The striking off of a company from the Register of Companies may appear, at first glance, to bring the company's affairs to an end. For creditors, however, the position is more nuanced.
A company being struck
off does not necessarily mean that its creditors have lost their rights or
that an outstanding debt has become irrecoverable. Kenyan company law
provides a mechanism through which a dissolved company may, in appropriate
circumstances, be restored to the Register, allowing creditors to pursue claims
that might otherwise be frustrated by the company's dissolution.
The recent decision in Kenya
Revenue Authority v Dream Dressing and Household Items Trading Co. Limited
& 3 Others [2025] KEHC 3942 (KLR), together with Kathambo &
Another (Suing as the Legal Representatives of Kihome Muthui (Deceased)) v
Amarshan Limited & Another [2026] KEHC 4138 (KLR) and Agnator Kanini
v Mwalimu Mamundi Autoparts Ltd & Another [2017] eKLR, demonstrates the
willingness of the Kenyan courts to protect legitimate creditor interests where
a company has been struck off.
What Happens When a
Company Is Struck Off?
A company may be struck
off the Register through various statutory mechanisms, including voluntary
striking off.
Once a company is
dissolved, it ceases to exist as a legal entity in the ordinary sense. This can
create an immediate practical problem for a creditor. A creditor may have an
unpaid debt, contractual claim or even an existing court judgment against the company,
but the debtor company may no longer appear on the Register.
The creditor should not,
however, assume that the debt has disappeared.
The Companies Act, 2015
provides a statutory route for restoring a dissolved company to the Register.
The purpose of this mechanism is, among other things, to ensure that legitimate
claims are not defeated merely because the company has been removed from the
Register.
Creditors Can Apply for
Restoration
Section 916 of the
Companies Act, 2015 is particularly important to creditors.
The provision recognises
a creditor of a company at the time it was struck off or dissolved as a person
who may apply for restoration.
This is significant
because it means that a creditor does not necessarily have to accept the
company's dissolution as the end of its recovery efforts.
A creditor may approach
the High Court seeking restoration where the statutory requirements are met.
The position was
considered in Agnator Kanini v Mwalimu Mamundi Autoparts Ltd & Another
[2017] eKLR.
In that case, the
applicant had obtained a decree against the company. The company was
subsequently struck off the Register, thereby creating an obstacle to
execution.
The High Court ordered
restoration of the company so that the decree-holder could pursue enforcement.
The case is particularly
important because it demonstrates that restoration is not merely an
administrative remedy. It can have a direct and practical purpose: to enable
a creditor to enforce an otherwise valid claim or judgment.
Failure to Notify
Creditors Can Have Serious Consequences
The statutory procedure
for voluntary striking off contains safeguards designed to protect creditors.
Section 900 of the
Companies Act, 2015 imposes notification requirements in relation to an
application for voluntary striking off.
Where a company applies
to be struck off without complying with those requirements, the omission may
provide grounds for restoration.
This issue was considered
in Kenya Revenue Authority v Dream Dressing and Household Items Trading Co.
Limited & 3 Others [2025] KEHC 3942 (KLR).
The Kenya Revenue
Authority sought restoration of the company after it had been struck off while
owing tax liabilities.
The High Court considered
the statutory notification requirements and found that the company had failed
to comply with the obligation to notify the Kenya Revenue Authority of the
striking-off application.
The Court consequently
ordered restoration of the company to the Register.
The decision is an
important reminder that the statutory process of striking off cannot
properly be used to prejudice creditors who are entitled to notice under the
Companies Act.
What If the Creditor
Already Has a Judgment?
The position becomes
particularly compelling where the creditor has already obtained judgment or a
decree against the company.
A judgment creditor has
already established its legal entitlement to recover the debt. If the judgment
debtor is subsequently struck off, dissolution may create a procedural barrier
to execution.
This was the situation in
Agnator Kanini v Mwalimu Mamundi Autoparts Ltd & Another [2017] eKLR.
The Court recognised that
restoration could be ordered to facilitate execution of the decree.
The same principle has
more recently been considered in Kathambo & Another (Suing as the Legal
Representatives of Kihome Muthui (Deceased)) v Amarshan Limited & Another
[2026] KEHC 4138 (KLR).
The Court ordered
restoration of the company notwithstanding arguments concerning the absence of
demonstrated assets.
This is significant for
creditors because a creditor may not always know, before restoration, what
assets or recoverable interests a company possesses.
Requiring a creditor to
identify and prove the existence of assets before restoration could create a
circular problem: the creditor may need the company to be restored precisely so
that its affairs and assets can be properly investigated.
The recent decision in Kathambo
therefore reinforces the practical importance of restoration as a means of
enabling creditors to pursue available remedies.
Restoration Is Not the
Same as Piercing the Corporate Veil
It is important to
distinguish restoration from imposing personal liability on directors or
shareholders.
