A company requires directors to run the day-to-day business of the company. In Kenya, the Companies Act 2015 states that a private company must have at least one director, while a public company must have at least two directors. It also states that the company, in appointing directors, must ensure that at least one of them is a natural person – a human being. This gives leeway to have legal persons, like other companies or a corporation, as part of the directors of a company.

How are directors appointed?

There are three ways in which directors can appointed under the Act, for both private and public companies:

Through the company memorandum of association.

At formation of the company, the Act requires that the company should state the company officials. The persons named in the memorandum of association as subscribers and consequently in the CR1 form as directors, are the first directors of the company.

By an ordinary resolution.

During a general meeting, the members of the company are allowed to vote on appointment of directors of the company. This is done where an ordinary resolution for appointment of directors is part of the agenda to be discussed at the meeting, and a notice of this resolution has to be given together with the notice of the meeting.

Here, members of the company vote on the appointment of the directors named in the resolution. If the resolution is passed, by a simple majority, then the person’s subject to the resolution are seen to be appointed as directors of the company.

How can directorship be terminated?

When directors are appointed, particularly through an ordinary resolution, there is no limitation as to tenure. The directors appointed in this way can stay in the office for as long as they want. However, directorship can be terminated at any time, and the termination can either be voluntary or forceful-by operation of the law.

A director can voluntarily terminate their directorship two ways through:

Through the company memorandum of association.

At formation of the company, the Act requires that the company should state the company officials. The persons named in the memorandum of association as subscribers and consequently in the CR1 form as directors, are the first directors of the company.

By an ordinary resolution.

During a general meeting, the members of the company are allowed to vote on appointment of directors of the company. This is done where an ordinary resolution for appointment of directors is part of the agenda to be discussed at the meeting, and a notice of this resolution has to be given together with the notice of the meeting.

Conclusion

The Companies Act 2015 requires that whenever a director is appointed or ceases to hold office through any reason stated above, their appointment to or cessation from office must be notified to the registrar of companies. Companies need to ensure that the registrar is notified, in the prescribed form, to prevent any penalties to the company and the officers of the company.