Under Kenya's Companies Act 2015, a director's role goes far beyond signing documents and attending board meetings. Directors owe fiduciary duties to the company and its shareholders — and these duties can create personal liability if breached.
The Seven Statutory Duties of Directors
- Act within powers: Only exercise powers for the purposes for which they were conferred under the articles of association.
- Promote the success of the company: Make decisions in good faith, considering employees, suppliers, community, and long-term impact.
- Exercise independent judgment: Don't simply rubber-stamp management decisions — scrutinise them.
- Exercise reasonable care, skill and diligence: The standard expected is both objective (the general standard) and subjective (your specific expertise).
- Avoid conflicts of interest: Disclose any personal interest in company contracts. Do not exploit opportunities that belong to the company.
- Not accept benefits from third parties: Reject gifts, commissions, or kickbacks that could conflict with your duties.
- Declare interests in proposed transactions: Before the company enters a transaction in which you have an interest, declare it to the board.
Director Liability for Company Taxes
Directors can be held personally liable for unpaid PAYE and VAT where the failure to remit was fraudulent or grossly negligent. KRA has increasingly pursued directors personally in enforcement actions since 2022.
Disqualification
The Registrar of Companies can disqualify a director from serving on any board for up to 15 years if they are convicted of fraud, company insolvency misconduct, or persistent non-compliance with filing requirements.
Avatechtax provides company secretarial services and compliance advisory to ensure directors meet their legal obligations. Speak to our advisory team.
