1. Before this court for determination is the Objector’s Notice of Preliminary Objection dated 17th March 2026.
2. The Preliminary Objection seeks to strike out the Applicant’s petition and application dated 29th January 2026 with costs. The objection is founded on the grounds that the Petition is incompetent and fatally defective for want of proper corporate authority, having been filed without a special resolution of the members of the company authorising its institution, contrary to the requirements of the Companies Act and the Insolvency Act. is the Objector contends that, being a juristic person, the company can only act through resolutions duly passed by its members and that proceedings commenced without such authority are null and void.
3. The Respondent further contends that the Petition is incompetent and fatally defective for failure to comply with Regulation 77B(2) of the Insolvency Regulations, 2016, in that it was not accompanied by the mandatory documents prescribed thereunder, namely a Statutory Demand in Form 32E and a Statement of Financial Position in Form 32. According to the Objector, the omission of these documents renders the petition procedurally defective and incompetent, as the Court cannot properly determine the company’s alleged inability to pay its debts in their absence. The Objector therefore maintains that the petition is incurably defective, bad in law and an abuse of the process of the court.
4. The preliminary objection was canvassed by way of written submissions. The Objector filed its submissions dated 21st May 2026 and supplementary submissions 4th June 2026 in support of the objection. The Receiver filed submissions dated 25th May 2026 in support of the objection while the Petitioner filed submissions dated 2nd May 2026 in opposition thereto.
Objector’s submissions
5. The Objector submitted that the Petition and Notice of Motion dated 29th January 2026 are incompetent for failure to comply with mandatory statutory and regulatory requirements. It contended that the Preliminary Objection raises pure points of law within the meaning of Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, namely whether the Petition was instituted with proper corporate authority and whether it complies with Regulation 77B(2) of the Insolvency Regulations, 2016.
6. On corporate authority, the Objector argued that although Section 425 of the Insolvency Act permits a company or its directors to present a liquidation petition, a company seeking its own liquidation must first obtain the sanction of its members through a special resolution. Relying principally on Kenya Artisans Limited v Chemical & Allied Workers Union [2021] KEHC 4149 (KLR), it submitted that no such resolution was passed and that the Extraordinary General Meeting convened for that purpose was adjourned without the requisite resolution being adopted. Consequently, the Petition was said to have been filed without proper corporate authority and is therefore incompetent.
7. The Objector further submitted that the Petition contravenes Regulation 77B(2) of the Insolvency Regulations, 2016 because it was not accompanied by a Statutory Demand in Form 32E and a Statement of Financial Position in Form 32. It maintained that the requirement is mandatory and that the omission of the prescribed documents renders the Petition fatally defective. In support of that position, and to underscore the importance of Form 32 in enabling the Court to ascertain a company’s actual financial position, including its assets, liabilities and the assets available to creditors reliance was placed on D Manji Construction Limited v Associated Construction Company (K) Limited [2025] KEHC 13624 (KLR), East Africa Cables Limited v SMB Bank (K) Limited [2020] KEHC 9359 (KLR), Imbuki v Crown Health Care Limited; Planlink Limited (Supporting Creditor) [2025] KEHC 3283 (KLR)and Telegan Investments Limited v Standard Chartered Bank [2025] KEHC 11315 (KLR).
8. The Bank contended that the audited accounts annexed to the Petition which related to historical periods ending years before the Petition was filed, could not substitute the prescribed Form 32. It further submitted that the statutory notices issued under Section 90 of the Land Act could not substitute the Statutory Demand in Form 32E as the two documents arise under distinct statutory regimes and serve different purposes.
9. In its reply submissions, the Objector maintained that the Petitioner had failed to address the legal defects raised and had instead focused on the merits of the liquidation petition and its alleged insolvency. It argued that the issues of insolvency, creditor relations, and the conduct of the Bank are irrelevant to the determination of the Preliminary Objection, whose focus is whether the Petition had been commenced in compliance with the mandatory requirements of the Insolvency Act and the Insolvency Regulations, irrespective of the Petitioner’s actual financial position.
10. The Objector further contended that Section 425(1)(a) of the Insolvency Act identifies those entitled to present a liquidation petition and does not dispense with the requirement for proper internal corporate authorisation. It maintained that, absent a special resolution, the directors could not institute liquidation proceedings in the name of the company but their own names as directors. Reliance was placed on Kenya Artisans Limited v Chemical & Allied Workers Union [2021] KEHC 4149 (KLR).
11. Regarding Regulation 77B(2), the Objector rejected the Petitioner’s argument that the provision is inapplicable to petitions presented under Sections 424 and 425 of the Insolvency Act. It argued that the Regulation is couched in mandatory terms, applies to all liquidation petitions, and admits no exemption. The Objector further submitted that Article 159(2)(d) of the Constitution cannot be invoked to cure substantive defects relating to a party’s legal capacity to institute proceedings or compliance with mandatory statutory requirements.
12. In conclusion, the Objector urged the Court to find that the Petition was instituted without a special resolution authorizing its filing thus in breach of Regulation 77B(2) of the Insolvency Regulations, 2016 and that Forms 32E and 32 had not accompanied the Petition.. It therefore prayed that the Notice of Preliminary Objection dated 17th March 2026 be upheld and that both the Petition and the accompanying Notice of Motion be struck out with costs.
