Can an Unregistered Foreign Company Sue in Kenya? The Court of Appeal’s 2026 Ruling on Foreign Lenders

Foreign company Kenya registration rules do not automatically bar a lender from suing over an unpaid debt. That is the question the Court of Appeal faced when a foreign lender that finances a Kenyan borrower, without ever registering a branch or subsidiary in Kenya, needed to sue for repayment after the loan went bad, despite never having registered under the Companies Act. On 31 July 2026, the Court of Appeal answered that question in Stichting Rabobank Foundation v Ava Chem Limited & another, and the answer will matter to every foreign lender, trade creditor, and cross-border financier with an unregistered presence in Kenya.

The Dispute: A Cross-Border Loan and a Registration Objection

Stichting Rabobank Foundation, a Dutch foundation, had extended financial support to Ava Chem Limited, a Kenyan company, with Christopher Irungu Mwangi standing as guarantor. When the arrangement broke down, Stichting Rabobank sued in the High Court’s Commercial and Tax Division (Commercial Case E374 of 2022) to recover what it was owed and, at one stage, applied for judgment on admission based on the defendants’ own concessions.

The defendants did not primarily contest the debt on the merits. Instead, they raised a preliminary objection: Stichting Rabobank was a foreign company that had never registered under Part XXXVII of the Companies Act, 2015, and therefore, they argued, lacked the capacity or standing to sue in Kenya at all. The High Court agreed, upheld the objection, and struck out the suit without a trial on the underlying debt. Stichting Rabobank appealed.

What Section 974 Actually Says

Section 974 of the Companies Act, 2015 requires a foreign company to register in Kenya if it is “carrying on business” in Kenya. It does not say that any foreign company dealing with a Kenyan counterparty must register, and it does not say that an unregistered foreign company automatically loses the right to sue in a Kenyan court. The Court of Appeal’s judgment turned on exactly this distinction: registration is a consequence of carrying on business in Kenya, not a general precondition for a foreign entity to have legal existence or access to Kenyan courts.

The Court of Appeal held that the High Court had made two connected errors. First, it treated non-registration as equivalent to the company having no juridical existence and no locus standi, when the statute itself does not say that. Second, and more consequentially, it resolved the question of whether Stichting Rabobank was in fact “carrying on business in Kenya” at the preliminary objection stage, without a sufficiently undisputed factual foundation to decide that fact-sensitive question without a trial.

The Court of Appeal’s Holding

In its own words, the Court held that “the right of a foreign company to invoke the jurisdiction of a Kenyan court cannot be defeated merely by pointing to its foreign incorporation or its non-registration under section 974 of the Companies Act,” and that “whether a company is in fact carrying on business is a distinct inquiry,” with the consequences of non-registration to be derived from the statute itself “rather than assumed.” On that basis, the Court of Appeal allowed the appeal, set aside the High Court’s ruling, dismissed the preliminary objection, and reinstated the case for hearing before a different judge.

Two things the Court of Appeal did not do are worth being precise about. It did not rule that Stichting Rabobank was not carrying on business in Kenya; it ruled that the question could not be resolved on a preliminary objection without proper evidentiary determination, and left it to be decided at trial. It also did not touch the merits of the underlying debt claim itself; the judgment expressly states that nothing in it determines the application for judgment on admission, the substantive debt claim, or any other question requiring evidence about the appellant’s activities in Kenya. The practical effect is that the case goes back to the High Court to be argued properly, not that the foreign lender has already won on the money owed.

What This Means for Foreign Lenders and Creditors

For an unregistered foreign company, Kenya courts will not treat non-registration alone as an automatic, knockout defence that a Kenyan debtor can use to dismiss a foreign lender’s claim before any evidence is heard. A single cross-border loan, or an occasional financial support arrangement extended from outside Kenya, is not, without more, the kind of sustained local presence the “carrying on business” test in Part XXXVII is aimed at, and a court asked to decide that question needs a proper evidentiary basis rather than an inference drawn at the preliminary stage.

That said, this judgment does not create a blanket immunity from the registration requirement for every unregistered foreign creditor. The Court of Appeal deliberately left the “carrying on business” question open as one for trial on the facts of each case, which means a foreign lender with a more sustained or repeated pattern of Kenyan activity, rather than a single arm’s-length loan, could still face a genuine registration exposure once the facts are examined. Foreign lenders structuring Kenyan facilities, and Kenyan borrowers negotiating with them, should treat the registration question as a fact-specific risk to be assessed on the actual pattern of dealings, not as a settled point either way.