A company is a separate
legal person from its members and directors. The mere fact that a company has
been struck off does not automatically make its directors personally
responsible for the company's debts.
Restoration is instead
concerned primarily with reviving the company's legal status so that its
assets, liabilities and legal affairs can properly be dealt with.
If there are independent
grounds for pursuing directors personally—for example, under a personal
guarantee, fraud or another recognised legal basis—that is a separate question
requiring its own legal analysis.
The Court's
"Just" Jurisdiction
The Companies Act, 2015
also gives the Court a broader discretionary jurisdiction to restore a company
where it considers restoration to be just.
This is important because
not every case will fit neatly into a single factual category.
The Court may consider
the circumstances surrounding the striking off, the interests of creditors, the
existence of pending claims, the effect of dissolution on legal proceedings and
other relevant circumstances.
The principle was
recognised in Re Queensway Investments Limited [1995] 1 EA 231, an
authority subsequently considered in Agnator Kanini.
The underlying rationale
is straightforward: the statutory process for removing companies from the
Register should not become an instrument of injustice.
Where dissolution would
unfairly deprive a creditor of a legitimate claim, restoration may provide the
appropriate remedy.
Is Restoration Automatic?
No.
A creditor does not
acquire an automatic right to restoration merely because a company owes it
money.
The creditor must satisfy
the statutory requirements and demonstrate grounds upon which the Court may
properly exercise its jurisdiction.
The Court will consider
the circumstances of each case, including the manner in which the company was
struck off and the nature of the creditor's claim.
Accordingly, creditors
should act promptly once they discover that a debtor company has been struck
off.
What Should a Creditor
Do?
Where a creditor
discovers that a debtor company has been struck off, the following steps should
ordinarily be considered:
1. Obtain
an official company search to establish the company's status
and the date on which it was struck off.
2. Establish
how the company was struck off, including whether the
process was voluntary.
3. Establish
whether the creditor received notice of the proposed striking
off.
4. Review
the underlying debt or claim, including any contract, invoices,
correspondence and acknowledgements of indebtedness.
5. Establish
whether judgment has already been obtained and, if so, obtain
the relevant judgment and decree.
6. Investigate
whether the company has assets or other recoverable interests,
including property, debts owed to it, contractual rights or pending litigation.
7. Consider
an application for restoration under the Companies Act,
2015 where the statutory grounds are satisfied.
8. Act
within the applicable statutory and limitation periods.
Practical Implications
for Creditors
The decisions discussed
above provide an important practical lesson.
A creditor who discovers
that a debtor company has been struck off should not immediately write off
the debt.
Instead, the creditor
should determine whether restoration is available.
This is particularly
important where:
- the creditor was not notified of the
proposed striking off;
- the debt existed before dissolution;
- the creditor has already obtained a
judgment or decree;
- the company may have assets or
recoverable contractual rights;
- the striking-off procedure may not
have complied with the Companies Act; or
- restoration would otherwise be
necessary to prevent injustice.
The courts' approach in KRA
v Dream Dressing, Kathambo and Agnator Kanini demonstrates
that restoration can be a meaningful remedy rather than a purely technical
exercise.
Conclusion
Being struck off the
Register is not necessarily the end of the road for a company's creditors.
The Companies Act, 2015
recognises circumstances in which a dissolved company may be restored, and the
Kenyan courts have demonstrated a willingness to exercise that jurisdiction
where restoration is necessary to protect legitimate creditor interests.
The decisions in Kenya
Revenue Authority v Dream Dressing and Household Items Trading Co. Limited
& 3 Others [2025] KEHC 3942 (KLR), Kathambo & Another (Suing as
the Legal Representatives of Kihome Muthui (Deceased)) v Amarshan Limited &
Another [2026] KEHC 4138 (KLR) and Agnator Kanini v Mwalimu Mamundi
Autoparts Ltd & Another [2017] eKLR are particularly instructive.
The central lesson for
creditors is therefore simple:
A company may be struck
off, but that does not necessarily mean that a legitimate debt is written off.
Where the statutory
requirements are satisfied, restoration may provide the creditor with a route
back to the debtor company and an opportunity to pursue the remedies available
under Kenyan law.
Key Authorities
- Kenya Revenue Authority v Dream
Dressing and Household Items Trading Co. Limited & 3 Others
[2025] KEHC 3942 (KLR).
- Kathambo & Another (Suing as the
Legal Representatives of Kihome Muthui (Deceased)) v Amarshan Limited
& Another [2026] KEHC 4138 (KLR).
- Agnator Kanini v Mwalimu Mamundi
Autoparts Ltd & Another [2017] eKLR.
- Re Queensway Investments Limited
[1995] 1 EA 231.
Disclaimer: This
article is intended for general information only and does not constitute legal
advice. The circumstances of each case should be considered independently and
professional legal advice obtained before taking action.
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