Receiver’s submissions
13. The Receiver submitted that he was appointed on 9th April 2026 by Family Bank Limited, the secured creditor, as Receiver of the income from four charged properties belonging to the Petitioner. He fully associated himself with the Bank’s submissions and urged the court to strike out the Petition and Notice of Motion dated 29th January 2026 with costs on ground that they were fatally defective, bad in law, and incurably incompetent.
Petitioner’s submissions
14. The Petitioner opposed the Preliminary Objection and identified three issues for determination that is, whether the present proceedings are a voluntary liquidation under Sections 394 and 398 or liquidation by the court under Sections 424 and 425 of the Insolvency Act; whether a statutory demand is a pre-requisite in filing of a liquidation petition under Division 6 of the Insolvency Act; whether a statement of financial position in Form 32 is a pre-requisite in filing of a liquidation petition under Division 6 of the Insolvency Act and whether the Petition should be struck out or dismissed.
15. On the first issue, the petitioner submitted that the present proceedings are for liquidation by the Court under Sections 424 and 425 of the Insolvency Act, as opposed to a voluntary liquidation under Sections 394 and 398 of the Act. It argued that Section 425(1)(a) expressly permits a liquidation petition to be presented by a company or its directors and that the directors were therefore entitled to institute the proceedings without first obtaining a special resolution of the company’s members. In support of that position, the Petitioner relied on In Re Ukwala Supermarket Limited (Insolvency Petition No. E015 of 2018), Kenya Artisans Limited v Chemical & Allied Workers Union [2021] KEHC 4149 (KLR), Kenya Airfreight Handling Limited [2021] KEHC 4939 (KLR), and Macharia & Another v Kenya Commercial Bank Ltd & 2 Others [2012] KESC 8 (KLR). It maintained that the directors’ directors’ decision to commence the proceedings was therefore proper and responsible.
16. The Petitioner further submitted that although an Extraordinary General Meeting had been convened to consider a liquidation resolution, the meeting was adjourned before the resolution could be considered. It contended that the absence of a special resolution did not diminish the authority conferred upon the directors under Section 425(1)(a) of the Insolvency Act and therefore did not render the Petition incompetent.
17. On the issue of a statutory demand, the Petitioner argued that no such demand was required in the present case. It submitted that the statutory demand contemplated under Section 384 of the Insolvency Act is a mechanism available to creditors seeking to establish a company's inability to pay its debts and is inapplicable where the company itself presents the liquidation petition. Relying on Makatiani v African Merchant Assurance Company Limited (Insolvency Petition E001 of 2024) and Kinuthia v Xplico Insurance Company Limited (Insolvency Petition No. 3 of 2023), the Petitioner contended that Regulation 77B of the Insolvency Regulations must be construed in light of Section 384 and cannot impose additional substantive requirements not contemplated by the Act.
18. Regarding the third issue, the Petitioner submitted that a Statement of Financial Position in Form 32 was not a mandatory requirement for a petition brought under Sections 424 and 425 of the Insolvency Act. It argued that, in any event, the Petition was accompanied by financial statements and other documents disclosing the company’s assets, liabilities and financial position, thereby providing sufficient information for the Court to assess its alleged insolvency.
19. Finally, the Petitioner urged the Court to dismiss the Preliminary Objection, arguing that the issues raised were procedural and technical in nature and did not warrant the striking out of the Petition. It invoked Article 159(2)(d) of the Constitution and submitted that striking out is a draconian remedy that should be exercised sparingly. The Petitioner further maintained that the rights of secured creditors remained protected notwithstanding the liquidation proceedings and relied on Re Hi-Plast Ltd [2019] KEHC 5014 (KLR). It therefore prayed that the Preliminary Objection be dismissed and that the Petition be allowed to proceed to hearing on its merits.
Analysis and Determination
20. I have carefully considered the preliminary objection dated 17th March 2026 and the parties’ written submissions and, in my view, the issues arising for determination is whether the Petition and Notice of Motion dated 29th January 2026 are incompetent and ought to be struck out for want of proper corporate authority and/or for non-compliance with the mandatory requirements of Regulation 77B of the Insolvency Regulations, 2016
21. The law is settled that a preliminary objection must raise a pure point of law capable of disposing of the matter without having to ascertain contested facts or exercise judicial discretion. As was held in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, a preliminary objection cannot be sustained where its determination requires the investigation of disputed facts or evaluation of evidence.
22. In the present case, the Objector’s challenge is founded upon the provisions of the Insolvency Act and its attendant Regulations. Significantly, there is no dispute regarding the material fact that the Extraordinary General Meeting convened to consider the liquidation of the Petitioner did not pass the requisite special resolution. Indeed, the Petitioner acknowledges that the meeting was adjourned before the proposed liquidation resolution could be concluded. Whether, in those circumstances, the company could validly institute the present proceedings is therefore a question of law arising from substantially undisputed facts. Equally, the alleged absence of documents required under Regulation 77B does not necessitate a factual inquiry or trial. I am therefore satisfied that the Preliminary Objection raises pure questions of law that are properly amenable to determination at this stage.
