10th August 2026

In a recent landmark Judgment delivered on 31st July 2026 in Stichting Rabobank Foundation v Mwangi & another [2026] KECA 1550 (KLR), the Kenyan Court of Appeal confirmed that non-registration of foreign companies under Section 974 of the Companies Act does not deprive them of the right to sue in Kenyan courts.

Background

The Court of Appeal overturned a decision of the High Court that struck out the suit by Stichting Rabobank Foundation on a preliminary basis that it lacked capacity and standing to sue in Kenya because it was a foreign entity that had not been registered under Part XXXVII of the Companies Act.

Stichting Rabobank Foundation (a Dutch entity) sought to recover funds advanced to AVA Chem Limited and secured through a personal guarantee by Christopher Irungu Mwangi (AVA Chem Limited’s director).

A Summary of the Court of Appeal’s Key Findings

The three-judge bench of the Court of Appeal unanimously made the following important findings:

Section 974 of the Companies Act is not a bar to litigation: The Court focused on the statutory architecture of the Section and accordingly found that it does not expressly provide that an unregistered foreign company ceases to be a juristic person under the Act. The Judges equally noted that the said provision does not expressly prohibit an unregistered foreign company from suing or being sued in Kenya. The Court further held that had Parliament intended to impose a litigation disability, it could have said so expressly.

The distinction between locus standi, legal personality and statutory compliance: The Court held that the juridical existence of foreign companies under the law of their origin/incorporation is not displaced merely because they are not registered as foreign companies in Kenya. Such companies do not become non-entities at Kenya’s border. Statutory compliance and legal personality are, therefore, distinct questions and cannot be conflated to curtail a foreign company’s locus standi.

Whether a foreign company is “carrying on business in Kenya” is a factual matter that cannot be determined through a preliminary objection: The answer to the question of carrying on business in Kenya was held to be dependent on adequate factual foundation of matters such as, inter alia, the nature of the entity’s business, number and frequency of transactions, existence of local offices and employees, location from which funds and services are supplied, and no single factor is necessarily decisive. The Court cannot determine such a question through a preliminary objection when the facts are contested.

Loans to Kenyan entities do not necessarily constitute carrying on business in Kenya: The Court refuted the proposition that mere advancement of a loan or financial support to a Kenyan entity from a foreign company inevitably amounts to carrying on business in Kenya. The Court clarified that loans and debentures are not invariably synonymous.

The Paradigm Shift

Before 2025, courts enforced a rather strict approach to Section 974 and prohibited foreign companies without local registration from instituting proceedings in Kenyan courts. High Court decisions such as Root Capital Incorporated vs Tekangu Farmers Co-operative Society Ltd [2016] KEHC 3735 and Turn Key International Trade Limited vs Sunmatt Ltd (Sundip Shah) [2024] KEHC 2701 demonstrate the restrictive approach applied by the courts – they strictly required that foreign companies had to be registered under the Companies Act to possess the requisite locus standi to sue in Kenya.

The shift in the interpretation of Section 974 began in 2025 when the High Court adopted a pragmatic approach and abandoned the previous restrictive position to liberalise the locus standi of foreign companies not registered under the Companies Act while still balancing statutory compliance. Decisions such as Burton Gold Trading LLC vs Amadi & 6 Others [2025] KEHC 12657 and Superon Schweisstechnic India Ltd vs Oxychem Africa Ltd [2025] KEHC 8298 established that locus standi is not necessarily contingent on registration under the Companies Act and that the question of registration is not in itself determinative of locus standi.

Significance & Impact

This recent Court of Appeal decision now offers the much-needed clarity in interpreting Section 974 and equally reinforces the judicial precedents set by the High Court in Burton Gold Trading LLC vs Amadi & 6 Others [2025] KEHC 12657 and Superon Schweisstechnic India Ltd vs Oxychem Africa Ltd [2025] KEHC 8298. It is a resounding confirmation that registration is not a requirement for foreign companies to institute claims in Kenyan courts.

The courts must now distinguish between statutory compliance and a foreign company’s capacity to enforce legal rights. Further, the Court has confirmed that a preliminary objection which is essentially meant to determine pure undisputed points of law cannot be used to determine a factual issue such as whether a foreign company is “carrying on business in Kenya” – evidentiary interrogation is mandatory in such instances.

The decision is an important judicial development for multinational corporations, foreign investors, lenders and other cross-border trade players interacting with Kenyan entities.

Conclusion

This decision reflects and further cements the shift from a restrictive approach in the interpretation of Section 974 of the Companies Act to a more liberal and constitutionally grounded approach that ensures access to justice for all persons, including foreign juristic persons, and will have a significant impact on future decisions involving cross-border transactions.

Disclaimer: .

Section 19 of POCAMLA provides immunity to any reporting institution or Government entity, or any officer, partner, employee or other persons acting with due diligence and in good faith in enforcing the provisions of POCAMLA.

Conclusion

This decision accentuates the condition precedent to the grant of immunity under Section 19 of POCAMLA and affirms that the immunity from liability granted therein to investigative agencies is not absolute and may not apply where the agency or its officers are found to have acted without due diligence or in bad faith.

It will be interesting to see what ARA makes of the decision in the coming days. For now, Justice Prof. Sifuna’s Ruling brings down the curtains to the forfeiture case against the Fintech firms.

Disclaimer:  This legal alert is meant for general information only and should not be construed otherwise. You are hereby advised, in all circumstances, to seek clarification from Serena Chivumbe (serena.chivumbe@oklawllp.com) (serena.chivumbe@oklawllp.com) or OK Law Advocates LLP (legal@oklawllp.com) (legal@oklawllp.com).