6th September 2021
AB & David Africa has been named a winner of the flagship award “African Law Firm of the Year – Large Practice” at the 2021 edition of the Africa Legal Awards hosted by Legal Week and the Corporate Counsel Association of South Africa (CCASA). The announcement was made at an online event held on September 3, 2021.
The award is set out to recognise exceptional achievement from Africa’s legal community.
The Chairman and Senior Partner of the firm, David Ofosu-Dorte, remarked “It feels good to win this award at this time of Africa’s growth, especially as it coincides with the implementation of the AfCFTA and the unfolding events of the new decade”.
In 2015 AB & David Ghana won the Africa Law Firm of the Year – Small Practice and the CSR, Diversity, Transformation and Economic Empowerment Award. In addition, the firm was highly commended in the category of the Transportation and Infrastructure Team of the Year.
Again in 2016, the firm won the Africa Law Firm of the Year – Small Practice and was nominated in a number of other categories.
This prestigious 2021 award also follows the recent expansion of the group into Kenya with Oraro Company Advocates joining the group as an affiliate member.
In addition to its 6 offices (headquartered in Ghana), the firm has a network of firms in 24 African countries and continues to remain committed to its mantra of One Continent, One Law Firm.
Established 44 years ago by George Oraro SC (one of Kenya’s top litigators), Oraro & Company Advocates is a top-tier, full-service Kenyan law firm providing specialist legal services both locally and regionally in Arbitration, Asset Tracing & Recoveries, Banking & Finance, Capital Markets, Conveyancing & Real Estate, Corporate & Commercial, Dispute Resolution, Employment & Labour, FinTech, Infrastructure, Projects & PPP, Restructuring & Insolvency and Tax. The Firm has over the years developed a distinguished reputation which has seen it and its Partners recognised by leading international directories such as Chambers Global, Legal 500 and IFLR1000.
3rd August 2021
Leading Kenyan law firm, Oraro & Company Advocates is proud to announce the promotion of four advocates. The promotions have been made across the firm’s commercial and dispute resolution (employment & labour) practice areas.
The promotions are effective August 1, 2021.
James Kituku, highly experienced advocate in banking, finance, conveyancing and real estate matters, has been admitted into the Partnership after working at the firm for the last eight years in Associate and Senior Associate roles. He holds a wealth of transactional experience, having been involved in high-ticket deals over the years which span across corporate lending, commercial & residential real estate projects, transfer of land, project finance, among others.
Largely specialising in employment & labour law, Sandra Kavagi has over seven years of experience advising local and international clients in such sectors as education, financial services, and public entities. Sandra has developed strong expertise in contentious and advisory work in employment & labour. She also has extensive experience in handling banking and commercial litigation, constitutional law, environmental law, election petitions, fraud and land disputes.
Similarly, Anne Kadima, from the Dispute Resolution Department who specialises in employment & labour law, has been promoted to Senior Associate position after working at the firm for over five years, having joined as a pupil. Anne is also well-versed in banking and commercial litigation, defamation, and shareholder disputes.
From the Commercial Department, Sheila Nyakundi, with over seven years of experience, has been promoted to a Senior Associate. Sheila is well versed in advising on commercial contracts, due diligence, mergers & acquisition, corporate restructuring and reorganisations from target sectors such as construction, financial services, and manufacturing and industries.
Commenting on the promotions, Pamella Ager, the firm’s Managing Partner, noted that “these promotions are well-deserved and emphasize the fact that Oraro & Company Advocates is a firm that rewards hard work and recognises the importance of diversity. I heartily congratulate all the four advocates on their promotions and look forward to their enhanced service delivery and provision of innovative solutions to our clients in their new roles.”