23. The first issue concerns the legal capacity of the Petitioner to institute the liquidation proceedings without a special resolution of its members. The parties are in agreement that these proceedings concern liquidation by the court under Division 6 of the Insolvency Act, rather than voluntary liquidation. Section 423 vests the High Court with jurisdiction over the liquidation of companies, while section 424 specifies the circumstances in which a company may be liquidated by the Court. Of particular relevance are section 424(1)(a), which permits liquidation where a company has, by special resolution, resolved that it be liquidated by the court, and section 424(1)(e), which permits liquidation where a company is unable to pay its debts. Section 425(1)(a), further, provides that an application for liquidation may be made by “the company or its directors.”
24. The Objector contends that although Section 425(1)(a) identifies both the company and its directors as persons entitled to present a liquidation application, the provision does not dispense with the internal corporate authority required before a company may invoke the court’s liquidation jurisdiction in its own name. In the Objector’s view, a Board resolution cannot substitute for a special resolution of the members where the company itself is the applicant. The Petitioner, by contrast, argues that Section 425(1)(a) expressly confers standing upon either the company or its directors to present the application and that Parliament did not make the passing of a special resolution a precondition to every liquidation application brought under that provision.
25. There is considerable force in the Petitioner’s argument if section 425(1)(a) is viewed in isolation. The provision expressly identifies both “the company or its directors” as persons who may make an application to the court. Moreover, the grounds set out in Section 424(1) are disjunctive. A company may be liquidated because it has passed a special resolution under paragraph (a), because it is unable to pay its debts under paragraph (e), or on the other grounds specified in that section. It would therefore be incorrect to suggest that every liquidation application under section 425 must invariably be founded upon a special resolution.
26. The issue before the court, however, is a different one. The question is not whether a directors’ have standing to present a liquidation petition. Section 425(1)(a) clearly confers such standing. Rather, the issue is whether a company, as the named petitioner, may invoke the court’s jurisdiction to liquidate solely on the strength of a Board resolution where the members have not passed the special resolution required to authorise the company to take that course.
27. In my view, the distinction is both real and significant. Section 425(1)(a) separately identifies the company and its directors as potential applicants. Where directors approach the court in their capacity as directors, their standing is derived from the statute. Section 425(1)(a). Where, however, the proceedings are instituted in the name of the company, the court must be satisfied that the company has validly authorised the decision to seek its own liquidation. The separate legal personality of the company cannot be disregarded merely because its acts through its directors. The company’s decision-making process must still conform to the requirements imposed by law and its internal governance structure.
28. The decision in Kenya Artisans Limited v Chemical & Allied Workers Union [2021] KEHC 4149 (KLR) is instructive in this regard. In that case, the court considered a liquidation petition brought under Section 425(1)(a) and observed that, while directors may in appropriate circumstance initiate a voluntarily liquidation process, an application presented by the company itself requires the authority of shareholders expressed through a resolution. The court further underscored that, before exercising its jurisdiction to make a liquidation order, it must be satisfied that the statutory conditions prescribed by the Insolvency Act have been met. Significantly, the company in the Kenya Artisans case, had passed a special resolution resolving that the company be liquidated by the court.
29. The approach in Kenya Artisans case was subsequently been considered and applied in Imbuki v Crown Health Care Limited; Planlink Limited (Supporting Creditor) [2025] KEHC 3283 (KLR). There, the court expressly endorsed the principle that, whereas directors may themselves approach the Court, an application presented in the name of the company requires shareholder authorisation. Notably, the petition under consideration had itself been preceded by a special resolution authorising liquidation by the Court.
30. The distinction is apparent from In re Ukwala Supermarket Limited [2019] KEHC 7877 (KLR), on which the Petitioner places considerable reliance. In that case, the court recognized that the proceedings concerned liquidation by the court under Sections 424 and 425 of the Insolvency Act. However, in related proceedings involving the same company, the Court expressly noted that the petitioner was a director and was consequently entitled, by virtue of section 425(1)(a) to present the petition. Thus, in my view, the Ukwala case does not, stand for the proposition that a company may institute liquidation proceedings in its own name without the requisite corporate approval. It is distinguishable because the statutory standing of a director is not synonymous with the authority of the company, as a separate legal entity, to commence proceedings in its own name.
31. Similarly, the Petitioner’s reliance on Kenya Airfreight Handling Limited [2021] KEHC 4939 (KLR) does not resolve the issue in its favour. That decision concerned a petition presented by a shareholder in circumstances involving a deadlock and the court considered the locus standi of the petitioner under Section 425. The general proposition that a company acts through its directors is not in dispute. The question here is whether the directors, acting as the company’s organ, can override the statutory role of the members where the law requires a decision of the members in relation to the particular corporate act. The proposition that directors ordinarily manage the affairs of a company cannot be extended to mean that they may exercise every power reserved to the members in matters for which the law expressly requires shareholder approval.
