Section 644 of The Companies Act No. 17 of 2015: Group financial statements: subsidiary undertakings to be included in consolidation

(1) In preparing a group financial statement, the directors of the parent company shall include in the consolidation all of the subsidiary undertakings of the company, subject to the exceptions specified in subsections (2) and (3).
(2) A subsidiary undertaking can be excluded from the consolidation if its inclusion is not material for the purpose of providing a true and fair view. However, two or more undertakings can be excluded only if taken together they are not material.
(3) A subsidiary undertaking can also be excluded from the consolidation if—
(a) serious long-term restrictions substantially will hinder the exercise of the rights of the parent company over the assets or management of that undertaking;
(b) the information necessary for the preparation of the group financial statement cannot be obtained without disproportionate expense or undue delay; or
(c) the interest of the parent company is held exclusively with a view to making a subsequent resale.
(4) If the directors of the parent company fail to comply with subsection (1), each director of the company who is in default commits an offence and on conviction is liable to a fine not exceeding five hundred thousand shillings.