The COVID-19 pandemic has brought with it unprecedented disruptions in the corporate world. The Government of Kenya, in a bid to combat the spread of the virus, issued directives including the imposition of restrictions on public gatherings. This essentially meant that companies are not able to conduct their Annual General Meetings (“AGMs”) in the usual manner and as required by law (except for sole member companies). Consequently, the Director General in exercise of his powers under section 876 of the Companies Act, 2015 (the “Act”) has issued Guidelines on the conduct of hybrid and virtual meetings by companies (the “Guidelines”). Below are some of the options provided under the Guidelines for companies in relation to conducting general meetings (“GMs”):
Written Resolutions in lieu of General Meetings
A private company may, subject to the provisions of the Act and its Articles of Association, pass written resolutions that are as effectual as resolutions passed at a GM. The written resolutions may be proposed by directors or members of the company. It is however important to note that a resolution to remove a director or an auditor from office before the end of their term in office, may not be passed by way of a written resolution.
Delaying or postponing of Annual General Meetings
Companies have the option of applying to the Registrar to extend the period of conducting an AGM. The Guidelines provide for the electronic submission of applications for the delay or postponement of AGMs through the email address email@example.com. However, the applicant company needs to consider the potential effects that a delay or postponement of an AGM might occasion to its business and the interest of its shareholders.
Conducting of Hybrid and Virtual Meetings
Companies can now conduct either hybrid or virtual meetings during the COVID-19 pandemic period if the companies’ Articles of Association allow for the same. A hybrid meeting is where the members have the optionality of either attending the meeting in person, subject to the public gathering restrictions, or doing so virtually. A virtual meeting, on the other hand, is conducted purely on an online platform without members having the option of attending the meeting physically. It is important to note that the Articles of the company have to provide for the conduct of the meetings in such a manner.
Companies that have adopted the model articles can use the appropriate technology to hold a GM at two or more venues provided that the members are provided with a reasonable opportunity to participate in the meeting. Public companies can adopt the use of virtual or hybrid meetings where: (i) their Articles permit members to attend meetings remotely; (ii) their quorum requirements for a meeting is at par or lower than the prescribed maximum number of people allowed in a public gathering per the government’s directive; and (iii) for publicly listed companies, they have to comply with the court order issued under Miscellaneous Application No E680 of 2020 on the proposed conduct of its GM and keep the Registrar in copy.
Considerations to be made before conducting a Virtual Meeting
The Guidelines require a company to put in place the following considerations before using a virtual platform to conduct meetings:
In addition, companies will still be required to comply with all the other requirements of conducting meetings under the Act. These requirements include: (i) complying with the notice provisions; (ii) maintaining the quorum required for a valid meeting at the start and during the meeting; (iii) maintaining a proper record of the meeting; and (iv) for a hybrid meeting, conducting the physical meeting at the registered office of the company or a venue determined by the board and ensuring that key persons in the company attend the meeting physically to supervise compliance with the directives on public gatherings as determined by the government from time to time.
This alert is for informational purposes only. If you have any queries or need clarifications, please do not hesitate to contact Jacob Ochieng (firstname.lastname@example.org) (Partner), Naeem Hirani (Partner), or your usual contact at our firm, for advice relating to the Guidelines and how the same might affect you.
3rd June 2020
In the recently released awards by the Association of Young Abitrators dubbed “Africa’s 50 Most Inspiring Young Arbitration Pratictioners 2020”, our very own Noella Lubano, a partner at the firm’s dispute resolution practice, was recognised for her arbitration experience, putting her in the talent pool of Africa’s best arbitrators.
The prestigious award celebrates future leaders in Africa’s disputes markets, their achievements, and contributions to the development of arbitration in the African continent.
Noella has over the years built a solid dispute resolution practice with notable arbitration matters both locally and internationally. She has represented clients in multi-million dollar arbitration proceedings at the world’s leading arbitral institution such as the International Chamber of Commerce and the London Court of International Arbitration (LCIA).
Noella is a regular speaker at various arbitration events such as the LCIA African User’s Symposium in 2019, where she participated as a panel discussant on “The Future of African Arbitration” and the East Africa International Arbitration Conference in 2019 where she was also as a panel discussant on “Regional Legislation on Government Contracting”, among many others. In addition to this, Noella has written extensively on the subject contributing to various publications such as the Kenyan Chapter of the 6th Edition of Sweet & Maxwell’s Arbitration World and the Kenyan Chapter of the 6th Edition of the International Arbitration Review by Law Business Research.
