may decide to create committees in charge of examining questions that it or its Chairman
submits for their opinion.
It shall fix the composition and remit of such committees. It may entrust to one or several of
its members‘ special duties for one or several determined purposes.
Holding Subsequent Board Meetings of the Company. Every company shall hold a minimum
number of four meetings of its Board of directors every year in such a manner that not more than
120 days shall intervene between two consecutive meetings of the Board.
They are held at definite intervals to consider policy issues and major problems
They are usually presided over by an organization‘s chairman or his or her appointee
They must meet the quorum requirements
All directors (even if absent) are bound by collective responsibility to the resolutions of the
board committee
Deliberations and meeting agendas must be recorded in board meeting minutes
They must be recorded in meeting minutes
Meeting agendas are fundamental to the success of a board committee meeting. Usually a one-page
document, the board meeting agenda sets the tone, pace, and content of a board meeting, eliminating
any unwanted surprises.
A well-written meeting agenda should make it clear what will be covered during a board meeting:
Board meeting minutes are prepared as a follow up document that is made available to all relevant
stakeholders.
Statutory requirement - preserve an accurate and official record of decisions made and
actions taken
Meeting minutes also must demonstrate the fiduciary duty of directors, and serve as prima facie
evidence regarding:
Accurate - reflect what happened at the meeting, what decisions were made and who made
them
Accessible - make important information easy to find, easy to understand and easy to use
Uniform in style - use consistent formats, processes and language
1. Proper Authority:
The authority to call a general meeting is the board of directors of the company. The notice of the
meeting should be issued under their authority, granted at a duly constituted meeting of the board or
passing a resolution by circulation. A single director has no power to convene a meeting. The
secretary of the company has no authority to call a general meeting unless the Board resolves and
authorises him to do so.
2. Notice:
Notice to whom? Notice of every general meeting should be given to the following persons:
(ii) Every person entitled to a share in consequence of the death or insolvency of a member.
Deliberate omission to give notice to a single member may invalidate the meeting. However, an
accidental omission to give notice to or non-receipt of it, by a member will not invalidate the
meeting
Length of Notice:
A proper notice in writing to every member of the company is required by law for the holding of
every valid meeting. Notice must be given even though a member has waived his right to have
notice. It must disclose the purpose for which the meeting is called. It must be given at least 21 clear
days before the date of the meeting.
Service of Notice:
Company may serve notice on the members either personally or by prepaid post or by advertisement
in the newspaper. It must be properly addressed. Service of notice‘ by advertisement shall be
deemed to be complete the day when the advertisement appears in the newspaper on both resident
and non-resident members.
Explanatory statement need not be advertised, but the fact that the same has been sent to the
members through post shall be mentioned in the advertisement. In case of joint- holding of shares,
notice to first named shareholder would be sufficient.
When the meeting is adjourned for 30 days or more and the new business is to be transacted at the
adjourned meeting, a fresh notice has to be given.
(i) It should specify the name of the meeting, the place, day and hour of the meeting and the meeting
to be valid must be held at the place and time specified. Annual General Meeting should be held on
a working day during business hours. However, a meeting may continue beyond business hours.
Extraordinary general meeting can be held on any day including a holiday and not necessarily
during working hours.
(ii) It should also specify the nature of the business to be conducted at the meeting.
Agenda:
Agenda gives guidance and information as to the business to be discussed and transacted in the
meeting. It sets out the chronological sequence in which the various items of business shall be taken
up in the meeting for discussion. The sequence should not be changed unless agreed to by the
members present. Routine items should be put first and debatable items later. Similar items should
be placed closer to each other.
Agenda is prepared by the Secretary in consultation with the Chairman or the Managing Director.
Agenda must be clear and complete. A company may be restrained from transacting that business
which is not mentioned in the agenda.
A private company can hold its annual general meeting at any other place if:
(ii) It has fixed the place of the meeting by a resolution agreed by all the members.
4. Quorum:
Minimum number of members required to constitute a valid meeting and to transact business therein
is called ‗quorum‘. No meeting can be valid without quorum. Any resolution passed at a meeting
without quorum shall be invalid.
5. Chairman:
A general meeting of the company is to be presided over by a chairman who regulates and
supervises the proper conduct of the business at a meeting. He decides all incidental questions
arising in the course of the proceedings of the meeting. Chairman should act bonafide and in the best
interest of the company as a whole.
Powers of a Chairman:
1. The chairman has prima facie authority to decide all questions which arise at a meeting and which
require decision at the time.
2. The entry in the minute‘s book of the chairman‘s decision is evidence of the decision of the
meeting.
3. The chairman has a right to decide priority amongst speakers, to demand poll, to exercise casting
vote, to expel an unruly member and he may, with the support of the majority, apply closure to a
discussion after it has been reasonably debated.
4. He can adjourn a meeting when it is impossible, by reason of disorder or other like causes, to
conduct the meeting and complete business.
Casting Vote:
Articles of Association may give an additional or second vote to the chairman of the company, over
and above his right to vote as an ordinary member. In the case of a tie, i.e. equality of votes,
chairman may use the casting vote to decide the matter in one way or the other.
Duties of a Chairman:
The chairman must take care to see that proper discipline is maintained at the meeting, that the
proceedings are conducted in a proper manner, that proper opportunity is given to the members to
express their views, that the voting is fair, and that the proceedings of the meeting are properly and
correctly recorded in the minutes book.
The chairman should act bona fide according to his best ability and judgment and without any
prejudices. He should see that the meeting is duly convened and properly held.
6. Proxy:
The term proxy has two meanings:
(a) A personal representative of the member at a meeting i.e. the person authorised to act or vote for
another at a meeting of the company, and
(b) The instrument by which a person is appointed to act for another at a meeting of the company,
since a representative can be appointed only in writing.
After a proposed resolution has been discussed it is put to vote. Every member has a right to vote on
such resolutions. Shareholders may exercise their voting rights in their best interests with complete
freedom.
Directors, who are interested in the contract, are not counted in determining the presence of the
quorum except in the case of a private company. If all the directors are interested except one, there
can be no quorum and therefore no meeting.
Meeting of the Board of directors in the absence of quorum, unless otherwise provided in the
Articles, shall be adjourned until the same day in the next week, at the same time and place. In case
that day is a public holiday it shall be held on the next succeeding day which is not a public holiday.
(5) Chairman of the Board:
The Board may elect a chairman of its meetings and determine the period for which he is to hold
office. If no such chairman is elected or if at any meeting the chairman is not present within 15
minutes after the time appointed for holding the meeting, the directors present may choose one of
them to be chairman of the meeting.
Once the minutes have been confirmed or approved by the chairman of the meeting concerned, it
will not be possible to have any alteration in the minutes except by a fresh resolution of the meeting
of the board. Since minutes have to be recorded and not signed within 30 days, they may be
confirmed by the chairman of the subsequent meeting.
The idea here is to generate some board goals for the coming year. Remember, these are goals
for the board to accomplish, not for the staff.
Board goals might be things like: development of a comprehensive recruitment, selection and
orientation process for new directors; a training session for all directors in decision-making. In
this step, it is important to generate as many goals as the group is interested in creating. Do not
start discussing, agreeing or disagreeing on the goals at this time. Just generate the list. For this
step, it is important to focus only on the (goals) results or outcomes not the methods, programs,
strategies or tactics that you will use to achieve them.
Putting it all together
After completing all steps, the board can combine the lists. This list will be its work for the year.
At this point it may be necessary to prioritize the list to ensure that the most urgent or necessary
tasks are addressed before less urgent ones. With this list in hand, the board must now decide by
which meeting or timeline each project, goal or task, monitoring and activity should be
completed, reported on, or given time on the regular board meeting agendas. With this
information in hand, the board can now create a calendar for the coming year that shows what is
to be accomplished and by what date; what will be monitored and when; what will be addressed
at the various board meetings; and, the dates of various events in which the board is involved.
CHAPTER 6
Meetings in Company liquidation
6.1 Introduction to members’ and creditors’ voluntary
liquidation
Voluntary liquidation is when a company decides to dissolve itself on its own terms, as approved by
the shareholders of the company. The decision usually occurs when a company decides that it has no
reason for operating anymore, or if it is not feasible to operate anymore. The key factor here is that
the dissolution of the company is not ordered by a court.
Voluntary liquidation allows a company to terminate its operations, sell off assets, and dismantle
its corporate structure while paying back designated creditors based on their seniority.
Voluntary liquidation is initiated by a company‘s shareholders or ownership when they vote for a
resolution to cease further operations. The liquidation can proceed only with the shareholders‘
approval.
A Creditors’ Voluntary Liquidation (CVL) is a formal insolvency procedure which involves the
directors of an insolvent company voluntarily choosing to bring their business to an end, and wind
the company up. Although the process is entered into on a voluntary basis, it often follows the
cumulation of many months of financial distress when the possibility of a successful turnaround has
been extinguished. Even though this is far from an ideal situation, for an insolvent company which
has no viable future as a profitable entity going forwards, voluntary liquidation by way of a CVL
may be the best solution for all concerned.
It becomes a creditor's voluntary liquidation if the directors of the company fail to file a
declaration of solvency with the Registrar of Companies. It is at this meeting that the directors
provide the creditors with the statement of the company's financial position.
The primary legislation governing insolvency in Kenya is the Insolvency Act (No. 18 of 2015),
which regulates insolvency proceedings with regard to both natural and legal persons as well as
unincorporated bodies. The Insolvency Act consolidated the law relating to the insolvency of natural
persons and incorporated and unincorporated bodies as some aspects were previously covered by the
old and repealed Companies Act. The Insolvency Act is supplemented by the Insolvency
Regulations of 2016 that give full effect to the Insolvency Act.
The Companies Act (No. 17 of 2015) is the primary statute guiding the restructuring of a company,
dealing with the alteration and consolidation of a company‘s share capital as well as regulating
compromises, arrangements, reconstructions and amalgamations. Finally, mergers and divisions of
public companies are also regulated under the Companies Act.
The main insolvency proceeding in Kenya is liquidation, which may be initiated voluntarily or
through the courts. During the liquidation process, all the assets and liabilities of the company are
identified as are all the creditors of the company for the purpose of realizing the assets of the
company. Liquidation culminates in the winding up of the company.
The liquidation process as an insolvency proceeding may be initiated in the following ways:
This process is initiated through a special resolution by the company to liquidate the company
voluntarily. It becomes a creditor‘s voluntary liquidation if the directors of the company fail to file a
declaration of solvency with the Registrar of Companies.
The members of the company must also convene a meeting of all the company‘s creditors not more
than 14 days after the date scheduled for the company meeting to propose a resolution to voluntarily
liquidate the company. It is at this meeting that the directors provide the creditors with the statement
of the company‘s financial position. The effect of this provision is that the company intending to
undergo a creditor‘s voluntary liquidation must issue notices for its members‘ meeting and its
creditors‘ meeting almost simultaneously.
Compulsory liquidation:
The Insolvency Act allows creditors and contributories of the company to petition the High Court
for a liquidation order appointing a liquidator to liquidate the company. The Insolvency Act
provides for eight circumstances when a company may be liquidated by the court, including a
company being unable to pay its debts within 21 days of a statutory demand being issued. The
petition may be made by any of the following persons: the company or its directors, a creditor, a
contributor to the company, a provisional liquidator or administrator of the company, a duly
appointed liquidator or the attorney general in certain circumstances.
It is vital to note that this process is not exclusive to a creditor‘s voluntary liquidation. Other
creditors or contributories may apply to court whilst such a voluntary liquidation is ongoing.
As an alternative to liquidation the following processes are available:
a. Administration:
Administration is intended to maintain the company as a going concern or achieve a better outcome
for its creditors than would be achieved through liquidation or for the realisation of the company‘s
assets for the creditors. During administration, the company is protected from any adverse action by
creditors seeking to liquidate the company.
Through an application to the court and may only be done if the company is or is likely to become
unable to pay its debts and the administration has real prospects of achieving its objectives.
Holders of floating charges may appoint an administrator if such a charge empowers them to
appoint an administrator of the company. To do so, they must first notify the High Court (by a
notice of appointment, a statutory declaration and an affidavit of statement of facts), the Official
Receiver, the company‘s directors, contributories and creditors.
A company or its directors may initiate administration of a company out of court, through lodging
with the High Court a notice of its intention to appoint an administrator, a statutory declaration and
evidence of the administrator‘s consent to act. The company or its directors must also notify the
Official Receiver, any holder of a floating charge and the company‘s directors, contributories and
creditors.
b. Receivership:
Creditors may appoint an independent insolvency practitioner to act as a fiduciary for the company
to realise the company‘s assets and satisfy the outstanding debt of the creditor on whose behalf they
have been appointed. The appointment of a receiver is either a contractual right enshrined in a
contract empowering his/her appointment or statutory, where a statute provides for the appointment
of a receiver. It is important to note that despite the receiver‘s duty to their appointing creditor, they
are still accountable to the company and its directors.
These are agreements entered into between creditors and a debtor company to settle the company‘s
debt in a specified period and a specified manner.
To initiate this, a director, liquidator or administrator may propose a Company Voluntary
Arrangement to the company and its creditors. The proposal should make provision for an
insolvency practitioner as a provisional supervisor to oversee implementation of the voluntary
arrangement. If the proposal was made by the directors of the company, the provisional supervisor
should report to the High Court on whether the proposal has reasonable prospects of being approved
and implemented by the creditors. The proposal must then be approved by a majority of the
members of the company and each class of creditors.
d. Schemes of Arrangement:
Schemes of Arrangement allow a company to enter into an agreement with its creditors or members
to restructure the company or businesses. This may be a compromise or arrangement with creditors
that results in a variation of rights of creditors and allows a company in financial distress to avoid
formal insolvency proceedings. It may be initiated by directors or members of the company,
creditors, a liquidator or an administrator. The Scheme of Arrangement must be sanctioned by the
High Court as it binds all creditors or members.
The following processes exist under the Companies Act to initiate restructuring proceedings:
A company may opt to change its share capital structure for strategic reasons, including for raising
funds or financing a project. The Companies Act provides for four ways for a company to
reorganise its share capital:
Increasing its share capital: new shares are issued, increasing its share capital
Reducing its share capital: this may be achieved by reducing the number of shares or the
nominal value of the shares
Share splits: this involves subdividing existing shares into two or more shares of smaller
nominal amounts than the existing shares.
Consolidating existing shares into larger nominal amounts than the existing shares.
Share reorganisations (with the exception of reduction of share capital) must be authorised through
an ordinary resolution of the company‘s members unless a higher threshold is required in the
company‘s articles. Following the passing of the resolution, the company must lodge the resolution
with the Registrar of Companies within 14 days for registration.
