Paper 09: Meetings: Compliance and Administration - Traction School of Governance and Business

About Course

The Professional courses are administered at Foundation, Intermediate and Advanced Levels. Each level requires an average of one year, though candidates are advised to provide for an additional one year to meet requirements for internship/ practical experience.

A student must book for a minimum of three papers in a level in any order unless is exempted or has credits.

This course is aimed at persons who wish to qualify and work or practice as corporate secretaries, policy formulators, and consultants in governance, governance and compliance auditors and administrators at county and national levels and in the private sector.

Course Content

CLASS REECORDING JAN – APR 2024

CLASS 1 INTRO TO MEETINGS 13/01/24

00:00
CLASS 2 MEETINGS INTR 19/1/24

02:00:00
CLASS 3 MEETINGS 20/1/24

02:00:00
CLASS 4 GG N MINUTES BARD MEETINGS 26/1/24

00:00
CLASS 5 GS N RESOLUTIONS 27/1/24

02:00:00
CLASS 6 GENERAL MEETINGS 4/2/24

02:00:00
Lesson CLASS 7 GEN METINGS 4/2/24

02:00:00
Lesson CLASS 8 BOARD N CMM MEETINGS 9/2/24

02:00:00
Lesson CLASS 9BOARD AND COMM 10/2/24

02:00:00
Lesson 10 IQUIDATIN MEETINGS 16/2/24

02:00:00
Lesson 11 MEETINGS IN LIQUIDATION 17/2/24

02:00:00
Lesson MEETINGS OF COUNTY N NATINAL ASSEMBLY 24/2/24

00:00
Lesson 13 MEETINGS OF COUNTY N NATIONAL ASSEMBY 25/2/24

00:00
Lesson 14 COUNTY AND NATINAL ASSEMBLY MEETINGS 1/3/24

02:00:00
Lesson 14 TECHNOLOGY AND MEETINGS 2/3/24

02:00:00
Lesson 16 REGISTERS AND RECORDS 8/3/24

02:00:00
Lesson REGISTERS AND RECORDS 9/3/24

02:00:00
Lesson18 COMPLIANCE STRATEGY 15/3/24

01:00:00
Lesson19 COMPLIANCE STRATEGY & SHARES INTR 16/3/24

02:00:00
Lesson 20 SHARES MANAGEMENT 22/3/24

10:00:00
CLASS 21 NAIROBI SEC EXCHANGE 30/3/24

02:00:00
Lesson 22 DIV MGT& COMMON SEAL 5/4/24

02:00:00
CLASS 23 NSE 6/4/24

02:00:00
CLASS 25 REVISIN PILOT PAPER AND APRIL 2022 12/4/24

02:00:00
CLASS 25 13/4/24 REVISION APRIL& DEC 2024

02:00:00
Lesson REVISION APRIL 22 & MAY 2021 19/4/24

02:00:00

Overview
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

Online class link

TOPIC 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

TOPIC 2 Professional framework of the corporate secretarial profession
2.1 Evolution of the corporate secretarial profession (Global perspective and Case study of Kenya) 2.2 Legal and regulatory framework 2.3 Role and mandate of corporate secretarial professional bodies 2.4 Procedures on registration and deregistration as a member 2.5 Professional qualifications and qualities of a secretary 2.6 Required knowledge, skills and competencies 2.7 Appointment and vacation of office of the Secretary 2.8 Professional engagement and clearance as a Corporate Secretary 2.9 Rights, statutory and contractual obligations of a corporate secretary 2.10 Role of corporate secretarial 2.11 Continuous professional development 2.12 Disciplinary procedures CHAPTER 2 Professional framework of the corporate secretarial profession 2.1 Evolution of the corporate secretarial profession (Global perspective and Case study of Kenya) The role of company secretary has changed significantly in recent years. Since the financial crisis in 2008 there has been a tighter focus on corporate governance in all sectors, not just financial services. And boards and chairmen in all industries now rely on the company secretary to advise not only on statutory duties, but also on matters concerning corporate governance and effective board processes. The company secretary has gained greater visibility and greater influence in the boardroom. The traditional company secretary 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. Today’s company secretary 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. Key attributes of an effective company secretary 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. 2.3 Role and mandate of corporate secretarial professional bodies Institute of Certified Secretaries of Kenya (ICS) The Institute of Certified Secretaries of Kenya (ICS) is the professional organization for Certified Secretaries. The Institute is established under the Certified Public Secretaries Act, Cap 534 of 1988 and dedicated to the promotion, growth, development and regulation of the governance and corporate secretarial profession in Kenya. The Institute is governed by a Council comprising of eleven (11) members, out of whom ten (10) are elected by members and one (1) appointed by the Cabinet Secretary for Finance pursuant to the CPS Act. The Council is led by the Chairman who is also elected by members. The Council operates through Committees established to handle various activities touching on the CPS profession. Globally, Certified Public Secretaries (CPS) have varying titles depending with the type of organization they are working for and the position they occupy in such organizations. Some of the titles applicable include Certified Secretary (CS), Company Secretary, Corporate Secretary, Corporation Secretary, Board Secretary and Chartered Secretary. In Kenya, members of the Institute of Certified Public Secretaries of Kenya (ICPSK) are generally referred to as Certified Secretaries and the designatory letters “CS.” are used before their names. The designation “CS” has already been protected at the Kenya Industrial Property Institute (KIPI). Registration of Certified Public Secretaries Board (RCPSB) 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. 2.4 Procedures on registration and deregistration as a member A person is qualified to be registered on meeting the requirements of Section 20 of the Certified Public Secretaries of Kenya Act, Cap 534 of the Laws of Kenya as listed hereunder: 1. Has been awarded by the Examinations Board (KASNEB) a certificate designated the final certificate of Certified Public Secretaries Examinations; 2. Holds a qualification approved by the Registration of Certified Public Secretaries Board (RCPSB); 3. Was on 30th June, 2002 both a citizen of Kenya and a member of the professional body known as The Institute of Chartered Secretaries and Administrators; Some of documents required on application and must be certified by a commissioner of oaths: 1. Copy of birth certificate 2. 2 coloured passport photos 3. Copy of National ID or Passport 4. Work permit for foreigners 5. Copies of professional and academic certificates 6. Affidavit for lost or misplaced documents and change of name or name difference 7. Letter from an advocate certifying that the applicant is known to him or her and confirming character and conduct 8. Letter from current and previous employer(s) 9. Filled application form 2.5 Professional qualifications and qualities of a secretary The company secretary embraces a top-level managerial position in the company. This place necessitates sound educational knowledge, skills and effectiveness. Moreover, the company secretary performs numerous complex and statutory activities. Therefore, he needs to possess several different qualities and statutory qualifications. The qualities and qualifications that a company secretary needs to possess are as follows: 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. Educational qualification: Company secretary needs to have higher academic qualifications. He must have sound knowledge in Language and general affairs. These qualifications enable him to gain an idea on common business and managerial dealings.  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 requires particular information on secretarial practice to deal with notice, agenda, declaration, minutes of a meeting. He must know about office association for communication.  A company secretary must have adequate knowledge of the Companies Act, Industrial & Commercial law. To keep a good relationship with all stakeholders a company secretary should have knowledge of human relations.  He requires proper knowledge to work with a computer for documentation conservation and potential use of data or information. 2.6 Required knowledge, skills and competencies 1 Multitasking skills 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. 5 Effective communication skills 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. 2.7 Appointment and vacation of office of the Secretary 1. Company Secretary shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration. 2. A Company Secretary shall not hold office in more than one company except in its subsidiary company at the same time. If he is holding office in more than one company at the same time on the date of commencement of this Act, shall, within a period of six months from such commencement, choose one company, in which he wishes to continue to hold the office. Following Procedure Is To Be Followed 1. Meeting of Nomination and Remuneration Committee Where a Company is required to constitute a Nomination and Remuneration Committee under section 178, shall receive a recommendation from the committee for the appointment and remuneration of the Whole-Time Company Secretary. [For convening meeting of Nomination and Remuneration Committee 2. Obtain recommendations from the Audit Committee Where a Company is required to constitute an Audit Committee under section 177, shall receive a recommendation from the committee for the appointment and remuneration of the Whole-Time Company Secretary. [ 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  Certified true copy of the Board Resolution  Letter of Appointment  Any other relevant document 3. Making Necessary entries in Register of Directors Company shall make necessary entries in the Register of Director and Key Managerial Personals. 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. 2.8 Professional engagement and clearance as a Corporate Secretary A Corporate Secretary could be considered the glue that holds an entire corporation together. He/she is responsible for assuring the company stays in compliance with both regulatory and statutory requirements while also executing all of the decisions, resolutions and changes put forth by the corporation’s Board of Directors. 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. Traits of a Good Corporate Secretary The best candidate to hold the position of a Corporate Secretary would be:  Supremely organized and detail-oriented  An effective and patient communicator  An excellent problem solver  Experienced at managing entire departments as well as individual employees  Familiar with business laws and regulations  Extremely discreet  Acquainted with, and not bothered by, bureaucratic red tape  Able to perform under pressure  A calm and rational mediator 2.9 Rights, statutory and contractual obligations of a corporate secretary 2.10 Role of corporate secretarial 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, 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. 2.11 Continuous professional development Continuous professional development refers to the process of training and developing professional knowledge and skills through independent, participation-based or interactive learning. This form of learning allows professionals to improve their capabilities with the help of certified learning. CPD courses for professionals should reflect their current expectations as well as future ambitions. As your career develops, the knowledge and skills you require will also evolve. This is where CPD will come to your rescue and help you steer your career in the future. CPD can only be effective when:  It is part of a planned process;  There is a clear perspective on the improvement required;  It is tailored individually to each professional;  It is taught by people who have the necessary expertise, experience and skills. In addition, professionals have to set their short-term and long-term objectives while implementing a structured learning plan. They may also be required to record what they are learning and the progress they make in order to keep track of the skills and knowledge they obtain. CPD training helps professionals to:  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. Types of continuing professional development  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. Importance of continuing professional development “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. Benefits of continuous professional development 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:  Improves intellect, personal skills and confidence;  Opens doors to excellent future employment opportunities;  Improves learning ability;  Promotes independent learning;  Demonstrates ambition and commitment to professional self-improvement;  Relevant practical qualifications that will impress current and prospective employers. Now, take a look at the benefits of CPD for the employer:  Sets a high standard across the company for staff development;  Improves productivity with the help of motivated and skilled employees;  Endorses a learning culture in the organisation;  Enhances the reputation of the company among prospective employees and clients;  Increases employee retention;  Allows the company to keep up with the latest trends and changes in the industry. 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. 2.12 Disciplinary procedures Professional misconduct 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. Professional misconduct in relation to members of the Institute is broadly categorized as below: A. Professional misconduct in relation to Company Secretaries in Practice B. Professional misconduct in relation to members of the Institute in service C. Professional misconduct in relation to members of the Institute generally D. Other misconduct in relation to members of the Institute generally (Part IV of the First Schedule containing two clauses) E. Professional misconduct in relation to Company Secretaries in Practice (Part I of the Second Schedule containing ten clauses) F. Professional misconduct in relation to members of the Institute generally (Part II of the Second Schedule containing four clauses) G. Other misconduct in relation to members of the Institute generally A) Professional misconduct in relation to Company Secretaries in Practice A Company Secretary in Practice shall be deemed to be guilty of professional misconduct, if he– (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: (6) solicits clients or professional work, either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means: Provided that nothing herein contained shall be construed as preventing or prohibiting– (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

TOPIC 3 Governance standards and guidelines
3.1 GS 001: General Meetings 3.2 GS 002: Meetings of the Board 3.3 GS 003: Minutes 3.4 GS 004: Resolutions 3.5 GS 005: Board papers 3.6 GS 006: Registers and records 3.7 GS 007: Filing annual returns 3.8 GS 008: Common seal 3.9 GG 001- Professional ethics 3.10 GG 002- Role of the corporate secretary 3.11 GG 005: Virtual meetings

GS001: General Meetings

01:55:00
GS002: Meetings of the Board

00:00
GS003: Minutes

02:00:00
GS004: Resolutions

01:50:00
GS005: Board papers

01:50:00
GS006: Registers and records

00:00
GS007: Filing annual returns

00:00
GS008: Common seal

01:37:00
GG001- Professional ethics

01:37:00
GG001- Professional ethics
GG002- Role of the corporate secretary
GG005: Virtual meetings

