By Z.O.G
The striking off of a company from the Register of Companies may appear, at first glance, to bring the company's affairs to an end. For creditors, however, the position is more nuanced.
A company being struck off does not necessarily mean that its creditors have lost their rights or that an outstanding debt has become irrecoverable. Kenyan company law provides a mechanism through which a dissolved company may, in appropriate circumstances, be restored to the Register, allowing creditors to pursue claims that might otherwise be frustrated by the company's dissolution.
The recent decision in Kenya Revenue Authority v Dream Dressing and Household Items Trading Co. Limited & 3 Others [2025] KEHC 3942 (KLR), together with Kathambo & Another (Suing as the Legal Representatives of Kihome Muthui (Deceased)) v Amarshan Limited & Another [2026] KEHC 4138 (KLR) and Agnator Kanini v Mwalimu Mamundi Autoparts Ltd & Another [2017] eKLR, demonstrates the willingness of the Kenyan courts to protect legitimate creditor interests where a company has been struck off.
What Happens When a Company Is Struck Off?
A company may be struck off the Register through various statutory mechanisms, including voluntary striking off.
Once a company is dissolved, it ceases to exist as a legal entity in the ordinary sense. This can create an immediate practical problem for a creditor. A creditor may have an unpaid debt, contractual claim or even an existing court judgment against the company, but the debtor company may no longer appear on the Register.
The creditor should not, however, assume that the debt has disappeared.
The Companies Act, 2015 provides a statutory route for restoring a dissolved company to the Register. The purpose of this mechanism is, among other things, to ensure that legitimate claims are not defeated merely because the company has been removed from the Register.
Creditors Can Apply for Restoration
Section 916 of the Companies Act, 2015 is particularly important to creditors.
The provision recognises a creditor of a company at the time it was struck off or dissolved as a person who may apply for restoration.
This is significant because it means that a creditor does not necessarily have to accept the company's dissolution as the end of its recovery efforts.
A creditor may approach the High Court seeking restoration where the statutory requirements are met.
The position was considered in Agnator Kanini v Mwalimu Mamundi Autoparts Ltd & Another [2017] eKLR.
In that case, the applicant had obtained a decree against the company. The company was subsequently struck off the Register, thereby creating an obstacle to execution.
The High Court ordered restoration of the company so that the decree-holder could pursue enforcement.
The case is particularly important because it demonstrates that restoration is not merely an administrative remedy. It can have a direct and practical purpose: to enable a creditor to enforce an otherwise valid claim or judgment.
Failure to Notify Creditors Can Have Serious Consequences
The statutory procedure for voluntary striking off contains safeguards designed to protect creditors.
Section 900 of the Companies Act, 2015 imposes notification requirements in relation to an application for voluntary striking off.
Where a company applies to be struck off without complying with those requirements, the omission may provide grounds for restoration.
This issue was considered in Kenya Revenue Authority v Dream Dressing and Household Items Trading Co. Limited & 3 Others [2025] KEHC 3942 (KLR).
The Kenya Revenue Authority sought restoration of the company after it had been struck off while owing tax liabilities.
The High Court considered the statutory notification requirements and found that the company had failed to comply with the obligation to notify the Kenya Revenue Authority of the striking-off application.
The Court consequently ordered restoration of the company to the Register.
The decision is an important reminder that the statutory process of striking off cannot properly be used to prejudice creditors who are entitled to notice under the Companies Act.
What If the Creditor Already Has a Judgment?
The position becomes particularly compelling where the creditor has already obtained judgment or a decree against the company.
A judgment creditor has already established its legal entitlement to recover the debt. If the judgment debtor is subsequently struck off, dissolution may create a procedural barrier to execution.
This was the situation in Agnator Kanini v Mwalimu Mamundi Autoparts Ltd & Another [2017] eKLR.
The Court recognised that restoration could be ordered to facilitate execution of the decree.
The same principle has more recently been considered in Kathambo & Another (Suing as the Legal Representatives of Kihome Muthui (Deceased)) v Amarshan Limited & Another [2026] KEHC 4138 (KLR).
The Court ordered restoration of the company notwithstanding arguments concerning the absence of demonstrated assets.
This is significant for creditors because a creditor may not always know, before restoration, what assets or recoverable interests a company possesses.
Requiring a creditor to identify and prove the existence of assets before restoration could create a circular problem: the creditor may need the company to be restored precisely so that its affairs and assets can be properly investigated.
The recent decision in Kathambo therefore reinforces the practical importance of restoration as a means of enabling creditors to pursue available remedies.
Restoration Is Not the Same as Piercing the Corporate Veil
It is important to distinguish restoration from imposing personal liability on directors or shareholders.