32. The Companies Act draws a clear distinction between ordinary managerial decisions and fundamental corporate decisions requiring shareholder participation. A special resolution must be passed by a majority representing the voting rights of members entitled to vote, and the notice convening the meeting must expressly state that the resolution is proposed as a special resolution. The requirement is neither technical nor procedural. Liquidation fundamentally alters the legal existence of a company, places its affairs within the statutory insolvency regime, and has profound consequences for the rights and interests of members, creditors, employees, and other stakeholders. It is therefore unsurprising that Parliament reserved such a decision to the members acting collectively in accordance with the statutory thresholds prescribed by law.
33. In the present case, the absence of a special resolution is particularly significant because this is not a case where a duly passed resolution was merely omitted from the filed documents. The Petitioner expressly acknowledges in paragraph 26 of its submissions that an Extraordinary General Meeting was convened for the purpose of considering the proposed liquidation, but the meeting was adjourned before the resolution was passed. The members were therefore afforded an opportunity to consider the proposal and did not authorise it. In those circumstances, the subsequent Board resolution cannot be treated as the legal equivalent of the special resolution contemplated by the statutory scheme.
34. I am therefore persuaded that, while the Board resolution may have authorised the directors to undertake such steps as they considered necessary, it did not confer upon the company the authority of its members to seek liquidation by the Court. If the directors were of the view that liquidation was nevertheless warranted notwithstanding the absence of shareholder approval, section 425(1)(a) afforded them a direct statutory avenue to approach the Court in their capacity as directors. What they could not do was present the proceedings as those of the company while bypassing the corporate approval mechanism prescribed by law.
35. Accordingly, I find that the Petition, having been presented in the name of Associated Motors Limited without a special resolution authorising the company to seek liquidation by the Court, was instituted without the requisite corporate authority. The defect is not merely procedural, nor does it relate solely to the omission of a supporting document. Rather, it goes to the very capacity and authority of the named Petitioner to invoke the Court's liquidation jurisdiction. As such, it is a fundamental defect that renders the Petition incompetent. In the absence of proper corporate authorisation, the proceedings cannot be sustained and are liable to be struck out.
36. This conclusion is not altered by the Petitioner’s reliance on Article 159(2)(d) of the Constitution. Article 159(2)(d) was never intended to relieve parties of compliance with substantive legal requirements nor to confer upon courts authority to ignore clear statutory prescriptions. Its purpose is to ensure that justice is not defeated by mere procedural technicalities. It does not empower the Court to create rights, authority or jurisdiction where none exists.
37. More importantly, the Insolvency Act itself contains a clear statutory framework governing defects arising in insolvency proceedings. Section 696(1) provides that proceedings under the Act are not to be invalidated or set aside merely because of a defect in a step required to be taken in connection with those proceedings unless the Court is satisfied that the defect has caused substantial injustice that cannot be remedied. Section 696(2) further empowers the Court to permit the correction of such defects and to allow proceedings to continue on such terms as may be just.
38. This provision was recently considered by this Court in Midland Hauliers Ltd v Kotecha & 2 Others [2025] KEHC 4598 (KLR), where the Court declined to strike out an application on account of a procedural defect and held that insolvency proceedings ought not to be dismissed solely because of defects that occasion no demonstrable prejudice to the affected parties. The Court emphasized that both section 696 of the Insolvency Act and Article 159(2)(d) of the Constitution encourage the determination of disputes on their substantive merits rather than on procedural lapses.
39. However, section 696 is directed at defects occurring in the conduct of insolvency proceedings. It presupposes the existence of competent proceedings and provides a mechanism for curing procedural irregularities arising in their course. In my view, it cannot be invoked to create a substantive corporate decision that was never made in the first place. The defect before this Court is not merely the omission to file, attach or exhibit a document. Rather, the underlying corporate act said to authorise the proceedings never occurred. No special resolution was passed. The Court cannot, through recourse to section 696 or Article 159(2)(d), deem a shareholders' resolution to exist when the members themselves declined, or failed, to pass one.
40. To hold otherwise would be to transform a curative provision intended to remedy procedural defects into an instrument for dispensing with substantive statutory requirements. Such an interpretation would undermine the corporate governance framework established under both the Companies Act and the Insolvency Act and would effectively permit directors to substitute their own decision for that of the members in circumstances where the law expressly reserves authority to the members. Neither Article 159(2)(d) nor section 696 sanctions such a result.
41. I therefore find the first limb of the Preliminary Objection meritorious.
42. Having found that the purported resolution authorising the liquidation was not validly passed by the members, the foundation upon which the petition rests is itself defective. In those circumstances, it is unnecessary to consider the second limb of the objection concerning compliance with Regulation 77B of the Insolvency Regulations, 2016. Any determination on that issue would be merely academic, as the petition is already rendered unsustainable by the absence of a valid members’ resolution. I therefore decline to address the question of compliance with Regulation 77B and proceed on the basis of the finding already reached.
43. Accordingly, and for the reasons set out above, I find that the Preliminary Objection dated 17th March 2026 is meritorious. The Petition and Notice of Motion dated 29th January 2026 were instituted without the requisite corporate authority and are therefore incompetent. They are hereby struck out with costs to the Objector.
