Converting a Sole Proprietorship to a Private Limited Company in Kenya

The conversion of a sole proprietorship, also called an unlimited company is provided for in section 85-88 of the Companies Act, 2015.

Conditions to be met for an unlimited company to be converted to a Private Limited Company

  1. The passing of a special resolution by the members of the unlimited company stating that the company should be converted to a private limited company. For the resolution to be valid and effective, it must expressly state whether the company is to be limited by share or by guarantee.
  2. The company must not have been registered previously as a private limited company.
  3. An application for the registration of the conversion must be lodged with the Registrar of Companies.
  4. The necessary changes to the articles have been made in such a way that there is a connection with it becoming a private limited company.

Procedure of Converting an Unlimited Company to a Private Limited Company

Completion of Form CR 17, this is the Application for Registration of Conversion of Company form. This form must be delivered to the Companies Registry  accompanied with the following documents,

  1. A copy of the special resolution by the members converting the company into a private limited company.
  2. If the company is limited by guarantee then, a statement of guarantee set out in Form CR 17 must be presented.
  3. A duly completed Form CR 19. This is a notice of special/ordinary resolution required by the Companies Act, 2015 to  be lodged with Registrar.
  4. A copy of the amended articles of association.
  5. A statement indicating the new name of the company after conversion.

The conversion from an unlimited company to a private limited company becomes complete with the issuance of a certificate of incorporation. The certificate of incorporation also makes the change in name and article of association effective.