How Many Directors Does a Kenyan Company Actually Need?

It depends on the type of company, and the answer is smaller than most online guides suggest. A private company must have at least one director, and a public company must have at least two. At least one director of any company must be a natural person. That is the whole statutory floor in the Companies Act, 2015, and it answers the question of how many directors a Kenyan company needs. Older figures such as two or seven are not the test for the number of directors, and the number of directors is a separate question from the number of shareholders.

How many directors does the Companies Act require?

Section 128 provides that a private company is required to have at least one director and a public company at least two. Section 129 adds that a company must have at least one director who is a natural person. The requirement is met if the office of director is held by a natural person as a corporation sole or otherwise by holding a specified office. In practice that means a company cannot have only corporate directors.

Two further rules apply to every director. Under section 131, a person who has not reached eighteen years of age may not be appointed a director, and an appointment made in breach is void. Under section 130, if the Registrar forms the opinion that a company is in breach of section 128 or 129, the Registrar may give the company a direction specifying the breach, the action required and the period for compliance, which may not be shorter than one month or longer than three months. The company then complies by making the necessary appointment and giving notice of it.

Directors and shareholders are separate requirements

Section 11 allows one or more persons to form a company by subscribing their names to a memorandum of association. For a company with share capital, section 12 provides that each subscriber agrees to take at least one share. A private company can therefore be formed and run by one person who is both the sole shareholder and the sole director. The sections that set the number of directors do not require a director to hold shares, and they do not require a shareholder to serve as a director, although a company’s articles of association may impose additional requirements on either. Our guide to the shareholders agreement and the articles of association explains how those documents shape who can be appointed.

When deciding how many directors to appoint beyond the legal minimum, the question is a business one. A second director gives a check on decisions and cover if one director is unavailable or incapacitated. Sections 139 and 141 deal with the resolution to remove a director and a director’s right to protest against removal, so the rules for appointing and removing directors are best settled in the articles and in any shareholders agreement before a dispute arises.

The contact person rule for companies with no resident director

Section 243A(2) of the Companies Act requires a private company, or a company limited by guarantee, that has neither a company secretary nor a resident director to appoint a contact person. The contact person must be a natural person with a permanent residence in Kenya. The company must lodge a notice of the appointment with the Registrar, and must lodge a further notice within fourteen days if the contact person ceases to act or changes residential address in Kenya.

The contact person has real duties. Under section 243A(4), the contact person must keep a copy of the record relating to directorship, shareholding, beneficial ownership and other information the company is required to keep, and make those copies available to competent authorities and the Registrar. A contact person who fails to comply commits an offence with a fine not exceeding KES 500,000 (section 243A(5)). The company and each officer in default also commit an offence if the company fails to appoint one (section 243A(7)). This is a separate obligation from the director headcount, and one that many single-director companies with a director living abroad overlook. If you are a foreign investor, see our article on resident and nominee directors.

Why a low minimum does not mean low governance

A sole director still owes the full set of general duties in sections 142 to 147. A director must act within the company’s constitution and use powers only for the purposes for which they were given (section 142), promote the success of the company for its members as a whole (section 143), exercise independent judgment (section 144), and exercise reasonable care, skill and diligence (section 145). A director must also avoid conflicts of interest (section 146) and not accept benefits from third parties (section 147). Having only one director means there is nobody else on the board to catch a mistake before it happens.

The Act also protects outsiders who deal with the company. Section 133 provides that the acts of a director are valid even if it is later discovered that the appointment was defective or that the director was disqualified or had ceased to hold office. That protects third parties, not the director. Because section 210 requires minutes of directors’ meetings to be recorded, even a sole director should keep a written record of significant decisions. For a company with more than one family member on the board, our guide to formalising a family business board sets out the next steps.