Orders accordingly.
2. The Preliminary Objection seeks to strike out the Applicant’s petition and application dated 29th January 2026 with costs. The objection is founded on the grounds that the Petition is incompetent and fatally defective for want of proper corporate authority, having been filed without a special resolution of the members of the company authorising its institution, contrary to the requirements of the Companies Act and the Insolvency Act. is the Objector contends that, being a juristic person, the company can only act through resolutions duly passed by its members and that proceedings commenced without such authority are null and void.
3. The Respondent further contends that the Petition is incompetent and fatally defective for failure to comply with Regulation 77B(2) of the Insolvency Regulations, 2016, in that it was not accompanied by the mandatory documents prescribed thereunder, namely a Statutory Demand in Form 32E and a Statement of Financial Position in Form 32. According to the Objector, the omission of these documents renders the petition procedurally defective and incompetent, as the Court cannot properly determine the company’s alleged inability to pay its debts in their absence. The Objector therefore maintains that the petition is incurably defective, bad in law and an abuse of the process of the court.
4. The preliminary objection was canvassed by way of written submissions. The Objector filed its submissions dated 21st May 2026 and supplementary submissions 4th June 2026 in support of the objection. The Receiver filed submissions dated 25th May 2026 in support of the objection while the Petitioner filed submissions dated 2nd May 2026 in opposition thereto.
Objector’s submissions
5. The Objector submitted that the Petition and Notice of Motion dated 29th January 2026 are incompetent for failure to comply with mandatory statutory and regulatory requirements. It contended that the Preliminary Objection raises pure points of law within the meaning of Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, namely whether the Petition was instituted with proper corporate authority and whether it complies with Regulation 77B(2) of the Insolvency Regulations, 2016.
6. On corporate authority, the Objector argued that although Section 425 of the Insolvency Act permits a company or its directors to present a liquidation petition, a company seeking its own liquidation must first obtain the sanction of its members through a special resolution. Relying principally on Kenya Artisans Limited v Chemical & Allied Workers Union [2021] KEHC 4149 (KLR), it submitted that no such resolution was passed and that the Extraordinary General Meeting convened for that purpose was adjourned without the requisite resolution being adopted. Consequently, the Petition was said to have been filed without proper corporate authority and is therefore incompetent.
7. The Objector further submitted that the Petition contravenes Regulation 77B(2) of the Insolvency Regulations, 2016 because it was not accompanied by a Statutory Demand in Form 32E and a Statement of Financial Position in Form 32. It maintained that the requirement is mandatory and that the omission of the prescribed documents renders the Petition fatally defective. In support of that position, and to underscore the importance of Form 32 in enabling the Court to ascertain a company’s actual financial position, including its assets, liabilities and the assets available to creditors reliance was placed on D Manji Construction Limited v Associated Construction Company (K) Limited [2025] KEHC 13624 (KLR), East Africa Cables Limited v SMB Bank (K) Limited [2020] KEHC 9359 (KLR), Imbuki v Crown Health Care Limited; Planlink Limited (Supporting Creditor) [2025] KEHC 3283 (KLR)and Telegan Investments Limited v Standard Chartered Bank [2025] KEHC 11315 (KLR).
8. The Bank contended that the audited accounts annexed to the Petition which related to historical periods ending years before the Petition was filed, could not substitute the prescribed Form 32. It further submitted that the statutory notices issued under Section 90 of the Land Act could not substitute the Statutory Demand in Form 32E as the two documents arise under distinct statutory regimes and serve different purposes.
9. In its reply submissions, the Objector maintained that the Petitioner had failed to address the legal defects raised and had instead focused on the merits of the liquidation petition and its alleged insolvency. It argued that the issues of insolvency, creditor relations, and the conduct of the Bank are irrelevant to the determination of the Preliminary Objection, whose focus is whether the Petition had been commenced in compliance with the mandatory requirements of the Insolvency Act and the Insolvency Regulations, irrespective of the Petitioner’s actual financial position.
10. The Objector further contended that Section 425(1)(a) of the Insolvency Act identifies those entitled to present a liquidation petition and does not dispense with the requirement for proper internal corporate authorisation. It maintained that, absent a special resolution, the directors could not institute liquidation proceedings in the name of the company but their own names as directors. Reliance was placed on Kenya Artisans Limited v Chemical & Allied Workers Union [2021] KEHC 4149 (KLR).
11. Regarding Regulation 77B(2), the Objector rejected the Petitioner’s argument that the provision is inapplicable to petitions presented under Sections 424 and 425 of the Insolvency Act. It argued that the Regulation is couched in mandatory terms, applies to all liquidation petitions, and admits no exemption. The Objector further submitted that Article 159(2)(d) of the Constitution cannot be invoked to cure substantive defects relating to a party’s legal capacity to institute proceedings or compliance with mandatory statutory requirements.
12. In conclusion, the Objector urged the Court to find that the Petition was instituted without a special resolution authorizing its filing thus in breach of Regulation 77B(2) of the Insolvency Regulations, 2016 and that Forms 32E and 32 had not accompanied the Petition.. It therefore prayed that the Notice of Preliminary Objection dated 17th March 2026 be upheld and that both the Petition and the accompanying Notice of Motion be struck out with costs.