01:38:00

TOPIC 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 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. A company meeting may be defined as a concurrence or coming together of at least a quorum of members in order to transact either ordinary or special business of the company. The characteristics of a company meeting are as follows: 1. Two or more persons (who are the members of the Company) must be present at the meeting. 2. The assembly of persons must be for discussion and transaction of some lawful business. 3. A previous notice would be given for convening a meeting. 4. The meeting must be held at a particular place, date and time. 5. The meeting must be held as per provisions/rules of Companies Act. 4.2 Statutory meeting Statutory Meeting is the first meeting of the shareholders of a public company. It must be held within a period of not less than one month nor more than 6 months from the date at which the company is entitled to commence business. It is held only once in the lifetime of a company. 4.3 Annual general meeting An annual general meeting (AGM) is a yearly gathering of a company's interested shareholders. Shareholders with voting rights vote on current issues, such as appointments to the company's board of directors, executive compensation, dividend payments, and the selection of auditors. 4.4 Special general meeting Special General Meeting means a meeting of Members other than an Ordinary or Annual General Meeting convened for a special purpose in terms of this Constitution. 4.5 Extraordinary general meeting An extraordinary general meeting (EGM) is a shareholder meeting called other than a company’s scheduled annual general meeting (AGM). An EGM is also called a special general meeting or emergency general meeting. In most cases, the only time shareholders and executives meet is during a company’s annual general meeting, which usually occurs at a fixed date and time. 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. An EGM might be called to deal with any of the following:  The removal of an executive  A legal matter  Any matter that can't wait until the next shareholders meeting 4.6 Class meeting A class meeting is a meeting of shareholders, where the only shareholders in attendance that can vote are those that hold a particular class of shares. When the rights of the holders of a class of shares are to be varied by the company, it may be necessary to hold a class meeting to ensure that the shareholders of that class of shares can vote on the matter. At a class meeting only matters that concern that class of shares can be discussed. Any matters affecting more than one class must be discussed at a general meeting or dealt with using the usual written resolution procedure if the company is a private limited company. 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. 4.7 Meeting of debenture holders When a company desires to vary the rights of debenture-holders, such meetings are to be held according to the rules laid down in the Debenture Trust Deed. They are also held to enable the company to issue new debentures or to vary the rate of interest payable to debenture-holders. 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 debentureholders. 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. 4.8 Duties of the corporate secretary before, during and after a general meeting The Secretary's Role at Meetings 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: Before the Meeting  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. After the Meeting  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. 4.9 Methods of holding company meetings 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:  meetings of the organisation's management committee or board;  meetings of members of your community organisation;  management meetings; and  an annual general meeting. 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:  requirements to hold meetings and rights to call a meeting;  proper notice of the meeting (time periods, content of notice);  quorum (minimum number of people present to make meeting valid);  adjournments;  voting rights (and proxy rights);  resolutions; and  minutes. 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. What is an annual general meeting (AGM)? An AGM is a meeting that must be held each year to which all the current organisation members (financially paid-up for the current year) are invited to attend. In general, the purpose of an association’s AGM is:  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. 4.10 Requirements for a valid physical, virtual and hybrid members’ meeting 1. Decide if a meeting is necessary 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. 2. Only include people essential to the topic 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. 3. Create and share an agenda in advance Meetings need to be organized since they are consuming so much time. To keep them organized, create an agenda in advance and share with the attendees to solicit feedback. If they think something else needs to be added, consider adding it. It’s better to do that in advance rather than cutting into the limited in-person time you have at the meeting. 4. Keep time and don’t go over 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. 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 The options available to companies during this period include: 2. Delaying or Postponing the AGM a) The Act grants the Registrar power either on the application of the company or for any other reason the Registrar thinks fit, to extend the period within which the Company is to conduct an AGM even if, as a result, the period is extended beyond the calendar year. Companies who may wish to delay or postpone their AGMs may thus apply to the Registrar for an extension of the period within which to conduct their AGM in view of the restrictions in place. The applications should be submitted electronically through eo@brs.go.ke. b) However, before a company exercises this option, the applicant company needs to consider the potential effects of that delay or postponement of their AGM and how such delay or postponement would affect their businesses and interests of their shareholders. That is the inability to pass resolutions otherwise passed only in General Meetings, for instance: i. laying the company's annual accounts and reports before its Members; ii. removal of a director or auditor before the expiry of their term of Office; iii. re-electing directors retiring by rotation and appointing new directors to the company's board; iv. appointing or re-appointing the company's auditors; v. authorizing the directors to allot shares and disapplying pre-emption rights; vi. authorizing the purchase by the company of its own shares; vii. if a final dividend has been recommended by the directors, declaring that dividend; and viii. for quoted compani es, voting on the company's directors' remuneration report and policy, and authorizing the holding of other general meetings on 14 days' notice. 3. Hybrid and Virtual Meetings a) All Companies can leverage on technology and be able to hold General Meetings (GM) during the pandemic period. This is pursuant to Orders issued by the Court in NRB Miscellaneous Civil Application No. E721 of 2020 In the Matter of Kenya Private Sector Alliance Limited (KEPSA) for all companies and NRB Miscellaneous Application No E680 of 2020 (WPP Scangroup Plc) for listed Companies. This may be a hybrid where there is a physical in-person meeting (subject to the public 3 gathering restrictions) and the option to participate remotely or a virtual only GM that is conducted solely online. Virtual meetings are conducted online, without a physical meeting and the only venue in the conduct of a fully virtual meeting is the broadcast venue. b) The Companies Act, 2015 does not contain any provisions on the conduct of hybrid or virtual meetings, however, companies can make provision for virtual or hybrid meetings in their articles of association. c) The model articles for private companies, public companies and companies limited by guarantee provides that in determining attendance at a general meeting, it is immaterial whether any 2 or more members attending it are in the same place as each other. d) This provision in the model articles thus allows a company that has adopted the model articles to hold a General Meeting of its members at two or more venues using any appropriate technology that gives members as a whole reasonable opportunity to participate in the meeting and where the articles stipulate conditions on how such meeting shall be conducted then such conditions must be complied with. Such companies that have adopted the model articles or whose articles of association provides for holding of their General Meetings virtually need not refer to the Court Orders cited above. e) Companies therefore, whose articles of association do not provide for virtual or hybrid meetings, reference and compliance should be made pursuant to the Court Orders cited above. 4. Virtual Conduct of the meeting, considerations to be put in place: a) The Company needs to put in place appropriate technology that enables members to participate in the meeting and ability to record attendance. b) The infrastructure needs to be reliable and should enable members the right to speak and to vote. c) The online voting process must be able to allow members to cast their votes in time during the proceeding of the general meeting. 4 d) Members with no access to the internet can cast their votes via proxy forms appointing the Chairperson of the meeting, or any other individual, to vote on the members’ behalf. The proxy forms should be submitted within the stipulated time and through a manner (for example electronic means or postal) as determined by the Company. However, this is not a mandatory requirement but can be exercised on election by members. e) The Company needs to provide guidance to shareholders on the requirements and method of participating and voting in the general meeting using the selected platform, the means by which the meeting can be electronically accessed and the mode of participation. f) All protocols/rules of procedure must be circulated in advance to all shareholders, on how participants would use the selected technology, how the member may provide questions or matters to be raised at the meeting, the relevant cut-off time within which questions must be submitted and voting/polling procedures. g) The company should implement secure authentication measures to identify attendees and verify that a quorum is present and maintained throughout the meeting. h) The Company to consider the technological implications, including user accessibility, data security, management of Q&A, shareholder participation and voting arrangements. 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. 4.11Requirements for circulation of resolutions A Resolution proposed to be passed by circulation shall be sent in draft, together with the necessary papers, to all the Directors including Interested Directors on the same day. Companies Act 2015 264. Circulation date for written resolutions A reference in this Part to the circulation date of a written resolution is to the date on which copies of the written resolution are sent or delivered to, members or, if copies are sent or delivered to members on different days, to the first of those days. 265. Circulation of written resolutions proposed by directors (1) This section applies to a resolution proposed as written resolution by the directors of the company. (2) The company shall send or deliver a copy of a written resolution of the directors of the company to every eligible member— (a) by sending copies at the same time, so far as it is reasonably practicable, to all eligible members in hard copy form, in electronic form or by means of a website; or (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 by sending copies to some members in accordance with paragraph (a) and submitting a copy or copies to other members in accordance with paragraph (b). (3) The company shall attach to, or enclose with, the copy of the written resolution a statement informing the member— (a) how to signify agreement to the resolution; and (b) of the date by which the resolution is required to be passed if it is not to lapse. (4) The validity of the written resolution, if passed, is not affected by a failure to comply with this section. (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. 266. Right of members to require circulation of written resolution (1) The members of a private company may require the company to circulate a resolution that may properly be moved and is proposed to be moved as a written resolution. (2) A resolution may properly be moved as a written resolution unless— (a) it would, if passed, be void (whether because of inconsistency with a written 'law or the company's constitution or otherwise); (b) it defames a person; or (c) it is frivolous or vexatious. (3) If the members require a company to circulate a resolution, the members may require the company to circulate with it a statement of not more than one thousand, words on the subject matter of the resolution. (4) A company is required to circulate the resolution and any accompanying statement as soon as practicable after it has received requests to do so from members representing not less than the requisite percentage of the total voting rights of all members entitled to vote on the resolution. (5) The "requisite percentage" is five per cent or, if a lower percentage is specified for this purpose in the articles of the company, that percentage. (6) A request made under subsection (3) is not effective unless— (a) it is in hard copy form or in electronic form; (b) it identifies the resolution and any accompanying statement and (c) it is authenticated by the person or persons making it. 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. 268. Requisitioning members to meet expenses of circulation (1) The members who requested the circulation of the resolution shall meet the cost of circulating the resolution unless the company otherwise resolves. (2) Unless the company has previously so resolved, it is not bound to comply with section 267 unless there is deposited with or tendered to the company an amount reasonably sufficient to meet the expenses of the company in circulating the resolution. 4.12Requirements for keeping records of corporate resolutions and meetings Division 6 — Records relating to resolutions and company meetings 317. Records of resolutions and meetings, etc (1) Every company shall keep records comprising— (a) copies of all resolutions of members passed otherwise than at general meetings; (b) minutes of all proceedings of general meetings; and (c) details provided to the company in accordance with section 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. 318. Records as evidence of resolution, etc (1) This section applies to the records kept in accordance with section 317. (2) The record of a resolution passed otherwise than at a general meeting, if purporting to be signed by a director of the company or by the company secretary, is evidence of the passing of the resolution. (3) If a record of a written resolution of a private company exists, the requirements of this Act with respect to the passing of the resolution are presumed to be complied with unless the contrary is proved. (4) The minutes of proceedings of a general meeting, if purporting to be signed by the person presiding at that meeting or by the person presiding at the next general meeting, are evidence of the proceedings at the meeting. (5) If a record of proceedings of a general meeting of a company exists, then, until the contrary is proved— (a) the meeting is presumed to have been duly held and convened; (b) all proceedings at the meeting are presumed to have duly taken place; and (c) all appointments at the meeting are presumed to be valid. 319. Records of decisions by sole member (1) This section applies to a company that is limited by shares or by guarantee and has only one member. (2) If a company to which this section applies takes a decision that— (a) can be taken by the company at a general meeting; and (b) has effect as if agreed by the company at a general meeting, the member of the company shall, unless the decision is in the form of a written resolution, provide the company with details of the decision. (3) Failure to comply with this section does not affect the validity of a decision referred to in subsection (2). (4) A member of a company to which this section applies who, without reasonable excuse, fails to comply with subsection (2) commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings. 320. Inspection of records of resolutions and meetings (1) This section applies— (a) to a company that is required to keep records in accordance with section 317; and (b) to those records. (2) Except in so far as the regulations otherwise provide, a company to which this section applies shall keep its records available for inspection at its registered office. (3) The company shall, on being requested to do so by a member of the company, make the records available for inspection by the member without charge. (4) If a member of the company requests the company to provide the member with a specified record, the company shall comply with the request within seven days after receiving the request, subject to payment of the prescribed fee (if any). (5) If the company fails without reasonable excuse to comply with— (a) subsection (2); or (b) a request made under subsection (3) or (4), 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 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.

TOPIC 5 Board and Committee Meetings
5.1 Meaning, membership and functions of the board 5.2 Powers of the board 5.3 Restrictions on board members’ powers 5.4 First board meeting 5.5 Subsequent board meetings 5.6 Meetings of board committees 5.7 Requisites of valid board and committee meetings 5.8 Legal provisions regarding convening and management of board and committee meetings 5.9 Board annual work plan and calendar 5.10 The role of the secretary before, during and after board and committee meeting CHAPTER 5 Board and Committee Meetings 5.1 Meaning, membership and functions of the board 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. 5.2 Powers of the board  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. 5.3 Restrictions on board members’ powers The following powers can be exercised by the board of directors on behalf of the company by means of a resolution passed at the meetings of the board;  Making calls on shareholders with respect to money unpaid on their shares;  Authorizing buyback of securities  Issuing securities, debentures, in or outside Kenya  To borrow monies;  To invest the fund of the company;  To grant loans or to give guarantee or provide security in respect of loans;  Approving financial statement and board’s report;  To diversify the business of the meeting;  Approving amalgamation, merger, and reconstruction;  Taking over a company or acquiring control or substantial stake in other companies;  Any other matter which may be prescribed.  In addition to the powers provided under in the Act, the board of directors shall exercise the following powers only by the means of resolutions passed at the meeting of the boards;  Making Political Contribution;  Appointment and Removal of Key Managerial Personnel (KMP);  Noting of Appointment(s) and Removal(s) of one level below KMPs;  Appointing internal auditors and secretarial auditor;  Noting of disclosure of director’s interest or shareholding;  Buying or selling investments held by the company (other than trade investments), constituting five percent or more of the paid-up share capital and free reserves of the investee company;  Inviting or accepting or renewing public deposits or other related matters;  Renewing and changing the terms of Public Deposits;  Approving quarterly, half-yearly, or annual financial results or statements.  Matters related to sale, lease, or otherwise disposal of the undertaking;  Investing otherwise in trust securities the amount of compensation received as a result of any merger or amalgamation;  Borrowing in excess of the paid-up share capital and free reserves;  Remit or give the time to the repayment of any debt due to a director. 5.4 First board meeting The first board meeting of the company (private limited or public limited) is to be held within 30 days of incorporation of the company. In the first board meeting of the company, various transactions take place and the items are mentioned in the minutes of the first board meeting. Convening the First Board Meeting The first board meeting of a company must be held within 30 days of incorporation. The notice issued to the Directors to convene the first board meeting must mention that its the first Board Meeting of the company. A fine of Rs.25000 is applicable for every officer of the company whose duty is to give notice of the board meeting and who fails to do so. Hence, it’s important to conduct the first board meeting of the company on time. Transactions in First Board Meeting The following transactions must take place in the first board meeting and the agenda accompanying the notice must contain a reference to all of the following transactions: 1. Election of Chairman of the particular meeting. 2. Appointment of Chairman of Board of Directors. 3. Noting of a certificate of incorporation of the company before the Board. 4. Noting the Memorandum of Association and Articles of Association of the Company as registered. 5. Noting of first Directors of the company by noting a copy of the fining of consent sent by the company’s directors. 6. Adoption of the common seal of a company (Common seal is not voluntary) 7. Appointment of first Auditors of the company. 8. Appointment of Company Secretary, if applicable. 9. Production of a copy of the notice of the situation of the registered office of the company before the Board. 10. Opening of a bank account. 11. Allotment of shares agreed to be taken by the subscribers to the Memorandum of Association. 12. Approving the statement of preliminary expenses. 13. Adoption of preliminary contracts. 14. Directions to the Secretary to purchase books and registers. 15. Authorisation for the Board for taking loans, if necessary. 16. Authorisation for the Board for making investments, if necessary. 17. Decide date, time and place of next Board Meeting of the company. 18. Noting of disclosure of the interest of Directors. 19. Authorisation for the printing of share certificates and issuance of share certificates. 20. Any other matter that is pertinent to the company. 5.5 Subsequent board meetings 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. 5.6 Meetings of board committees Board committees hold meetings regularly so the members of a board of directors can make decisions regarding the direction of an organization. Board committee meetings typically follow a set of rules:  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 The Board Meeting Agenda 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:  Each topic should be clearly articulated  The length of time expected for any topic, and the member responsible for the discussion should be indicated What are Board Meeting Minutes? Board meeting minutes are prepared as a follow up document that is made available to all relevant stakeholders. They must include:  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:  The fact that a board meeting was held  Who attended the meeting  What transpired during the board meeting In all cases, they must also be:  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 Board Meeting Minutes should include:  The nature of meeting, date, time and place  Attendees  Comings and goings during meeting  Previous minutes or note amendments  Actions – discussion, items approved or deferred, receipt of information  Resolutions - adopted or not, outcome of votes, dissenting or abstaining, conflicts of interest  Briefing material - distributed in advance, presentations at meeting, documents at meeting 5.7 Requisites of valid board and committee meetings The following are the requisites for calling and conducting a valid general meeting: 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: (i) Every member of the company. (ii) Every person entitled to a share in consequence of the death or insolvency of a member. (iii) Auditor or auditors of the company [Sec. 172 (2)]. 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. Contents of the notice: The notice must contain the following particulars: (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. 3. Place of the Meeting: Annual General Meeting. The annual general meeting is to be held by a public company at its registered office or at some other place in the same city, town or village where the registered office of the company is situated. However, the Central Government has the power to grant exemption to any company from this provision. A private company can hold its annual general meeting at any other place if: (i) It has fixed the place of the meeting by the articles; or (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. 7. Voting at General Meeting: The decisions at the meetings are taken by way of passing the resolutions. Every proposed resolution is discussed by the members of the company. Members have the right to move amendments to the proposed resolutions provided the amendments are germane to the proposed resolution. 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. 5.8 Legal provisions regarding convening and management of board and committee meetings Conduct of meetings in a proper manner is important for the proper functioning of the company. Following are the provisions of the Companies Act regarding conduct of board’s meetings: (1) Frequency of Board Meeting: In the case of every company, a meeting of its Board of directors must be held at least once in every 3 months and at least 4 such meetings shall be held every year (2) Notice of Board Meeting: Notice of every meeting of the Board of directors of a company shall be given in writing to every director for the time being in India, at his usual address in India. Notice must be given even to a director who has waived his right to notice or who has stated that he was unable to attend. Notice should also be given to an interested director. (3) Place of Board Meeting: Subject to the provisions of the Articles, the meetings of the Board can be held at any place other than the registered office of the company. Meetings may be held even on public holidays. (4) Quorum for Board’s Meetings: Quorum means the minimum number of directors who are authorised to act and transact business as a Board. The quorum for a board meeting is one-third of the total number of directors in office or two directors, whichever is more. 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. (6) Minutes of the Board Meeting: It is not necessary that the minutes of any meeting of the Board be confirmed in the next meeting. Such minutes may be signed by the chairman of the meeting at any time before the next meeting is held. The question of postponing action on the resolution already passed by the board for want of such confirmation would not arise. 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. 5.9 Board annual work plan and calendar One of the first requirements for a board to be effective and successful is to know what its work is for the coming year. A key tenet of effective governance is that the role and work of the board is different from that of staff. The board’s roles and functions demand that the energy, effort and time of the board be directed to addressing its own work and not the work of staff. The vision and strategic plan should clearly spell out what the organization will seek to accomplish over the next 3-5 years, but it generally does not indicate what the board needs to work on and wants to achieve. For the board to figure this out it needs to spend some time at the start of the new board year in identifying and prioritizing its must do’s, outcomes/goals, activities, events and its monitoring program for the year. Annual Board Goals/Outcomes and Annual Calendar  The first step in developing the board’s annual work-plan is to identify and list the tasks, activities and events that must be performed or accomplished during the term of this board. The list might include such things as the following:  Strategic Planning session  Nomination’s for next years board  Monitoring of organizational performance regarding achievement of outcomes and compliance with policies  The Annual General Meeting § Approve annual budget  Financial Audit § Policy Development/review  Selection of delegates to attend national conference  Chief Executive Performance and compensation review § Bylaw review  The second task in developing the board’s annual work-plan is to identify the issues/concerns/problems that the board needs to or would like to address or resolve during its current term of office. The types of issues I am referring to are not operational ones (these belong to the Chief Executive), but big picture issues that will have significant effect on the organization, its work, what it is trying to achieve, and/or those it serves. Neither the board nor the Chief Executive will know all of the issues that will present themselves during the year, but they can be included in the plan as they arise.  Generating Board Goals for the Coming Year 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

