As a business grows, it often outgrows its legal form. A private company may need to go public to raise capital, or a sole trader may need a limited company. Company conversion in Kenya changes a company’s status without starting again, through re-registration under the Companies Act, 2015. This guide explains each route, and the related reorganisations.
This guide is for owners, directors and advisers changing a company’s legal form or reshaping a group. If you are forming an entity for the first time, see our guide to company registration in Kenya and to partnership and LLP registration. If instead you want to close a company you no longer need, see our separate guide to striking off a company.
The key idea is simple. A conversion does not create a new company. The same company keeps its history, its assets and its contracts. Only its legal status changes. The mechanism under the Companies Act, 2015 is re-registration. In short, the company passes the required resolution, meets the conditions for the new status, and files with the Registrar. It then receives a fresh certificate that reflects the change. Because the entity survives, conversion is usually cleaner than winding one company up and starting another.
The Act sets out each status change as its own route.
A private company converts to a public company under section 70. It must meet the share-capital and net-asset tests in sections 71 and 72. It also passes a special resolution and re-registers. Companies usually go public to raise capital more widely. In return, they take on heavier disclosure and governance duties.
A public company converts to a private limited company under section 77. Members who object can apply to the court, so the process protects a dissenting minority. In practice, companies take this route when the public structure is no longer needed.
A private limited company can convert to an unlimited company under section 82, and there are matching routes back. This is a narrower choice. It is usually driven by specific tax, filing or privacy reasons. Because it changes the members’ exposure, take it with advice.
| Conversion | Why do it | Key provision |
|---|---|---|
| Private to public | Raise capital more widely | Section 70 (with sections 71 and 72) |
| Public to private | Shed public-company obligations | Section 77 |
| Limited to unlimited | Specific tax, filing or privacy reasons | Section 82 |
Not every change is a re-registration, and this is where people slip. Turning a sole proprietorship or a partnership into a limited company is not a conversion of the same entity. Instead, you incorporate a new company and transfer the business into it, then wind down the old vehicle. Separately, a private company or a firm can convert to a limited liability partnership under the Limited Liability Partnership Act, 2011. Either way, moving a business across entities has tax and contract effects. These run from stamp duty to the assignment of leases and licences. So plan the transfer before you file.
Larger changes reshape ownership or structure while the company keeps trading. This covers share reorganisations and group restructures that move subsidiaries or assets. It also covers a scheme of arrangement, which is a court-approved compromise between a company and its members or creditors. Moving shares in a reorganisation follows the rules in our guide to transferring and issuing company shares. One caution. Where a company is in financial distress, the rescue tools are different. They sit under the Insolvency Act, 2015, as we explain in our guides to liquidation and to company administration. So a solvent reorganisation and an insolvent rescue are handled separately.
How do I convert a private company to a public company in Kenya? You re-register under section 70. You must meet the share-capital and net-asset tests in sections 71 and 72, pass a special resolution, and obtain a new certificate.
Does a conversion create a new company? No. The same company continues, with its assets and contracts, and only its legal status changes.
Can a public company become private again? Yes, under section 77, though objecting members can apply to the court.
How do I turn my business into a limited company? You incorporate a new company and transfer the business into it. This is not a re-registration of the same entity, and it has tax and contract effects.
Can a company convert to an LLP? Yes. A private company or a firm can convert to a limited liability partnership under the Limited Liability Partnership Act, 2011.
Several mistakes recur. The first is treating a change of business form as a simple conversion, when turning a sole trader or partnership into a company actually needs a new company and a transfer of the business. The second is converting to a public company without meeting the share-capital and net-asset tests, so the application fails. The third is ignoring the tax and contract effects of moving a business across entities. Others overlook that a limited-to-unlimited conversion changes the members’ exposure.
Our corporate and company-secretarial team handles conversions and reorganisations end to end. We re-register a company’s status, plan a change of entity type and the transfer of the business, document group reorganisations, and make the filings with the Registrar. To convert or reorganise your company, contact John Maina or Kenneth Likoko, Partners, at OLM Law Advocates LLP.
This article is a general guide only and is not legal advice. Please seek advice on your specific circumstances.
OLM Law Advocates LLP advises companies, founders and investors on conversions, reorganisations and corporate compliance.
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