This recognition shines a spotlight on Noella’s spirited arbitration career and reaffirms comments made by international legal directory - Chambers Global 2020, which commented that she is “very determined”.
The first case of coronavirus (COVID-19) was reported in Kenya on 13th March, 2020 and with it came the disruption of Kenyan business on an unprecedented scale. Businesses have had to cut down on operations with many being forced to reduce operating costs, lay off workers, close down branches, among other measures. The snowball effect has been reduced liquidity in the economy as very few people can meet their day to day cash obligations. As Harry Truman once said “…It is a recession when your neighbour losses his job; it’s depression when you lose yours…” the adverse economic and financial effects of the pandemic are truly felt when they hit home. It is therefore imperative for businesses to not only tighten their financial and strategic belts by controlling their operational costs but also find creative ways of enhancing their liquidity.
In this alert, we consider the measures taken by the government to financially cushion corporate entities in this pandemic as well as corporate measures that companies may take to enhance their liquidity and ensure business continuity.
A. Corporate Measures
Debt discounting generally involves banks or financial institutions lending money with the deduction of interest or premiums in advance of the amount being received by the borrower. This would generally ensure that the institution recovers its interest in advance and at the same time allow borrowers easy access to liquid cash.
Factoring and Receivable Financing
Factoring and receivable financing transactions offer easier access to capital by corporate entities through the sale of receivables, invoices, and other highly traded commercial assets.
Factoring is a financial transaction in which an enterprise sells its account receivables to an entity at a discount to raise capital to run the enterprise.
Receivable financing, on the other hand, is a subset of factoring. It occurs when a business raises money or finance based on or from its receivables by offering the receivables as security for a loan. It is a tool used by businesses to obtain quick access to short-term financing while mitigating the risks related to payment delays and default by buyers.
Kenya does not have a specific legal framework that regulates factoring and receivable financing. Parties to factoring and receivable financing transactions rely on general principles of contract law and the Moveable Property Security Rights Act (No.13 of 2017) (MPSRA). Section 2 of the MPSRA recognises receivables as intangible assets over which security may be created to obtain a loan.
In the case of Trans National Bank Limited v Swift Truckers Limited & 3 Others  eKLR the Court held that a receivable financing transaction is based on the contractual relationship entered between two parties, namely the factor and the supplier. The contract terms are negotiated by the parties and spell out the rights, obligations and conduct of the parties in the factoring agreement.
Receivable financing stands out as being a mode of financing that is within reach of Small and Medium Sized Enterprises (SMEs). This is due to the low levels of credit scores required to access finance thus promoting financial inclusion. Further, receivable financing improves the flow of cash to assist with the operations within the supplier’s business while eliminating bad debt. It is estimated that a company may access up to 80% of the invoice value from factoring without having to wait for the final payment period for invoices.
Finally, receivable financing may serve as an avenue of lowering a company’s tax liability by converting a supplier’s debtors (which is an asset) into security for achieving financing. The servicing of the finance serves as an additional expense for the supplier, effectively lowering their net profit thereby incurring a lower tax liability.
With the impending financial crisis, businesses may consider receivable financing, factor financing and debt discounting as possible avenues of boosting their liquidity.
New Creditors to Offer Facilities
Corporate entities may consider engaging other credit offering non- financial institutions offering debt discounting services to sustain their financial buoyance
Re-negotiation of Debt Repayment Terms
Following the flexibility of loan terms that is forthcoming, borrowers can negotiate methods through which they can service their debts. Extended loan repayment periods, payment-in-kind, scraping of penalties, or the interest rates can all be negotiated to prevent default whilst maintaining liquidity. Indeed, the Central Bank of Kenya (CBK) vide notices dated on 18th Mach, 2020, on Emergency Measures To Mitigate The Adverse Economic Effects On Bank Borrowers From The Coronavirus Pandemic, formulated measures that were to apply for borrowers whose loan repayments were up to date as at 2nd March, 2020. Notably, banking institutions were directed to consider renegotiating the debt repayment terms for their borrowers. Borrowers whose loans and other credit facilities were not in arrears as at the beginning of March 2020 should take advantage of this directive and renegotiate the terms of repayment in a manner that best suits their financial position subject to the banks’ acceptance of the renegotiated terms.
