What is a shareholders agreement and why do small companies in Kenya need one?
A shareholders agreement is a private contract between shareholders that governs their relationship — how decisions are made, how shares are transferred, what happens if a shareholder wants to exit, and how disputes are resolved. Even small companies benefit from one, as the Companies Act 2015 defaults may not reflect what the shareholders actually intended.
Does a shareholders agreement need to be filed with the Registrar in Kenya?
No. A shareholders agreement is a private document and is not filed with the Companies Registry. This is one of its advantages over the Articles of Association, which are public. However, key provisions should also be reflected in the Articles if they are to bind third parties and future shareholders.
Is a shareholders agreement valid internationally?
Yes. A shareholders agreement for a Kenyan company is governed by Kenyan law and the Companies Act 2015. For companies with international shareholders, specify the governing law, dispute resolution mechanism, and ensure the agreement is consistent with the law of incorporation.