For a reduction of share capital, a special resolution of the members is required. For public
companies, such resolution must be passed at a meeting convened for this purpose. Private
companies may opt to pass a written resolution. In both cases, the resolution is to be sent out to
members 21 days prior to the meeting (for a public company, a 14-day prior notice suffices if the
meeting at which the resolution is to be passed is not an annual general meeting). Before a share
capital reduction is registered with the Registrar of Companies, the company must apply to court to
confirm the proposed reduction by attaching the resolution and the proposed statement of capital. If
the proposed share reduction has the effect of diminishing liability in respect of unpaid share capital
or payment of any paid-up share capital to a shareholder, members or creditors are entitled to object
to such reduction. Therefore, before the court makes an order, confirmation will be sought that the
company‘s creditors and members have consented to the reduction or that their debt or claim has
been discharged or settled.
The court has the discretion to order the company to disclose the share reduction as it may deem
necessary. The company will then be required to file the court order and the court-approved
statement of share capital with the Registrar of Companies for registration. The company may be
required by the court to publish reasons for the reduction or such other information it considers
necessary in this connection. The Registrar of Companies will then certify the registration of the
order and statement of capital and authenticate the same with the official seal formalising
completion of the process.
Private companies may, as distinct from that stated above, opt to reduce share capital without
involving the court in any way at all. This can be achieved by all the directors of the company
making a statement confirming the solvency of the company not more than 14 days before the date
that a special resolution on the reduction is passed (either at a duly convened meeting of the
members or by way of written resolution both on 21 day prior notice). Within 14 days of the passing
of such resolution, the Company must lodge with the Registrar of Companies a copy of the
resolution, alongside a statement of its directors confirming the solvency statement was made within
the stipulated time together with a statement of capital that (i) attaches a copy of the solvency
statement; (ii) sets out the total number and the aggregate nominal value of shares of the company;
in the case of classes of shares (iii) sets out their particular rights; their total number and aggregate
nominal value; (iv) evidences delivery within the stipulated time of the solvency statement to the
members and (v) sets out the amount paid up and the amount (if any) unpaid on the shares or in the
form of a premium. The resolution takes effect upon registration of these documents by the
Registrar of Companies.
b. Compromise or arrangement:
Where a compromise or arrangement has been arrived at between a company, its creditors (or class
of creditors), or its members, an application must be made to court. This is made either by the
company, any creditor or member of the company or, if in liquidation or under administration, by
the liquidator or administrator. The court may then order the compromise to be effected in line with
the proposal or make amendments as it deems fit. Upon issuance of the order, a copy must be lodged
with the Registrar of Companies for due registration.
c. Merger:
In the case of mergers, the directors of the two companies must prepare and adopt draft proposed
terms of the merger. A special resolution must then be passed by both parties to commence the
process. The Companies Act requires an expert to be appointed by the merging companies to
prepare a written report on the terms. The proposal must then be lodged with the Registrar for
registration with notification given to the Competition Authority of Kenya.
The Competition Act (No. 12 of 2010) requires notification to the Competition Authority of Kenya
regarding a proposed merger. The Authority may accept, reject or require further information on the
merger based on the documents supporting the application for approval.
d. Division of companies
Division of companies may be carried out where two or more companies wish to divide their assets
and liabilities among themselves.
The division of a company is initiated by the directors of the company seeking division, who
prepare a draft proposal of terms for the scheme. This is then approved by a special resolution prior
to registration with the Registrar of Companies.
For public companies, a special resolution of the members is required before lodging the draft terms
with the Registrar of Companies. To protect the holders of securities on the assets of the company
and ensure their interests are protected under the division scheme, the directors also prepare an
explanatory report on the division and procure an expert to review all the company‘s documents and
intended division for the preparation of an expert‘s report. In the event that the division is likely to
cause material changes to the assets of the company, the directors of the company will be required to
report on the same.
The Insolvency Act defines when a company may be said to be unable to pay its debts as:
If a company is unable to pay a debt of more than KES 100,000 (approx. USD 1,000) within
21 days after being served with a statutory demand.
If execution issued on a judgment, decree or order of any court in favour of a creditor of the
company is returned unsatisfied in whole or in part.
If it is proved to the satisfaction of the court that the company is unable to pay its debts as
they fall due.
If it is proved to the satisfaction of the court that the value of the company‘s assets is less
than the amount of its liabilities (including its contingent and prospective liabilities).
While the insolvency of a company is not prohibited, a number of actions under the Insolvency Act
may be initiated by a number of parties should a company fall within these categories.
If shareholders resolve by a special resolution to have the Court liquidate the company;
If the company has not commenced active business for a year after it is incorporated or it has
suspended active business for a year;
The company
Directors
Contributories (whom are mandated to contribute to the liabilities of the company upon a
call being made on them).
The Attorney General after an investigation into the company‘s affairs raises the inference
that the company should be liquidated
The court shall hold a hearing on the application for liquidation. The court may dismiss the
application to wind up the business if there is insufficient evidence to mandate the liquidation or it
may issue an interim liquidation order pending a final order. The court may also adjourn the hearing
of the liquidation application to give the company time to finalise a creditors‘ arrangement.
This is a very general overview of certain provisions of the Kenyan Insolvency Act 2015 and does
not constitute legal advice. Please contact one of our Partners if you wish to discuss any aspect of
Kenyan insolvency legislation.
CHAPTER 7
Meetings of County and National Assembly
7.1 Standing orders
In Exercise of the powers conferred by Article 124 of the Constitution of the Republic of Kenya, the
National Assembly, by resolution passed on 9th January, 2013, adopted these Standing Orders and
the Houses of Parliament (Joint Sittings) Rules.
(1) Each House of Parliament may establish committees, and shall make Standing Orders for the
orderly conduct of its proceedings, including the proceedings of its committees.
(2) Parliament may establish joint committees consisting of members of both Houses and may
jointly regulate the procedure of those committees.
(3) The proceedings of either House are not invalid just because of-
(a) a vacancy in its membership; or
(b) the presence or participation of any person not entitled to be present at, or to participate in,
the proceedings of the House.
(4) When a House of Parliament considers any appointment for which its approval is required under
this Constitution or an Act of Parliament--
(a) the appointment shall be considered by a committee of the relevant House;
(b) the committee‘s recommendation shall be tabled in the House for approval; and
(c) the proceedings of the committee and the House shall be in public.
5. All other requirements on conduct of meetings must be complied with. That is:
a) A company need to comply with requirements on notice by ensuring that all shareholders entitled
to receive the notice do receive the notice. The notice can be circulated electronically (e-mail,
website, newspaper or other electronic means). The notice to stipulate the aforementioned
information on the manner in which the meeting shall be accessed and conducted. The notice to
advise whether the proceedings of the meeting will be recorded or not, and that attendance at the
meeting would be express permission by the attendees for the recording of their images. The notice
period must be complied with.
b) For a hybrid meeting, the main venue of the physical meeting shall be at the registered office of
the company or a venue determined by the Board of Directors and the following key persons may be
present at the physical location: 5 chairperson, directors, company secretary, external auditor and
executive Management and shall observe any directive or/and protocol on public gatherings as
determined by the Government from time to time. The composition of those attending the meeting
in-person shall be the prerogative of the Chairperson.
c) The quorum requirements of holding a valid meeting must be met. The quorum requirements
must be complied with throughout the meeting.
d) A company must ensure that proper record of the meeting is kept and maintained. Where the
meeting is held on a digital platform, it is encouraged a video/audio record of the meeting be kept.
(3) Pursuant to Article 74 of the Constitution, no person shall assume or perform any functions of
the office of a Member before taking and subscribing to the Oath or Affirmation of Office provided
for under paragraph (1)
(4) When the Clerk is administering the Oath or Affirmation of Office to Members and before the
Clerk has administered the Oath or Affirmation of Office to the Speaker, any question arising in the
House shall be determined by the Clerk who shall, during that period, exercise the powers of the
Speaker.
(5) At any other time, the Oath or Affirmation of Office shall be administered by the Speaker
immediately after Prayers.
(6) When a Member first attends to take his or her seat after the first sitting of the House, the
Member shall, before taking his or her seat be escorted to the Table by two Members and be
presented by them to the Speaker who shall then administer to the Member the Oath or Affirmation
of Office.
(7) Notwithstanding Standing Order 30(Hours of Sitting), on the day when the election of the
Speaker is to be conducted after a general election the sitting of the House shall commence at 9.00
am.
Nomination of candidates
5.
(1) Upon the President notifying the place and date for the first sitting of a new Assembly pursuant
to Article 126(2) of the Constitution, the Clerk shall by notice in the Gazette notify that fact and
invite interested persons to submit their nomination papers for election to the office of Speaker.
(2) The names of candidates for election to the office of Speaker shall be entered upon nomination
papers obtained from the Clerk and handed back to the Clerk, at least forty-eight hours before the
time appointed at which the House is to meet to elect a Speaker
(3) The nomination papers of a candidate shall be accompanied by the names and signatures of
twenty Members who support the candidate and a declaration by them that the candidate is qualified
to be elected as a Member of Parliament under Article 99 of the Constitution and is willing to serve
as Speaker of the National Assembly.
(4) The Clerk shall maintain a register in which shall be shown the date and time when each
candidate‘s nomination papers were received and shall ascertain that every such candidate for
election to the office of Speaker is qualified to be elected as such under Article 106 of the
Constitution.
(5) Immediately upon the close of the nomination period provided for in paragraph (2), the Clerk
shall- (a) publicize and make available to all Members, a list showing all qualified candidates; and
(b) make available to all Members, copies of the curriculum vitae of the qualified candidates. (6)
The Clerk shall, at least two hours before the meeting of the Assembly, prepare ballot papers upon
which shall be shown the names of all candidates validly nominated under paragraph (5) of this
Standing Order.
Secret ballot
6.
(1) The election of the Speaker shall be by secret ballot.
(2) The Clerk shall, at the commencement of each ballot, cause the ballot box, empty and unlocked,
to be displayed to the House and shall, in the presence of the House, lock the box, which shall
thereafter be kept in the full view of the House until the conclusion of the ballot.
(3) The Clerk shall issue not more than one ballot paper to each Member who comes to the Table to
obtain it and each Member who wishes to vote shall proceed to a booth or designated area provided
by the Clerk for that purpose and located next to and within reasonable distance of the ballot box
and shall, while there, mark the ballot paper by placing a mark in the space opposite the name of the
candidate for whom the Member wishes to vote, fold the marked ballot paper before leaving the
booth or area and place the folded ballot paper in the ballot box.
(4) A Member who, before the conclusion of a ballot has marked a paper in error may, by returning
it to the Clerk, obtain another in its place and the Clerk shall immediately cancel and destroy the
paper so returned.
(5) The Clerk shall make such arrangements as may be necessary to enable any Member with
disability to vote.
(6) When it appears to the Clerk that all Members who are present and who wish to vote have placed
their ballot papers in the ballot box, the Clerk shall unlock the box, examine the ballot papers and,
having rejected those unmarked or spoilt, report the result of the ballot; and no Member who has not
already recorded his or her vote shall be entitled to do so after the Clerk has unlocked the ballot box.
(7) A ballot paper is spoilt, if in the Clerk‘s opinion, it does not identify the candidate purported to
be selected by the member voting.
Election threshold
7.
(1) A person shall not be elected as Speaker, unless supported in a ballot by the votes of twothirds of
all Members.
(2) If no candidate is supported by the votes of two-thirds of all Members, the candidate or
candidates who received the highest number of votes in the ballot referred to in paragraph (1) and
the candidate or candidates who in that ballot received the next highest number of votes shall alone
stand for election in a further ballot and the candidate who receives the highest number of votes in
the further ballot shall be elected Speaker.
Withdrawal of candidate
8.
A candidate may, by written notice to the Clerk, withdraw his or her name before a ballot is started,
and in the event of such withdrawal, the Clerk shall cross-out the name of that candidate off any
ballot papers issued for that or any subsequent ballot.
Equality of votes 9.
If, in the further ballot referred to in Standing Order 7 (Election threshold), more than one candidate
receives the highest number of votes, the ballot shall again be taken, and if there is an equality of the
highest number of votes a further ballot shall be take until one candidate obtains more votes than the
other or others.
(4) A Member giving notice of a Motion approved by the Speaker shall state its terms to the House
and whether the original copy received by the Clerk has been certified by a party leader orparty
whip for sponsorship by the Member‘s party.
(6) Where the presiding officer has an original vote, the presiding officer shall cast his or her vote
from the Chair.
(7) Any Member present in the House but who shall not have voted at the expiry of five minutes or
after the announcing of the results, whichever is earlier, shall forfeit the right to vote and shall be
deemed to have abstained from voting.
(2) The Speaker shall direct a division to be taken in every instance where the Constitution lays
down that a fixed majority is necessary to decide any question.
(1) All proceedings of the House shall be conducted in Kiswahili, English or in Kenyan Sign
Language.
(2) A Member who begins a speech in any of the languages provided for under paragraph (1) shall
continue in the same language until the conclusion of the Member‘s speech.
(1) It shall be out of order to anticipate the debate of a Bill which has been published as such in the
Gazette by discussion upon a substantive Motion or an amendment, or by raising the subject matter
of the Bill upon a Motion for the adjournment of the House.
(2) It shall be out of order to anticipate the debate of a Motion of which notice has been given by
discussion upon a substantive Motion or an amendment, or by raising the same subject matter upon
a Motion of the adjournment of the House. (3) In determining whether a debate is out of order on the
grounds of anticipation, regard shall be had to the probability of the matter anticipated being brought
before the House within a reasonable time.
(1) Neither the personal conduct of the President, nor the conduct of the Speaker or of any judge,
nor the judicial conduct of any other person performing judicial functions, nor any conduct of the
Head of State or Government or the representative in Kenya of any friendly country or the conduct
of the holder of an office whose removal from such office is dependent upon a decision of the House
shall be referred to adversely, except upon a specific substantive
(1) Subject to paragraph (5), no Member shall refer to any particular matter which is sub judice or
which, by the operation of any written law, is secret. (2) A matter shall be considered to be sub
judice when it refers to active criminal or civil proceedings and the discussion of such matter is
likely to prejudice its fair determination.
(3) In determining whether a criminal or civil proceeding is active, the following shall apply- (a)
criminal proceedings shall be deemed to be active when a charge has been made or a summons to
appear has been issued;
(b) criminal proceedings shall be deemed to have ceased to be active when they are concluded by
verdict and sentence or discontinuance;
(c) civil proceedings shall be deemed to be active when arrangements for hearing, such as setting
down a case for trial, have been made, until the proceedings
(3) A Motion under paragraph (2) shall not be made in the course of the debate to which it refers
unless it is moved after the adjournment of such debate and before the debate is resumed. (4) No
Member may speak in a debate on Bills, Sessional Papers, Motions or Reports of Committees for
more than twenty minutes without the leave of the Speaker but the Leader of Majority party and the
Leader of Minority party may each speak for a maximum of 60 minutes.