TOPIC 6 Meetings in Company liquidation
6.1 Introduction to members’ and creditors’ voluntary liquidation 6.2 Legal provisions for members’ and creditors’ voluntary liquidation 6.3 Liquidation by the court 6.4 Legal provisions for liquidation by the court. 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. How Voluntary Liquidation Works 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. A Members Voluntary Liquidation (MVL) is a process that enables shareholders’ to appoint a Liquidator in order to formally close down a solvent company. Once the Liquidator has realised all company assets and ensured that there are no outstanding company liabilities, a capital distribution will be paid to shareholders either in specie or from funds held in the company. A solvent company must be differentiated between insolvent companies as there will be sufficient assets to not only repay all creditors in full but also make a distribution to the company’s shareholders. Whilst a Members Voluntary Liquidation is initiated by the company’s Directors, it still requires 75% of shareholders who have been given notice of the meeting of members to pass the winding up resolution. 6.2 Legal provisions for members’ and creditors’ voluntary liquidation 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. 2. How are insolvency proceedings or restructuring proceedings initiated? 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:  Creditor’s voluntary liquidation: 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. Administration may be initiated:  By an administration order from the High Court 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.  By the holder of a floating charge 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.  By the company or its directors 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. A receiver may be appointed:  By an application made to the court; and  Out of court under an appointing instrument that empowers a creditor to appoint a receiver c. Company Voluntary Arrangement: 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. Reorganisation of share capital: 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. 3. What are the legal reasons for insolvency in your country? 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. 6.3 Liquidation by the court This is a compulsory liquidation or winding up by the court and is often initiated by a creditor when the insolvent company fails to pay off liabilities owed to such a creditor. The court has power to wind up a company:  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;  If the company is unable to pay its debts; or  If the court considers that justice will be rendered by liquidating a company. Who may Apply to the Court to Liquidate a Company  The company  Directors  Creditors of the company  Interim liquidators/ Full time liquidators  Administrators of the company  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 Office of the Official Receiver – a statutory body. Court Procedure in a Liquidation Application 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. 6.4 Legal provisions for liquidation by the court. Liquidation by the Court The High Court of Kenya maintains the jurisdiction for supervising liquidation of companies under the new law. Liquidation by the Court is done by way of an application to the Court made by any of the following people: 1. The Company or its directors; 2. A creditor or creditors including any contingent or prospective creditor • A contributory of the company 1. A provisional liquidator or administrator 2. The Attorney General The process of liquidation by the Court has, to a large extent, remained unchanged from the old law. The only point of deviation is the change in name from Winding-Up to Liquidation. What used to be the winding-up order is now to be known as a Liquidation Order. 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.