Receiver’s submissions
13. The Receiver submitted that he was appointed on 9th April 2026 by Family Bank Limited, the secured creditor, as Receiver of the income from four charged properties belonging to the Petitioner. He fully associated himself with the Bank’s submissions and urged the court to strike out the Petition and Notice of Motion dated 29th January 2026 with costs on ground that they were fatally defective, bad in law, and incurably incompetent.
Petitioner’s submissions
14. The Petitioner opposed the Preliminary Objection and identified three issues for determination that is, whether the present proceedings are a voluntary liquidation under Sections 394 and 398 or liquidation by the court under Sections 424 and 425 of the Insolvency Act; whether a statutory demand is a pre-requisite in filing of a liquidation petition under Division 6 of the Insolvency Act; whether a statement of financial position in Form 32 is a pre-requisite in filing of a liquidation petition under Division 6 of the Insolvency Act and whether the Petition should be struck out or dismissed.
15. On the first issue, the petitioner submitted that the present proceedings are for liquidation by the Court under Sections 424 and 425 of the Insolvency Act, as opposed to a voluntary liquidation under Sections 394 and 398 of the Act. It argued that Section 425(1)(a) expressly permits a liquidation petition to be presented by a company or its directors and that the directors were therefore entitled to institute the proceedings without first obtaining a special resolution of the company’s members. In support of that position, the Petitioner relied on In Re Ukwala Supermarket Limited (Insolvency Petition No. E015 of 2018), Kenya Artisans Limited v Chemical & Allied Workers Union [2021] KEHC 4149 (KLR), Kenya Airfreight Handling Limited [2021] KEHC 4939 (KLR), and Macharia & Another v Kenya Commercial Bank Ltd & 2 Others [2012] KESC 8 (KLR). It maintained that the directors’ directors’ decision to commence the proceedings was therefore proper and responsible.
16. The Petitioner further submitted that although an Extraordinary General Meeting had been convened to consider a liquidation resolution, the meeting was adjourned before the resolution could be considered. It contended that the absence of a special resolution did not diminish the authority conferred upon the directors under Section 425(1)(a) of the Insolvency Act and therefore did not render the Petition incompetent.
17. On the issue of a statutory demand, the Petitioner argued that no such demand was required in the present case. It submitted that the statutory demand contemplated under Section 384 of the Insolvency Act is a mechanism available to creditors seeking to establish a company's inability to pay its debts and is inapplicable where the company itself presents the liquidation petition. Relying on Makatiani v African Merchant Assurance Company Limited (Insolvency Petition E001 of 2024) and Kinuthia v Xplico Insurance Company Limited (Insolvency Petition No. 3 of 2023), the Petitioner contended that Regulation 77B of the Insolvency Regulations must be construed in light of Section 384 and cannot impose additional substantive requirements not contemplated by the Act.
18. Regarding the third issue, the Petitioner submitted that a Statement of Financial Position in Form 32 was not a mandatory requirement for a petition brought under Sections 424 and 425 of the Insolvency Act. It argued that, in any event, the Petition was accompanied by financial statements and other documents disclosing the company’s assets, liabilities and financial position, thereby providing sufficient information for the Court to assess its alleged insolvency.
19. Finally, the Petitioner urged the Court to dismiss the Preliminary Objection, arguing that the issues raised were procedural and technical in nature and did not warrant the striking out of the Petition. It invoked Article 159(2)(d) of the Constitution and submitted that striking out is a draconian remedy that should be exercised sparingly. The Petitioner further maintained that the rights of secured creditors remained protected notwithstanding the liquidation proceedings and relied on Re Hi-Plast Ltd [2019] KEHC 5014 (KLR). It therefore prayed that the Preliminary Objection be dismissed and that the Petition be allowed to proceed to hearing on its merits.
Analysis and Determination
20. I have carefully considered the preliminary objection dated 17th March 2026 and the parties’ written submissions and, in my view, the issues arising for determination is whether the Petition and Notice of Motion dated 29th January 2026 are incompetent and ought to be struck out for want of proper corporate authority and/or for non-compliance with the mandatory requirements of Regulation 77B of the Insolvency Regulations, 2016
21. The law is settled that a preliminary objection must raise a pure point of law capable of disposing of the matter without having to ascertain contested facts or exercise judicial discretion. As was held in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, a preliminary objection cannot be sustained where its determination requires the investigation of disputed facts or evaluation of evidence.
22. In the present case, the Objector’s challenge is founded upon the provisions of the Insolvency Act and its attendant Regulations. Significantly, there is no dispute regarding the material fact that the Extraordinary General Meeting convened to consider the liquidation of the Petitioner did not pass the requisite special resolution. Indeed, the Petitioner acknowledges that the meeting was adjourned before the proposed liquidation resolution could be concluded. Whether, in those circumstances, the company could validly institute the present proceedings is therefore a question of law arising from substantially undisputed facts. Equally, the alleged absence of documents required under Regulation 77B does not necessitate a factual inquiry or trial. I am therefore satisfied that the Preliminary Objection raises pure questions of law that are properly amenable to determination at this stage.