(2) Every Member shall have an opportunity to correct the draft verbatim report of his or her
contribution, but not so as to alter the substance of what the Member actually said.
(3) Where there is doubt as to the content of the verbatim record of the House, the Speaker shall
make a determination. Secret or personal matters 249. The Speaker may direct any matter which, in
the Speaker‘s opinion, is secret or purely personal to be excluded from the Journals of the House
and from the verbatim report of the proceedings of the House, and to be the subject of a separate
verbatim report, which shall be kept in the custody of the Clerk and made available only to
Members.
Registers
Private limited companies in the Kenya are legally required to maintain a number of important
statutory registers at a location where they can be inspected when required. Companies will
generally store these registers at their registered office and Companies House should be informed
and kept up-to-date of their whereabouts at all times. The required statutory registers under the
Companies Act 2015 are: Register of Members, Register of Directors, Register of Directors‘
Residential Addresses, Register of Secretaries (if one is appointed to the company), and Register of
Charges. Other non-statutory registers that your company may wish to keep include: Register of
Allotments, Register of Transfers, Register of Debentures, Register of Sealings and Executions, and
Register of Directors‘ Interests.
Records:
Every assessee is required to maintain private records as a compulsorily activity. They do not have
to maintain statutory records.
Meaning of records:
Records shall mean all the records prepared or maintained by the assessee for accounting of
transactions and therefore consist of the following -
Returns
On Company Annual Returns in Kenya,Section 125 of the Companies Act stipulates that every
company having a share capital shall, once at least in every year, make a return, and the said return
shall be in the form and shall be made up to the date of the fourteenth day after the date of the
annual general meeting.
Annual returns or Form 1.is a statutory document that every registered company in Kenya has to file
with the registrar of companies to show the ―current‖ status of the company. Annual returns
highlight the structure of the company, the shareholding, the division of shares, the Nominal capital,
the names and addresses of the directors and shareholders in a company. The current registered
office of the company and details of the company secretary.
All Companies should file the first annual return exactly One year and 6 months after incorporation.
Thereafter, the company has to file annual returns every other one year. Returns are filed by filling
out a Form 1.Annual return form. The form should then be certified by the company secretary and
uploaded to ecitizen.
1. The situation of the registered office of the company and the company‘s registered postal
address;
2. If the register of members is, under the provisions of the Companies Act, kept elsewhere
than at the registered office of the company, the address of the place where it is kept;
3. If any register of holders of debentures of the company or part of any such register is, under
the provisions of the Companies Act, kept elsewhere than at the registered office of the
company, the address of the place where it is kept;
4. A summary, distinguishing between shares issued for cash and shares issued as fully or
partly paid up otherwise than in cash, specifying the following particulars—
5. The amount of the share capital of the company and the number of shares into which it is
divided;
6. The number of shares taken from the commencement of the company up to the date of the
return;
7. The amount called up on each share;
8. The total amount of calls received;
9. The total amount of calls unpaid;
10. The total amount of the sums (if any) paid by way of commission in respect of any shares or
debentures;
11. The discount allowed on the issue of any shares issued at a discount or so much of that
discount as has not been written off at the date on which the return is made;
12. The total amount of the sums (if any) allowed by way of discount in respect of any
debentures since the date of the last return;
13. The total number of shares forfeited;
14. The total amount of shares for which share warrants are outstanding at the date of the return
and of share warrants issued and surrendered respectively since the date of the last return,
and the number of shares comprised in each warrant.
15. Particulars of the total amount of the indebtedness of the company as at the date of this
return in respect of all mortgages and charges which are required to be registered with the
registrar under the Companies Act.
16. A list:
17. Containing the names and postal addresses of all persons who, on the fourteenth day after the
company‘s annual general meeting for the year, are members of the company, and of persons
who have ceased to be members since the date of the last return or, in the case of the first
return, since the incorporation of the company;
18. Stating the number of shares held by each of the existing members at the date of the return,
specifying shares transferred since the date of the last return (or, in the case of the first
return, since the incorporation of the company) by persons who are still members and have
ceased to be members respectively and the dates of registration of the transfers; and
19. If the names aforesaid are not arranged in alphabetical order, having annexed thereto an
index sufficient to enable the name of any person therein to be easily found. [/su_list]
Company Registers
1. Register of members
The register of members must be lodged with the Registrar of Companies within
30 days of its preparation. Any amendment made to the register of members
should also be lodged with the Registrar of Companies within 14 days of the
amendment.
If a company is formed having only one member it should enter a statement in its
register of members that it has only one member. Similarly if a company had more
than one member but subsequently the number of members falls to one, the
register entry for the single member must be amended to include a statement that
the company has only one member, and the date on which the company became a
company with only one member.
If the membership of a company increases from one to two or more members, the
register entry for the former sole member must be amended to include a
statement that the company has ceased to have only one member, and the date
on which that event occurred.
Index of members: under Section 95 of the Companies Act, a company that has
more than fifty members is required to keep an index of the names of the
members of the company unless the register of members is in such a form as to
constitute in itself an index.
2. Register of directors
Under Section 134 of the Companies’ Act, a company must also keep a register of
all its directors indicating the following details of each director:
Name;
Registered or principal office of the body corporate;
Legal form of the body corporate- e.g. company;
The register in which it is entered (including details of the country or
territory) in which it was registered; and
The registration number.
The company's register of directors which is available for inspection by the public
must not contain information about a director’s residential address. It should only
show the director’s service address.
4. Register of secretaries
Under Section 248 of the Companies’ Act, a public company is required to keep a
register of secretaries which should be available for inspection at the company’s
registered office.
Under Section 551 of the Companies Act, a public company is required to keep a
register of people who disclose that they hold an interest in the company’s shares
or have held an interest in the company’s shares for the past three years in
accordance with Section 536 of the Companies Act.
Under Section 573 of the Companies Act, if a company allots debentures, it should
establish and maintain a register of debenture holders and the register shall be
available for inspection at the Company’s registered office.
7. Register of charges
Under Section 891 of the Companies Act, whenever a company creates a charge or
enters into a security agreement, it should register it in its register of charges.
The register should contain a record of all charges and security rights specifically
affecting the company’s property as well as all floating charges on the whole or
part of the assets of the company.
full name;
national identity card number / passport number;
personal identification number;
nationality;
date of birth;
postal address;
residential address;
current telephone number;
current email address;
occupation;
date on which any person became a beneficial owner;
date on which any person ceased to be a beneficial owner;
nature of ownership or control; and
any other detail the Registrar may from time to time require.
In addition to maintaining the registers listed under Part A above, companies are also required to
maintain the following records:
d) Accounting Records.
10. Review of this Practice Note. This Practice Note shall be reviewed at least once every two years by
the JLC at its discretion and subject to any change in the Companies Act. 11. Effective Date. This Practice
Note shall come into effect from 16th June 2020.
11.6 Register of Directors - This displays the details of the company's current directors,
including name, address, date of birth and other directorships held by that person. In addition,
any past holders of the director position will also be shown together with information on their
appointment and resignation dates.
11.7 Register of Allotment: This register includes information of the application for and the
allotment of new shares. It's a useful register since it records the issue of shares and
maintains a list of who owns which shares.
11.8 Register of Secretaries - This register contains similar information to that recorded for the
directors and will serve as a record to show who is responsible for the company's compliance
towards it statutory obligations. Since company secretaries are no longer required for private
limited companies, the records may remain unused or show the final resignation of the person
without a replacement being made
11.9Register of Applications and Allotments - Would be used in conjunction with the aboveto
record the issue of the company's shares and to maintain a definitive list of who owns the
equity. In smaller companies, there may only be one such shareholder, however the
obligations to maintain the above record does not diminish because of this.
11.10 Share Certificates - These are commonly used to prove ownership of the company and
would be investors would expect to receive one following the. purchase. On issuing a share
certificate a company seal is sometimes used to provide official recognition and validity to the
document.
11. 11 Register of Debentures - A less commonly used form for newly registered companies
but in the event that debenture stock is issued, the required entries should be made on this
document.
11.12 Register of Directors' Interests - These are used to record details of both shares and
other arrangements undertaken by the company, in which the director or anyone connected with
them have an interest. The purpose is to increase the levels of transparency between the director
and any beneficial ownership in the company which they might be party to.
11.13 Register of Members' Share Ledger - Provides a definitive record of who the current
company shareholders are and will be compiled from both the register of application and
allotments and the register of transfers. This section will display ultimately the owners of the
business.
11.14 Register of Mortgages and Charges - Where the company enters in to agreements which
stipulate that a charge or mortgage is secured against some or all of its assets, those entries must
appear here. The purpose is to allow prospective investors to assess the gearing levels within the
company and thereby the potential risk to any contributions they may decide to make.
The register must state the residential address of each of the company's directors.
If a director's usual residential address is the same as his service address (as stated in the company's
register of directors), the register of directors' residential addresses need only contain an entry to that
effect. This does not apply if his service address is stated to be "The company's registered office".
11.16 Register of Transfers — It bears some similarities to the Register of applications and
allotments where shares are issued but instead records transfers undertaken by existing
shareholders. For smaller entities, transfers might be an occasional occurrence whereas for
larger companies, the frequency of transfers may be greater.
11.17 Company Minutes - Most company constitutions require it to have meetings at least
annually and sometimes more frequently. The business conducted at these meeting should be
aptly records in the company's minutes and be available as a record to the decisions which have
been taken.
During the 2016 London Anti-Corruption Summit, Kenya made a commitment to fighting
corruption which included the establishment of the Register of Beneficial Ownership Information
for companies, which led to the amendment of the Companies Act, through the Companies
(Amendment) Act, 2017 which came into force on 3rd August 2017, to introduce the concept of
Beneficial Ownership Register.
The Companies Act was further amended in 2019 making it a requirement for every company to
keep a register of its beneficial owners and to submit a copy of the register to the Registrar of
Companies.
11.15 Tax, NHIF, and NSSF requirements
Registration & Contributions (employees, employers & volunteers) is a statutory requirement under the
National Social Security Fund Act CAP 258.The repealed NSSF Act provided contributions of Ksh 400 per
employee, made up of Ksh 200 deducted from employee's pay and Ksh 200 from the employer.
The NSSF Act of 2014 Section 20 stipulates that an employer shall pay to the Pension Fund in respect
of each employee in his or her employment:
Tier I contributions shall be credited to the employee's Tier I Fund Credit and, subject to the provisions of
section 21, Tier II contributions shall be credited to the employee's Tier II Fund Credit.
1. An employer may opt to pay Tier II contributions in respect of its employees into a contracted-out
scheme it participates in or opts to establish or to participate in.
2. The opt-out under subsection (1) may be exercised subject to the following conditions:
a. the employer shall make written request of its intention to opt out to the Authority at least
sixty days before opting to contract-out in such a way;
b. the written request required under paragraph (a) shall clearly set out such details of the
contracted-out scheme as the Authority shall require from time to time in order to
ascertain that the contracted-out scheme meets the Reference Scheme Test;
c. within thirty days from the date of receiving the written request and provided that the
contracted-out scheme satisfies the Reference Scheme Test specified in the Fourth Schedule,
the Authority shall respond in writing indicating its approval or otherwise to the employer and
notify the Board accordingly;
d. where such approval is received, Tier II Pension Fund Credits in respect of the
employees shall be
e. transferred from the Pension Fund to the approved contracted- out scheme; and •
f. the contracted-out scheme shall maintain an accurate record of Protected Rights which shall
be paid in the same manner as for benefits- in respect of Tier II Contributions as prescribed in
Part V of this Act.
c. contributions may be paid directly to a designated Fund office, by mobile money or any other
electronic transfer specified by the Board; and
d. the Fund shall notify the member of the receipt of the contribution as soon as the
contribution is received.
2. The contributions made under this section shall be paid into the Provident Fund and immediately
credited to the member's individual account as the Provident Fund Credit provided under section 24
1. The Board establishes and maintains for each member of the Pension Fund, an individual account to
be known as the Pension Fund Credit to which it credits all contributions made to the Pension Fund
by and in respect of each member of the Pension Fund.
2. The individual Pension Fund Credit in respect of each member of the Pension Fund, at any
particular date, show a full break down of-
a. Tier I Fund Credit showing the employer and member contributions separately;
b. where applicable Tier II Fund Credit showing employer and member contributions
separately;
1. If any contribution for which a contributing employer is required to pay to the Fund is not paid
within one month after the end of the month in which the last day of the contribution period to
which it falls, a sum equal to 5 % of the amount of that contribution shall be added to the
contribution for each month or part of a month that the amount due remains unpaid, and any such
additional amount shall be recoverable at the same time and in the same manner as the
contribution to which it is added.
2. Where it is established by a member or officer of the Fund to the satisfaction of the Managing
Trustee that any amount has been paid to the Fund as a contribution when it was not payable under
this Act and the amount was paid as a result of a bona fide error, the amount paid in error shall be
refunded without interest thereon or may be applied, with the consent of the person who made the
payment, to any current liability of that person to the Fund.
3. Any amount which is payable under this Act as a contribution by an employer in respect of himself
or his employee that is in excess of the statutory contribution payable under this
Act for-any period, the amount in excess shall be refunded to the employer or employee, as the
case may be, without interest thereon or may be applied, with the consent of the employer or
employee, to any current liability of the employer or employee to the Fund.
NHIF
Registration of Employers and Employees under the National Hospital Insurance Fund Act Revised
2014(Act No. 9 of 1998) is a statutory requirement. NHIF contribution is deducted from employee's salary
and depends on the salary.
Remittance of NHIF deductions from employees by employers should be done by 9th of the
following month.
Gross Pay (Ksh) Deduction (Ksh) Gross Pay (Ksh) Deduction (Ksh)
c) whose total income, whether derived from salaried or self-employment, in the immediately
preceding month, was not less than such amount as the Board, in consultation with the Minister,
may prescribe, shall be liable as a contributor to the Fund.
2. A person liable as a contributor under this section shall pay to the Board
a) in the case of a person whose income is derived from salaried employment, a standard
contribution; or
b) in the case of a person whose income is derived from self-employment, a special contribution, in
accordance with this section.
3. A contribution under subsection (2) shall be at such rate, depending on the person's total income,
b. knowingly makes any deductions from the salary or other remuneration of any person
employed by him, purporting to be a deduction in respect of any standard contribution, other than a
deduction which he is authorized to make by the Act, commits an offence and is liable on conviction
to a fine not exceeding fifty thousand shillings.