TOPIC 7 Meetings of County and National Assembly
7.1 Standing orders 7.2 Meetings of the House 7.3 Requirements for a valid physical, virtual and hybrid physical, virtual and hybrid National Assembly meeting 7.4 Swearing in of members and election of Speaker 7.5 Sittings and adjournment of the House 7.6 Quorum of the House 7.7 Order of Business 7.8 Motions and Amendments 7.9 Divisions 7.10 Rules of Debate 7.11 Limitations of Debate 7.12 Requirements for keeping records of County and National Assembly meetings 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. 7.2 Meetings of the House 7.3 Requirements for a valid physical, virtual and hybrid physical, virtual and hybrid National Assembly meeting 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 The options available to companies during this period include: 2. Delaying or Postponing the AGM a) The Act grants the Registrar power either on the application of the company or for any other reason the Registrar thinks fit, to extend the period within which the Company is to conduct an AGM even if, as a result, the period is extended beyond the calendar year. Companies who may wish to delay or postpone their AGMs may thus apply to the Registrar for an extension of the period within which to conduct their AGM in view of the restrictions in place. The applications should be submitted electronically through eo@brs.go.ke. b) However, before a company exercises this option, the applicant company needs to consider the potential effects of that delay or postponement of their AGM and how such delay or postponement would affect their businesses and interests of their shareholders. That is the inability to pass resolutions otherwise passed only in General Meetings, for instance: i. laying the company's annual accounts and reports before its Members; ii. removal of a director or auditor before the expiry of their term of Office; iii. re-electing directors retiring by rotation and appointing new directors to the company's board; iv. appointing or re-appointing the company's auditors; v. authorizing the directors to allot shares and disapplying pre-emption rights; vi. authorizing the purchase by the company of its own shares; vii. if a final dividend has been recommended by the directors, declaring that dividend; and viii. for quoted compani es, voting on the company's directors' remuneration report and policy, and authorizing the holding of other general meetings on 14 days' notice. 3. Hybrid and Virtual Meetings a) All Companies can leverage on technology and be able to hold General Meetings (GM) during the pandemic period. This is pursuant to Orders issued by the Court in NRB Miscellaneous Civil Application No. E721 of 2020 In the Matter of Kenya Private Sector Alliance Limited (KEPSA) for all companies and NRB Miscellaneous Application No E680 of 2020 (WPP Scangroup Plc) for listed Companies. This may be a hybrid where there is a physical in-person meeting (subject to the public 3 gathering restrictions) and the option to participate remotely or a virtual only GM that is conducted solely online. Virtual meetings are conducted online, without a physical meeting and the only venue in the conduct of a fully virtual meeting is the broadcast venue. b) The Companies Act, 2015 does not contain any provisions on the conduct of hybrid or virtual meetings, however, companies can make provision for virtual or hybrid meetings in their articles of association. c) The model articles for private companies, public companies and companies limited by guarantee provides that in determining attendance at a general meeting, it is immaterial whether any 2 or more members attending it are in the same place as each other. d) This provision in the model articles thus allows a company that has adopted the model articles to hold a General Meeting of its members at two or more venues using any appropriate technology that gives members as a whole reasonable opportunity to participate in the meeting and where the articles stipulate conditions on how such meeting shall be conducted then such conditions must be complied with. Such companies that have adopted the model articles or whose articles of association provides for holding of their General Meetings virtually need not refer to the Court Orders cited above. e) Companies therefore, whose articles of association do not provide for virtual or hybrid meetings, reference and compliance should be made pursuant to the Court Orders cited above. 4. Virtual Conduct of the meeting, considerations to be put in place: a) The Company needs to put in place appropriate technology that enables members to participate in the meeting and ability to record attendance. b) The infrastructure needs to be reliable and should enable members the right to speak and to vote. c) The online voting process must be able to allow members to cast their votes in time during the proceeding of the general meeting. 4 d) Members with no access to the internet can cast their votes via proxy forms appointing the Chairperson of the meeting, or any other individual, to vote on the members’ behalf. The proxy forms should be submitted within the stipulated time and through a manner (for example electronic means or postal) as determined by the Company. However, this is not a mandatory requirement but can be exercised on election by members. e) The Company needs to provide guidance to shareholders on the requirements and method of participating and voting in the general meeting using the selected platform, the means by which the meeting can be electronically accessed and the mode of participation. f) All protocols/rules of procedure must be circulated in advance to all shareholders, on how participants would use the selected technology, how the member may provide questions or matters to be raised at the meeting, the relevant cut-off time within which questions must be submitted and voting/polling procedures. g) The company should implement secure authentication measures to identify attendees and verify that a quorum is present and maintained throughout the meeting. h) The Company to consider the technological implications, including user accessibility, data security, management of Q&A, shareholder participation and voting arrangements. 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. 7.4 Swearing in of members and election of Speaker PART II - SWEARING-IN OF MEMBERS AND ELECTION OF SPEAKER Proceedings on assembly of a new House 3. (1) On the first sitting of a new House pursuant to the President’s notification under Article 126(2) of the Constitution, the Clerk shall- (a) read the notification of the President as published in the Gazette; (b) lay a list of the names of the persons elected as Members on the Table of the House; and (c) administer the Oath or Affirmation of Office provided for in Third Schedule to the Constitution to all members present in the House in the order set out in paragraph (2). (2) The Clerk shall administer the Oath or Affirmation of Office to Members in alphabetical order using the following order of precedence- (a) Members with the longest cumulative period of service in the Assembly; (b) Members with the longest cumulative period of service in the National Assembly and the Senate; (c) longest cumulative period of service in the Senate; (d) all other Members. (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. Vacancy in the Office of Speaker 4. (1) A Speaker shall be elected when the House first meets after a General Election and before the House proceeds with the dispatch of any other business, except the administration of the Oath or Affirmation of Office to Members present. (2) If the office of Speaker falls vacant at any time before the expiry of the term of Parliament, no business shall be transacted by the House until the election of a new Speaker. (3) The Deputy Speaker shall preside over the election under paragraph (2) but if the Deputy Speaker is a candidate, a Member elected by the House in accordance with Article 107 of the Constitution. 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. Custody of ballot papers 10. Immediately the results are declared, all the ballot papers used in the election of a Speaker shall be packed and sealed in the presence of the House and kept in the custody of the Clerk for a period of six months and shall thereafter be destroyed. Single duly nominated candidate 11. Despite the provisions of this Part, if there is only one candidate who has been duly nominated for election as Speaker at the expiry of the nomination period, that candidate shall be declared forthwith to have been elected Speaker without any ballot or vote being required. Swearing-in of the Speaker 12. Immediately following the election of the Speaker, the Clerk shall administer the Oath or Affirmation of Office to the Speaker in the presence of the assembled House. 7.5 Sittings and adjournment of the House Location of the first sitting of a new House 26. Whenever a new House is elected, the President, by notice in the Gazette, shall appoint the place and date for the first sitting of the new House, which shall be not more than thirty days after the election. Regular Sessions of the House 27. (1) Except for the Session commencing immediately after a general election, the regular Sessions of the House shall commence on the second Tuesday of February and terminate on the first Thursday of December. (2) Despite paragraph (1), the House may, by resolution, alter the dates specified under paragraph (1) in respect of a particular Session. (3) Subject to paragraph (1), the House shall continue to be in session and may adjourn for such number of days as it may determine in its calendar. (4) Despite paragraphs (1), (2) and (3), a period of three months shall not intervene between the last sitting of the Assembly in one Session and the first sitting thereof in the next Session. Calendar of the Assembly 28. (1) The House Business Committee shall, with approval of the House, determine the calendar of the House. (2) The calendar of the House once approved shall be published in the gazette, parliament website and at least two newspapers of national circulation. (3) On a day when the Assembly is scheduled to adjourn to a day other than the next normal sitting day in accordance with the parliamentary Calendar, the Leader of the Majority Party or the Leader of the Minority Party or any other member of the House Business Committee shall move a Motion of adjournment which shall be debated for not more than three hours after which the House shall adjourn without question put. (4) Despite paragraph (2) the Assembly may, by resolution, alter its Calendar or the adjournment date. Hours of meeting 30. (1) Unless the Speaker, for the convenience of the House otherwise directs, the House shall meet at 9.00 a.m. on Wednesday and at 2.30 p.m. on Tuesday, Wednesday, and Thursday, but more than one sitting may be directed during the same day. (2) Unless for the convenience of the House the Speaker or the Chairperson (as the case may be) directs earlier or later interruption of business, at 6.30 p.m. or (if it is an Allotted Day) at 7.00 p.m., on the occasion of an afternoon sitting and at 12.30 p.m. on the occasion of a morning sitting, the Speaker or the Chairperson of Committees shall interrupt the business then under consideration and if the House is in Committee the Chairperson shall leave the Chair and report progress and ask leave to sit again. (3) Notwithstanding paragraphs (1) and (2), the House may resolve- (a) to extend its sitting time, or (b) to meet at any other time on a sitting day; or (c) to meet on any other day, in order to transact business. Adjournment of the House 31. (1) A Member may at any time, for reasons stated, seek leave to move “That, this House do now adjourn.” (2) If the Speaker is of the opinion that such Motion for adjournment of the House is frivolous, vexatious, or an abuse of the proceedings of the House, the Speaker may forthwith put the question thereon or decline to propose it. (3) The debate on a Motion under this Standing Order shall be confined to the matter of the Motion. Resumption of interrupted business 32. Any debate interrupted under this Part shall on coming again before the House or the Committee, be resumed at the point where it was interrupted and any Member whose speech was so interrupted shall have the right to speak on such resumption for the remainder of the time available to him or her but if such Member does not avail himself or herself of this right, his or her speech shall be deemed to have been concluded. Adjournment on definite matter of urgent national importance 33. (1) Any Member may at any time rise in his or her place and seek leave to move the adjournment of the House for the purpose of discussing a definite matter of urgent national importance. (2) A Member who wishes to seek leave to move the adjournment of the House shall, at least two hours before the commencement of the sitting, hand to the Speaker a written notification of the matter but the Speaker shall refuse to allow the claim, unless the Speaker is satisfied that the matter is definite, urgent and of national importance and may properly be raised on a Motion for adjournment of the House. (3) If the Speaker is satisfied in terms of paragraph (2) and not less than twenty other Members rise in their places in support, the Speaker shall nominate a time on the same day at which such Motion may be moved. (4) No Member speaking on a matter under this Standing Order shall speak for more than five minutes without the leave of the House, except that the Mover may speak for ten minutes. 7.6 Quorum of the House The quorum of Parliament shall be-- (a) fifty members, in the case of the National Assembly; or (b) fifteen members, in the case of the Senate. Quorum at commencement of the House 34. (1)A quorum of the House or of a Committee of the whole House shall be fifty Members. (2) If there is not a quorum present when the Chair is taken, at the time appointed for a meeting of the House, immediately after the saying of the prayer, the Speaker shall order the bell to be rung for ten minutes, and if no quorum is present at the expiration of the ten minutes, the Speaker may direct that the bell be rung for a further five minutes and if there is still no quorum present, the Speaker shall adjourn the House forthwith to the next sitting. Quorum during the proceeding of the House 35. (1) If at any time after the Chair is taken, or when the House is in Committee, a Member objects that there is not a quorum present, the Speaker or the Chairperson shall count the House or the Committee as the case may be. (2) If on the count under paragraph (1) a quorum does not appear to be present, the Speaker or the Chairperson shall cause the division bell to be rung as on a division, and if no quorum is present at the expiration of the ten minutes- (a) if the Speaker is in the Chair, the Speaker shall adjourn the House until the next sitting without question put; (b) if the House is in Committee, the Chairperson shall leave the Chair and report the fact to the Speaker, who shall adjourn the House until the next sitting without question put. (3) Whenever the Speaker or the Chairperson, as the case may be, is engaged in counting the House or the Committee respectively, the doors shall remain unlocked but no Member shall be allowed to leave the Chamber, except a party whip who may be permitted to leave the Chamber to seek the Members required to raise a quorum. Quorum during voting or division 36. If, from the number of Members taking part in an electronic voting or roll call division, it appears that the Members do not themselves constitute a quorum, the vote or division shall be invalid and the business then under consideration shall stand over until the next sitting and the Speaker shall proceed as if his or her attention had been drawn to the absence of a quorum, but if after so proceeding a quorum is then present, the next business shall be entered upon. Decorum when quorum not present 37. When the Quorum bell is ringing members shall maintain order in the House. 7.7 Order of Business Order Paper to be prepared and circulated 38. (1) The Order Paper shall be prepared by the Clerk, showing the business to be placed before or taken by the House and the order in which it is to be taken, including a notice paper showing the business for each sitting day of the week, together with such other information as the Speaker may from time to time direct. (2) The Order Paper shall be published in the parliamentary website and shall be made available to members, at least twelve hours before the House meets, but a supplementary Order Paper shall be made available at least one hour before the House meets. 7.8 Motions and Amendments Application 46. This Part shall apply to all Motions, including special Motions. Notices of Motions 47. (1) Except as otherwise provided by these Standing Orders, notice shall be given by a Member of any Motion which the Member proposes to move. (2) Before giving notice of Motion, the Member shall deliver to the Clerk a copy of the proposed Motion in writing and signed by the Member, and the Clerk shall submit the proposed Motion to the Speaker. (3) If the Speaker is of the opinion that any proposed Motion – (a) is one which infringes, or the debate on which is likely to infringe, any of these Standing Orders; (b) is contrary to the Constitution or an Act of Parliament, without expressly proposing appropriate amendment to the Constitution or the Act of Parliament; (c) is too long; (d) is framed in terms which are inconsistent with the dignity of the House; (e) contains or implies allegations which the Speaker is not satisfied that the Mover can substantiate; or (f) calls for the commitment of public funds for which no provision is made in the Annual Estimates as adopted by the National Assembly, the Speaker may direct either that, the Motion is inadmissible, or that notice of it cannot be given without such alteration as the Speaker may approve or that the motion be referred to the relevant committee of the Assembly, pursuant to article 114(2) of the Constitution. (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. (5) Unless the House resolves otherwise— (a) a Motion sponsored by a party shall have precedence over all other Motions on such day as the House Business Committee, in consultation with the Speaker, may determine, but where a party has sponsored two or more motions, the Motion shall be considered in such order as sponsoring party may determine; (b) notice of an approved Motion other than those under paragraph (a) may be given to Members by means of a list to be published in such manner as the Speaker may from time to time direct and the Member giving such notice shall state its terms to the House when the Motion has acquired precedence in accordance with Standing Order 50 (Time for moving Motions), but at least one day before the Motion appears on the Order Paper Amendment of Notice of Motion 48. The Speaker may permit a Member to move in amended form a Motion of which notice has been given if in the opinion of the Speaker the amendment does not materially alter any principle embodied in the Motion of which notice has been given. Certain Motions not to be moved 49. (1) No Motion may be moved which is the same in substance as any question which has been resolved (either in the affirmative or in the negative) during the preceding six months in the same Session. (2) Despite paragraph (1)- (a) a Motion to rescind the decision on such a question may be moved with the permission of the Speaker; (b) a Motion to rescind the decision on a question on a Special Motion shall not be allowed. 7.9 Divisions PART XV – VOTING AND DIVISIONS Voting in the House 69. (1) Unless otherwise provided under the Constitution, a question arising in the House shall be decided by a majority of the members in the House, present and voting. (2) In ascertaining the results on a question under paragraph (1), the Speaker shall, in the first instance, collect the voices of the “Ayes” and the “Noes” and shall declare the results accordingly. (3) On a question proposed for a decision in the House, the Speaker has no vote. (4)In determining the number of Members of the House for the purpose of voting, the Speaker shall not be counted as a Member. Electronic voting 70. (1) Unless the Speaker, for the convenience of the House otherwise directs, voting on a division in the House shall be by electronic voting. (2) When the Speaker directs that an electronic voting to be taken, the Division Bell shall be rung for not more than ten minutes and the House shall proceed to a vote at the expiry of the ten minutes, or such further time as the Speaker may, for the convenience of the House, direct. (3) During electronic voting, Members shall cast their votes by pressing either the “Yes”,” No” or “Abstain” button. (4) At the expiry of five minutes or as soon as the result of the voting appears on the indicator board, the Speaker or the Chairperson, as the case may be, shall announce the results of the division forthwith. (5) A Member who is not able to cast his or her vote due to any reason considered sufficient by the Speaker, may before the result of the division is announced and after obtaining the permission of the Speaker, have his or her vote recorded verbally by stating whether he or she is in favour of or against the Question. (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. Technical failure, confusion or error occurring 71. In the event of a technical failure, confusion or error occurring in the course of voting which in the opinion of the Speaker cannot otherwise be corrected, the Speaker may direct the House to another round of electronic voting or proceed to a roll call voting. Roll call Division claimed 72. (1) The Speaker shall direct a roll call vote to be taken if a Member claims a division and- (a) the Speaker considers that there is a reasonable doubt as to the outcome of the vote in question; or (b) if, on a question other than a question of procedure, thirty or more Members rise in their places to support the Member claiming the roll call division (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. Roll call voting 73. (1) When the Speaker directs a roll call voting to be taken, the Division Bell shall be rung for ten minutes. (2) The names of one teller for the “Ayes” and one teller for the “Noes” shall be submitted to the Speaker and the Speaker shall direct the tellers to take seats at a designated place. (3) At the end of ten minutes, the Speaker shall direct the doors to be locked and the Bar drawn and no Member shall thereafter enter or leave the House until after the roll call vote has been taken. (4) When the doors have been locked and the Bar drawn and the names of the tellers have been announced, the Speaker shall put the question again and direct the Clerk to call out the names of Members in alphabetical order in the presence of the tellers. (5) When called out, each Member shall, thereupon rise in his or her place and declare assent or dissent to the question in the following manner; “I vote Yes”; or, “I vote No”; or, “I Abstain”, or use appropriate Kenyan sign language. (6) After the Clerk has read the last name in the Division list, the tellers shall present the result of the roll call vote to the Speaker who shall thereupon announce the result of the vote to the House. In case of confusion or error 74. In case of confusion or error occurring in the course of a roll call voting concerning the numbers or names recorded, which cannot otherwise be corrected, the Speaker shall direct the House to proceed to another roll call vote. Errors corrected 75. If, after a roll call vote has been made, it is discovered that the number has been inaccurately reported or that an error has occurred in the names on the division lists, the fact shall be reported to the House and the Speaker shall direct that the necessary corrections be made. Decorum during division 76. (1) No Member shall be obliged to vote in a division, but those present and not voting shall either- (a) in the case of electronic voting , press the “Abstain” button ; or (b) in the case of roll call voting , record their abstention with the Clerk. (2) It shall be disorderly conduct for a Member to fail to record his or her abstention in a division. (3) A member shall not vote on any question in which the member has a pecuniary interest. (4) During division, members shall maintain order in the House and shall be in their designated seats and must remain seated until the result is announced. 7.10Rules of Debate Proceedings to be in Kiswahili, English or Kenyan Sign Language 77. (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. Members to address the Speaker 78. Every Member desiring to speak shall address a request to the Speaker. Two or more Members requesting to speak 79. If two or more Members request to speak at the same time, the Member called upon by the Speaker shall be entitled to speak. Speeches may not be read 80. (1)No Member shall read a speech but a Member may read short extracts from written and printed papers in support of an argument and may refresh memory by reference to notes. (2) The Speaker may allow a Member to read a speech in particular cases where the Speaker is satisfied that this is necessary for precision in statement of facts. No Member to speak after Question put 81. No Member shall speak to any question after the same has been put by the Speaker. Speaking twice to a Question 82. (1) No Member shall speak more than once to a question except in Committee of the whole House. (2)Despite paragraph (1)- (a) a Member who has spoken on a question may again be heard to offer explanation of some material part of the Member’s speech which has been misunderstood but must not introduce new matter; (b) a reply shall be allowed to a Member who has moved a substantive Motion but not to a Member who has moved an amendment. (3) The mover of a substantive Motion may surrender all or part of his or her right to reply to another Member or Members nominated by him or her who has not already spoken to such Motion. Points of Order 83. (1) Any Member may raise a point of order at any time during the speech of another Member stating that the Member rises on a point of order and that member shall be required to indicate the Standing Order upon which the point of order is based. (2) When a Member raises a point of order during the speech of another Member, the Member who was speaking shall thereupon resume his or her seat and the Member raising the point of order shall do likewise when he or she has concluded his or her submission, but no other Member may, except by leave of the Speaker, speak on the point of order. (3) The Speaker shall either give a decision on the point of order forthwith or announce that the decision is deferred for consideration after which the Member who was speaking at the time the point of order was raised may continue to speak. (4) The Speaker or the Chairperson shall order any Member who unnecessarily and persistently interrupts proceedings or consults loudly and disruptively to withdraw from the Chamber and Standing Order 107 (Grossly disorderly conduct) shall apply to any such Member. Personal Statements 84. By the indulgence of the House, a Member may explain matters of a personal nature although there is no question before the House, but such matter may not be debated. Anticipating debate 85. (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. Proceedings of Select Committees not to be referred to 86. No Member shall refer to the substance of the proceedings of a Select Committee before the Committee has made its report to the House. Contents of speeches 87. (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 Motion of which at least three days’ notice has been given. (2) It shall be out of order to introduce an argument on any specific question upon which the House has taken a decision during the same Session, except upon a Motion to rescind that decision made with the permission of the Speaker. (3) It shall be out of order to use offensive or insulting language whether in respect of Members of the House or other persons. (4) No Member shall impute improper motive to any other Member or to a Senator except upon a specific substantive Motion of which at least three days’ notice has been given, calling in question the conduct of that Member or Senator. (5) It shall be out of order for a Member to criticize or call to question, the proceedings in the Senate or the Speaker’s Ruling in the Senate but any debate may be allowed on the structures and roles of the Senate or Parliament. Retraction and Apologies 88. A Member who has used exceptionable words and declines to explain and retract the words or to offer apologies for the use of the words to the satisfaction of the Speaker shall be deemed to be disorderly and shall be dealt with in accordance with the rules pertaining to disorderly conduct. Matters sub judice or secret 89. (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 Adjournment of debate 96. (1) A Member who wishes to postpone to some future occasion the further discussion of a question which has been proposed from the Chair may claim to move “That, the debate be now adjourned”, or, in Committee of the whole House “That, the Chairperson do report progress”. (2) The debate on a dilatory Motion shall be confined to the matter of the Motion. (3) If the Speaker is of the opinion that a dilatory Motion is an abuse of the proceedings of the House, the Speaker may forthwith put the question thereon or decline to propose it. (4) A Member who has moved or seconded a dilatory Motion which has been negatived may not subsequently move or second another such Motion during the same debate, whether in the House or in Committee of the whole House 7.11 Limitations of Debate PART XVII - LIMITATION OF DEBATE Limitation of debate 97. (1) The House may, on a Motion made by any Member in accordance with this Standing Order, impose a limit in respect of debate on any particular Motion or Bill by allotting a limited period of time for such debate or by limiting the time during which Members may speak in such debate or by imposing such limitations. (2) A Motion for limitation of debate under this Standing Order may be made without notice. (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. 7.12 Requirements for keeping records of County and National Assembly meetings PART XXV – JOURNALS, RECORDS AND BROADCAST OF PROCEEDINGS Journals of the House 246. All votes and proceedings of the House shall be noted by the Clerk and shall constitute the Journals of the House. Custody of Journals and Records 247. (1) The custody of the Journals and Records, whether audio, electronic or any other form, including all papers and accounts howsoever presented to or belonging to the House, shall be vested in the Clerk, who shall unless otherwise prohibited by any law, allow their access by the public. (2) The Clerk shall publish the Votes and Proceedings of the House within forty eight hours of any sitting. (3) The Speaker may make rules to regulate the access by the public to Journals and Records under paragraph (1). Hansard reports 248. (1) There shall be published within forty eight hours, a verbatim report of all proceedings of the House, unless the Speaker is satisfied that this is rendered impossible by some emergency. (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. Broadcast of House Proceedings 250. (1) The proceedings of the House may be broadcast. (2) The broadcasting of the proceedings of the House shall comply with the Rules set out in the First Schedule of these Standing Orders.