23. The first issue concerns the legal capacity of the Petitioner to institute the liquidation proceedings without a special resolution of its members. The parties are in agreement that these proceedings concern liquidation by the court under Division 6 of the Insolvency Act, rather than voluntary liquidation. Section 423 vests the High Court with jurisdiction over the liquidation of companies, while section 424 specifies the circumstances in which a company may be liquidated by the Court. Of particular relevance are section 424(1)(a), which permits liquidation where a company has, by special resolution, resolved that it be liquidated by the court, and section 424(1)(e), which permits liquidation where a company is unable to pay its debts. Section 425(1)(a), further, provides that an application for liquidation may be made by “the company or its directors.”
24. The Objector contends that although Section 425(1)(a) identifies both the company and its directors as persons entitled to present a liquidation application, the provision does not dispense with the internal corporate authority required before a company may invoke the court’s liquidation jurisdiction in its own name. In the Objector’s view, a Board resolution cannot substitute for a special resolution of the members where the company itself is the applicant. The Petitioner, by contrast, argues that Section 425(1)(a) expressly confers standing upon either the company or its directors to present the application and that Parliament did not make the passing of a special resolution a precondition to every liquidation application brought under that provision.
25. There is considerable force in the Petitioner’s argument if section 425(1)(a) is viewed in isolation. The provision expressly identifies both “the company or its directors” as persons who may make an application to the court. Moreover, the grounds set out in Section 424(1) are disjunctive. A company may be liquidated because it has passed a special resolution under paragraph (a), because it is unable to pay its debts under paragraph (e), or on the other grounds specified in that section. It would therefore be incorrect to suggest that every liquidation application under section 425 must invariably be founded upon a special resolution.
26. The issue before the court, however, is a different one. The question is not whether a directors’ have standing to present a liquidation petition. Section 425(1)(a) clearly confers such standing. Rather, the issue is whether a company, as the named petitioner, may invoke the court’s jurisdiction to liquidate solely on the strength of a Board resolution where the members have not passed the special resolution required to authorise the company to take that course.
27. In my view, the distinction is both real and significant. Section 425(1)(a) separately identifies the company and its directors as potential applicants. Where directors approach the court in their capacity as directors, their standing is derived from the statute. Section 425(1)(a). Where, however, the proceedings are instituted in the name of the company, the court must be satisfied that the company has validly authorised the decision to seek its own liquidation. The separate legal personality of the company cannot be disregarded merely because its acts through its directors. The company’s decision-making process must still conform to the requirements imposed by law and its internal governance structure.
28. The decision in Kenya Artisans Limited v Chemical & Allied Workers Union [2021] KEHC 4149 (KLR) is instructive in this regard. In that case, the court considered a liquidation petition brought under Section 425(1)(a) and observed that, while directors may in appropriate circumstance initiate a voluntarily liquidation process, an application presented by the company itself requires the authority of shareholders expressed through a resolution. The court further underscored that, before exercising its jurisdiction to make a liquidation order, it must be satisfied that the statutory conditions prescribed by the Insolvency Act have been met. Significantly, the company in the Kenya Artisans case, had passed a special resolution resolving that the company be liquidated by the court.
29. The approach in Kenya Artisans case was subsequently been considered and applied in Imbuki v Crown Health Care Limited; Planlink Limited (Supporting Creditor) [2025] KEHC 3283 (KLR). There, the court expressly endorsed the principle that, whereas directors may themselves approach the Court, an application presented in the name of the company requires shareholder authorisation. Notably, the petition under consideration had itself been preceded by a special resolution authorising liquidation by the Court.
30. The distinction is apparent from In re Ukwala Supermarket Limited [2019] KEHC 7877 (KLR), on which the Petitioner places considerable reliance. In that case, the court recognized that the proceedings concerned liquidation by the court under Sections 424 and 425 of the Insolvency Act. However, in related proceedings involving the same company, the Court expressly noted that the petitioner was a director and was consequently entitled, by virtue of section 425(1)(a) to present the petition. Thus, in my view, the Ukwala case does not, stand for the proposition that a company may institute liquidation proceedings in its own name without the requisite corporate approval. It is distinguishable because the statutory standing of a director is not synonymous with the authority of the company, as a separate legal entity, to commence proceedings in its own name.
31. Similarly, the Petitioner’s reliance on Kenya Airfreight Handling Limited [2021] KEHC 4939 (KLR) does not resolve the issue in its favour. That decision concerned a petition presented by a shareholder in circumstances involving a deadlock and the court considered the locus standi of the petitioner under Section 425. The general proposition that a company acts through its directors is not in dispute. The question here is whether the directors, acting as the company’s organ, can override the statutory role of the members where the law requires a decision of the members in relation to the particular corporate act. The proposition that directors ordinarily manage the affairs of a company cannot be extended to mean that they may exercise every power reserved to the members in matters for which the law expressly requires shareholder approval.