Sale of Non-Strategic Assets
Businesses may also consider selling certain non-strategic assets. This could guarantee a prompt boost of their liquidity. They may also renegotiate with their lenders so that the proceeds of these sales of assets (even where such assets act as the collateral) can be reinvested in the company’s main business activities rather than into the servicing of the existing facilities. Alternatively, the gains from the sale may be channelled towards structuring sales or purchases through collection or payment in kind (shares, exchange of assets, etc.) which would limit the outflow of cash and maximize the value of the corporate entities and its future activities.
B. Government Measures
As discussed in our recent Alerts on Tax Reliefs and the Tax Amendments Act, 2020 the Government has taken fiscal measures aimed at cushioning Kenyans against the adverse economic effects of the COVID-19 pandemic, laid out various tax reliefs that would aid businesses to mitigate against the harsh economic times. These measures have been incorporated in the Tax Laws (Amendments) Act, 2020, and would aid in preserving liquidity as a result of lowered tax obligations. They include among others: the reduction of VAT from 16% to 14%, the lowering of the Central Bank Rate from 8.25% to 7.25% and further reduced to 7% which would aid borrowers and lenders; the reduction of the Turnover Tax rates for SMEs from 3% to 1%; the reduction of Corporate Tax from 30% to 25%; and the expedited payment of verified VAT refunds.
Central Bank of Kenya Directives
In an address to the Nation on 25th March 2020, President Uhuru Kenyatta called for the lowering of the Cash Reserve Ratio (CRR) to 4.25 percent from 5.25 percent which would provide additional liquidity of Kenya Shillings Thirty Five Billion (KES 35 Billion) to commercial banks. As a result, borrowers have access to liquid capital for their businesses. The CBK rate has also been lowered to facilitate the ease of access to capital by borrowers. See the CBK’s Additional Emergency Measures to Mitigate the Adverse Effects on The Banking Sector from The Coronavirus Pandemic dated 20th March, 2020.
There was also the temporary suspension of the listing with Credit Reference Bureaus (CRB) of any person, Micro Small and Medium Enterprises (MSMEs), and corporate entities whose loan account falls overdue or is in arrears. As a result, companies which would otherwise have not been creditworthy can remain afloat and solvent despite being generally high-risk borrowers.
Trading on the Capital Markets
The Capital Markets Authority (CMA) issued a Press Release dated the 3rd of April, 2020, by the Capital Markets Stakeholders on “Capital Market industry announces measures to mitigate the adverse effects of the Corona pandemic” announcing a raft of measures to mitigate the impact of the virus on trading and the continuity of business.
Some of the measures include the sanction of Annual General Meetings of listed companies and making the procurement of all relevant approval, audited financial statements and dividend policies to the CMA, NSE and the public available through prescribed channels; ensuring that trading on the NSE can be carried out through online, mobile platforms or trading systems that can be accessed virtually and allow for automated customer onboarding processes to reduce the need for physical verification of documents and in-person visits while facilitating access to the market by investors.
It is hoped that these measure will see the markets remain open and accessible so that businesses can trade on highly liquid markets. Corporate entities trading on the market can, therefore, take advantage of liquid markets to make high returns.
This alert is for informational purposes only and should not be taken as or construed to be legal advice.
If you have any queries or need clarifications, please do not hesitate to contact Jacob Ochieng (email@example.com), Nelly Gitau, Lena Onchwari, Wanjala Opwora (firstname.lastname@example.org) or your usual contact at our firm, for legal advice relating to the COVID-19 pandemic and how the same might affect you.
The COVID-19 pandemic has impacted numerous companies and businesses globally with the result that many are currently facing financial difficulties including possible insolvency, closure and/or an uncertain future. In these difficult circumstances, it is important that directors and business owners understand the options available to them with a view to either rescue and revive their business or dissolve them in an organised and legal manner.