TOPIC 8 Registration and Compliance Requirements for
8.1 Pension Funds 8.2 Cooperative Societies 8.3 Political Parties 8.4 Public Benefit Organisations 8.5 Education Institutions 8.6 Religious Institutions 8.7 Residents Associations 8.8 Business names 8.9 Partnerships 8.10 Companies 8.11 Foreign branch establishments 8.12 Drafting, altering and registration of memorandum of association, articles of association, by-laws and other constitutive documents for various forms of organisations 8.13 Shareholders agreements CHAPTER 8 16. Registration and Compliance Requirements for: 8.1 Pension Funds A pension fund, also known as a superannuation fund in some countries, is any plan, fund, or scheme that provides retirement income. Pension funds are pooled monetary contributions from pension plans set up by employers, unions, or other organizations to provide for their employees' or members' retirement benefits. Pension funds are the largest investment blocks in most countries and dominate the stock markets where they invest. When managed by professional fund managers, they constitute the institutional investor sector along with insurance companies and investment trusts. Typically, pension funds are exempt from capital gains tax and the earnings on their investment portfolios are either tax deferred or tax exempt

TOPIC 9 Seal and Authentication of documents
9.1 Approval of Common Seal 9.2 Form and content of Common Seal 9.3 Authority and mode of affixation 9.4 Register of documents executed under common seal 9.5 Custody of Common Seal 9.6 Official seal for use abroad 9.7 Authentication of documents 9.8 Legal, regulatory and professional requirements

TOPIC 10 Listing at the securities exchange
10.1 Listing requirements: 10.2 Regulatory regime 10.3 Listing process 10.4 Types of public issue 10.5 Role of the advisers: sponsor, broker, financial public relations consultants, lawyers, accountant, share registrars, other advisers 10.6 Prospectus contents and approval 10.7 Dematerialisation MEETINGS COMPLIANCE AND ADMINISTRATION NAIROBI SECURITIES EXCHANGE The stocks, bonds and other securities issued by issuers require listing for providing liquidity to investors. Listing means formal admission of a security to the trading platform of the Exchange. It provides liquidity to investors without compromising the need of the issuer for capital and ensures effective monitoring of conduct of the issuer and trading of the securities in the interest of investors. The issuer wishing to have trading privileges for its securities satisfies listing requirements prescribed in the relevant statutes and in the listing regulations of the Exchange. It also agrees to pay the listing fees and comply with listing requirements on a continuous basis. All the issuers who list their securities have to satisfy the corporate governance requirement framed by regulators. Listing Agreement All companies seeking listing of their securities on the Exchange are required to enter into a formal listing agreement with the Exchange. The agreement specifies all the quantitative and qualitative requirements to be continuously complied with by the issuer for continued listing. The Exchange monitors such compliance. Failure to comply with the requirements invites suspension of trading, or withdrawal/delisting, in addition to penalty under the Securities Contracts (Regulation) Act, 1956. The agreement is being increasingly used as a means to improve corporate governance Regulatory Regime A system of regulations and the means to enforce them, usually established by a government to regulate a specific activity. The Central Depositories Act lays down the legal and regulatory framework upon which the establishment and operations of CDSC are anchored. CDSC operates under the regulatory oversight of the Capital Markets Authority. It is a limited liability company approved by the Capital Markets Authority and mandated to ensure the effectiveness and efficiency of the clearing, delivery and settlement of securities in the Kenya capital markets. In this regard, CDSC falls under the ambit of the Capital Markets Act and the Regulations and Rules thereunder. CDSC as an integral financial market infrastructure plays a critical role for the efficient functioning of the domestic and regional financial markets. Its day-to-day management is guided by the CDS Rules. The CDSC Operational Procedures outline the detailed processes and description on how the different functions are performed. The Rules and Operational Procedures and any amendments thereon must be approved by the Capital Markets Authority. CDSC also enters into various contractual relations with stakeholders for provision of various services. Key among these is the Agreements signed between CDSC and the CDAs as well as Agreements between CDSC and the Settlement Banks. CDSC has also entered into an Agreement with the Central Bank of Kenya through which the funds leg of all securities transaction is settled. Public Participation Clause The Central Depository and Settlement Corporation shall, on conducting consultations with its stakeholders and obtaining the approval of the Capital Markets Authority, formulate and implement operational and procedural rules to ensure orderliness, efficiency and security in the capital markets and to charge fees or levy transaction and depository levies and penalties in connection to its services and facilities. TYPES OF PUBLIC ISSUE A public issue may be defined as an offer for subscription by a company of its securities to the general public. Many people interchange the terms Public Issue and IPO. The term IPO refers to an Initial Public Offer/ Offering. Thus, any company can have only one IPO in its lifetime since it cannot have an Initial Offer time and again. A public issue on the other hand is a much wider term and includes within its purview both IPOs as well as all other subsequent public offerings also known as FPOs or Follow-on Public Offers. An IPO can only be made by an unlisted company whereas an FPO can only be made by a listed company. This is one fundamental difference which should be borne in mind. There are three types of Public Issues by which a public company can raise funds: (a) IPO: Initial Public Offer, which is once in the Company’s lifetime (b) FPO: Follow-on Public Offers, which a Company can raise any number of times (c) Rights Issue: When a Company makes an Offer to raise capital from its existing shareholders. The advantages of rights issues are as follows: • Almost assured success, as the shares are marketed/sold to already convinced buyers. • Allows the shareholders of the issuer to maintain their original proportion of share ownership in the issuer. • Increased likelihood that all the shares will be subscribed, as they are usually subscribed at a discount compared to the quoted price of • Less expensive than an offer for sale. The disadvantages of rights issues are as follows: • Limited scope of raising capital for the issuer as it is limited to the existing shareholders of the issuer. • It dilutes the shareholding of members who do not take up their rights. • If the share price is deeply discounted, the company will have to issue more shares (on which it will be expected to pay dividends) in order to CONTENTS OF A SHARE PROSPECTUS SHARES CORPORATE INFORMATION a.Name and registered address b. Date, place and authority of incorporation c. Name and address of bankers, auditors (if any) of the Entity, bankers to the issue, lawyers, registrars, secretaries, auditors, managers to the issue. OBJECTIVES OF THE ISSUE a. Details of the intended application of the proceeds of the issue and in the event the proceeds are being applied for multiple purposes, the breakdown of the proceeds to be utilized for each purpose. b. If the funding required to achieve the objects of the issue exceeds the amount expected to be mobilised through the issue, the means of funding the full cost of the objects of the issue. c. If the funds are utilized to acquire assets, a description of each asset, basis of determination of the price of the assets, any amount payable, if any, for goodwill, any relationship of the Entity with the seller and any other material information regarding the acquisition. d. If the proceeds may or will be used to finance acquisitions of any other PARTICULARS OF SHARES FOR WHICH APPLICATION IS BEING MADE Nature and classification of the shares for which admission is sought and a description of the rights of holders of such shares, in particular the voting rights, entitlement to share in the profits and, in the event of liquidation, in any surplus and any other special rights. Where there is or is to be more than one class of Securities of the Entity in issue, like particulars shall be given for each additional class. What are the main content or disclosure requirements for a prospectus (or other main offering document)? What main categories of information are included? An offering document must include the following information: • Detailed information on the issuer, including: authorised, issued and unissued share capital; • amount of paid-up share capital; • description and nominal value of the shares; • the voting rights of shareholders; • if there is more than one class of shares, the rights of each class of shares as regards voting, dividend; capital, redemption and the creation or issue of further shares ranking in priority to or pari-passu with each class other than ordinary shares. • The history of changes in the share capital of the issuer within the two years preceding the publication of the prospectus; • the names of the holders of any substantial or controlling beneficial interest (that is, 5% or more in the capital of the company and the amount of their holdings); • directors' interests; • extracts from the articles of association; and extracts from the articles of association; and • information on the directors and company secretary; • descriptions of major customers or suppliers that contribute 10% or more of the turnover or purchase for each of the last three financial years and the latest financial period (if any), level of sales or purchase, and whether or not the issuer is dependent on the major customers or suppliers for business ROLE OF ADVISERS/ SPONSORS A sponsor is also required to (amongst other things): • provide expert guidance to companies seeking or which have an existing premium listing on the Listing Obligations and our processes • communicate with us, as an expert, on the company’s behalf when reviewing a prospectus or circular • ensure that all matters known to it which, in its reasonable opinion, should be taken into account by us in considering the relevant transaction are included in the relevant document or notified to us to ensure full disclosure is made. For a company seeking a Premium listing, this would include matters such as whether the admission of the shares would be detrimental to investors’ interests Introduction to Dematerialization Dematerialization is a process by which a person can convert their physical shares and securities into digital or electronic format. With the dematerialization of the physical shares and securities, it becomes easier for an individual to buy, sell, transfer and hold shares. It secures them from any theft and makes it cost-effective at the same time. Process of Dematerialization The process starts by opening a Demat account (trading account), all one needs to do is shortlist a depository participant that offers Demat services. One can also open a share market online. To covert the physical shares into electronic or Demat form, one need to generate a Dematerialization Request, to submit a DRF i.e., Dematerialization Request Form available with the DP (Depository Participant). It has to be filled in and deposited along with the share certificates that one is holding. Each certificate must mention “Surrendered for Dematerialization”. The DP will process this request along with the share certificates submitted , and simultaneously to the registrar and transfer agents through the depository. Once the application is approved, all the share certifications in the physical form submitted will be destroyed and confirmation of dematerialization of shares will be sent to the depository. The depository will confirm the dematerialization of share to the DP, and once it is over, shares will be credited in the Demat Account which can be seen electronically. The advisers involved in an equity offering are: • Financial advisers and issuing house. They advise on the structure of the equity offering contemplated by the company and are responsible for filing documents with the Securities Exchange Commission (SEC) and securing SEC's approval. • Reporting accountants and auditors. They prepare the company's financial statements in accordance with the applicable standards and • Solicitors. They are appointed to give legal guidance to the company in the equity/IPO process. A solicitor can act in a dual capacity as adviser to the company and adviser on the offer. • Underwriters. They are usually used in IPOs to underwrite the securities being offered. Public issues are underwritten, at the discretion of the issuer. • Stockbrokers. They sponsor the application to the NSE and co-ordinate listing day activities. • Registrars. They maintain the register of shareholders of the company. • Receiving banks. They are responsible for the custody of the offer proceeds.