1. If any contribution which any person is liable to pay under the NHIF Act in respect of any month,
is not paid on or before the day on which payment is due, a penalty equal to:
a) in the case of micro and small enterprises, twenty-five percent of the amount of that
contribution; and
b) in any other case, two times the amount of that contribution, shall be payable by that person for
each month or part thereof during which the contribution remains unpaid, and any such penalty
shall be recoverable as a sum due to the Fund, and when recovered, shall be paid into the Fund.
2. If an employer fails to pay a standard contribution in respect of any person employed by him:
1. that employer shall be liable to pay the penalty prescribed in subsection (1);
2. that employee shall not be liable to any penalty under this section for so long as he is
employed by that employer.
3. Where a contributor is outside Kenya on the day when a standard contribution becomes payable by
him, that contribution shall, for the purposes of this section, be deemed to become payable on the day
of his return to Kenya.
But is not only about reporting; Integrated Reporting encompasses Integrated Thinking. It is as much about how
companies do business and how they create value over the short, medium and long term as it is about how this
value story is reported.
There are a multitude of benefits associated with Integrated Reporting - both within an organisation and from an
external perspective.
Creating value for stakeholders through identification and measurement of non-financial factors
Improved internal processes leading to a better understanding of the business and improved decision
making process.
Corporate governance reports provide the structures that ensure to stakeholders that corporations are committed
to good corporate governance and that they‘re complying with all applicable laws and regulations.
The corporate report should include a statement of disclosure of the company‘s governance procedures and
compliance. It should also disclose the principles and codes that guide the company‘s procedures. Disclosure
statements usually detail the distribution of powers between the board chair and the CEO. Best practices in
today‘s marketplace discourage the same individual from serving as CEO and board chair.
Board Composition
The average size of corporate boards is 9.2 directors. The ideal size of corporate boards is seven to 11 members.
Best practices for good corporate governance recommend that boards strive for a mix of board directors in terms
of competencies, age, gender, profession, independence and diversity. There should also be a mix of executive
and independent directors, with the majority being independent directors. Disclosure statements should disclose
the regularity and frequency of board meetings.
The corporate governance report should contain a section that lists the powers, functions, roles and
responsibilities of board directors. The report includes information about committees and sub-committees and
any delegated powers and duties. This section of the report should include conformance and transformative
functions.
Shareholders may be particularly interested in reading information about board directors in the corporate
governance report. Such information may include the company‘s procedures for appointing directors, board
development, succession planning and remuneration by shareholding members.
Disclosures often describe the corporation‘s mechanisms for monitoring the board‘s performance, as well as the
performance of individual board directors. It also includes information about related party transactions, conflicts
of interest and how the board handled them.
A section of the annual report details the overall organizational plan, and how it relates to business plans and
budgets; operational and performance measures; and a description of risk management and internal control
procedures. These reports provide evidence of accountability and transparency and support generally accepted
accounting and auditing standards. Sections on accounting also specifically disclose the company‘s relationship
with internal and external auditors.
Disclosure statements also cover such issues as communications with shareholders and stakeholders, legal
compliance, and codes of conduct for the board, CEO, management and staff.
Finally, statements usually detail the nature of the business and its future prospects. Shareholders are interested
in knowing the company‘s outlook for growth, sustainability and innovation, and how the corporation plans to
factor future market trends into their strategic planning.
Memorandum and Articles of Association (original and updated copies) Permanently Permanently
Dividend and interest mandate forms ceased to be valid N/A 3 years from when the instruction
Register of Debentures and Loan Stock Holders N/A Permanently / 7 years after redemption of stock
Letters and forms applying for Shares, Debentures etc. N/A 12 years from issue, with a permanent microfilmed record
Contracts for purchase of own shares by Company N/A Period of retention 10 years from date of contract
Dividend and interest payment lists N/A Until audit of the dividend payment is complete
Paid dividend and interest warrants N/A 6 years after date of payment
Bank Records
VAT Records and Customs & Excise Inspection may be conducted up to 6 years
Permanently
Returns after tax/accounting period
Deeds of Covenant 6 years after last payment 12 years after last payment
Contracts
Contracts with customers, suppliers, agents or others N/A 6 years after expiry or contract completion
Rental and hire purchase agreements N/A 6 years after expiry
Insurance
40
Employers' Liability Policies Permanently
years
Assessment of risks under health and safety regulations (including routine Until revised (Management of
Permanently (old
assessment monitoring and maintenance records for aspects in workplace Health & safety at Work
and current
such as air quality, levels of pollution, noise level, use of hazardous Regulations 1992 S1
copies)
substances etc.) 1992/2051)
Employees Records
Some 6
Employee records from closed units 12 years
years
Pension scheme investment policies N/A 12 years after transfer or value taken
Pension Scheme Documents (inland revenue approved and statutory pension schemes)
Pension fund accounts and supporting documents 6 years from date of accounts signed Permanently
Medical records - Radiation dosage summary 2 years from end of calendar year Permanently
Under Control of Lead at Work Regulations 1998 (replaced 1980 2 years from date of last entry to be
Permanently
regulations) effective
Certificates of registration of trade/service marks (current and lapsed) N/A Permanently or 6 years after cessation of registration
Documents evidencing assignment of trade/service marks N/A 6 years after cessation of registration
Property Documents
Leases N/A 12 years after lease and liabilities under the lease have terminated
Medical Records
Diaries 3 years
Health Visitor Records 10 years or for Children retain to their 25th Birthday
Oncology 30 years
X-Rays 8 years
Manuals 10 years
Reports 30 years
Your security officer or supervisor will brief you on the specific rules for handling classified information that
apply to your organization. Here are some standard procedures that apply to everyone.
Classified information that is not safeguarded in an approved security container shall be constantly under the
control of a person having the proper security clearance and need-to-know. An end-of-day security check should
ensure that all classified material is properly secured before closing for the night.
Classified material shall not be taken home, and you must not work on classified material at home.
Classified information shall not be disposed of in the waste basket. It must be placed in a designated container
for an approved method of destruction such as shredding or burning.
E-mail and the Internet create many opportunities for inadvertent disclosure of classified information. Before
sending an e-mail, posting to a bulletin board, publishing anything on the Internet, or adding to an existing Web
page, you must be absolutely certain none of the information is classified or sensitive unclassified information.
Be familiar with your organization's policy for use of the Internet. Many organizations require prior review of
ANY information put on the Internet.
Classified working papers such as notes and rough drafts should be dated when created, marked with the overall
classification and with the annotation "Working Papers," and disposed of with other classified waste when no
longer needed.
Computer diskettes, magnetic tape, CDs, carbon paper, and used typewriter ribbons may pose a problem when
doing a security check, as visual examination does not readily reveal whether the items contain classified
information. To reduce the possibility of error, some offices treat all such items as classified even though they
may not necessarily contain classified information.
Top Secret information is subject to continuing accountability. Top Secret control officials are designated to
receive, transmit, and maintain access and accountability records for Top Secret information. When information
is transmitted from one Top Secret control official to another, the receipt is recorded and a receipt is returned to
the sending official. Each item of Top Secret material is numbered in series, and each copy is also numbered.
The area of financial oversight and reporting is part of good governance, involving the concepts of accountability
and transparency.
The corporate secretary as the governance professional is responsible for ensuring that the organization, the
board, and management are accountable and transparent in their financial systems and reporting. To carry out
this role the corporate secretary has to be competent in financial accounting and reporting.
1. Ensuring compliance with legal, shareholding, and other stakeholder requirements. For example, those relating
to the content and timing for disclosures of the financial and nonfinancial statements and other disclosures.
2. Interpreting in nonfinancial terms the financial performance and results of the organization. The corporate
secretary should be able to provide narrative reporting to explain the figures in the financial statement produced
by the organization. In some cases, the corporate secretary will be expected to advise the board on the
implications of accounting policies and disclosures, especially under International Financial Reporting
Standards. The corporate secretary may also be required to write some of them, such as those relating to
relatedparty transactions, directors remuneration, and so on.
3. Advising the board on the implications and the potential reputational risk of the financial performance and
results for the organization, the shareholders, and other stakeholders.
4. Advising and assisting the board with its financial oversight role.
The board‘s role in financial oversight is set out in to assisting with the board‘s financial oversight role, the
corporate secretary typically would advise the board (or the audit committee, if one exists) on:
• Non-audit fees. Many jurisdictions have rules concerning auditors carrying out non-audit work.
• The evaluation of the external auditor. This should be included as an agenda item each year.
• Attendance at annual shareholder meetings of the external auditor. In some jurisdictions it is still the practice
for the external auditors to present their audit report and answer questions on it at the annual shareholder
meeting. In other jurisdictions external auditors attend the meeting but only speak if asked a specific question by
a shareholder.
• Auditor rotation. Again, this differs between jurisdictions. Best practice seems to be that at least the audit
partner should change every five years for larger companies, and that smaller ones should consider changing
audit firms every five years.
• External auditors annual management letter. The corporate secretary should ensure that an action plan is
developed by management and that updates on progress to resolve the issues raised in the letter are presented to
the board regularly
5. Advising the board on whether it is appropriate to delegate the financial oversight role to an audit
committee. If an audit committee is to be set up, the corporate secretary should:
• Develop terms of reference for the audit committee with well-defined responsibilities.
• Advise on the appropriate composition of the committee. Many jurisdictions require members to be
independent and to have financial experience.
• Ensure that members with appropriate skills and experience are included in the board‘s succession planning.
• Develop an annual calendar of activities for the committee to ensure that the committee gives sufficient time to
all of its responsibilities.
• Ensuring that the committee has sufficient resources to carry out its role. This may include advising the board
on when it is appropriate to set up an internal audit and risk functions.
• Assist the committee members in their understanding of current and emerging issues, especially those from
shareholders, regulators, and other stakeholders.
• Assist the committee in sourcing the advice of experts on issues under the Committee‘s responsibility. •
Organizing professional development for the committee members in those areas under the committee‘s
responsibility, such as audit, risk, and financial oversight.
• Acting as secretary to the committee, providing governance, procedural, and logistical support to the
committee and its chairman.
• Organizing the annual evaluation of the performance of the committee and its chairman.
In organizations without audit committees, the corporate secretary, on behalf of the board, should coordinate
with the internal and external auditors to ensure that the board is aware of audit findings and that management
actions emanating from them are tracked and updates reported to the board. In organizations with audit
committees, the corporate secretary should be available to assist the chairman of the committee, often as
secretary of the committee.
7. Advising the board on its responsibilities with regard to risk management and internal controls.
To fulfill this role effectively, the corporate secretary requires a basic understanding of the risk management
process and the system of internal
8. Providing advice and oversight, on behalf of the board, for the preparation of the annual report
and accounts. The corporate secretary‘s role may include:
• Being a member of or leading the production team for the annual report and accounts.
• Ensuring that the annual report and accounts meets all the requirements of applicable laws, regulations,
standards, and codes.
• Conducting quality control/verification of the facts, views, and opinions contained within the annual report
and accounts.
• Ensuring that the information within the annual report and accounts: – Is transparent, – Is balanced between
the positive and negative information, properly reporting everything of relevance, – Is presented in a fashion
that nonfinancial people can understand, – Is not ―window dressed‖—that is, that the true financial position
of the organization is not hidden.
9. Advising the board on the applicable laws, regulations, standards, and codes relating to reporting
of nonfinancial information.
The corporate secretary should advise the board on the applicable laws, regulations, standards, and codes
relating to the reporting of nonfinancial information within its jurisdictions. This includes whether the
organization should consider producing an integrated report. An integrated report should enable an
organization to understand better the relationships between its various operating and functional units and the
resources the organization uses and needs to achieve its strategic goals. An organization will also be able to
understand:
• The opportunities and risks it faces and how to tailor strategies to manage them.
• The nature and quality of its relationships with key stakeholders. A good corporate secretary develops
relationships across all departments within an organization and uses those relationships to coordinate the
departments to ensure that they do not operate as ―silos‖ but rather as an integrated team. The corporate
secretary should also be able to advise both the board and management on the company‘s external
relationships with stakeholders.
Although a one-size-fits-all compliance and ethics program does not exist, the Federal Sentencing
Guidelines (FSG).
Here are seven basic compliance elements that can be tailored to assist organizations in developing an effective
compliance and ethics program. It is critical that there is demonstrated commitment to these seven basic
elements:
The industry has now defined the following as the components of an effective compliance and ethics program
Delegation of authority
Enforcement, discipline, and incentives
Internal investigations, including a root cause analysis and corrective action plans
Risk assessments
It is always important to note that each organization needs to tailor its compliance and ethics program to its
specific mission and ethical values. Your organization may have stricter guidance that includes additional
elements. This manual does not include every compliance and ethics element utilized by every organization
globally. But it tries to address the standard used by most organizations—the elements listed above.
Many new compliance and ethics officers come into programs that have none of these elements. Some come into
their new office with some or broken pieces of these elements. Keep in mind that effective compliance programs
According to the Association of Corporate Counsel it‘s ―become a necessity to protect any highly regulated
organization.‖ Companies that don‘t comply can face civil and criminal penalties and watch their brand‘s
reputation shatter.
But it can seem daunting to figure out how to build an effective compliance program from the ground up.
You need to create dozens of policies, procedures, processes, and systems to address compliance requirements,
from prevention to detection to correction of any compliance issues or fraudulent or illegal behavior. You also
need to get everyone on the same page about the benefits of a compliance program, clearly communicate
expectations, provide staff training, and assess what‘s working and what‘s not.
While it can feel overwhelming, it‘s certainly doable. How? By focusing on the key elements and following the
steps for how to create a compliance program, outlined below.
With a system that addresses these questions, your organization mitigates liability and protects itself, its
employees, and the community.
Accreditation is often how organizations demonstrate compliance to laws, regulations, and best practices.
Without technology to automate elements of your compliance program, maintaining accreditation can be
overwhelming.
Compliance programs are not one-size-fits-all. Although you can follow the guidelines on how to create a
compliance program and what to include, you‘ll need to develop a plan that meets your company‘s specific
needs.
When it comes to building a compliance program, there‘s no need to recreate the wheel.
1. Establish and adopt written policies, procedures, and standards of conduct. Having clear written
policies and procedures in place that describe compliance expectations fosters uniformity within your
company.
2. Create program oversight. Determine who will oversee, monitor, and enforce the compliance program
and serve as your go-to company ―watchdog‖ with questions and concerns.
3. Provide staff training and education. Employees at every level need to understand your compliance
program expectations and standards to be able to comply with them. Implement a training program that
clearly communicates your company‘s program requirements, with an annual refresher course that
reminds employees of your code of conduct and incorporates any changes.
4. Establish two-way communication at all levels. Set forth the expectation that employees should
proactively communicate in a timely manner, whether that means asking compliance questions, reporting
issues, or addressing ethical concerns. Include a way for employees to anonymously report compliance
issues or fraudulent or illegal behavior without fear of retaliation.
