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Special Resolution Approving a Redemption or Purchase of Shares Out of Capital

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DOCX
Pages
1
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Document Overview

A Special Resolution Approving Redemption or Purchase of Shares Out of Capital is a resolution passed by shareholders of a company under Sections 424–480 of the Companies Act, 2015 (Kenya).

It authorises the company to redeem shares (usually redeemable preference shares) or buy back its own shares, and pay for them out of the company’s capital rather than only from distributable profits.

Because this reduces the capital available to creditors, the law requires:
1. A special resolution by shareholders, and
2. A directors’ solvency statement (Section 479), confirming the company can still pay its debts.

Purpose:
1. To formally approve a redemption or buy-back of shares funded out of capital.
2. To comply with legal requirements ensuring shareholder consent and creditor protection.
3. To authorise directors to execute the redemption/purchase, file forms (e.g. CR37 or CR38), and update company records.
4. Provides the legal foundation for the transaction, without which the redemption or buy-back would be invalid.
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