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ELCAllowedNot stated in the judgment as provided· [2017] KEELC 2477 (KLR)

In re Faulu Microfinance Bank Limited [2017] KEELC 2477 (KLR)

Environment & Land Court at Nakuru
14 June 2017
MSMunyao Sila
1,041 words in judgment
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The bottom line

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A Kenyan court gave a bank 30 extra days to register a company charge after a missed deadline, showing courts forgive honest mistakes under Section 888.

What this practically means

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Executive summary

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Faulu Microfinance Bank Limited applied on 16 May 2017 for an extension of time within which to register, with the Registrar of Companies, a charge dated 22 March 2017 in favour of County Wide (K) Investments Limited over land parcel Nakuru Municipality Block 10/51. Registration under Section 878 of the Companies Act, 2015 was required within 30 days under Section 885, but the deadline lapsed because the advocate handling the matter, Lawrence Macharia Karanja, initially lodged copies of documents and, by the time he obtained the originals, time had expired. The court analysed Section 888 of the Act, which permits a company or interested person to apply for relief where the failure to register was accidental or due to inadvertence or other reasonable cause, or where it is just and equitable to grant relief. Munyao Sila J found the chargee to be an interested person, accepted that the omission was inadvertent and not intentional, and saw no prejudice to any creditor or member of the company. The court allowed the application and extended the time for registration of the charge by 30 more days from the date of the order, with no orders as to costs. The judgment was delivered in open court at Nakuru on 14 June 2017, with Ms. Gitau appearing for the applicant.

Key legal issues

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Whether the court should extend time for registration of a charge under Section 888 of the Companies Act, 2015

Holding

Yes - the omission was due to inadvertence on the part of the applicant's law firm, the applicant was an interested person (the chargee), and no creditor or member would be prejudiced.

Reasoning

Section 878 of the Companies Act, 2015 requires charges over land created by companies to be registered with the Registrar of Companies, and Section 885 fixes a 30-day deadline. Section 888 allows a company or interested person to apply for extension where the failure was accidental or due to inadvertence, or where it is just and equitable. The chargee applied, the explaining affidavit showed inadvertence in presenting original documents, and no prejudice to creditors or members was demonstrated.

p. 2

Legal principles established

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  • A company or interested person seeking extension of time to register a charge must show the failure was accidental, due to inadvertence or other reasonable cause, or that it is just and equitable to grant relief.

Court orders

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  1. 1.Extension of time by 30 more days from the date of the order within which the charge over land parcel Nakuru Municipality/Block 10/51 made by County Wide (K) Investments Limited ought to be registered with the Registrar of Companies
  2. 2.No orders as to costs

Authorities

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Legislation

  • Companies Act, 2015Section 878(1), (2), (4)(a)
  • Companies Act, 2015Section 885
  • Companies Act, 2015Section 888(1), (2)
Jurisdiction invoked
Section 888 of the Companies Act, 2015 (application for extension of time to register a charge)

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 Faulu Microfinance Bank Limited [2017] KEELC 2477 (KLR)", Case Analysis (2017). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/2477/eng@2017-06-14

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