5. Implement a monitoring and auditing system. You‘ll need to measure the effectiveness of your
corporate compliance program and identify risks. To accomplish this, develop a system of both internal
and external monitoring, including formal audits.
6. Enforce consistent discipline. Develop a plan to enforce standards of conduct in a timely manner,
outlining appropriate disciplinary measures for employees who fail to comply with program
requirements.
7. Take corrective action. When you identify vulnerabilities or violations through monitoring and auditing,
take timely, consistent action to correct the issue.
Keep in mind that this list is designed specifically for healthcare facilities. However, it serves as a solid guideline
for any industry, touching on the key components of an effective compliance program
12.3 Monitoring and evaluation of the strategy and plan
Monitoring is essential. It tells you if your service is up, down, fast, slow, and functioning as designed. When
something inevitably breaks, a monitoring tool can notify you via alerts and help diagnose the problem. An
effective monitoring strategy can allow organizations to reap significant benefits including:
But what exactly are the components of an effective monitoring strategy? The report talks about analyzing log
files and tracking system resources such as memory, storage, and processing power. This is a good start but to
achieve all the benefits listed above, you have to do more than analyze the systems and logs. A comprehensive
monitoring strategy must include synthetic and real user monitoring (RUM).
Applications today are complex with components being delivered by first and third parties, APIs, CDNs, the
cloud, and physical data centers. If you‘re only monitoring your infrastructure and the content you deliver, issues
will be missed. Synthetic monitoring from globally distributed locations enables your organization to test not just
the infrastructure but all the additional dependencies. Everything can be fine inside your firewall and with your
systems, but users may still be experiencing problems. Monitor the application the same way a user accesses it to
fully understand the digital experience.
Users are geographically distributed and access applications across a wide range of devices and connectivity.
Synthetic monitoring may not cover all geographies, that‘s one place where RUM can help fill in the gaps. RUM
collects data from real visitors to your application providing insight into how users are interacting with the site,
what paths they are taking through an application, and how the pages are performing. RUM can expand the
insights you are collecting via synthetic monitoring and logs.
Collecting monitoring data is the easy part, the harder part is determining which data to collect and ensure that
all viewpoints are being included.
1. Monitor the components and the whole. System level, component level, and overall application metrics
need to be included to get the full picture.
2. Analyze first and third party performance. Problems with a third party affect the overall digital
experience just as much as problems with first party content.
3. Measure individual pages and multi-step transactions. Users are visiting more than a single page, you
should be monitoring more than the home page.
4. Configure alerts to be notified when performance varies from a baseline. Early identification of issues
can help resolve problems before customers are impacted.
5. Compare your performance to competitors or industry leaders. Performance is relative, you are being
compared to other sites on a daily basis, do you know how you stack up?
6. Monitor from the viewpoint of your users. Capture metrics from real users to get the broadest coverage
and use those locations to influence where to capture synthetic measurements from.
7. Measure performance across multiple connection types. Performance and availability can vary widely
across connection types include a representative sample of your users.
8. Align metrics with business objectives. Why should others in the organization care about a metric?
Describe how the monitoring data is relevant to objectives such as increasing customer loyalty, increasing
revenue, or reducing costs.
9. Re-evaluate your strategy on a regular basis. As your company grows, and your application changes, your
monitoring strategy should be re-evaluated. Are you still measuring from the geographies that matter?
Have new components been introduced that need to be monitored?
10. Look for the anomalies and outliers. We can learn more from the unexpected than from the everyday
occurrences.
Creating a monitoring strategy isn‘t easy, but the time invested will be worthwhile in the long run.
he strategy evaluation process involves analyzing your strategic plan and assessing how well you've done against
achieving the goals in your strategy. A strategy evaluation is an internal analysis tool and should be used as part
of a broader strategic analysis for the organization when making decisions about your strategy.
Typically, the strategy evaluation process involves answering questions such as:
No matter which stage you are at, it’s crucial to understand the basics of regulatory compliance. Use this checklist as a
guide to manage your compliance needs effectively.
The assessment will help identify strengths and opportunities within a specific compliance
area's ecosystem, including oversight accountability, regulatory reporting requirements,
compliance management, compliance risks, and key compliance gaps, along with laying the
groundwork to develop a compliance gap closure plan and escalating compliance concerns as
appropriate.
There are very few companies whose corporate governance is perfect. The most common pitfalls are
often basic errors – like updates to the register of shareholders or directors – but cannot be ignored.
The missed filings with the Commercial Registers might cause significant consequences. Recently, on
onboarding, the GSGS team found, during a routine CHC, that an Irish branch had actually been
deregistered and needed re-registration due to missing filings of the financial statements. In another
similar case, a US entity was found to have been de-activated due to the missed filing of annual
returns.
The implications for non-compliant entities can be serious and, while they will vary from country to
country, can lead to financial penalties for the company, penalties for the directors, suspension of
other filings requested and even the closure of affiliates.
Usually, the penalties for missed filings increase the longer the problem is left unaddressed. In some
countries, there is even personal liability for company directors for these missed filings. In Singapore, if
a company misses its deadline to hold its AGM, the local director will receive official notification from
the authorities with request to attend a hearing in person, unless it is remedied in good time.
Very simply, a compliance health check procedure identifies the status of all filings and governance
obligations as well as any remedial actions that are necessary. Without remedial action, the
consequences for mistakes can quickly compound. For example, mistakes accrued in the filing of
financial statements may mean you cannot register new directors before remedying.
The CHC outlines which remedial actions are essential and which are merely „nice to have‟, but these
decisions can only be made once the health check has been conducted. In this sense the health check
provides a practical framework for identifying governance priorities.
A CHC will ensure that you are able to meet your essential compliance requirements, including:
It is a misconception that a compliance health check is only necessary after a burst of M&A activity. A
CHC should be considered as a regular on-going part of a group‟s governance activity. Errors do not
only occur around major transactions, but can also stem from any of the usual day-to-day activities of
a business, arising for example from missed filings or a failure to register a new director.
For this reason, it is best practice to ensure that your company‟s CHCs are regular and are able to
ensure the continual maintenance of your entities‟ compliance.
Here is an overview of the fit and proper requirements for directors. It considers, in particular:
The rules concerning the disqualification of unfit directors under the Company Directors Disqualification
Act
The increasing trend for the introduction of fit and proper persons tests in other regulatory provisions.
A review of the fit and proper person requirements in the financial services and health sectors.
A summary of how companies should approach fit and proper testing requirements, including pre-
appointment checks by headhunters, recording procedures, and the impact on HR and settlements.
An action list for employers, including setting up the process, common checks, and the responsibility or
governance map.
The impact that these increasing requirements are likely to have on business and the appointment of
directors generally.
It has long been the case that the law does not allow negligent or dishonest directors to continue as directors.
Disqualification
The Company Act provides that a court can make a disqualification order against a person preventing them from
being a director of a company for a specified period. This order also prevents a disqualified director from:
There are a number of routes to disqualification, some of which lead to a compulsory disqualification, others to a
discretionary one. The kind of scenarios may include:
There is also a general discretionary ground where, following investigation, the Secretary of State can apply to
the court if he believes that it is expedient and in the public interest for a disqualification order to be made.
Certain sections of the act also require the court to consider specifically the "fitness" of a director in addition to
the activity caught. For example, the court may make a disqualification order against a person who is a director
of a company which becomes insolvent only if the court is also satisfied that the director's conduct makes him
unfit to be concerned in the management of a company.
There are two large sectors where there have been significant recent developments in fit and proper person
testing: financial services and the health sector . It is clear from both the financial services and health sectors that
these stringent tests have been introduced to enable regulatory sanctions against individuals in the face of failure,
enabling the regulator to hold individuals to account for serious failings within the regulated organisation.
The new, more stringent (and in some instances subjective) tests reflect a view that a test which is in practice
limited to basic matters such as court judgments or bankruptcy, or previous regulatory enforcement action is
wholly inadequate. The greater focus on technical competence is aimed at assessing future risks to firms and
markets, rather than just relying on an absence of evidence of past impropriety.
Fit and proper test for approved persons. Individuals can only be approved where the FCA or PRA is satisfied
that a candidate is "fit and proper" to perform the controlled function(s), and approval must be obtained before a
person can perform that function. The approved person regime is intended to complement the regulation of the
authorised firm for which the approved person(s) performs the function.
Honesty, integrity and reputation. In determining a person's honesty, integrity and reputation, and person has
been convicted of any criminal offence.
The person has been the subject of any adverse finding or settlement.
The person has been the subject of earlier investigations.
The person is or has been the subject of disciplinary or criminal proceedings.
The person has contravened the requirements or standards of the Kenyan regulatory system or other
regulatory authorities.
The person has been a director, partner, or concerned in the management, of a business that has gone into
insolvency, liquidation or administration.
The person has been dismissed, or asked to resign and resigned, from employment or from a position of
trust, fiduciary appointment or similar.
The person has ever been disqualified from acting as a director or disqualified from acting in any
managerial capacity.
In the past, the person has been candid and truthful in all his dealings with any regulatory body.
The person demonstrates a readiness and willingness to comply with the requirements and standards of
the regulatory system and with other legal, regulatory and professional requirements and standards.
Financial soundness. In determining a person's financial soundness, have regard to any relevant factors,
including whether:
The person has been the subject of any judgment debt or award, in the UK or elsewhere, that remains
outstanding or was not satisfied within a reasonable period.
In the Kenya or elsewhere, the person has:
made any arrangements with his creditors;
filed for bankruptcy;
had a bankruptcy petition served on him;
been adjudged bankrupt;
been the subject of a bankruptcy restrictions order (including an interim bankruptcy restrictions
order);
offered a bankruptcy restrictions undertaking;
had assets sequestrated; or
been involved in proceedings relating to any of these things.
The CQC test, in addition to the base level matters we have seen elsewhere, includes assessments that the
individual:
Is of good character (requiring, among other things, checking for strikings off from professional
registers).
Has the qualifications, competence, skills and experience necessary.
Is able by reasons of their health, after reasonable adjustments are made, to perform their role.
Has not been responsible for, been privy to, contributed to, or facilitated any serious misconduct or
mismanagement (whether unlawful or not) in the course of carrying on a regulated activity, either in
England, or similar activity overseas.
Does not meet some specified grounds for unfitness (including being on a children or vulnerable adults'
barred list).
Companies: how should the new fit and proper persons test be approached?
As well as documenting the testing process, it is becoming increasingly important for organisations to document
properly internal failings and the extent of the involvement of senior individuals in the matter. This will be
needed in the event that third parties want to check on a candidate's background when he or she is applying for a
director or senior management role at the third party. The third party will of course be keen to understand the
extent of the individual's involvement in such failings. Legal advice on the conflicting requirements of the Data
Protection Act, and not keeping on record information about an individual for longer than is necessary, may need
to be sought to get the balance right.
A board resolution, also sometimes called a corporate resolution, is a formal document that makes a statement
about an issue that is so important that the board wants to have a record of it. A resolution is a document stands
as a record if compliance comes in to question.
A resolution can be made by a corporation‘s board of directors, shareholders on behalf of a corporation, a non-
profit board of directors, or a government entity.
The length of the resolution isn‘t important. It only needs to be as long as what you need to say.
Keep resolutions with other books and important documents and have a backup copy in another location.
Resolutions can also be kept with the meeting minutes because they are legally binding documents.
1. Format the resolution by putting the date and resolution number at the top. If it‘s the board‘s first
resolution, you can number it whatever you want. Consider using something like 0001 and then giving all
future resolutions a consecutive number.
2. Form a title of the resolution that speaks to the issue that you want to document. For example,
―Resolution to Designate Funds of the 2016 Gala Fundraiser to the Marketing Fund.‖
3. Use formal language in the body of the resolution, beginning each new paragraph with the word,
whereas. The first sentence should reference the board‘s responsibility. For example, ―Whereas it is the
responsibility of the Board to designate funds for a specific purpose.‖
4. Continue writing out each important statement of the resolution, beginning each paragraph with whereas.
5. The last statement of the resolution should state the final resolution, which is the action that the board
took. For example, ―Now, therefore be it resolved to designate the funds of the 2016 Gala Fundraiser to the
Marketing Fund.‖
6. The bottom of the resolution should list the names of the board members voting on the resolution and
spaces adjacent to their names where they can indicate a ―yes‖ or ―no‖ vote. Obviously, the resolution is
approved when the majority of the board members vote ―yes.‖
7. There should also be a place for the board president to sign and date the resolution.
See this free copy of a board resolution template. Here is another sample of a corporate resolution that is written
out. Winthrop University lists numerous links to resolutions that they‘ve drafted. This link is a good example of
a resolution that was written to honor someone.
Understanding better how resolutions are written should take any intimidation out of the process. Once you get
started, you‘ll find that it‘s actually pretty easy and you‘ll probably enjoy it. Remember to review templates of
resolutions that were written by other boards for similar purposes. Find a good template to help you get started,
but keep it flexible enough to serve the true purpose of the resolution. Most importantly, make sure that the board
members and the board president sign and date the resolution. It‘s a legal document just like the meeting
minutes.
Following these key steps will demonstrate that an organization is ready for the compliance audit and has
prepared for the auditors' requests.
o Determine the metrics for which compliance is being audited. These can include standards,
regulations, company policies, laws and legal precedent, and recognized activities constituting
good practice.
o Make sure the auditors are knowledgeable of the items to be audited. It may be necessary to
educate auditors on the specific compliance mandates relevant to the organization so they can
perform a careful examination.
o Ensure the audit team has a place to work, especially if using an external audit firm. A
conference room is typically an ideal work location; it can also be used to conduct interviews.
o Have copies of all relevant compliance audit documents available for the audit team. This
includes the standards and regulations, along with other metrics.
o Identify employees who are SMEs and likely targets for interviews by the auditors. Verify
their availability during the planned audit period, and advise them that they may be asked to
respond to follow-up inquiries by the auditors.
o Have copies of internal evidence supporting compliance. These can include reports, emails,
policies, procedures, testing reports, previous audit reports and minutes of meetings. Try to
provide more evidence than necessary so auditors won't need to continually ask for more
materials to examine.
o Conduct pre-audit meetings with the team(s) likely to be involved in the audit. This will
ensure all players, from SMEs to senior management, fully understand their roles and
responsibilities during the course of the audit.
o Be prepared to conduct a pre-audit meeting with the auditors to review their approach and
what they will need during the course of the audit. This includes the process for obtaining an
attestation of their audit report.
o Prepare a tentative schedule and timeline, and make it available to the auditors. They may
have their own project approach and timetable, but it clearly shows that an organization is ready.