A company is a separate legal person from its members and directors. The mere fact that a company has been struck off does not automatically make its directors personally responsible for the company's debts.
Restoration is instead concerned primarily with reviving the company's legal status so that its assets, liabilities and legal affairs can properly be dealt with.
If there are independent grounds for pursuing directors personally—for example, under a personal guarantee, fraud or another recognised legal basis—that is a separate question requiring its own legal analysis.
The Court's "Just" Jurisdiction
The Companies Act, 2015 also gives the Court a broader discretionary jurisdiction to restore a company where it considers restoration to be just.
This is important because not every case will fit neatly into a single factual category.
The Court may consider the circumstances surrounding the striking off, the interests of creditors, the existence of pending claims, the effect of dissolution on legal proceedings and other relevant circumstances.
The principle was recognised in Re Queensway Investments Limited [1995] 1 EA 231, an authority subsequently considered in Agnator Kanini.
The underlying rationale is straightforward: the statutory process for removing companies from the Register should not become an instrument of injustice.
Where dissolution would unfairly deprive a creditor of a legitimate claim, restoration may provide the appropriate remedy.
Is Restoration Automatic?
No.
A creditor does not acquire an automatic right to restoration merely because a company owes it money.
The creditor must satisfy the statutory requirements and demonstrate grounds upon which the Court may properly exercise its jurisdiction.
The Court will consider the circumstances of each case, including the manner in which the company was struck off and the nature of the creditor's claim.
Accordingly, creditors should act promptly once they discover that a debtor company has been struck off.
What Should a Creditor Do?
Where a creditor discovers that a debtor company has been struck off, the following steps should ordinarily be considered:
1. Obtain an official company search to establish the company's status and the date on which it was struck off.
2. Establish how the company was struck off, including whether the process was voluntary.
3. Establish whether the creditor received notice of the proposed striking off.
4. Review the underlying debt or claim, including any contract, invoices, correspondence and acknowledgements of indebtedness.
5. Establish whether judgment has already been obtained and, if so, obtain the relevant judgment and decree.
6. Investigate whether the company has assets or other recoverable interests, including property, debts owed to it, contractual rights or pending litigation.
7. Consider an application for restoration under the Companies Act, 2015 where the statutory grounds are satisfied.
8. Act within the applicable statutory and limitation periods.
Practical Implications for Creditors
The decisions discussed above provide an important practical lesson.
A creditor who discovers that a debtor company has been struck off should not immediately write off the debt.
Instead, the creditor should determine whether restoration is available.
This is particularly important where:
- the creditor was not notified of the proposed striking off;
- the debt existed before dissolution;
- the creditor has already obtained a judgment or decree;
- the company may have assets or recoverable contractual rights;
- the striking-off procedure may not have complied with the Companies Act; or
- restoration would otherwise be necessary to prevent injustice.
The courts' approach in KRA v Dream Dressing, Kathambo and Agnator Kanini demonstrates that restoration can be a meaningful remedy rather than a purely technical exercise.
Conclusion
Being struck off the Register is not necessarily the end of the road for a company's creditors.
The Companies Act, 2015 recognises circumstances in which a dissolved company may be restored, and the Kenyan courts have demonstrated a willingness to exercise that jurisdiction where restoration is necessary to protect legitimate creditor interests.
The decisions in Kenya Revenue Authority v Dream Dressing and Household Items Trading Co. Limited & 3 Others [2025] KEHC 3942 (KLR), Kathambo & Another (Suing as the Legal Representatives of Kihome Muthui (Deceased)) v Amarshan Limited & Another [2026] KEHC 4138 (KLR) and Agnator Kanini v Mwalimu Mamundi Autoparts Ltd & Another [2017] eKLR are particularly instructive.
The central lesson for creditors is therefore simple:
A company may be struck off, but that does not necessarily mean that a legitimate debt is written off.
Where the statutory requirements are satisfied, restoration may provide the creditor with a route back to the debtor company and an opportunity to pursue the remedies available under Kenyan law.
Key Authorities
- Kenya Revenue Authority v Dream Dressing and Household Items Trading Co. Limited & 3 Others [2025] KEHC 3942 (KLR).
- Kathambo & Another (Suing as the Legal Representatives of Kihome Muthui (Deceased)) v Amarshan Limited & Another [2026] KEHC 4138 (KLR).
- Agnator Kanini v Mwalimu Mamundi Autoparts Ltd & Another [2017] eKLR.
- Re Queensway Investments Limited [1995] 1 EA 231.
Disclaimer: This article is intended for general information only and does not constitute legal advice. The circumstances of each case should be considered independently and professional legal advice obtained before taking action.
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