Directors and owners of businesses in distress ought to take care not to attract liability for wrongful trading. Liability for this might arise if they knew or ought to have known that there was no reasonable prospect that the company would avoid being placed in insolvent liquidation. It should be noted however that trading whilst insolvent does not, in itself, constitute wrongful trading. Liability only arises if it can be shown that the company is worse off as a result of the continued trading.
Corporate insolvency in Kenya is governed by the Insolvency Act, 2015 (the Act). Under the Act, a company is deemed insolvent if:
The main options available to insolvent companies or companies in distress under Kenyan law are administration, company voluntary arrangements and liquidation. Each of these processes have various advantages and disadvantages and it is necessary that directors and business owners clearly define the objectives they wish to achieve and carefully weigh which option is best suited to achieve these objectives.
Administration is a procedure used to reorganize a company or to realise its assets under the protection of a statutory 12 month moratorium which prevents creditors from taking action to enforce their claims against the company which may prevent the implementation of a strategy for the company’s rescue or asset realization.
The objectives of an administration are twofold, namely to allow an insolvent company to continue trading with protection from creditors through a moratorium and to achieve a better result for creditors than is likely if the company was to be liquidated.
An administration order will be issued if court is satisfied that the company is or is likely to become unable to pay its debts (upon satisfaction of the cash flow, balance sheet and net asset position tests), and that the administration order is reasonably likely to achieve the objective of administration.
An administrator is appointed by way of an administration order. He may, among other things, sell the company’s property, borrow or institute proceedings on behalf of the company. He must however seek the creditors approval for his proposals and has a duty to perform his functions as quickly and reasonably as is practicable. He is an authorized insolvency practitioner and considered an officer of the court, whether or not appointed by court.
An administration may be terminated on:
The advantages of an administration are numerous, for instance, an administrator owes his or duty to all the creditors and not to a single creditor. Administration also has the prime advantage of a statutory moratorium which prevents all creditors from bringing forward legal claims against the company while it undergoes administration. This may afford the company time and space to recover while ensuring that the goodwill and value of the business is preserved.
An administration process does not ordinarily interfere with the company’s employment or commercial contracts. Also, although administration may lead to liquidation of the company, the business itself may well be saved, in whole or in part, by sale to a third party.
The downside of an administration is that it very often leads to the eventual liquidation of the company and it may not be possible to secure the sale of the business. It also has the potential of being lengthy and costly. Further, it comes with negative publicity and exposes directors to claims in for misfeasance, fraudulent trading, wrongful trading, preferences, liability for transactions undertaken at an undervalue among others.
Company Voluntary Arrangement
A company voluntary arrangement (CVA) is a voluntary arrangement, compromise or scheme of arrangement between a company and its creditors that is lodged in court as a proposal to take effect as voluntary arrangement. The CVA takes effect upon its approval by court and binds every creditor and member of the company.
A CVA is implemented under the supervision of an insolvency practitioner who assumes the role of a “supervisor” and becomes responsible for implementing the arrangement in the interests of the company and its creditors and monitoring compliance by the company with the terms of the CVA.
During the period during which the CVA is being considered, small eligible companies have the option of applying for and obtaining a moratorium which commences at the time when the application for the moratorium is lodged in court and ceases at the end of the day in which a meeting has been held to consider the implementation of a CVA, provided that the duration does not exceed 30 days.
CVAs can take many forms including but not limited to mergers and acquisition, share capital restructuring, debt for equity swaps, compromises, among others.
Some of the key advantages of CVAs include the fact that directors remain in control of the company. CVAs also tend to be more affordable than other formal insolvency procedures such as liquidation and administration. Further, a short-term moratorium is available to small companies while the CVA proposal is being considered. An administration may also be combined with a CVA which may avail the advantage of a statutory moratorium.
