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ELCDismissedNot stated in the judgment· [2017] KEELC 2424 (KLR)

In re Joshua Musembi Ndolo [2017] KEELC 2424 (KLR)

Environment and Land Court
27 June 2017
1,747 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that charges over land owned by an individual, not a company, don't need registration with the Registrar of Companies, so no extension of time could be granted.

What this practically means

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Executive summary

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Faulu Microfinance Bank Limited applied on 16 May 2017 under Sections 878 and 888 of the Companies Act, 2015 for an extension of time of 30 days to register with the Registrar of Companies a charge dated 14 March 2017 over land parcel Nakuru Municipality/Block 16/303 in favour of Eastmore School Limited. The charge had been created by Joshua Musembi Ndolo, the individual owner of the land, to secure the company's debts. The supporting affidavit of Lawrence Macharia Karanja explained that the charge was registered against the land on 15 March 2017, but lodgement with the Registrar of Companies was delayed because copies rather than original documents had initially been presented, and the 30-day period lapsed owing to inadvertence on the part of the law firm. Munyao Sila J held that Section 878 of the Companies Act requires registration only of charges created by a company over land owned by the company or in which it has a proprietary interest. Since the land was owned by an individual and the company had no proprietary interest in it, the charge was not one required to be registered with the Registrar of Companies, whether within any particular period or at all. Counsel for the applicant was unable to point to any provision making such registration mandatory. Consequently, Section 888, which provides for extension of the registration deadline, had no application: the court cannot extend a period that does not exist in law. The application was dismissed, with the court observing that there is no bar to notifying the Registrar of the charge, which may even be good practice. There was no order as to costs.

Key legal issues

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01

Whether the charge over the suit land fell within Section 878 of the Companies Act, 2015

Holding

It did not, because the charge was created by the individual land owner and the company neither owns the land nor has a proprietary interest in it

Reasoning

Section 878(4)(a) applies only to charges on land owned by the company or in which it has a proprietary interest. The land parcel Nakuru Municipality/Block 16/303 is owned by Joshua Musembi Ndolo, an individual. The obligation to register under Section 878(1) falls on the company creating the charge. Since the charge was created by the individual, not the company, no provision of the Companies Act mandates registration of such a charge with the Registrar of Companies, even within any particular period.

p. 3
02

Whether the court could grant extension of time under Section 888 of the Companies Act

Holding

No, because Section 888 relief presupposes a failure to register a charge that was required to be registered before a deadline; where no registration is required and no deadline exists, there is nothing to extend

Reasoning

Section 888 permits a company or interested person to seek rectification where there has been a failure to register a charge before the deadline for registration. That remedy is anchored on the existence of a statutory registration obligation and deadline under Sections 878 and 885. Since the applicant's charge is outside Section 878, the application under Section 888 is not anchored in any law and the court cannot extend a non-existent period.

p. 4

Legal principles established

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  • Section 878 of the Companies Act, 2015 applies only to charges created by a company over land owned by the company or in which it has a proprietary interest; a charge created by an individual over land not owned by the company need not be registered with the Registrar of Companies
  • Where there is no mandatory requirement to register a charge, there is no deadline whose extension can be ordered under Section 888

Court orders

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  1. 1.The application for extension of time to register the charge with the Registrar of Companies was dismissed
  2. 2.No order as to costs

Authorities

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Legislation

  • Companies Act, 2015Section 878
  • Companies Act, 2015Section 885
  • Companies Act, 2015Section 888
Jurisdiction invoked
Sections 878 and 888 of the Companies Act, 2015

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "In re Joshua Musembi Ndolo [2017] KEELC 2424 (KLR)", Case Analysis (2017). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/2424/eng@2017-06-27

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.