What is the Validity of Actions Taken by Disqualified Directors and Unapproved Appointments in Kenyan Company Law?

Question from alias, What is the Validity of Actions Taken by Disqualified Directors and Unapproved Appointments in Kenyan Company Law?

Answer from AI:

Validity of Actions by a Disqualified Director

In Kenya, the Companies Act 2015 governs the conduct of directors and the validity of their actions. According to section 148 of the Act, a person who is disqualified from being a director but acts as one is liable to a fine. However, the Act does not explicitly state that the actions of a disqualified director are automatically void or invalid.

It is generally accepted in law that the acts of a de facto director (a person acting as a director even though they are not validly appointed) are valid as far as the outsiders are concerned. This is known as the “doctrine of indoor management”. Therefore, the loan transaction executed by the disqualified director may still be valid.

However, this is a complex area of law and the specific circumstances of the case could affect the outcome. It is recommended that the members consult with a legal professional for personalized advice.

Validity of the Appointment of the Director’s Son

According to section 144 of the Companies Act 2015, the appointment of a director should be approved by the company in a general meeting. A director cannot unilaterally appoint another director without the approval of the board or the members of the company.

Therefore, the appointment of the director’s son by his father, without the approval of the other board members, is likely to be invalid. The son should not be allowed to act as a director until his appointment has been properly approved.

Next Steps

The members of Wayami Co. Ltd should consider the following steps:

1. Consult with a legal professional to understand the potential implications of the disqualified director’s actions and the invalid appointment.
2. Hold a general meeting to discuss these issues and decide on the appropriate course of action.
3. If the members decide to validate the appointment of the director’s son, they should hold a vote in accordance with the company’s articles of association.
4. The company should also consider taking action against the disqualified director for acting in breach of his disqualification.

For more information, refer to the Companies Act 2015.