TOPIC 11 Statutory Reports, Registers, Records and Returns
11.1 Meaning, types and contents 11.2 Maintenance of statutory reports, registers, records and returns 11.3 Legal and regulatory requirements on filing of statutory reports, registers, records and returns for various types of organisations 11.4 Annual statutory returns 11.5 Register of Members 11.6 Register of Directors and Secretaries 11.7 Register of Allotments 11.8 Register of Transfers 11.9 Register of Charges 11.10 Register of Beneficial Owners 11.12 Register of Residential Address, etc. 11.13 Register of charges and debentures 11.14 Registers of interests in voting shares of a public company 11.15 Tax, NHIF, and NSSF requirements 11.16 Occupational safety and health format of registers, custody and retention of registers 11.17 Access to records and registers 11.18 Inspection: in person, right to request copies, fees 11.19 Minute books: custody and retention, access rights 11.20 Financial records: custody and retention, inspection 11.21 Integrated Reporting 11.22 Corporate governance report 11.23 Directors’ remuneration report 11.24 Retention periods for documents and registers 11.25 Managing Classified information 11.26 Preparation and approval of registers and records 11.27 Process and procedure of effecting and filing corporate changes in: register of members; board members, registered capital, corporate, corporate address, corporate name, corporate objective 11.28 Role and responsibilities of the corporate secretary in the external audit process and in the annual reporting cycle 11.29 Penalties for non-compliance CHAPTER 11 Statutory Reports, Registers, Records and Returns 11.1 Meaning, types and contents The statutory report is the obligatory submission of financial and non-financial information to a government or concerned agency. This is a report that a company or organization must make public by law, especially its financial report. For a common example, this report is a statement drafted by the directors of a public limited company to forward to the shareholders at least 21 days before the date of the meeting. Each industry has its own set of laws and regulations (statues) that mandate reports. A copy is also sent to the registrar of joint-stock companies for registration. It is the mandatory submission of financial and non-financial information to a government agency. In many countries, International Financial Reporting Standards (IFRS) has replaced country-specific Generally Accepted Accounting Principles for statutory reporting. Examples of Statutory Reports The followings are examples of the statutory report. 1. Statutory Report submitted at the statutory meeting of the company. 2. Directors’ Report to the Annual General Meeting. 3. Annual Returns. 4. Auditors’ Report. 5. Reports by Inspectors appointed to investigate the affairs of the company. 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 - · Accounts prepared with regard to receipt, purchase, manufacture, storage, sales or delivery of the goods including inputs and capital goods. · Agreements · Invoices i.e. sales invoice, purchase invoice · Price-list · Returns · Statements · Any other source documents such as journal voucher, delivery challan, debit or credit note. 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. What is Included in an annual return. All annual returns in Kenya include the following.[su_list] 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] 11.2 Maintenance of statutory reports, registers, records and returns Company Registers 1. Register of members Under Section 93 of the Companies Act, a company should keep a register of members. The register of members must contain an entry for each member of the company showing:  The member's name and address;  The date on which the person was registered as a member;  The date on which any person ceased to be a member; and  Where the company has a share capital:  the number and class of shares held by each member (and, if the shares are numbered, their distinguishing numbers); and  the amount paid or agreed to be considered as paid on the member's shares. 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. Location of the register: the register of members should be kept at the company’s registered office and a copy lodged with the Registrar of Companies. 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:  the director’s name and former name (if any);  service address;  country, state or part of Kenya in which the person resides;  the person’s nationality;  the person’s business occupation (if any); and  the person’s date of birth. If the director is a body corporate the register should contain:  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. 3. Register of director’s residential addresses Under Section 137 of the Companies’ Act, the company is required to keep a separate register showing the directors’ residential addresses which will not be available for inspection by the public as this is considered to be protected information under section 200 and 201 of the Companies Act. However, it is recommended that any protected information with respect to directors should be recorded under the register of directors’ residential 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. 5. Register of Interests Disclosed 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. 6. Register of debenture holders 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. The register should indicate: 1. A short description of the property; 2. The amount secured by the charge or security right; and  Except in cases of securities to bearers, the names of the persons entitled to it. 8. Register of beneficial owners Under section 93A of the Companies Act, a company is required to keep a register of beneficial owners within 30 days after completing its preparation. A company's beneficial owner is any natural person who either directly or indirectly holds at least 10% of the issued shares of the company; exercises at least 10% of the voting rights in the company; holds a right to appoint or remove a director of the company; or exercises significant influence or control over the company. A company is required to enter in its register of members the following particulars in respect of its beneficial owner:  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. PART B-COMPANY RECORDS 9. Other Records to be Maintained. In addition to maintaining the registers listed under Part A above, companies are also required to maintain the following records: a) Directors service contracts; b) Records of resolutions and minutes; c) Records of directors’ indemnities; and 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. 11.3 Annual statutory returns Circular 16 of 2021: Annual Statutory Returns for the financial year ended 31 December 2020 The Council for Medical Schemes (CMS) has finalised the 2020 Annual Statutory Return online system, which is now available on our website on this link. It should be noted that the Word document will only be available at a later stage therefore schemes will not be able to generate draft or final documents before then. Communication will be sent once the document becomes available. Please note that the deadlines for the submission of the 2020 Annual Statutory Return are:  Part 1 changes must be finalised by 2 April 2021*  Electronically signed submission of the Annual Statutory Return via the statutory return portal must occur by 27 April 2021** *It is important that the information captured in Part 1 is correct as some of it is linked (i.e. pulled through) to other parts of the return. Incorrect details may therefore result in errors in the return and the SignFlow process. ** The hard copy submission is no longer necessary. Submission requirements In terms of Section 37 of the Medical Schemes Act 131 of 1998 (the Act), the following electronically signed documentation must be submitted to the Office of the Registrar, to ensure a complete submission:  2020 Annual Statutory Return signed via the SignFlow process  Board of Trustees’ Report*  2020 audited financial statements*  Auditor’s report on the financial statements* (CMS requires the auditor’s report on the AFS to be on the auditor’s letterhead)  ISA 800 and ISRE 2410 auditor report*  ISAE 3000 auditor report*  The auditor’s management report to the Board of Trustees on the 2020 audit findings (the said report should include housekeeping issues for the Board of Trustees’ attention)  If applicable, the letter of comfort from the administrator and co-administrator**  Declaration of conflicts of interest from asset managers  Reconciliation between detailed third party investment schedules and data captured per part 9(a) Please also refer to Circular 7 of 2005 in this regard. It is envisaged that an accurate and complete Part 9B would in future replace this submission requirement.  Detailed third party investment schedules * The online system makes provision for these documents to be uploaded after the final submission of the annual statutory return to facilitate the simultaneous signing of these documents. The scheme would need to request CMS to unlock the return to upload the documents, after which the online return system would again need to be submitted. **Where self-administered schemes pay any administration or co-administration fee, a letter of comfort from the relevant party must also be submitted. The above-mentioned documents must be electronically uploaded on Parts 11.1 and 11.2 in the Annual Statutory Return. The deadline for the electronic submission of all these documents is 27 April 2021. Signatories The Principal Officer, Chairperson and one other trustee signatory must sign these documents, as is required in terms of Section 39 of the Act. Kindly note that the investment schedules should also be signed off by the Principal Officer. If any of the documents are not signed as required, the CMS will regard the submission of the Annual Statutory Return documentation as incomplete. In this regard, it is important to note that the signing authority of a Principal Officer and/or Chairperson can only be delegated to a suitable person appointed by the Board of Trustees. Further, the appointment of an acting Principal Officer should be in line with the provisions of Section 57(4) of the Act, and the appointment of an acting Chairperson in line with the rules of the scheme. Where applicable, a copy of the signed Board of Trustee resolution, where another person was appointed, should accompany the Annual Statutory Return submission. The Principal Officer and/or Chairperson would be able to create a proxy on Sign Flow to redirect the signature to the relevant person appointed. Should the Principal Officer and/or Chairperson no longer be available to create the proxy, the scheme must send the contact details of the relevant signatory for the attention of the Financial Supervision Unit to allow for the bypass of the Sign Flow to the relevant signatory. The auditor is required to electronically sign the annual statutory return. It is important to note that the auditor’s signature is for identification purposes only (it is also indicated as such on the signature page). Help Files and Guidelines available Schemes are referred to the 2020 Annual Statutory Return Help File, for detailed guidance on the completion of the Annual Statutory Return. In order to provide assistance regarding the completion of Part 9(a): Assets Held in the Republic in Terms of Regulation 30 of the Act in Conjunction with Annexure B to the Regulations, the CMS published various guidelines on its website, in this regard. Please note that these publications serve as a guideline only, as the scheme will have more details available in respect of specific investments and the nature of the underlying assets. Supporting documentation attesting to the new classification must be submitted in the event where a scheme categorises any investment in Part 9 differently from the categorisation provided for in the guidelines. It should be noted that the purpose of these Guidelines is to provide guidance on the categorisation of assets in accordance with Annexure B to the Regulations, and not to highlight any noncompliance matters. Schemes should ensure compliance with not only the limitations imposed by Annexure B, but also the various Sections of the Act. The following guidelines on the categorisation of assets in terms of Annexure B as at 31 December 2020 are available on our website:  Registered banks as at 31 December 2020  Securities listed on the JSE as at 31 December 2020  Bonds listed on the JSE Debt Market as at 31 December 2020  ASISA list of Collective Investment Schemes as at 30 September 2020  Registered Financial Service Providers as at 31 December 2020  Registered insurers as at 31 December 2020 Kindly note that only Financial Advisory and Intermediary Services (FAIS) – registered entities are allowed to manage investments on behalf of a medical scheme. Investments managed by these registered entities should be accounted for in such entities’ registered names in Part 1.4 question 6(g) and Part 9(b). Schemes are referred to the guideline listing all the authorised Financial Service Providers (as mentioned above), as well as to the website of the Financial Sector Conduct Authority (FSCA) for more detail on registered entities. The CMS has also published the following documents to aid in the identification of Sections 35(8)(c) and (d) non-compliance issues:  Accredited third-party administrators and their holding companies as at 31 December 2020  Accredited administrators and its accredited managed care organisations as at 31 December 2020 Your attention is drawn to the provisions of Section 66(3) of the Act, in terms of which any medical scheme which fails to furnish the Registrar with the prescribed documentation shall be liable to a penalty of R1,400 (one thousand four hundred rand) for every day that the non-compliance continues. 11.4 Register of Members The register or members, or register of shareholders, is a record of the individuals who own the company and the details of the shares they hold. You should ensure that your register of members includes the following information:  The name of each member / shareholder  The contact address for each member / shareholder  The number and classes or types of share held by each shareholder  The amount paid or agreed to be paid on each share  The date that each shareholder became a member of the company  The date each shareholder ceased to be a member of the company (where applicable) 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 11.9 Register of Applications and Allotments - Would be used in conjunction with the above to 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. 11.15 Register of Residential Address, etc. 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. 11.18 Register of Beneficial Owners 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 r to the Registrar of Companies.

TOPIC 12 Compliance Strategy and Plan
12.1 Nature of a compliance strategy and plan 12.2 Preparation and execution of a compliance strategy and plan 12.3 Monitoring and evaluation of the strategy and plan 12.4 Draft a compliance checklist and schedule for the organisation. 12.5 Compliance Assessment/Compliance health check 12.6 Periodical fit and proper tests for directors, Corporate Secretary and Senior Management 12.7 Annual review of implementation status of previous board resolutions 12.8 Statutory review and comparison of Corporate and registry records to ensure consistency and full compliance with prevailing statutory rules 12.9 Remedial work to regularise anomalies and to remedy compliance failings identified during the status check and statutory review procedures 12.10 Preparatory compliance checks and remediation in view of transactional work 12.11 Setting-up, monitoring and updating of corporate calendar CHAPTER 12 Compliance Strategy and Plan 12.1 Nature of a compliance strategy and plan All organizations face increasing ethics and compliance demands, and even the most sophisticated businesses may struggle to maintain compliance with today’s growing multitude of regulations. The risks that corporations face change frequently and sometimes with dramatic speed. The success of any compliance strategy, therefore, depends on how well it is planned and implemented, and how well it responds to new standards. While compliance is an obligation of everyone within the firm, appointing a compliance officer can ensure nothing falls through the cracks. However, company-wide training is the key to instilling company ethics and disseminating a culture of compliance. 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: 1. Standards, policies, and procedures 2. Compliance program administration 3. Communication, education, and training 4. Monitoring and auditing 5. Internal reporting systems 6. Discipline for noncompliance 7. Investigation and remediation measures The industry has now defined the following as the components of an effective compliance and ethics program (not all inclusive):  Code of conduct and relevant compliance policies and procedures  Oversight and accountability by the board for the compliance program  Education, communication, and awareness  Delegation of authority  Enforcement, discipline, and incentives  Monitoring and auditing  Internal investigations, including a root cause analysis and corrective action plans  Consistent and fair discipline  Risk assessments  Effective assessments of the compliance and ethics program  Ongoing program improvements 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 do not happen overnight. 12.2 Preparation and execution of a compliance strategy and plan With a fluid environment of laws and regulations to stay on top of, addressing compliance requirements makes good business sense. 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. What is a compliance program? A compliance program is an organization's system for creating, reviewing, distributing, and tracking the policies and procedures needed to adhere to laws, rules, and regulations. An effective compliance program addresses the following questions:  Who is responsible for maintaining and proving compliance?  How frequently do compliance policies need to be reviewed and updated?  How are employees held accountable to compliance policies and procedures?  Can employees quickly access job-critical procedures in the field when needed?  How does your organization prove compliance to policies? 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. Elements of an effective compliance program 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. The 7 seven key elements of an effective compliance program. 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:  Protecting revenue, brand, and security  Identification of issues before customers are impacted  Creating feedback loops and stability  Gathering information on usage and usability  Experimenting with A/B scenarios  Collecting information from real users 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. Here are 10 tips to create a comprehensive monitoring strategy: 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:  How much progress have we made towards our Vision?  Are our Strategic Focus Areas still relevant?  Which of our Objectives have we completed?  Which Objectives are no longer needed?  Do we have sufficient Projects to deliver incomplete Objectives?  Are our KPIs still effective for measuring progress towards our Objectives?  Where we fell short of our targets, why did this happen? 12.4 Draft a compliance checklist and schedule for the organisation. In recent years, the scope and speed of regulations has increased tremendously. Organizations are being suffocated by changing regulations, their hands tied in the face of innovation imperatives and massive market disruption. And still, the vast majority of organizations manage risk and compliance in an ad-hoc, siloed fashion, with reactive tendencies and little-to-no sharing of data intelligence across business segments. Identifying the right talent and developing skill set is a critical first step towards compliance. Compliance needs to be part of your DNA given its importance. Make sure you have resources in place to support this growing priority. Every company today is a software company, and if there isn’t a digital transformation underway at your company, you are in jeopardy. 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. 12.5 Compliance Assessment/Compliance health check A Compliance Assessment is used to to assess and document the current state of compliance oversight, management and related risks in a given compliance area. 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. Why Compliance Health Checks are essential 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. Compliance Health Checks: both diagnosis and a remedy 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: - Necessary number of directors - Required amount of share capital, and - Residency requirements, if any, for directors - CHCs should be carried out regularly 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. 12.6 Periodical fit and proper tests for directors, Corporate Secretary and Senior Management In recent years, there has been an increasing prevalence of specific tests or requirements to ensure that certain persons are appropriately "fit and proper" to undertake and continue in their roles in the workplace: this is especially the case in certain regulated industries such as financial services and health, but its beginnings can be found in broader companies legislation. 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 preappointment 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. Disqualification of unfit directors: general 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:  Acting as a receiver of a company's property.  Being in any way concerned with the promotion, formation or management of a company, except with the leave of the court.  Being an insolvency practitioner. The period of disqualification can be up to a maximum of 15 years and depends on the powers of the court under the particular section(s) under which the disqualification order is made. 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:  Being a director in insolvency situations.  Being a director of a company which breaches competition law.  Being convicted of:  an indictable offence in connection with the promotion, formation or management of a company; or  a summary offence for breaching provisions of company law.  Being a director of a company which consistently breaches companies legislation, such as failing to file company accounts.  Committing fraud in a winding up.  Being an undischarged bankrupt. 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. Increasing trend for fit and proper person testing 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. The fit and proper test assesses the following:  Honesty, integrity and reputation.  Competence and credibility.  Financial soundness. These matters are considered in greater detail below. 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? Pre-appointment checks for head hunters Certainly in banking and health, head hunters have already long been doing pre-appointment checks to varying degrees. However, a likely impact of the more stringent tests introduced, or to be introduced, and the increasing onus on organisations to approve the individuals in question themselves, is that these head-hunter checks will often be undertaken earlier in the process to ensure that candidates who would very clearly fail the test are not put forward to the client at all. Head hunters are unlikely to undertake the detailed checks necessary on final appointees on behalf of organisations, as the latter are likely to want undertake those themselves given the implications, and the need anyway for ongoing reviews of fitness and propriety of individuals once they are in post. Recording procedures from organisations It is essential that organisations to whom the fit and proper person tests apply adopt appropriate policies and procedures, and document the process they have followed in certifying that someone is fit and proper. 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. Impact on HR/settlement agreements Organizations need to rise to these new challenges and often HR, in tandem with the company secretary and/or inhouse legal and compliance team(s) will lead on the design of appropriate processes. The responsibility for getting these processes right cannot be overstated whether in respect of the impact on the reputation of the individuals concerned, or the organisation by association. 12.7 Annual review of implementation status of previous board resolutions At first glance, reading a board resolution is intimidating because of the formal language. In fact, once you know what components make up a board resolution, they are very easy to write. Before getting started, take a look at some other resolutions that other entities have written to get an idea of the format and language. A few people working together will be able to write one up in short order. Why Do Boards Write Resolutions? 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 nonprofit 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. What Kinds of Situations Call for a Board Resolution? A board of directors can decide to write up a resolution for most any reason they choose. Think about it in terms of any decision that a board resolves to do. Resolutions can be written for the following reasons:  To document that a new member of the board was voted in  To record a decision made at a board meeting  To document a decision made by the shareholders of a corporation  When a company wants to hire new employees  When a company wishes to sell shares in the corporation  When a non-profit organization wants to delegate funds to a certain project  When a government entity wants to honor someone Where Should Boards Store Resolutions? 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. How to Write a Resolution 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. Concluding Thoughts About Writing a Resolution 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. 12.8 Preparatory compliance checks and remediation in view of transactional work Compliance audit preparation checklist 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 Be prepared to organize a schedule of interviews for 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. 12.10Setting-up, monitoring and updating of corporate calendar Most companies are organized in teams or departments that focus on specific areas of work, such as engineering, production, sales and finance. In small businesses, it is also common that some people wear multiple hats and work in more than one department. A company calendar structured according to the operation helps keep a clear overview of who is doing what or simply the availability of resources.

