For years, foreign companies trying to enforce contracts in Kenya have relied on a well-established understanding that local registration under the Companies Act was not required to pursue a legal claim.
Then, one year ago, this understanding was shaken when a High Court decision suggested that non-registered companies could be barred from suing, creating a heightened period of uncertainty for international businesses operating in Kenya.
But thanks to an even more recent case, the High Court has reaffirmed the established rule, essentially giving unregistered foreign businesses access to Kenyan courts.
In this case, Bruton Gold, a company incorporated in Dubai, filed a lawsuit in Kenya. Fraud, professional misconduct, and other unlawful acts were all cited in relation to an agreement to export gold from Kenya. The defendants challenged the case on the basis that Bruton Gold had not registered in Kenya. However, the High Court has now ruled that registration requirements do not limit access to justice.
The lesson: Registration remains relevant for defining the right to operate a business in Kenya, but it does not, on its own, bar a foreign company from seeking redress through the courts.
While the Bruton Gold decision provides reassurance, uncertainty in the broader legal landscape has not entirely disappeared. Previous rulings suggesting stricter interpretations remain part of Kenyan jurisprudence and could be cited in other cases. Foreign companies should continue to evaluate carefully whether their activities constitute “carrying on business” in Kenya and whether local registration might offer a prudent safeguard.
The Bruton Gold case highlights the importance of proactive legal planning. Foreign companies and lenders entering the Kenyan market should ensure contracts are enforceable, anticipate potential procedural challenges, and consider the merits of local registration as part of a risk management strategy.
At the end of the day, this High Court decision represents a welcome reaffirmation of the long-standing legal principle. It provides clarity and reassurance for businesses navigating the Kenyan market, while underscoring the value of strategic compliance and careful legal planning.
This ruling revealed that, while a business’s legal identity is based on where it was incorporated, registering in Kenya is not enough to define that. Now, a clearer line in the sand has been drawn, separating the right to operate a business from the constitutional right to seek justice.
Now, a foreign business that engages in even a single transaction in Kenya for whatever legitimate business purposes can pursue legal remedies in Kenyan courts without being automatically barred for non-registration. A foreign business is determined to be “carrying on business” in Kenya according to the specifics of the case. With this move, legitimate claims are not unjustly dismissed, and it emphasises that access to justice takes precedence over technical registration requirements.
The court also revealed that locus standi (the right to be heard) is a fundamental principle rooted in the Constitution. Registration may be relevant in specific contexts, but it is not, in itself, the determining factor of whether a foreign company has the right to pursue a claim. What we have here is the recognition of the constitutional guarantee of access to justice.
Additionally, Section 974 of the Companies Act (Cap 486) (the “Companies Act”) currently restricts unregistered foreign companies from carrying on business in Kenya, a term presently limited to offering or guaranteeing debentures in Kenya. The Business Laws (Amendment) Bill, 2025, proposes to introduce a provision within this section, clarifying that foreign companies may still sue, be sued, enforce rights, or incur obligations in Kenya without registration, provided they comply with Kenyan law. This amendment aligns statutory language with the constitutional right of access to justice as affirmed in Bruton Gold, harmonising the Companies Act with judicial principles and reinforcing foreign companies’ legal standing in Kenya.
That said, foreign companies and lenders entering the Kenyan market should remain vigilant ensuring contracts are enforceable, assessing potential procedural risks, and consider the merits of local registration.
Ultimately, the Bruton Gold decision represents a more balanced and constitutionally sound approach by Kenyan courts to provide more tangible access to justice for foreign businesses. Separately, the proposed amendment to the Companies Act underscores ongoing legislative efforts to align company law with this evolving judicial outlook. Together, these developments are both reassuring and a clear reminder that the Kenyan legal landscape demands rigorous planning, an awareness of evolving jurisprudence, and a strategic approach to compliance and risk management.
The writer is the Managing Partner at Cliffe Dekker Hofmeyr (CDH) Kenya