Internal controls are one of the most essential elements within any organization. Internal controls are put in place
to enable organizations to achieve their goals and missions. Management is responsible for the design,
implementation, and maintenance of all internal controls, with the Board responsible for the overall oversight of
the control environment. Strong internal controls allow for organizations to achieve three main objectives. These
three objectives are: accurate and reliable financial reporting, compliance with laws and regulations, and
effectiveness and efficiency of the organizations operations. In order to achieve these objectives an internal
control framework needs to be applied and followed throughout the organization. The five components of the
internal control framework are control environment, risk assessment, control activities, information and
communication, and monitoring.
The first component, control environment, is crucial since it‘s the foundation for the four other components of
internal control. The control environment sets the tone at the top of an organization and provides discipline and
structure. Within the control environment there are several factors that include the following:
Ethical Values and Integrity
Management and employees must show integrity. If management displays issues of lack of integrity, it can
trickle down to the employees causing internal control issues and opportunities for fraud.
Human Resource Policies & Procedures
Control difficulties can be avoided by sound hiring procedures, training of new employees, and appropriate
discipline.
Organization Structure
Organizations that have a clear understanding of who reports to whom within an organization will limit the
chance for internal control issues.
Participation of Those Charged with Governance
It is important for those charged with governance (audit committee, board of directors, etc.) to be involved with
the organization and monitor internal control functions.
Philosophy of Management & its Operating Style
If management incorporates the importance of internal control in its operating style, employees will know the
seriousness of the matter.
Assuming you‘d prefer not to publish your internal company business for the world to see, a secure, password-
protected WordPress site is a must. Luckily, it‘s super easy to set up.
Once you‘ve got WordPress site up and running, choose from several plugins that offer password protection.
You can keep the security simple, using a single password for all to use and access your site. You can also
choose a plugin that blocks certain pages from public access.
You‘ve got your WordPress site. You‘re password protected. You‘re ready to rock and roll with a calendar.
You can get your calendar up and running in minutes with a free plugin like The Events Calendar. Set-up is a
breeze. Check out this guide will help you get started and on your way to creating your first event.
Pro tip: Focus on functionality first. A super slick-looking calendar isn‘t so slick if it doesn‘t work properly.
Step 3: Use fun features to energize employees and to organize your events
No offense to Outlook, but your stodgy corporate calendar doesn‘t provide many ways to generate excitement.
Your WordPress calendar can help close the gap by providing functions your Outlook calendar simply cannot.
If you create your calendar with a plugin like The Events Calendar, you‘ve opened a door to tons of other
amazing features. There‘s even a whole family of premium add-ons to make the most of your corporate calendar:
Community events: Let other people, teams and departments submit events to the calendar. It‘s
impossible to know every planned event, so make it easier to curate events through open submissions.
Crowdsourcing goes corporate!
Filter Bar: At a big company, it‘s unlikely that every event is relevant to every employee. Use this add-
on to make it easier to search and sort the events by tags and categories. If you‘re using Events Calendar PRO,
then you have more filtering options, like location and even custom fields.
Step 4: Use notifications to alert employees to new events and increase participation
When employees register for your events, stay engaged with email follow-ups. Even more than excitement,
email serves as a helpful reminder. A tool like Promoter can help you connect with your employees every step of
the way. Announce new events, target emails to specific departments or groups, automate reminders to cut back
on the time you spend organizing and promoting events… there are many possibilities. The nice thing about
Promoter is that it works seamlessly with The Events Calendar. Set it and forget it!
Another way to make events more enticing is by adding detailed event descriptions and photos or videos to your
event listings. Show what your events entail and you‘ll give your colleagues a better idea of what they can
expect. This makes it much more tempting to close a laptop and show up to your morale-boosting team outings.
A dedicated corporate events calendar can drive excitement, attendance, and engagement
The Events Calendar family of products offers tons of ways to make your events more meaningful for
employees. No more events getting drowned out by a sea of meetings. Instead, you get a dedicated space to plan
and promote events while engaging with everyone.
Monitoring Calendars
As participatory tools, seasonal calendars and timelines help us to compare qualitative data over time, so that we
can analyze project activities and outcomes in relation to seasonal and other events.
Usually, we draw up a seasonal calendar or timeline as a participatory process
Analyze outputs and outcomes in relation to events:
Seasonal calendars and timelines help us to record data over time, so we can analyze project outputs or outcomes
in relation to seasonal and other events. Calendars and timelines can also help us pinpoint where potential project
bottlenecks might occur, and relate these to seasonal changes. For instance, sometimes a project might slow
down during the rainy or dry season, or increase activities during the harvest season. Also, annual events such as
the start of school or various cultural events could also impact project activities. Mapping these events out on a
calendar can be helpful for project planners as they craft project timelines and activities.
Record the daily activities of stakeholders:
We might also use timelines (perhaps disaggregated through the seasons) to show the daily activities of
individual project stakeholders. This would help us see the time commitments of stakeholders, which is
especially important in the planning and implementation of projects. For instance, timelines help us to see how
many hours a day women in a village spend collecting water, or how many hours are spent in agricultural
activities. This gives us insight into work burdens, in addition to the amount of time stakeholders might have to
devote to a potential project. Timelines can also tell us the relative importance a person or a community places
on a particular activity.
Analyze and predict income and expenditure flows: Another use for seasonal calendars and timelines is
for income and expenditure flows, so that stakeholders can discuss their income and spending needs throughout
the year. This is important when planning for periods of high expenditure, when school fees are due or when
farmers need to purchase seeds, for example.
Track project spending: Oftentimes we also use calendars or timelines to help us track spending on a
project in relation to project activities. For instance, if we are running an election monitoring program, our
spending will increase dramatically around the time of the elections.
CHAPTER 13
Management of Share Registration Services
13.1 Issue of shares at par/premium/discount
A company can issue its shares either at par, at a premium or even at a discount. The shares will be at par is when the
shares are sold at their nominal value. Shares sold at a premium cost more than their nominal value, and the amount in
excess of the face value is the premium. And of course, shares sold at discount cost less than the face/nominal value.
Now the accounting treatment of all these issues will be slightly different. The money for these shares may also be
collected in instalments – on the application, allotment, first call, final call etc. The shares will be fully paid up only
after the last instalment has been called and paid up.
This money collected on the application must be deposited in the bank account in a Schedule Bank according to the
Companies Act. This account is exclusively opened to deal with the application money. The journal entry for this
transaction in the books of the company is as follows,
On Allotment of Shares
After the company receives minimum subscriptions, it may start allotting the shares. Once the shares are allotted, the
applicants now become stakeholders in the company, i.e. they get into a contract with the company. Let us see the
journal entries passed in the books of the company in event of allotment.
The first step is that the money received on the application for shares can now finally be transferred to the Share
Capital Account since now the allotment has been finalized.
Date Particulars Amount Amount
Then there may be the case that certain applications were rejected for any reasons. So the money received on the
application must now be refunded within the stipulated time frame. The entry for the same will be,
If the allotment was done on pro-rata basis than the excess application money received must be taken into account.
But instead of refunding the money, it can simply be adjusted against the allotment payment due on such allotted
shares. Such an adjustment entry will be,
Then the final entry of this stages will be the allotment money becoming due, and finally being paid by the allottee.
We will pass two entries for a better understanding of the process. But take note that one combined entry can also be
passed instead of two.
On Calls
The instalments after the allotment are known as calls, i.e. first call, second call, final call etc. If the shares are not
fully paid up at the time of allotment, then several calls can be made until the shares are fully paid up. However, no
call can exceed 25% of the nominal value of shares, and there must be at least one month between two calls.
Calls in Arrears
Sometimes when the company makes a call, the shareholder is unable to pay the call money. In this case, this
stakeholder becomes in arrears, and it is called an unpaid call. The company may choose to simply debit the amount
from the paid-up capital in the balance sheet. But companies choose to maintain a call-in-arrears account. The
following entries are passed in the journal.
Then there are certain times when the calls in arrears are paid by the shareholder. However, the shareholder will
have to pay an interest for the time delay.
Relevant provisions
As per the Companies Act 2015 the right offer shall include a right exercisable by the person concerned to
renounce the shares offered to him in favor of any other person further if concerned person declines to accept the
shares offered, the Board of Directors may dispose them in such manner which is not dis-advantageous to the
shareholders and company;
Analysis of law
There are two ways by which shares can be issue to the outsider other than the existing share holder of company
by way of Right Issue.
1. Renouncing shares by existing shareholder that are offered to him by Letter of Offer
2. Company will receive an acceptance letter and share application money from the renouncee.
3. After closing of offer period company will hold a Board Meeting and allot shares to renouncee.
Disposing Unsubscribed Capital by The Board Of Directors
1. Company will give offer of ―Renunciation‖ to existing shareholders in the Letter of Offer.
2. If Shareholder don‘t subscribe to the ‗right issue‘ nor renounce their right to a third person than Board of
Directors can allot the un-subscribed portion of shares to any other person in such manner which is not
detrimental to the interest of shareholder and the company.
Checking that certificates are valid, contain the details recorded in the original source data and
that they have not been traded or immobilized.
Confirming these certificates as immobilized, and canceling them for safe custody, and
returning a report to the CDS to confirm the deposits.
Sharing necessary reports with the CDS
De-immobilization is a process where shares held in the CDS are withdrawn and re-issued in the form
of share certificates, on clients’ request
The most important rights that all common shareholders possess include:
In addition to a share in profits generated by the company, shareholders also have rights to income distributions
through dividend payments. If a company's board of directors declares a dividend in a certain period, common
shareholders are in line to receive it.
Dividends are not guaranteed, however. If the company is liquidated, common shareholders have the right to
assets and income of the company after bondholders and preferred shareholders are paid.3
In either case, individuals in the management of the company do not own enough of a stake in the company to
influence who sits on the board of directors. Shareholders have the right to influence who holds management
positions through control over the election of board members.1
Right to Vote
Arguably, the greatest right for common shareholders is the ability to cast votes in a company's annual or general
meeting.2 Major shifts within a publicly-traded company must be voted on before changes can take place, and
common shareholders hold the right to vote either in person or via proxy. Most common shareholder voting
rights equate to one vote per share owned, resulting in greater influence from shareholders who own a larger
number of shares.
Companies use the shareholder register to keep track of shares held by shareholders and contact them directly
instead of going through a custodian bank.
Here, days are not working days but days. This effectively translates to five or six working days depending upon
companies policies and holidays.
The registers shall be maintained at the registered office of the company unless a special resolution is passed in
a general meeting authorising the keeping of the register at any other place within the city, town or village in
which the registered office is situated or any other place in India in which more than one-tenth of the total
members entered in the register of members reside.
Consequent upon any forfeiture, buy-back, reduction, sub-division, consolidation or cancellation of shares, issue
of sweat equity shares, transmission of shares, shares issued under any scheme of arrangements, mergers,
reconstitution or employees stock option scheme or any of such scheme provided under this Act or by issue of
duplicate or new share certificates or new debentures or other security certificates, entry shall be made within
seven days after approval by the Board or committee, in the register of members or in the respective registers.
If any change occurs in the status of a member or debentures holder or any other security holder whether due to
death or insolvency or change of name or due to transfer to Investor Education Protection Fund or due to any
other reason, entries thereof explaining the change shall be made in the respective register.
Even thought there is no time frame is given in this sub – rule, it will be prudent to make an entry within seven
days of receiving relevant information.
If any rectification is made in the register maintained under section 88 by the company pursuant to any order
passed by the competent authority under the Act, the necessary reference of such order shall be indicated in the
respective register. [
Even thought there is no time frame is given in this sub – rule, it will be prudent to make an entry within seven
days of receiving of order or within time-frame given in the order whichever is earlier.
the shareholder‘s name and address (in the articles of association it can be stipulated that the shareholder
register contains the shareholders municipality of residence and birth date instead of their addresses);
the number of individualized shares or share certificates per share type;
the date of issue of the shares; and
other differences in the rights and obligations carried by the shares.
If a share certificate has not been issued for the share, the shareholder register must note a lien or other
comparable right that has been notified to the company.
Even in the case that the company has only one shareholder, the shareholding shall be notified for registration in
the shareholder register immediately, and no later than within two months from the acquisition.
Maintaining the shareholder register is always the sole responsibility of the company‘s board of directors. This
means that the board of directors may not assign its decision-making power for entering the shareholder register
notations to any other company organ or officer of the company. In practice, however, the board of directors may
assign the preparation and maintenance of the shareholder register to the company‘s managing director or to
another officer of the company but the board itself is nevertheless always responsible for the proper
administration of the register. If it is not clear for example what should be marked in the shareholder register the
decision on the shareholder register notation shall be made at a board meeting. The board of directors is also
responsible for reassuring that reliable evidence of the payment of the transfer tax has been presented. According
to the Limited Liability Companies Act the negligence of these activities is a punishable as a limited liability
company violation and may result in liability for damages.
According to law, the registers shall be maintained in a reliable manner. No other requirements are given. In
practice, the register is kept either manually or automatically. In the latter situation, updated documents of the
register should be printed.
A shareholder may exercise his/her rights only after he/she has been included in the company‘s shareholder
register or he/she has at least announced his/her acquisition to the company and presented a statement of his
acquisition. The use of such property rights that require position of share certificate, such as taking payment on a
dividend against the share certificate, does not require registration of the ownership of the share in the share
register.
In case several persons own shares together, they may exercise the rights belonging to a shareholder only
through a joint representative.
The shareholder register is a public document. Thus, it must be kept available at the company‘s headquarters for
public inspection. Everyone has a right to inspect the register and to be given a copy of them after having
compensated the costs accrued to the company thereof.
A share register is an indispensable element for every company, as it not only summarises who holds shares and
how many but it also records the share transfer transactions.
The information recorded in the share register is essential when it comes to a company running smoothly,
especially for convening the annual general meeting as well as when amending the articles of association,
liquidating the company, applying for credit and in many other cases.
The new Companies and Associations Code (Wetboek van Vennootschappen en Verenigingen) allows public
limited companies, private limited companies and cooperative companies to now keep an electronic share
register.
The general meeting is no longer required to adopt this resolution, and henceforth the management body
can decide to do so.
Most companies still keep a hardcopy register, while an electronic version means that the rather careless attitude
that some companies have to keeping a share register is no longer an issue. In other words, keeping an electronic
share register is not just an unnecessary luxury.
The law does not only abandon the principle of one share, one vote, but it does also provide that the transfer
restrictions under the articles of association and, when one of the parties requests such, the transfer restrictions
that arise out of agreements or the conditions for issuance must be stated in the share register.
The authorities are also requesting an increasing amount of data from companies and organisations about their
shareholders (through instruments such as the UBO register).