TOPIC 13 Management of Share Registration Services
13.1 Issue of shares at par/premium/discount 13.2 Letters of offer, allotment letters renunciation 13.3 Call on shares 13.4 Rights and bonus issues 13.5 Shares with different differential rights 13.6 Issue and redemption of shares 13.7 Immobilisation of share certificates 13.8 Shareholder rights 13.9 Share ownership registration 13.10 Maintenance of registers of members and debenture holders 13.11 Manual and electronic share registers 13.12 Shares transfer and shares transmission 13.13 In house and outsourced share registry service 13.14 Managing unclaimed shares 13.15 Role of the Secretary in share registration 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. Shares Issued at Par – Share Capital Account On Application Money Received Application of shares does not guarantee allotment of shares. Some applications will be rejected. So when the application money is received we do not credit the share capital account. For the sake of convenience, we open a new account- share application account. 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, Date Particulars Amount Amount Bank A/c Dr xxx To Share Application A/c xxx (Being share application amount received for _ shares @ Rs _ per share) 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 Share Application A/c Dr xxx To Share Capital A/c xxx (Being Application money of _ shares being transferred to Share Capital A/c) 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, Date Particulars Amount Amount Share Application A/c Dr xxx To Bank A/c xxx (Being Application money of _ shares being refunded) 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, Date Particulars Amount Amount Share Application A/c Dr xxx To Share Allotment A/c xxx (Being Application money of _ shares being adjusted against allotment) 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. Date Particulars Amount Amount Share Allotment A/c Dr xxx To Share Capital A/c xxx (Being Allotment money becoming due) Date Particulars Amount Amount Bank A/c Dr xxx To Share Allotment A/c xxx (Being allotment money received on shares) 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. Date Particulars Amount Amount Share Call A/c Dr xxx To Share Capital A/c xxx (Being call amount due) Date Particulars Amount Amount Bank A/c Dr xxx To Share Call A/c xxx (Being call amount received) 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. Date Particulars Amount Amount Calls in Arrears A/c Dr xxx To Share Call A/c xxx (Being calls in arrears brought into the books) 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. Date Particulars Amount Amount Bank A/c Dr xxx To Calls in Arrears A/c xxx To Interest A/c xxx (Being call in arrear paid with interest) Calls in Advance Then at times, shareholders pay more than the call amount. Such cases are called calls in advance. The excess amount received is a liability for the company. The following entry is passed when such advance is received and then is adjusted against the next call. Date Particulars Amount Amount Bank A/c Dr xxx To Calls in Advance A/c xxx (Being amount received as calls in advance) Date Particulars Amount Amount Calls in Advance A/c Dr xxx To Share Call A/c xxx (Being calls in advance adjusted against call) 13.2 Letters of offer, allotment letters renunciation Response to a letter Offer refers to an Offer made to the shareholders to purchase ordinary shares in the capital of the Company at a specified subscription price, subject to the terms and conditions of the Offer and conditional on relevant shareholder approvals being obtained. It can be used by a shareholder to subscribe for more shares under the terms of the Offer. Remittance for the subscription monies should be enclosed with the completed letter. 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. Disposing unsubscribed capital by the Board of Directors Below is the detailed procedure for same Renouncing Shares By Existing Shareholder 1. Company will give offer of “Renunciation” to existing shareholders in the Letter of Offer. If Shareholder wants to renounce the Shares offered to him then shareholder will give a letter of renunciation in favor of other person (“herein referred as renouncee) to Company. 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. 3. Calling the Board Meeting for following a. Allotment of shares b. Taking note that the said allotment is in the best interest of the shareholder and the company Note: – Normally practice followed by good companies is to ask the Shareholders to apply for additional shares, over and above the shares allocable to them as a matter of right. The un-subscribed portion is allotted to the members who have applied for additional shares on an equitable basis and balance amount is refunded. The price at which shares are allotted to third person shall not be less than the price at which shares are allotted to existing shareholders 13.3 Call on shares The Board may make such calls as it thinks fit upon the Members in respect of any monies (whether in respect of nominal value or premium) unpaid on the shares allotted to or held by such Members and, if a call is not paid on or before the day appointed for payment thereof, the Member may at the discretion of the Board be liable to pay the Company interest on the amount of such call at such rate as the Board may determine, from the date when such call was payable up to the actual date of payment. The Board may differentiate between the holders as to the amount of calls to be paid and the times of payment of such calls. 13.4 Rights and bonus issues Rights shares are offered at a discounted price compared to the market price. Bonus shares are issued to the shareholders free of cost. Rights shares are either partly paid or fully paid-up depending on the proportion of the paid-up value of equity shares when the further issue takes place. 13.5 Shares with different differential rights Sshare capital is the capital contributed by the owners of the company. So the capital is of two types. 1 Equity share capital 2. Preferential share capital. Again in the equity share capital there is another class of shares i.e. Equity shares with differential rights. The differential rights are in respect of voting power and dividend. So generally equity shares with less voting rights carry higher rate of dividend but whereas the equity shares with higher voting shares carries with lesser rate of dividend. Equity shares with higher voting rights are generally given to promoters, key managerial persons, Managing directors etc. 13.6 Issue and redemption of shares According to the provisions Companies Act 2015, a company limited by shares, if authorized by the Articles of Association [AOA] of the company may issue preference shares which are liable to be redeemed within 20 years from the date of their issue. No company shall be allowed to issue irredeemable preference shares. Provided that the company engaged in setting up of infrastructure projects may issue preference shares for a period exceeding 20 years but not exceeding 30 years for subject to the condition that redemption of a minimum ten percent of such preference shares per year from the twenty first year onwards or earlier, on proportionate basis, at the option of the preference shareholders. The company may issue preference shares under the Act subject to the following conditions:-  The issue shall be authorized in Articles of Association [AOA] of the company.  The shares shall be issued after passing special resolution in the general meeting of the company.  The company, at the time of such issue of preference shares, has no subsisting default in the redemption of preference shares issued either before or after the commencement of this Act or in payment of dividend due on any preference shares. Provided that the company issuing preference shares shall incorporate the following matters in the resolution passed at the general meeting:- 1. The priority in respect of payment of dividend as well as repayment of capital. 2. The participation in the surplus dividend. 3. The participation in surplus assets and profits on winding up which may remain after the entire capital has been paid. 4. Payment of dividend on cumulative or non-cumulative basis 5. The conversion of the preference shares into equity shares. 6. The voting rights. 7. The redemption of preference shares. The company may issue preference share after complying the above provisions under the following route: 1. Rights issue 2. Preferential allotment 3. Private placement It should be noted that at the time of issue of preference share please ensure that there is authorized capital for preference share and if there is no authorized capital for preference share then amend the capital clause of Memorandum Of Association. Redemption of Preference shares In light of the above, the preference shares shall be issued up to maximum of 20 years or 30 years in case company setting up infrastructure projects. It is clear that before expiry of the term the shares should be redeemed or converted into equity shares depending on the terms and conditions. The following are the important provisions regarding redemption of preference shares:-  The preference shares shall be redeemed out profits available for distribution of profits or out of the proceeds of fresh issue of shares made for the purpose of redemption.  No preference shall be redeemed unless they are fully paid up.  In case the preference shares are proposed to redeemed out of profits of the company then the equivalent amount should be transferred to a reserve called ‘Capital Redemption Reserve Account’.  The premium if any payable at the time of redemption of preference shares shall be paid out of the profit of the company or out of securities premium account. 13.7 Immobilisation of share certificates Immobilization is a process by which the Registrar verifies signatures and validates certificates for purposes of confirming shares deposited to the CDS. This is in line with the current trend in the market to have shares held in electronic form rather than share certificates. The process entails;  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 13.8 Shareholder rights Individuals that own common shares of company stock are viewed as the true owners of that company. As such, a common shareholder has specific privileges and rights that are governed by the laws that prevail in the state where the company is headquartered. The most important rights that all common shareholders possess include:  The right to share in the company's profitability, income, and assets  A degree of control and influence over company management selection1  Preemptive rights to newly issued shares.  General meeting voting rights Right to Share in Profitability As partial owners of the company, common shareholders have the right to participate in a company's profitability for as long as they own the shares. The division of profits is based on the number of shares owned by a shareholder, and gains can be substantial to shareholders over time. 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 Right to Influence Management Common shareholders also have the right to influence company management through the election of a company's board of directors. 1 In smaller companies, the president or chairperson of the board is typically the individual who owns the largest share of common stock. Larger companies may have greater diversity in the common shareholder investor pool. 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 Buy New Shares Common shareholders also have preemptive rights. If the company issues new shares to the public, current shareholders have the right to buy a specific number of shares before the stock is offered to new potential shareholders. Preemptive rights can be valuable to common shareholders, as they are often provided at a subscribed price on a per-share basis. 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. The Right to Sue for Wrongful Acts Common shareholders who feel their rights have been violated also have the right to sue the issuing company. A court has the power to enforce common shareholder rights when corporations are found to have violated their rights, either through a single shareholder complaint or as a class-action lawsuit 13.9 Share ownership registration A shareholder register is a list of all active and former owners of a company’s shares. The register includes details of shareholders, such as their name, address, the number of shares they own, class of shares held, date when they became a shareholder, and when they ceased being a shareholderA company’s directors are required to update the shareholder register on an ongoing basis and ensure that every current shareholder is recorded in the register. The shareholder register serves as proof of ownership in the company, and it shows the number of shareholders in each class 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. 13.10 Maintenance of registers of members and debenture holders Every company shall maintain the registers in the following manner namely:- The entries in the registers maintained shall be made within seven days after the Board of Directors or its duly constituted committee approves the allotment or transfer of shares, debentures or any other securities, as the case may be. 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. This sub – rule clearly gives following three options only: 1. Registered office of the company, or 2. Any other place within same city, town, village under authority of special Resolution, or 3. Any other place in India where more than one – tenth of total members resides under authority of special Resolution. The registers shall not be maintained at corporate office, factory, branch office or any other premises without authority of special resolution and without fulfilling condition related to location. A company having registered office in Delhi, shall not maintain these registered in corporate office situated in Gurgaon unless more than one – tenth of total members resides as per official record in Gurgaon itself. 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. 13.11 Manual and electronic share registers Manual Registers If the shares in a limited liability company have not been incorporated in the book-entry system, the company is under an obligation to maintain a shareholder register.The shareholder register is a register on the company’s shareholders and the company’s shares in their possession. All shares and shareholders of the public companies are listed on the date base held by the Finnish Central Securities Depository Ltd. The shareholder register shall include at least the following information:  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. Electronic Share Register 1. General 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. 3. Reliability and discretion guaranteed 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. 13.12 Shares transfer and shares transmission There may be times when you want to change the share structure of your company; either by adding a new shareholder or by changing the existing proportion of shares between shareholders. A share transfer is the process of transferring existing shares from one person to another; either by sale or gift. 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. (7) A payment made in accordance with an arrangement— (a) entered into as part of the agreement for the relevant transfer and within one year before or two years after the date that agreement is entered into; and (b) to which the company whose shares are the subject of the bid, or any person to whom the transfer is made, is privy, is presumed, except in so far as the contrary is shown, to be a payment to which this section applies 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. 502. Certification of document of transfer of shares of debentures (1) A certificate issued by a company in relation to a transfer of shares in, or of debentures of, the company is to be taken to be a representation by the company to any person acting on the faith of the certificate that there have been produced to the company such documents as on their face show title to the shares or debentures in the transferor named in the certificate. (2) The certificate is not in itself a representation that the transferor has any title to the shares or debentures (3) If a person acts on the faith of a false certificate issued by a company made negligently, the company is liable to pay damages to the person as if the certificate had been made fraudulently. (4) For the purposes of this section— (a) a certificate issued by a company in relation to a transfer is treated as having been made by the company if the certificate is signed by a person authorised to certify transfers on the company's behalf or by an officer or employee either of the company or of a body corporate so authorised; and (b) a certificate is treated as signed by a person if— (i) it purports to be authenticated by the person's signature or initials (whether handwritten or not); and (ii) it is not established that the signature or initials was or were placed there by someone other than that person, or a person authorised to use that person's signature or initials, for the purpose of certifying transfers on the company's behalf. 503. Duty of company as to issue of certificates etc. on transfer (1) A company shall, within two months after the date on which a transfer of any of its shares, debentures or debenture stock is lodged with the company, complete and have ready for delivery— (a) the certificates of the shares transferred; (b) the debentures transferred; or (c) the certificates of the debenture stock transferred. (2) For the purpose of subsection (1), "transfer" does not include a transfer that the company is for any reason entitled to refuse to register and does not register. (3) Subsection (1) does not apply if the conditions of issue of the shares, debentures or debenture stock provide otherwise. (4) If a company fails to comply with subsection (1), 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. (5) If, after a company or any of its officers is convicted of an offence under subsection (4), the company continues to fail to complete and have ready for delivery the documents referred to in subsection (1), the company, and each officer of the company who is in default, commits a further offence on each day on which the failure continues and on conviction 13.13 In house and outsourced share registry service Traditionally, Share Registry mainly covered the work of share register maintenance. This includes the core activities of maintaining and updating shareholder details, processing and registering transfers and immobilizations. On top of this share registrars are involved in reconciling share register closures and providing eligible shareholder details for purposes of corporate actions. Optional services also included AGM registration management and dividend processing, disbursements and reconciliation. However, Share Registry has increasingly become a complex industry with companies now calling on their registrars for information and consultative advice for wider investor relations activities, including emerging trends and regulatory compliance. Share Registrars are now required to monitor industry regulations and advise on the impact for share registry maintenance. Share Registrars are also required to provide data analysis to ensure compliance with new or amended regulations in the Capital Markets industry. This has in turn led to the industry being one that is systems reliant. As the Share Registrar, we provide the first point of contact for resolution of enquiries from the Regulator and/or shareholders, thus the necessity being able to store and retrieve shareholder transactional information quickly and efficiently. Share Registrars are therefore usually seen as the initial face of investor relations for their clients and it is important that the face shows values of integrity, efficiency, accuracy and responsiveness. 13.14 Managing unclaimed shares How do I claim unclaimed assets in Kenya? Claim by an agent/representative of an owner 1. An agent for owner claim form (form 4D) 2. An indemnity agreement (form 5) 3. An official letter received from the holder confirming remittance of unclaimed assets to the Authority. 4. A Certified copy of the claimant's national identity card or passport. 13.15 Role of the Secretary in share registration 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, 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.