On the other hand, some of the disadvantages of CVAs are that unlike an administration process, they have no automatic statutory moratorium. Further, in the event that a CVA is combined with an administration, the insolvency costs increase thereby defeating the purpose of opting for the CVA in the first place. Secured creditors are also not bound by CVAs and may still appoint an administrator or liquidator. Finally, if a CVA fails and the company cannot meet its terms, it may be sued by creditors. It is therefore important to ensure that the terms of the CVA are feasible.
Liquidation is the legal process by which a company’s control is removed from directors and placed under a liquidator for purposes of collecting and realising its assets and distributing the same to the creditors in order of priority ranking and thereafter, in the event of any surplus, distributing it to the members. When such process takes places, the company is deemed to be dissolved.
A company may file for liquidation in order to avoid incurring liability for wrongful trading. The intention is to bring the company to an end. Once the liquidation order has been made, legal proceedings against the company may be instituted or continued only with the approval of the court.
There are two types of liquidation namely, a compulsory liquidation and a voluntary liquidation where compulsory liquidation is supervised by the High Court of Kenya while a voluntary liquidation is instigated by the members or creditors of the company. A compulsory liquidation will normally be initiated on the basis that the company is insolvent while a voluntary liquidation is normally initiated when the company is not insolvent.
A members’ voluntary liquidation is undertaken when a company is solvent. It is deemed to have commenced after the passing of the special resolution by the members of the company after which the company ceases to carry on its business, except in so far as may be necessary for its beneficial liquidation.
The directors of the company are required to produce a declaration of solvency which declares that the company will be able to pay all its debts within 12 months. Creditors play no part in members’ voluntary liquidation since the assumption is that their debts will be paid in full. The Registrar of Companies dissolves the company after 3 months from the date of receipt of the final accounts of the company by removing its name from the register of companies.
A creditors' voluntary liquidation is commenced by the directors convening a general meeting of members to pass a special resolution to wind-up the insolvent company (private companies may pass a written resolution with a 75% majority), appoint a liquidator and nominate up to 5 representatives in a liquidation committee. Thereafter, the directors must also convene a meeting of creditors, within 14 days.
The advantage of a liquidation is that it brings matters to an end for a struggling business in a legal and organised manner. It also removes the responsibility from the company’s directors and transfers it to a qualified insolvency practitioner who makes decisions for the directors. It has the effect of permitting employees to claim terminal or redundancy dues from the relevant government fund and lifts the pressure of court judgement and debt recovery claims.
On the other hand, some of the major disadvantages of liquidation include the fact that on the appointment of a liquidator, all the powers of the directors cease. Further, the business can no longer trade, employees lose their jobs and creditors and suppliers may lose money which might make is difficult for the directors to start a similar business. In addition, the business’ reputation, licenses and assets may be lost on liquidation.
This alert is for informational purposes only and should not be taken as or construed to be legal advice. If you have any queries or need clarifications, please do not hesitate to contact Noella Lubano (email@example.com), Eva Mukami (firstname.lastname@example.org), Jessica Detho (email@example.com) or your usual contact at our firm, for legal advice relating to the COVID-19 pandemic and how the same might affect your business.
Our Banking and Finance lawyers, Pamella Ager, Partner, and James Kituku, Senior Associate, contributed to the Kenyan Chapter of the recently-released ICLG: Project Finance 2020. The chapter covers various crucial topics around project finance laws and regulations such as bankruptcy and restructuring proceedings, tax, foreign insurance, foreign employee restrictions and force majeure among others.
A publication by the Global Legal Group that was established in 2002 as an independent, London-based media company specialising in the legal market, the publication aims to provide current and practical comparative legal information on several jurisdictions in a Q&A format. To read the Kenyan chapter, click here.
20th April, 2020
In the midst of these challenging times, we are delighted to announce that Oraro & Company Advocates has achieved a top ranking in the just released 2020 edition of The Legal 500 EMEA rankings. We have been ranked a Top Tier Firm in the Dispute Resolution and Employment practice areas. In addition, our Banking, finance and capital markets practice area has been highly recommended by the directory.