2. Required information in the share register
In accordance with the Companies and Associations Code, the following information must be recorded in the
share register:
the total number of shares issued by the company and, where applicable, the total number of shares by
type;
for every shareholder, the names and addresses of natural persons and the names, registered offices and
identification numbers of legal entities;
the number of shares held by each shareholder and the types of shares they hold;
the payments made on each share;
the transfer restrictions under the articles of association and, when one of the parties requests such, the
transfer restrictions that arise out of agreements or the conditions for issuance;
the transfer and assignment of shares, together with the date it was performed. If an electronic register is
kept, the transfer declaration can be in electronic form and be signed using electronic data that can be
linked to a specific person and that can demonstrate that the integrity of deed has been retained; and
the voting rights and profit entitlements associated with each share as well as their share in the liquidation
balance, if that differs from the profit entitlements.
Keeping an electronic share register boils down to keeping personal data in electronic form. The primary points
for attention concern the protection of that data, which means preventing manipulation and/or the ability for
unauthorised persons to access the data.
A company can keep its own electronic share register or outsource the work of keeping and managing it to an
external confidential party. The administrator of the electronic share register is obliged to create a system that
controls access in order to prevent unauthorised parties gaining access to the personal data contained in the
register. There are three parts to the access control: (i) the identification of the person, (ii) checking the legal
capacity that serves as the basis for claiming access to the data, and (iii) the relevant nature of the requested data.
The administrator of an electronic register must also employ all necessary measures in order to track down
consultations of and operations performed in the electronic share register, whether normal or abnormal ones. The
administrator must identify the authors of such actions, record the date thereof, and retain this information as
long as the affected personal data is recorded in the electronic share register. What this means is that the
administrator is responsible for the integrity of the register and must prevent outside parties from being able to
manipulate it. This means that, where necessary, the administrator can limit the number of parties who are able to
access it.
The Institute of Accountants and Tax Consultants (IAB) and the Civil-Law Notaries' Federation have already
jointly launched a reliable electronic share register through the "eSTox" tool. Notaries, accountants and tax
consultants will be able to register shareholder information electronically and, at a later stage, a company's
management body will be able to register such information itself, although in that event one will be able to see
what information has been verified by a notary, accountant or tax consultant.
But there is more than that under the hood of the new IAB platform, and a business that uses it will be able to
automatically send to the FPS Finance that information required under the UBO rules using the electronic share
register. That makes life considerably easier for company directors, in view of the fact that they are responsible
for compliance with the UBO rules. The intention is that, in due course, a company can gain access to all the
deeds concerning the company that a notary retains (articles of incorporation, amendments to the articles of
association, etc).
4. Turning your hardcopy share register into an electronic one
The Companies and Associations Code has introduced the principle that registration in an electronic register
holds as the presumption of shareholdership until evidence to the contrary is presented.
However, this presumption does not apply to hardcopy share registers. When a hardcopy share register is
converted into an electronic one, the hardcopy version must be retained for its evidentiary value when it comes to
the registration of shareholders from before the electronic share register was introduced.
Companies are not obliged to keep electronic versions of all securities registers, and a company could decide to,
for example, have an electronic register of bondholders and a hardcopy share register. If a company discontinues
keeping an electronic register it must be printed out in full, dated, signed and retained by the company.
Where an electronic share register is discontinued because the company is dissolved, a printout must be kept for
at least five years after the liquidation concludes.
Before you transfer any shares, you need to confirm your current shareholdings, the number of shares you wish
to transfer and the resulting share structure of your shareholders. If you are transferring shares to a new
shareholder you will also need to confirm their name, date of birth, nationality, residential address, proof of ID
and relationship to the other shareholders in your company.
In some cases, you may have insufficient shares in your company to allow your intended transfer. This would
mean that you need to allot new shares. If you are unsure about the number of shares in your company, please
contact your account manager.
184. Members‘ approval required for payment in connection with share transfer
(1) A person may not make a payment for loss of office to a director of a company in connection with a transfer
of shares in the company, or in a subsidiary of the company, resulting from a takeover bid, unless the payment
has been approved by a resolution of the relevant shareholders.
(2) The relevant shareholders are the holders of the shares to which the bid relates and any holders of shares of
the same class as any of those shares.
(3) A resolution approving a payment to which this section applies can be passed only if a memorandum setting
out particulars of the proposed payment (including its amount) is made available to the members of the company
whose approval is sought—
(a) in the case of a written resolution—by being sent or submitted to every eligible member at or before the time
at which the proposed resolution is sent or submitted to the director;
(b) the case of a resolution at a meeting —by being made available for inspection by the members both— (i) at
the company's registered office for not less than fourteen days ending with the day before the date of the
meeting; and (ii) at the meeting itself.
(4) Neither the person making the offer, nor any associate of that person, is entitled to vote on the resolution,
but—
(a) if the resolution is proposed as a written resolution, they are entitled (if they would otherwise be so entitled)
to be sent a copy of it; and
(b) at any meeting to consider the resolution they are entitled, if they would otherwise be so entitled, to be given
notice of the meeting, to attend and speak and if present, either in person or by proxy, to count towards the
quorum.
(5) If at a meeting to consider the resolution a quorum is not present, and after the meeting has been adjourned
to a later date a quorum is again not present, the payment is, for the purposes of this section, taken to have been
approved. (6) An approval is not required to be obtained under this section from shareholders in a body corporate
that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate.
Execution of share transfer by executor or administrator A document of transfer of the share or other interest of a
deceased member of a company—
(a) can be made by the deceased member's executor or administrator even though the executor or administrator is
not a member of the company; and (b) is as effective as if the executor or administrator had been such a member
at the time of the execution of the document.
A Company Secretary performs various administrative and corporate governance tasks in compliance with the
provisions of the Companies Act such as taxation laws, shareholder‘s rights, business structure, statutory laws,
1. Ensures effective and efficient implementation and execution of the management policies decided by the
Board.
2. Acts as a communicating channel between the top management i.e. board and the executives and
coordinates the actions of the executives according to the directions given by the Board.
3. Ensures the company works in accordance with the rules and regulations of the company‘s policy.
4. Ensures corporate governance norms are being complied with.
5. Formulates decisions on which the structure of the company administration is constructed.
6. Act as a secretary to the audit committee; ensure compliance with statutory filing requirements.
7. Ensures compliance with listing agreements and responsible for monitoring the transfer of shares and
reporting them to the Board in its meeting.
8. Identify strengths and weaknesses of the functional executives and can apply them to the benefit of the
company.
9. Arrange and manage the process of conducting the Annual General or Extra Ordinary General meetings
and advise the matter of concerns to be raised at the board meetings for shareholder‘s support and vote.
CHAPTER 14
Management of Dividends
While doing so, the company may choose different ways of paying out dividend. A company can also decide the
frequency of paying out the dividend, meaning it can give it annually, monthly or quarterly. This is solely
Cash dividend
Stock dividend
Property dividend
Scrip dividend
Liquidating dividend
1) Cash Dividend:
Cash dividend is the most popular form of dividend payout. In this, company issues the dividend to all
shareholders where the money is deposited in the bank accounts of shareholders as per the holdings of the
2) Stock dividend:
If any company issues additional shares to common shareholders without any consideration then the action
becomes stock dividend. If the company issues less than 25% of the previously issued stocks then it will be
treated as the stock dividend. If the issuance of new shares is more than 25% of the last issue shares then it is
3) Property dividend:
Any company can issue any non-monetary dividend to its shareholders. The issued property dividend would be
recorded against the current market price of the asset distributed. As the market price of the asset is expected to
be either above or below the book value therefore it would either incur profit or loss and accordingly would be
entered in the books. This interpretation of the distributed asset may force businesses to intentionally issue the
4) Scrip dividend :
When any company does not have enough funds to pay dividend then it may choose to pay dividend in the form
of promissory note to pay the shareholders at a later date. This essentially creates a note payable.
5) Liquidating dividend:
When the board of the company thinks of returning the original capital invested by the shareholders then it is
known as the liquidating dividend. This may happen due to the fact the company intends to wrap up the business.
Management confidence: Paying a dividend provides a clear signal about management‘s confidence in
the company‘s ability to continue to post profits.
Fiscal discipline: The decision to pay a dividend isn‘t entered into lightly. As soon as a company starts
paying a dividend, shareholders come to expect it. Cutting or eliminating a dividend reflects very poorly on the
managers and the company in the eyes of investors.
Corporate governance: Dividends provide a form of corporate governance for shareholders. Corporate
managers, by the nature of their positions, know more about a company‘s operations than do outside
shareholders. Contemporary corporate scandals show that some managers make decisions to benefit themselves
at the expense of the company and its true owners, the shareholders. Because companies can‘t fake dividends,
payments provide a good benchmark for shareholders.
declare. The cash dividend is the only monetary dividend that shareholders of equity shares receive. The directors of a
corporation are charged with the responsibility of making the formal decision to pay dividends.
In the cash of bonus shares, their decision may be subject to shareholder approval. Once the decision to pay a dividend is
made, four dates become important: date declared, date of record, ex-dividend date, and date payable.
The Date declared is the date on which the directors of a company declare that a dividend is going to be paid. Such
At the same time, the directors announce the date of record. Only shareholders who are recorded on the transfer books of
the company on the date of record are entitled to receive the dividend.
It takes about four business days from the time one buys shares until one‘s name is recorded on the company‘s transfer
books. Therefore a date must be established to let potential buyers know that they will be eligible to receive the dividend
Those who buy the shares after it has gone ex-dividend are not entitled to the dividend because there is not sufficient time
to get their names on the books before the date of record and the dividend is paid. The date payable is the date when the
dividend is paid. The time between the date declared and the date payable varies from company to company.
The Finance Act, 2018 amended the Income Tax Act by repealing section 7A and replaced it with a new a new
section 7A with effect from 1 January 2019.
The New section 7A provides that where dividends are distributed out of gains or profits on which no tax has
been paid, the company distributing the dividend will be charged tax in the year of income in which the
dividends are distributed, at the resident corporate tax rate on the gains/profits from which the dividends are
distributed.
Prior to this amendment, a company would be liable to pay compensating tax if it made a distribution from
untaxed earnings, or where the distribution was out of income that was subject to tax at a rate lower than the
resident corporation tax rate applicable to the company.
Dividends received by a resident company from a company where it holds directly or indirectly more than 12.5%
of the shares is exempt from tax. This means that dividend received by a resident company from its local or
foreign subsidiary is tax exempt. The applicable withholding tax rate for dividends paid to Kenya residents or to
citizens of the East African Community is 5%. The withholding tax rate for dividends paid to non-residents is
10%.
Dividends received from a publicly listed company are taxable at the same withholding tax rate as those received
from a private company, i.e. 5% for a resident and 10% for a non-resident. as a final tax. Where a Double
Taxation Agreement exists between Kenya and a foreign country, lower withholding tax rates for dividends may
apply, if the recipient the dividends qualifies under the limitation of benefits provisions.
Dividend income received from a subsidiary in a foreign country is exempt from tax. Any expenses that are
directly attributable to such exempt income are non-deductible for tax purposes in Kenya.
In the event of inadequacy or absence of profits in any year, dividend may be declared by a company for that
year out of the accumulated profits earned by it in previous years and transferred by it to the reserves, subject
to the conditions that-
( i ) the rate of dividend declared shall not exceed the average of the rates at which dividend was declared by it in
the five years immediately preceding that year or ten per cent of its paid up capital, whichever is less;
(ii) the total amount to be drawn from the accumulated profits earned in previous years and transferred to the
reserves shall not exceed an amount equal to one-tenth of the sum of its paid up capital and free reserves and the
amount so drawn shall first be utilized to set off the losses incurred in the financial year before any dividend in
respect of preference or equity shares is declared; and
(iii) the balance of reserves after such drawal shall not fall below fifteen per cent of its paid up share capital.
Explanation.-For the purposes of this rule, "profits earned by a company in previous years and transferred by it to
the reserves" shall mean the total amount of net profits after tax, transferred to reserves as at the beginning of the
year for which the dividend is to be declared; and in computing the said amount, the appropriations out of the
amount transferred from the Development Rebate Reserve [at the expiry of the period specified under the
Income-tax Act, +) shall be included and all items of capital reserves including reserves created by revaluation of
assets shall be excluded
The SEC intends to take measures to reduce the incidence of unclaimed dividends in the capital market. This
may include:
- Directives to registrars, listed companies, investment advisers, broker-dealers and all affected
market operators, to take reasonable steps to trace owners of unclaimed dividends through but not
limited to the following media form
: - Publication of details of unclaimed dividends in the annual reports of listed companies or in a special
publication to be distributed to all shareholders, the SEC and the GSE
- All investment advisers, broker-dealers and other market operators who may have unclaimed
dividends of clients in their possession and have no authorization from their clients to reinvest or
hold such unclaimed dividends on their behalf, will be required to report and submit a list of such
clients and return the dividends to the registrar of the equity in question.
- The SEC will require listed companies to make general announcements in the mass media- print
and electronic and such other investor relations vehicles as newsletters, house journals, websites
etc. to remind shareholders who have not claimed their dividends in previous dividend declaration
years to come forward to claim. The SEC may direct that such announcements be carried for three
to four successive times after each dividend declaration year.
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14.9 Role of the Secretary in dividends payment
A company secretary is essentially responsible for all the company administration which is also known as
company compliance.
This means they are accountable for the submission of confirmation statements and other important documents to
Companies House, and they often take up a number of other administrative matters such as arranging board
meetings. The company secretary cannot be the same person as the limited company director, however, in the
absence of a company secretary, the company director will need to absorb the required duties.
There is no formal training required of a company secretary. They will, however, be responsible for a lot of
administrative work. It is recommended that the ideal person in the role is naturally organised, efficient, and has
some understanding of the business structure and finances.
Filing confirmation statements – A company secretary will take over this responsibility from the limited
company director. This means they are responsible for the completion and timely submission of the company‘s
confirmation statement (previously know as annual return) and full accounts by the statutory deadline.
Keeping Companies House updated of changes – you need to let Companies House know if the official
details change about your company. These details include who the shareholders are and their share capital, the
Directors details and any PSC (Persons of Significant Control), and the registered office address. The company
secretary has to communicate these changes to Companies House in a timely manner. This is also known as
event-driven filing as it happens after the event. They should also ensure these changes are on company
communications such as your website or stationery.
Updating the Company‘s Statutory Books - It's really important to keep a record of any changes to the
structure of the company. These records are also known the company‘s statutory registers, e.g. the Register of
Directors and the Register of Members. Should you ever decide to sell your company you will need to show
these records as part of the transaction.
Communication with shareholders – As previously mentioned, the company secretary acts as the bridge
between shareholders and the company. This means that they will be communicating any important
announcements. The Secretary will be sending out news and liaising with shareholders to organise shareholder
meetings and the company's Annual General Meeting (AGM).