TOPIC 14 Management of Dividends
14.1 Types of dividends 14.2 Management of dividends 14.3 Procedure in dividends payment 14.4 Payment and taxation of dividends 14.5 Declaration of dividends out of reserves 14.6 Restriction on distribution 14.7 Closure of register of members 14.8 Managing unclaimed dividends 14.9 Role of the Secretary in dividends payment CHAPTER 14 Management of Dividends 14.1Types of dividends Typically any company is engaged in the value generation for customers in the form of products and services. For the efforts of the company, it charges a small proportion of additional money known as profit. If any generates profits then it could either reinvest profits into the business or it could give the capital to its investors in the form of dividend. Dividends are given so as: 1. To increase the faith of retail investors in the company. 2. To send a signal to investors about companies optimism towards future earnings. 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 dependent of the dividend policy of the company. There are following types of dividend options with the company.  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 investors. Usually there is a predefined process for the dividend declaration. Cash Dividend Example 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 treated as the stocksplit. 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 property dividend to manipulate the taxable income. 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. 14.2 Management of dividends Dividends typically signify good corporate management. To pay out a dividend, a company must have cash on hand. Management can’t fake it. It can (and sometimes does) fake paper profits by padding its sales and profits on reports, but it can’t fake paying cash dividends to shareholders. Paying dividends over a long period of time makes a positive statement about the company’s financial health. When you see a company paying dividends, you can expect to find confident managers in charge, exerting fiscal discipline, good corporate governance, and transparency in the company’s earnings reports:  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.  Earnings transparency: In light of earnings-manipulation scandals, paying dividends validates the company’s accounting process and increases the credibility of the earnings reported currently and in the past. Again, you can fake sales and earnings figures, but you can’t fake cold, hard cash. 14.3 Procedure in dividends payment After the firm’s dividend policy has been structured, several procedural details must be arranged. For instance, how frequently are dividend payments to be made? If a shareholder sells the shares during the year, who is entitled to the dividend? To answer these questions, we need to understand the dividend payment procedures. Generally, cash, the most common type of dividend, is one of several types of dividends that corporate directors can 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 announcements are frequently reported in the financial press and elsewhere. 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 because their names are on the company books. 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. 14.4 Payment and taxation of dividends Dividends for purposes of taxation is any distribution, whether in cash or kind, made before or during windingup by a company to its shareholders with respect to their equity interest in the 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. 14.5 Declaration of dividends out of reserves If there’s any inadequacy or inadequate profits in any year, a company may declare dividend out of surplus provided fulfilment of below-mentioned conditions: a. The rate of dividend declared shall not exceed the average of the rates at which dividend was declared by it in the three years immediately preceding that year. However, this sub-rule shall not apply to a company, which has not declared any dividend in each of the three preceding financial year. 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 14.7Closure of register of members The register or members, or register of shareholders, is a record of the individuals who own the company and the details of the shares they hold. ... The amount paid or agreed to be paid on each share. The date that each shareholder became a member of the company. Restrictions on Declaration Of Dividend:  it has defaulted in redemption of debentures or payment of interest thereon or creation of debenture redemption reserve,  it has defaulted in redemption of preference shares or creation of capital redemption reserve,  it has defaulted in payment of dividend declared in the current or previous financial year(s), or  it has defaulted in repayment of any term loan to a bank or financial institution or interest thereon, till such time the default is subsisting 14.8 Managing unclaimed dividends Causes of Unclaimed/ Unpaid Dividends Among the reasons given for the high incidence of unclaimed dividends in our jurisdiction include: • Wrong address of shareholders • Death of shareholders without any notification • Relatives and heirs may not be aware of deceased’s shareholdings • Beneficiaries may have traveled without leaving a forwarding address • Many shareholders fail to monitor their investments • Minimum deposit requirements by commercial banks has forced many small shareholders to close their accounts, hence, the high incidence of return of dividend cheques back to registrars • Many individual small shareholders not satisfied with dividend amount received, do not bother to claim dividend. • • Ignorance of shareholders is generally regarded as one of the major causes of unclaimed dividends in the country. Securities and Exchange Commission’s Proposed Actions On Unclaimed/ Unpaid Dividends 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. - 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. What is the role of a company secretary? A company secretary plays a largely supportive role, taking care of important tasks such as general administration, shareholder communication, corporate governance, and statutory compliance/filing of accounts. In short, the secretary acts as a bridge between the company, the shareholders and Companies House, ensuring all the relevant information is shared in compliance, on time and efficiently. The role of company secretary involves lots of different tasks, and so an organised individual with prior experience in an administrative role is often a preferred candidate. Company secretary duties A company secretary will take care of a number of administrative tasks, including:  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

PREVIOUS SEMESTERS RECORDINGS

Lesson INTRODUCTION SUMMARY

01:30:00
Lesson TWO: Introduction

01:40:00
Lesson three, Introduction

01:30:00
CHAPTER TWO LEGAL AND PROFESIONAL FRAMEWORK OF THE CS PROFFESSION

01:35:00
Lesson CHP TWO COP SECRETARIAL FRAMEWORK 22/SEP/23

01:35:00
Lesson CS REGISTRATION PROF N LEGAL REQUIREMENTS16 SEP/23

02:00:00
Lesson DISP C2 CONT 22/9/23

02:00:00
Lesson C3 INTRODUCTION TO GOV STDS N GUIDE 22/SEP/23

02:00:00
Lesson 22/SEP/23

02:00:00
Lesson STANDARDS CONC 29/9/23

02:00:00
DIVIDENDS AND TECHNOLOGY AND MEETINGS JULY/22

02:10:00
Draft LessonDIVIDENDS/TECH AND MEETINGS JULY 22

00:00
Lesson REVISION AUG 2022/PAPER

02:05:00
Lesson REVISION Q&A 3/8/23

02:05:00
Lesson TECH N MEETINGS 14/11/23

02:00:00
Lesson TECH N MEETINGS/REVISION 18/11/23

02:00:00
Lesson NSE/COMPANY SEAL MCA REVISION 17/7/23

02:00:00
Lesson TECH N MEETINGS 18/11/23

02:00:00
Lesson REVISION APRIL 2022

02:00:00
Lesson REVISION APRIL/AUGUST 2022 25/11/23

02:00:00
Lesson REVISION 25/11/23

02:00:00
Lesson Revision 26/11/23

02:00:00

TOPIC 15 Technology and Meetings
15.1 Laws, regulations and guidelines on virtual meetings 15.2 Technology in use in virtual meetings 15.3 Planning and conducting virtual meetings 15.4 Risks associated with virtual meetings and their mitigations 15.5 Virtual meetings etiquette 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 The options available to companies during this period include: 2. Delaying or Postponing the AGM a) The Act grants the Registrar power either on the application of the company or for any other reason the Registrar thinks fit, to extend the period within which the Company is to conduct an AGM even if, as a result, the period is extended beyond the calendar year. Companies who may wish to delay or postpone their AGMs may thus apply to the Registrar for an extension of the period within which to conduct their AGM in view of the restrictions in place. The applications should be submitted electronically through eo@brs.go.ke. b) However, before a company exercises this option, the applicant company needs to consider the potential effects of that delay or postponement of their AGM and how such delay or postponement would affect their businesses and interests of their shareholders. That is the inability to pass resolutions otherwise passed only in General Meetings, for instance: i. laying the company's annual accounts and reports before its Members; ii. removal of a director or auditor before the expiry of their term of Office; iii. re-electing directors retiring by rotation and appointing new directors to the company's board; iv. appointing or re-appointing the company's auditors; v. authorizing the directors to allot shares and disapplying pre-emption rights; vi. authorizing the purchase by the company of its own shares; vii. if a final dividend has been recommended by the directors, declaring that dividend; and viii. for quoted compani es, voting on the company's directors' remuneration report and policy, and authorizing the holding of other general meetings on 14 days' notice. 3. Hybrid and Virtual Meetings a) All Companies can leverage on technology and be able to hold General Meetings (GM) during the pandemic period. This is pursuant to Orders issued by the Court in NRB Miscellaneous Civil Application No. E721 of 2020 In the Matter of Kenya Private Sector Alliance Limited (KEPSA) for all companies and NRB Miscellaneous Application No E680 of 2020 (WPP Scangroup Plc) for listed Companies. This may be a hybrid where there is a physical in-person meeting (subject to the public 3 gathering restrictions) and the option to participate remotely or a virtual only GM that is conducted solely online. Virtual meetings are conducted online, without a physical meeting and the only venue in the conduct of a fully virtual meeting is the broadcast venue. b) The Companies Act, 2015 does not contain any provisions on the conduct of hybrid or virtual meetings, however, companies can make provision for virtual or hybrid meetings in their articles of association. c) The model articles for private companies, public companies and companies limited by guarantee provides that in determining attendance at a general meeting, it is immaterial whether any 2 or more members attending it are in the same place as each other. d) This provision in the model articles thus allows a company that has adopted the model articles to hold a General Meeting of its members at two or more venues using any appropriate technology that gives members as a whole reasonable opportunity to participate in the meeting and where the articles stipulate conditions on how such meeting shall be conducted then such conditions must be complied with. Such companies that have adopted the model articles or whose articles of association provides for holding of their General Meetings virtually need not refer to the Court Orders cited above. e) Companies therefore, whose articles of association do not provide for virtual or hybrid meetings, reference and compliance should be made pursuant to the Court Orders cited above. 4. Virtual Conduct of the meeting, considerations to be put in place: a) The Company needs to put in place appropriate technology that enables members to participate in the meeting and ability to record attendance. b) The infrastructure needs to be reliable and should enable members the right to speak and to vote. c) The online voting process must be able to allow members to cast their votes in time during the proceeding of the general meeting. 4 d) Members with no access to the internet can cast their votes via proxy forms appointing the Chairperson of the meeting, or any other individual, to vote on the members’ behalf. The proxy forms should be submitted within the stipulated time and through a manner (for example electronic means or postal) as determined by the Company. However, this is not a mandatory requirement but can be exercised on election by members. e) The Company needs to provide guidance to shareholders on the requirements and method of participating and voting in the general meeting using the selected platform, the means by which the meeting can be electronically accessed and the mode of participation. f) All protocols/rules of procedure must be circulated in advance to all shareholders, on how participants would use the selected technology, how the member may provide questions or matters to be raised at the meeting, the relevant cut-off time within which questions must be submitted and voting/polling procedures. g) The company should implement secure authentication measures to identify attendees and verify that a quorum is present and maintained throughout the meeting. h) The Company to consider the technological implications, including user accessibility, data security, management of Q&A, shareholder participation and voting arrangements. 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. 2. Web and Video Conference 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. 15.3Planning and conducting virtual meetings Executed well, virtual meetings can enable geographically dispersed teams to collaborate, solve problems, and get work done as a group. Inefficient meetings, however, become a waste of time, leading to unproductive and disengaged employees. 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. Tip #1: Set a plan This is true for any meeting but even more pertinent when you have attendees calling in from various locations. 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? Tip #2: Schedule ahead of time 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. Tip #3: Establish etiquette for virtual meetings 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 inperson 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. Tip #4: Keep participants engaged 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?” Tip #5: Follow up 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. Tip 5 # Choose the right software for your virtual meeting 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. 15.4 Risks associated with virtual meetings and their mitigations 1. Zoom fatigue and reduced productivity 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. 5. Technical issues and losing time 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. 7. Distant time zones 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 8. There are an overwhelming amount of options Zoom, Teams, Slack, Google Meet, Go To, Blue Jeans, Facetime, Discord. The options for technology to host your virtual meeting can seem endless. Each platform promises to achieve similar goals, but the interface and user experience can vary. 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. 9. You run into continuous technology problems 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 15.5 Virtual meetings etiquette Be conversant with the software 2. Prepare ahead 3. Stick to time 4. Dress appropriately 5. Have a clear background 6. Try to avoid distractions 7. Know when to speak 8. Speak to the camera 9. Use the keyboard less 10. Minimize Body movement 11. Have breaks 12. Avoid eating 13. Don’t leave without informing others 14. Protect sensitive information 15. Wrap up professionally

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About Course

Course Content

CLASS REECORDING JAN – APR 2024

CLASS 1 INTRO TO MEETINGS 13/01/24

CLASS 2 MEETINGS INTR 19/1/24

CLASS 3 MEETINGS 20/1/24

CLASS 4 GG N MINUTES BARD MEETINGS 26/1/24

CLASS 5 GS N RESOLUTIONS 27/1/24

CLASS 6 GENERAL MEETINGS 4/2/24

Lesson CLASS 7 GEN METINGS 4/2/24

Lesson CLASS 8 BOARD N CMM MEETINGS 9/2/24

Lesson CLASS 9BOARD AND COMM 10/2/24

Lesson 10 IQUIDATIN MEETINGS 16/2/24

Lesson 11 MEETINGS IN LIQUIDATION 17/2/24

Lesson MEETINGS OF COUNTY N NATINAL ASSEMBLY 24/2/24

Lesson 13 MEETINGS OF COUNTY N NATIONAL ASSEMBY 25/2/24

Lesson 14 COUNTY AND NATINAL ASSEMBLY MEETINGS 1/3/24

Lesson 14 TECHNOLOGY AND MEETINGS 2/3/24

Lesson 16 REGISTERS AND RECORDS 8/3/24

Lesson REGISTERS AND RECORDS 9/3/24

Lesson18 COMPLIANCE STRATEGY 15/3/24

Lesson19 COMPLIANCE STRATEGY & SHARES INTR 16/3/24

Lesson 20 SHARES MANAGEMENT 22/3/24

CLASS 21 NAIROBI SEC EXCHANGE 30/3/24

Lesson 22 DIV MGT& COMMON SEAL 5/4/24

CLASS 23 NSE 6/4/24

CLASS 25 REVISIN PILOT PAPER AND APRIL 2022 12/4/24

CLASS 25 13/4/24 REVISION APRIL& DEC 2024

Lesson REVISION APRIL 22 & MAY 2021 19/4/24

course outline

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online class link

CLASS

Meetings Introduction

Lesson :CHAPTER TWO

GS001: General Meetings

GS002: Meetings of the Board

GS003: Minutes

GS004: Resolutions

GS005: Board papers

GS006: Registers and records

GS007: Filing annual returns

GS008: Common seal

GG001- Professional ethics

GG001- Professional ethics

GG002- Role of the corporate secretary

GG005: Virtual meetings

Company meetings (part 1)

Company meeting (part 2)

copany meeting (part 2)

Company meeting MEMBERS MEETINGS

AGM, COMPANIES ACT PROVISIONS

Lesso MEETINGS BOARD N COMMITTEE

Lesson MEETINGS 29/923

Lesson MEETINGS C4 CONCLUSION 30/9/23

BOARD AND COMMITTEE MEETINGS

BOARD AND COMMITTEE MEETINGS CONCLUSION

Lesson BOARD COMMITTEEE

Lesson BOARD MEETINGS INTRO 7/6/23

Lesson C5 BOARD N COMMITTEE MEETINGS

Lesson BOARD N COMM 6/OCT/23

Lesson BOD N COMMITTEE CONC 7/OCT/23

meetings in liquidation (part 1) 14/6

meetings in liquidation (part 2) 22/6

Lesson LIQUIDATION 13/OCT/23

Lesson LIQUIDATION MEETINGS 18/OCT/23

meeting of national and county assembly (part 1)

meeting of national and county assembly (part 2)

Lesson 6/7NATIONAL ASS CONCLUSION

Lesson LIMITATIONS OF DEBATE

LessonMEETINGS OF COUNTY N NATIONAL ASSEMBLY 21/OCT/23

Lesson COUNTY N NATIONAL ASSEMBLY MEETINGS N RECORDS INTRO 27/OCT/23

Lesson STATUTORY RECORDS N REGISTERS 2/11/23

Draft Lesson

INTRO COMMON SEAL

Draft Lesson COMPANY SEAL31/07/23

Draft Lesson COM SEAL N NSE 17/7/23

Lesson NSE REGULATIONS JULY 29

Lesson NSE/ SEAL

Lesson NSE LISTING/COM SEAL 17/7/23