Pioneering Legal Changes: The Best Updates on PoA in Kenya

The Registrar of Records has tightened the Power of Attorney (PoA) registration process to combat fraudulent practices and unauthorized transactions.

Why Have These Regulations Been Strengthened?

Cases have emerged where directors collude to transfer company assets without full board approval, leading to governance issues and legal disputes. By reinforcing documentary verification and aligning PoA execution with Form CR12, authorities aim to protect corporate integrity, prevent fraud, and safeguard shareholder interests.

What Is Form CR12 and Why Is It Required?

A current, dated Form CR12, issued by the Registrar of Companies, is mandatory for PoA registration. This document confirms the legally recognized directors and shareholders of a company, serving as the official record of ownership and control. It lists directors, shareholding percentages, and compliance status, ensuring that only authorized individuals can execute a PoA on behalf of the company. This requirement prevents unauthorized transactions and enhances corporate governance transparency.

What Information Must a Power of Attorney Contain?

A PoA must clearly define the donor (the individual or entity granting authority) and the donee (the recipient of the authority). It must include:

• Full legal names matching official identification documents
• Postal and service addresses
• Phone numbers and email addresses
• A passport-sized photograph of the donor
• A precise description of the PoA’s scope (general, specific, or irrevocable)

How Must a Power of Attorney Be Executed?

To be legally valid, a Power of Attorney must be properly executed and witnessed. The donor must sign the PoA in the presence of a neutral witness, who is not a party to the agreement.

For corporate entities, execution requires:

• Affixation of the company seal
• A board resolution confirming the approval of the PoA
• Signatures of all required directors in alignment with Form CR12

Why Must Form CR12 Align with PoA Signatories?

For a Power of Attorney to be accepted, the signatories must exactly match the names listed in Form CR12. If any discrepancies exist—such as outdated directorship records—the PoA will not be registered until the company updates its records with the Registrar of Companies. This requirement ensures that PoAs cannot be misused by unauthorized individuals to conduct fraudulent transactions, such as unapproved asset transfers.

What Are the Stamp Duty and Registration Requirements?

Once properly executed, a Power of Attorney must be registered under the Registration of Documents Act. This process requires:

• Payment of the prescribed stamp duty
• Submission of the PoA within two months of execution

How Can Companies Ensure Compliance and Avoid Delays?

Failure to register a PoA within the stipulated timeframe can lead to penalties or rejection by the authorities. To prevent unnecessary delays and administrative hurdles, companies must:

• Ensure all directors signing the PoA are listed in Form CR12.
• Regularly update directorship records with the Registrar of Companies.
• Follow all execution and witnessing requirements.
• Submit the PoA for registration within the required timeframe.

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For more insights into processes in other jurisdictions, explore our article, Mastering Due Diligence: Key Steps You Need To Secure Investments.