Maintaining paperwork - A company secretary is responsible for the security and accuracy of important
company documents, which include the certificate of incorporation, share certificates and other important ones.
Signing paperwork – The duty of signing legal documents on behalf of the company director may
sometimes fall to the company secretary. This can be anything from signing cheques and bank documents to
other vital documents.
Compliance – The company secretary should take time to ensure the company remains compliant with
legislation outlined in Companies Act 2006 at all times. They also need to keep up to date with any changes in
compliance, such as the PSC register which came into effect in 2017.
What are the duties of secretary regarding payment of dividends?
Annual Report: (i) disclose the total amount lying in the Unpaid Dividend Account of the company in
respect of the last seven years. (ii) The amount of Dividend, if any, transferred by the company to the Investor
Education and Protection Fund during the year shall also be disclosed.
CHAPTER 15
TECHNOLOGY AND MEETINGS
15.1 Laws, regulations and guidelines on virtual meetings
1. Requirements of the Companies Act, 2015 (―the Act‖)
a) The Companies Act, 2015 in section 275A imposes a statutory requirement for annual general meetings for all
companies, except single member companies.
b) Subject to their Articles of Association, the Act permits private companies to pass written resolutions having
effect as if passed by the Company in a general meeting.
c) By virtue of the provision in section 262(4)(a), private companies whose membership exceeds the prohibited
numbers (Government directives on public gathering to curb spread of COVID-19) can pass written resolutions
in lieu of a meeting of members. The written resolution is to be signed by members of the company who are
entitled to attend and to vote at a general meeting as at the date of circulation of the resolution.
d) The exception made here is passing of resolutions to remove a director or an auditor before the expiry of their
term of office.
e) Public Companies in section 310 of the Act are required to hold an annual general meeting within six months
from and including the day following its accounting reference date in each year, whether or not it holds other
meetings during that period. Failure to comply with this provision is an offence.
f) The COVID-19 pandemic and ensuing Government directives on public gatherings to curb the spread of the
pandemic poses a challenge to companies on the conduct of general meetings
5. All other requirements on conduct of meetings must be complied with. That is:
a) A company need to comply with requirements on notice by ensuring that all shareholders entitled to receive
the notice do receive the notice. The notice can be circulated electronically (e-mail, website, newspaper or other
electronic means). The notice to stipulate the aforementioned information on the manner in which the meeting
shall be accessed and conducted. The notice to advise whether the proceedings of the meeting will be recorded or
not, and that attendance at the meeting would be express permission by the attendees for the recording of their
images. The notice period must be complied with.
b) For a hybrid meeting, the main venue of the physical meeting shall be at the registered office of the company
or a venue determined by the Board of Directors and the following key persons may be present at the physical
location: 5 chairperson, directors, company secretary, external auditor and executive Management and shall
observe any directive or/and protocol on public gatherings as determined by the Government from time to time.
The composition of those attending the meeting in-person shall be the prerogative of the Chairperson.
c) The quorum requirements of holding a valid meeting must be met. The quorum requirements must be
complied with throughout the meeting.
d) A company must ensure that proper record of the meeting is kept and maintained. Where the meeting is held
on a digital platform, it is encouraged a video/audio record of the meeting be kept.
15.2 Technology in use in virtual meetings
In a global marketplace, more and more companies have satellite offices, freelancers and clients who can't
always be in the same room for strategy, coordination and presentation meetings. Virtual meetings and
conference tools allow key players to communicate using audio, video and even chat tools. The technology
used to help with virtual meetings shrinks the distance between companies and their employees and clients for
the most personal attention possible.
1. Audio Only
Audio-only devices, such as phone conferences, are the most economical of the virtual meeting tools. Phone
systems are set up to handle calls to several participants at once, then used with speakers and other features so
a number of people are able to talk and participate. While certainly economical, audio-only devices have
certain drawbacks; namely, they don't allow participants to see each other, meaning facial expressions and
visual presentations are lost. Audio-only is best for quick delegation or coordination meetings, but it should be
combined with screen-sharing software for more functionality.
Armed with a web camera, it's a simple process to see those you're meeting with, share visual presentations
and note body language and facial expressions, all which enhance a virtual meeting. Simple video chatting
products, such as Skype and ooVoo are free to use if you have a quality web camera and sound system already
installed in your computer. More advanced systems use integrated video and audio system, which operates
more like a phone. Other programs, such as GoToMeeting allow you to add participants to your meeting and
share video, documents and presentations from your computer screen.
3. Instant Messaging
While it has its limitations, office-wide meeting via instant messaging combines with social networking to
allow participants to communicate quickly. While video conferencing is ideal for longer presentations and
meetings, instant messaging is best for relaying shorter pieces of information. MSN Messenger, Facebook chat
and AOL Instant Messenger can all be used for virtual meeting applications, such as arranging a schedule or
changing a last-minute detail.
4. Asynchronous Tools
The tools for virtual meetings are often thought of as those which allow participants to communicate with each
other in real time. But virtual meetings often use asynchronous tools to help wrap up loose ends and solidify
decisions made during the meeting. Social networking, email and databases are required to ensure all
participants are on the same page. Don't discount lower-tech tools as part of your virtual meeting. Sending out
minutes, contracts and assignments ensures the meetings end with clarity.
Leaders must consider the unique challenges of virtual communication to get the most out of their teams at
every meeting. Below are some best practices for planning a successful virtual meeting.
For every virtual meeting, it‘s important to have a plan beforehand so attendees know what to expect and
how they can contribute to the conversation. Here are some key best practices:
Share your agenda ahead of time: Send the agenda to attendees well before the meeting, so they
have clear expectations of what to prepare. Provide details in your email invite about key talking
points and any relevant documents, files, or research you‘ll be referring to during the meeting.
If applicable, provide attendees with the opportunity to view the document or add comments
before the meeting: Give everyone equal opportunity to contribute to the meeting. You can do so
through document management tools like Google Drive. Whether it‘s a slideshow, video, or annual
report, using file-sharing tools like Dropbox and Box will ensure everyone is in the loop.
Provide expectations for how the virtual space will be managed: Ensure all attendees are on the
same page about how the virtual meeting will be conducted. For example, should attendees mute their
videos while others are speaking? Is a discussion expected or is the meeting mainly led by the
presenter?
Coordinating times for attendees who are on different schedules and time zones can be challenging. Below
are some recommendations for ensuring everyone is on the same scheduling page:
Pick time frames that work for everyone’s time zone: For example, if you are expecting
attendees in New York and London, an ideal time to schedule meetings would be 10 a.m. in New
York and 1 p.m. in London.
Use tools that help you choose the right time frame: Figuring out who is available at what times
can be confusing. Rather than let time zones get the better of you, consider using appointment
scheduling software to help with automatic time zone detection of all attendees.
Schedule meetings in advance: The more heads up attendees have ahead of meetings, the less
likely they will have scheduling conflicts. If you have to schedule a last minute meeting, make sure to
check that all attendees have time blocks open.
Practicing proper etiquette sets the stage for a seamless and productive virtual meeting. Here are some
helpful etiquettes for hosts and participants to establish prior to every virtual meeting to ensure a smooth
meeting experience:
Test all technology prior to the meeting: Check your meeting connections in advance. This
includes your video, Wi-Fi, and screen sharing capabilities. When possible, establish the connection
about ten minutes before the meeting begins.
Meet face-to-face on video: Ensure that every member at the virtual meeting can see one
another. 55% of communication is body language, while another 38% is tone of voice, according to
research. Meeting face-to-face on video is much more personal than meeting with a disembodied
voice on the phone, and it helps build more of a rapport too. It also allows participants to pick up on
body language and cues, such as when someone has finished speaking or if they are just taking a
pause.
Set aside all distractions: As many as 83% of attendees say they checked their email at an in-
person meeting or presentation—and that‘s with other guests in the room to hold them accountable.
Remind attendees to give their full attention to participants and reduce distractions like email and text
messages during the meeting.
All scheduling and planning are for naught if your audience isn‘t engaged. Here are our recommendations
for keeping your team present and engaged for a virtual meeting:
Give space for casual conversation: Don‘t be too quick to quash small talk that naturally happens
at the start of a meeting. It gives remote teams the chance to connect on a personal level before
getting down to business—the same as they would in person.
Introduce methods to drive participation: Encourage everyone to act like they are in the front
row by creating opportunities for participation. For example, participants can be given a chance to
submit questions well before the start of the virtual meeting. If necessary, you can also implement a
poll or encourage more questions over live chat.
Ask questions frequently: Check in constantly throughout the meeting to give participants a
chance to share and make sure they‘re following. Instead of asking open-ended questions, be explicit
in what you‘re asking. For example, instead of ―What do you think of this tool?‖ you should instead
opt for: ―Do you think this tool will help with productivity?‖
Just like an in-office meeting, the discussion that follows at the water cooler can be just as telling as the
session itself. Here‘s what you can do to ensure communication is clear and there‘s no confusion:
Conclude with a water cooler conversation: About five to ten minutes before the meeting ends,
ask your team if they have any further questions or concerns. This is when participants are open to
share their reservations or doubts.Summarize and debrief with your team after: You can do so with a
follow-up email both about what was covered at the meeting, what key decisions were made, and
what actions are required of your team.
Ask how the meeting could’ve been better: Take stock yourself. What worked? What fell short?
You don‘t have to apply all of the above principles in these less formal sessions, but taking t he time
to honestly listen, assess, and revise will ensure the most successful meetings in the future.
Whether it‘s a web conference software or project management software, there‘s a wide selection of
technology tools that can help you conduct productive and efficient virtual meetings.
The key is determining which of these tools are the right fit for your team. When choosing tools, ask
yourself:
What is the key functionality my virtual meeting needs to be successful? For example, do you
need everyone to work collaboratively on a document at the same time? Then Google Docs is the
likely solution. Do you need team members to view a demo in real time? Then screen sharing
software is for you.
What is the average number of participants in your virtual meeting? The meeting software
you‘ll need for a one-on-one virtual meeting can differ widely to one that allows you to host a
meeting with over 15 employees. Make sure the web conference or meeting conference you‘re
considering provides that flexibility.
We defined the term "Zoom fatigue" in the introduction, and it is indeed one of the most significant problems
with online meetings. Because virtual calls and meetings are comparatively easy to set up, some leaders and
project managers may abuse their accessibility.
However, employees in creative and technical roles like design, writing, and software development work well
in flow states. When they're pulled into too many virtual meetings, their productivity and output start to drop.
The solution to this issue with virtual meetings is simple: Schedule fewer meetings. As a project manager, you
can choose to batch meetings with specific departments on specific days, limit meeting duration, and use
collaborative workspaces like Wrike to handle quick questions and updates.
Technology can be managed but not controlled. With the best setup and practice sessions, you may still find
yourself facing technical challenges in virtual meetings.
The best solution to this recurring challenge in virtual meetings is to have a tested backup plan. As project
manager, you should send out the details for the backup plan along with other relevant information and agendas
for your meetings.
This way, if you face technical challenges, you and other attendees can quickly switch to the backup
conferencing plan without loss of time in your meeting schedule. Ensure that attendees are familiar with the
virtual meeting options you use.
6. Communication gap
Virtual meetings are limited to audio and visual cues, unlike in-person meetings where body language, tone of
voice, pacing, and gestures add to a speaker's words.
Here are several steps that can solve recurring virtual meeting challenges and help you communicate your key
points clearly.
1. Distribute a clear, concise meeting agenda beforehand. This clarifies to attendees what they can expect
from the meeting and when they‘d be required to participate.
2. Create slide decks for your presentation. This solves one of the major problems with virtual meetings:
eliminating monotony and ensuring that attendees follow key meeting points.
3. Ask everyone to mute their microphones when they aren't speaking and sit in quiet areas during the call.
4. Use file and screen-sharing tools to engage attendees and remember to call each person by name when
you need a response or contribution from them.
5. Stick to the meeting plan. Don't allow colleagues or teammates to ramble on and deviate from the agenda
or prolong the meeting. If your teammates know you lead actionable meetings, they're likely to show up
prepared and with more energy and focus.
6. Always end your virtual meetings with exact action items for every attendee. Before you adjourn your
session, ask each person for their next steps to ensure everyone is aware of their responsibilities.
Sometimes, your virtual meeting attendees may include teammates, clients, or stakeholders from other continents
and time zones.
As the project manager, you may fall into the habit of prioritizing yours and your team's time and schedules, but
it's wise to factor in other attendees as well. Spend time thinking of how you can make it convenient for
everyone to join in at a reasonable hour, especially if it's a recurring meeting.
When you schedule the most convenient time for everyone involved, you show that they are valued and
considered. This creates an atmosphere of better virtual meetings, motivated teams, and an overall increased
chance of success
A common issue is just the overwhelming amount of platforms available to users. Each employee,
stakeholder or client might have a preferred platform. How can you select what technology would work best for
you and your team?
It‘s best to select a platform that seamlessly integrates with your existing technology or platform. Already use the
Microsoft 365 suite? Teams would be a natural selection for your team. If you‘re dealing with many external
meetings, perhaps Zoom is a better option since it‘s easy to set up meetings outside your office ecosystem.
Learning how to use all your selected platform’s features may seem like an obvious step, but it is
important. Features like screen sharing can be complex and lead to larger issues if not used properly.
One common issue with screen sharing is that sensitive data can be accidentally leaked. Let‘s say you will share
your presentation with your team, but you were also doing some online banking previous to the meeting. If you
accidentally hit the share all screens options, meeting attendees can now see the screen with your banking
information. It‘s important to learn to use the features, so mistakes like that don‘t happen.
Spending time to research what each platform can do and selecting one in advance will save you time and money
down the line. Set a standardized way to host meetings across your company, so every team member is
trained and using the same platform.
Provide training for multiple platforms if you deal with external clients—that way, you are prepped and ready to
use any platform.
It may seem that technology fails every time you need it most. Technical problems are a common issue with
virtual meetings. This applies to both the software or supporting accessories.
Maybe your resolution is low, no one can hear you, or your video keeps freezing. Regardless of what the
technical issue you are having is, it can be annoying and disruptive.
The best way to combat any tech issues you come across is to be as prepared as possible.
Test your setup well in advance of your meeting so you can identify any tech issues early. If you are frequently
on virtual meetings throughout the day, take some time each morning to test your camera, internet connection
and audio.
The equipment you are using plays a big role in the quality of your meeting.
A widespread issue that arises during virtual meetings is audio problems. Audio is perhaps the most important
factor in having a successful virtual meeting. Feedback, echoes and team members talking over each other can
make the conversation nearly impossible to follow.
One solution to solve audio issues on your end is to purchase a dedicated headset. Your computer or headphones
can cause the audio quality to drop, making it difficult for your coworkers to hear you clearly
2. Prepare ahead
3. Stick to time
4. Dress appropriately