If you are reading this blogpost, then it means you have resolved to close your businesses or company for reasons best known to you. Among the popular reasons why people close their companies are bankruptcy, court order, non-profitability over a long period of time, change of country of residence among others.
The process of closing a company is different from the one of opening a company. There are some basic important things that I think you should know as the director of the company about the process.
In this blogpost, I will focus on 5 important things you need to know when planning to close a limited company with shareholders in Kenya.
Note: The information I am going to share with you on this post, is based on my experience while closing my company Trendline Network Limited. You might have seen me talk about the company in my past posts and videos. Sadly, I have finally closed it so that I can begin a new journey. Reasons for closure remains confidential to me.
The Process Can Be Initiated Online
Its possible to initiate closure of your company in Kenya online. To do this go to www.ag.ecitizen.go.ke. Use your eCitizen credentials to sign in to the portal.
When you are logged in, select make an application then click on strike off a Limited company. You will be take to a screen where you are required to pay Ksh. 4,050 to initiate the process. Under section 897 of the companies act 2015, you will be required to state the reason for closing the company and sign two documents. The documents here referred to as CR18 and CR19 respectively.
After you are done, allow the office of the Attorney General sometime to verify your request for company dissolution. Here, they can either approve or reject the application.
The documents must be signed by all the directors of the company and reasons for strike off request stated clearly for your application to be approved.
Company Strike off Gazettement
When your request to strike off your company is approved by office of the Attorney General, what will follow is the company gazettement. Kenya gazette is a Free to download publication that is printed and distributed weekly to government institutions. Printed copy costs Ksh.60. It’s also downloadable online here.
Be on the look out to confirm 1st and 2nd gazettement. You will NOT be notified about it by anyone. Its your responsibility to regularly check the weekly Kenya gazettes for it. It took a month for mine to be published from the time I initiated the strike off process.
Period Of Wait For Complete Dissolution
It will take 90 days from the day of Gazettement, for the registrar of companies to completely dissolve a company and remove it from their registrar.
During this period, if anyone is in disagreement with your decision to close the company, they can launch a dispute to bar you from closing the company.
Understanding Section 897 (3) And Section 897 (4) of Companies Act 2015
The first time your company is gazetted, it will be under section 897 (3). Here the registrar of companies gives notice that names of the companies specified in the gazette, shall be struck off from the registrar of companies at the expiry of 3 Months from date of publication of the notice and invites persons to show course why the companies should not be stroke off from the register.
Second time gazettement will be under section 897 (4) which is the final publication to notify public that the companies listed there on are dissolved and their names have been struck off the registrar of companies with effect from the date of publication of the notice.
Letter Of Confirmation That Your Company is Dissolved
When all the above procedures are completed, you will now be able to request for a letter from the registrar of companies that confirms dissolution of your company. This letter will be required by various institutions for assistance going forward. One of the places that this will required is Kenya Revenue Authority (KRA).
For them to close your company PIN, they will require evidence in form of a letter from the registrar of companies confirming dissolution of your company.
Close All Bank/Insurance Accounts Linked To the Company
The moment you decide to close a company, it means its over. Make sure you close all accounts related to the company. If you company had purchased stocks in the stock exchange, make a plan to sell or transfer them.
Ensure that everything that was linked to the company is fully closed or settled. This should be your priority and has to be finished.
When done and dusted, you can now proceed to the next chapter of your life with a clear state of mind.
Closing a company is not a one day affair. It may take up to a year to close everything depending on how big the company was. While arriving to a conclusion to close a company is not easy, taking the step and closing it when the time is right is best thing to do.
Entrepreneurship is a journey with endless possibilities. Be open to see the new opportunities and jump right into it.
Is there any other important thing that anyone should know when planning to close their business or company? Let me know in the comments section below.
And if you need help to create step by step screencast training videos, you can request a quote for free here.
Until next time, bye bye and take care.
Follow me on twitter @cheptiony.