The High Court of Kenya in the case of Kenya Revenue Authority v Salsa Global Investment Company Limited & 3 others [2025] KEHC 5619 (KLR) reinforced the requirement for companies to inform interested parties when applying for deregistration from the Companies Register and the need to settle their debts when dissolving companies. The Kenya Revenue Authority (hereinafter “KRA”) successfully applied to have Salsa Global Investment Company Limited (hereinafter “the Company) reinstated to the Companies Register. The core issue revolved around the Company’s deregistration while owing substantial unpaid taxes (Kshs 38,041,137.26) and its failure to notify KRA or comply with tax deregistration procedures as required by law. The court agreed with KRA, ordering the company’s restoration to the Companies Register.
Background
KRA moved Court through an Application seeking restoration of the company to the Companies Register. The Application was brought against the Company, its two directors and the Registrar of Companies.
KRA in their Application averred that the Company applied to be deregistered from the Companies Register but failed to notify KRA of its deregistration. KRA averred that at that time the company owed KRA Kshs. 38,041,137.26 being; unpaid income tax amounting to Kshs. 10,341,577.05, and value added taxes amounting to Kshs 27,699,560.22, which sums continued to accrue interest and penalty.
KRA also averred that the Company failed to apply to the Commissioner for deregistration of its tax obligations and cancellation of its Personal Identification Number which is a requirement of Section 36 of the Value Added Tax Act as read together with Section 10 and 14 of the Tax Procedures Act.
The Respondents filed grounds of opposition opposing the Application on the basis that the Application was incurably defective and an abuse of the process of the Court and application was misconceived, mischievous, in bad faith, frivolous and vexatious and should be dismissed with costs.
The court allowed the Application and ordered the Registrar of Companies to forthwith restore and reinstate the Company to the Register of Companies.
Key Takeaways from the decision
- Application for a company’s name to be struck off from the Register of Companies should be made by and on behalf of the company by its directors or by a majority of them.
- A person who makes an application for the Company to be deregistered from the Companies register is obligated to serve a copy of the Application to every person who at the time of the Application for deregistration is a member of the company, an employee of the company, a creditor of the company, a director of the company, and a manager or trustee of any pension fund established for the benefit of employees of the company.
- A company which ceases to do business by applying for the company to be struck off should apply to the Commissioner for deregistration under that registered tax law. The application for deregistration should be done in the prescribed form and within thirty (30) days of ceasing to carry out business. The implication of this is to avoid tax penalties that may be imposed for failure to apply for deregistration after a company has been dissolved.
- Court has powers upon application by a person who was a creditor of the company at the time of its being struck off from the Companies Register, to order for its restoration.
How we can Assist Business Entities in Data Protection Compliance
- Application for a company’s name to be struck off from the Register of Companies should be made by and on behalf of the company by its directors or by a majority of them.
- A person who makes an application for the Company to be deregistered from the Companies register is obligated to serve a copy of the Application to every person who at the time of the Application for deregistration is a member of the company, an employee of the company, a creditor of the company, a director of the company, and a manager or trustee of any pension fund established for the benefit of employees of the company.
- A company which ceases to do business by applying for the company to be struck off should apply to the Commissioner for deregistration under that registered tax law. The application for deregistration should be done in the prescribed form and within thirty (30) days of ceasing to carry out business. The implication of this is to avoid tax penalties that may be imposed for failure to apply for deregistration after a company has been dissolved.
- Court has powers upon application by a person who was a creditor of the company at the time of its being struck off from the Companies Register, to order for its restoration.