Legal 500 EMEA affirmed our continued ‘exceptional record in big-ticket disputes’ and noted that our firm remains a notable name in insolvency and tax disputes, in addition to handling major arbitration matters. The directory quoted clients’ testimonials praising our Dispute Resolution practice for providing ‘personalised service, [being] flexible on fees and top-notch lawyers’ with another source adding that the team is ‘solution oriented, [making] commercial sense, [has] a wealth of knowledge, ability to understand issues and draft pleadings within pressing timelines.’
Senior Partner George Oraro SC and Managing Partner, Chacha Odera were ranked as ‘Leading Individuals’ confirming their outstanding reputation over the years. George was highly praised with sources saying ‘George Oraro is available throughout, he is willing to meet and offer advice and solutions. Even when he is not able to take up a matter, he is still willing to see how best he can assist.‘ Additionally, Noella Lubano, Partner, was recognised as Next Generation Partner, with sources saying she is ‘responsive, conducts very good and well thought out research, and is approachable and witty.’
Our Employment practice area also received a Tier 1 rating with the directory noting our strength in handling both contentious and non-contentious employment matters and our experience in handling redundancies, retrenchments, employee benefits and collective bargaining arrangements. Recognised as a leader in employment litigation, Chacha Odera was ranked in the elite group of ‘Leading Individuals’. Georgina Ogalo-Omondi was recognised as an ‘employment specialist’ and ranked Next Generation Partner.
In the Banking, Finance and Capital Markets practice area, Oraro & Company Advocates was also highly ranked,with Legal 500 noting that the firm is a ‘popular choice’ for a number of leading domestic banks and large real estate developers. The practice was recognised for being ‘…partner led, commercial and lean…’ with Pamela Ager who leads the team being noted as a ‘Key Partner’.
Upon receiving the news, Chacha Odera, Managing Partner stated “Despite the difficult time we find ourselves in, this is indeed good news to receive. I am proud of everyone in the firm for their unrelenting effort, support and hard work which lead to such great recognitions. We acknowledge and thank our clients for continuing to choose our firm as their legal and strategic partner.”
The Legal 500 EMEA highlights the practice area teams and experts providing the most cutting edge and innovative advice to corporate counsel in over 150 jurisdictions. The rankings are based on feedback from clients, submissions from law firms and interviews with leading private practice lawyers.
Established 43 years ago by George Oraro SC (one of Kenya’s top litigators), Oraro & Company Advocates is a top-tier, full-service Kenyan law firm providing specialist legal services both locally and regionally with a focus on Arbitration, Banking & Finance, Conveyancing & Real Estate, Corporate & Commercial, Dispute Resolution, Employment & Labour, Infrastructure, Projects & PPP, Restructuring & Insolvency and Tax.
Oraro & Company Advocates prides itself in its deeply rooted client relationships by steadily providing quality legal services through its partner-led approach and continues to distinguish itself as an African law firm offering legal services drawing from local knowledge and global perspectives.
Capital Gains Tax (CGT) is a tax payable under the Income Tax Act by a proprietor of land upon transfer of such land and/or buildings. In Kenya, CGT was re-introduced on 1st January 2015 after being suspended in 1985.
Kenya Revenue Authority (KRA) issued a public notice on 4th October 2016 requiring that CGT and Stamp Duty be paid through the KRA i-Tax online platform. This effectively meant that CGT and Stamp Duty would be paid simultaneously before any transfer of property could be completed. Prior to payment of Stamp Duty, a purchaser was required to present an approved CGT slip as proof of payment of CGT by the vendor or exemption therefrom as the case may be.
In September 2019, KRA introduced an additional layer to the transfer process by requiring approval and verification of all transactions declared as exempt from CGT.
Kenya Bankers Association (KBA) on behalf of licensed banks who were aggrieved by the mandatory requirement of presentation of an approved CGT slip prior to the payment of Stamp Duty by a purchaser, moved to Court (Kenya Revenue Authority v Kenya Bankers Associations  eKLR) to challenge this requirement by the KRA . KBA argued that the requirement would place the burden of paying CGT that is ordinarily payable by a property owner on either a bank exercising its statutory power of sale to recover a debt or a purchaser in the circumstances.
