Under the repealed Companies Act (Cap 486), execution of documents by a company was done under the common seal of the company. The affixing of the seal would be witnessed by either two (2) Directors, or a Director and the Secretary or in the presence of two (2) authorized persons.
The Companies Act, 2015 has however provided companies with more leeway when it comes to execution and gives companies the option of doing away with the common seal. The Act provides that execution may be done: under seal where the affixing of the seal is witnessed by a director; or by two authorized signatories on its behalf or by a director in the presence of a witness.
The Government, taking note of this development in law has advised banking institutions in Kenya through the Kenya Bankers Association (KBA) to do away with the requirement that documents being executed by companies be executed under the company seal. This directive was made vide a letter from the Cabinet Secretary, Ministry of East African Community and Regional Development addressed to the Kenya Bankers Association. Pursuant to this the Kenya Bankers Association advised its members to comply with the Government directive.
Despite the issuance of such notices, it is important to note that companies are bound by their Articles of Association. Where the Articles of Association of a Company require the use of the company seal for execution of documents, that requirement ought to be complied with despite the existence of such directive by the Government.
Companies that may not want to employ their seals in the execution of documents ought to therefore amend their Articles of Association where they provide for such a requirement.