32. The Companies Act draws a clear distinction between ordinary managerial decisions and fundamental corporate decisions requiring shareholder participation. A special resolution must be passed by a majority representing the voting rights of members entitled to vote, and the notice convening the meeting must expressly state that the resolution is proposed as a special resolution. The requirement is neither technical nor procedural. Liquidation fundamentally alters the legal existence of a company, places its affairs within the statutory insolvency regime, and has profound consequences for the rights and interests of members, creditors, employees, and other stakeholders. It is therefore unsurprising that Parliament reserved such a decision to the members acting collectively in accordance with the statutory thresholds prescribed by law.
33. In the present case, the absence of a special resolution is particularly significant because this is not a case where a duly passed resolution was merely omitted from the filed documents. The Petitioner expressly acknowledges in paragraph 26 of its submissions that an Extraordinary General Meeting was convened for the purpose of considering the proposed liquidation, but the meeting was adjourned before the resolution was passed. The members were therefore afforded an opportunity to consider the proposal and did not authorise it. In those circumstances, the subsequent Board resolution cannot be treated as the legal equivalent of the special resolution contemplated by the statutory scheme.
34. I am therefore persuaded that, while the Board resolution may have authorised the directors to undertake such steps as they considered necessary, it did not confer upon the company the authority of its members to seek liquidation by the Court. If the directors were of the view that liquidation was nevertheless warranted notwithstanding the absence of shareholder approval, section 425(1)(a) afforded them a direct statutory avenue to approach the Court in their capacity as directors. What they could not do was present the proceedings as those of the company while bypassing the corporate approval mechanism prescribed by law.
35. Accordingly, I find that the Petition, having been presented in the name of Associated Motors Limited without a special resolution authorising the company to seek liquidation by the Court, was instituted without the requisite corporate authority. The defect is not merely procedural, nor does it relate solely to the omission of a supporting document. Rather, it goes to the very capacity and authority of the named Petitioner to invoke the Court's liquidation jurisdiction. As such, it is a fundamental defect that renders the Petition incompetent. In the absence of proper corporate authorisation, the proceedings cannot be sustained and are liable to be struck out.
36. This conclusion is not altered by the Petitioner’s reliance on Article 159(2)(d) of the Constitution. Article 159(2)(d) was never intended to relieve parties of compliance with substantive legal requirements nor to confer upon courts authority to ignore clear statutory prescriptions. Its purpose is to ensure that justice is not defeated by mere procedural technicalities. It does not empower the Court to create rights, authority or jurisdiction where none exists.
37. More importantly, the Insolvency Act itself contains a clear statutory framework governing defects arising in insolvency proceedings. Section 696(1) provides that proceedings under the Act are not to be invalidated or set aside merely because of a defect in a step required to be taken in connection with those proceedings unless the Court is satisfied that the defect has caused substantial injustice that cannot be remedied. Section 696(2) further empowers the Court to permit the correction of such defects and to allow proceedings to continue on such terms as may be just.
38. This provision was recently considered by this Court in Midland Hauliers Ltd v Kotecha & 2 Others [2025] KEHC 4598 (KLR), where the Court declined to strike out an application on account of a procedural defect and held that insolvency proceedings ought not to be dismissed solely because of defects that occasion no demonstrable prejudice to the affected parties. The Court emphasized that both section 696 of the Insolvency Act and Article 159(2)(d) of the Constitution encourage the determination of disputes on their substantive merits rather than on procedural lapses.
39. However, section 696 is directed at defects occurring in the conduct of insolvency proceedings. It presupposes the existence of competent proceedings and provides a mechanism for curing procedural irregularities arising in their course. In my view, it cannot be invoked to create a substantive corporate decision that was never made in the first place. The defect before this Court is not merely the omission to file, attach or exhibit a document. Rather, the underlying corporate act said to authorise the proceedings never occurred. No special resolution was passed. The Court cannot, through recourse to section 696 or Article 159(2)(d), deem a shareholders' resolution to exist when the members themselves declined, or failed, to pass one.
40. To hold otherwise would be to transform a curative provision intended to remedy procedural defects into an instrument for dispensing with substantive statutory requirements. Such an interpretation would undermine the corporate governance framework established under both the Companies Act and the Insolvency Act and would effectively permit directors to substitute their own decision for that of the members in circumstances where the law expressly reserves authority to the members. Neither Article 159(2)(d) nor section 696 sanctions such a result.
41. I therefore find the first limb of the Preliminary Objection meritorious.
42. Having found that the purported resolution authorising the liquidation was not validly passed by the members, the foundation upon which the petition rests is itself defective. In those circumstances, it is unnecessary to consider the second limb of the objection concerning compliance with Regulation 77B of the Insolvency Regulations, 2016. Any determination on that issue would be merely academic, as the petition is already rendered unsustainable by the absence of a valid members’ resolution. I therefore decline to address the question of compliance with Regulation 77B and proceed on the basis of the finding already reached.
43. Accordingly, and for the reasons set out above, I find that the Preliminary Objection dated 17th March 2026 is meritorious. The Petition and Notice of Motion dated 29th January 2026 were instituted without the requisite corporate authority and are therefore incompetent. They are hereby struck out with costs to the Objector.
Orders accordingly.