The Court of Appeal considered the following issues among others:
The Court of Appeal upheld the decision of the High Court that held as follows:
The Court of Appeal concluded that requiring a chargee exercising its statutory power of sale or purchaser to pay CGT without first ascertaining whether there is in fact capital gain is unreasonable and unfair. KRA was directed to allow for payment of Stamp Duty on an instrument of transfer following the sale of land by a bank pursuant to a bank’s statutory power of sale, without requiring prior payment of CGT. (To view the decision click here)
Subsequent to the above decision, KRA published a notice on 23rd March 2020 dispensing with the conditional presentation of a CGT Acknowledgement Slip before Stamp Duty payment is processed. (To view notice click here).
Effectively, as soon as the necessary adjustments are in place, it will no longer be mandatory to present proof of payment of CGT prior to payment of Stamp Duty and registration of a disposition in land.
Landowners are however still liable to pay CGT only that the same can now be paid after completion of the transfer process. KRA has indeed emphasized that transfer of property will still attract CGT to be paid by the transferor on or before the 20th day of the following month in which the transfer of property is effected.
We are of the view that these changes will go a long way in expediting the transfer process. This will complement the government’s recent efforts of improving the ease of doing business in Kenya by creating efficiency in the transfer process and promoting investments in the real estate sector.
The content of this alert is intended to be of general information only and should not be relied upon without seeking specific legal advice on any matter.
Should you have any queries or questions on the legal alert, please do not hesitate to contact Nelly Gitau or Tesrah Wamache (firstname.lastname@example.org).
Further to the earlier directives issued by the Ministry of Lands and the Office of the Attorney General, further guidelines have been issued with respect to the operations of the Lands and Companies Registries in the midst of the COVID-19 pandemic. Below is a summary of the further guidelines:-
1. Ministry of Lands and Physical Planning
Following the closure of the Lands Registry, the Cabinet Secretary of the Ministry of Lands and Physical Planning issued a further notice declaring that the period between 17th March 2020 to 13th April 2020 (both days inclusive) shall not be factored in when computing the timelines prescribed for registration of instruments under the Land Registration Act (the Act).
This effectively means that the timelines prescribed for registration of various documents under the Act stopped running from 17th March 2020 and shall continue to run from 14th April 2020. Given that the situation in the country has not improved, it is likely that the closure of the Lands Registries might subsist for a longer period than that envisaged under the notice. Therefore, there is a likelihood that further directive will be issued extending this period. We will continue to monitor the situation as it develops and note to keep you updated.
2. Office of the Attorney General and Department of Justice
The Office of the Attorney General and Department of Justice - Business Registration Service (BRS) also issued a further notice on 26th March 2020 clarifying the critical and essential services that continue to be provided despite the physical closure of the Registry. The services are as follows:
a) The online services on brs.ecitizen.go.ke
b) Registration of businesses
c) Registration of Debentures and Charges
d) Enquiries relating to insolvency matters
e) Support to investigative agencies
f) Persons seeking other services other than those listed above are advised to contact BRS through their
We will keep you updated on any developments with respect to any further directives that might be issued by the Office of the Attorney General and Department of Justice during this period.
This alert is for informational purposes only and should not be taken as or construed to be legal advice. If you have any queries or need clarifications, please do not hesitate to contact Nelly Gitau, Partner or Tesrah Wamache, Associate or your usual contact at our firm, for legal advice relating to the COVID-19 pandemic and how the same might affect you.
Oraro & Company Advocates is a full-service market-leading African law firm established in 1977 with a strong focus on dispute resolution and corporate & commercial law. With a dedicated team of 10 partners, 4 senior associates, 10 associates, 1 lawyer and 36 support staff, the Firm has been consistently ranked by leading legal directories such as Chambers Global, IFLR 1000 and Legal 500 as a top-tier firm in Kenya.
Oraro & Company Advocates is an affiliate member of AB & David Africa.
Oraro & Company Advocates © 2021