Introduction
1. This ruling determines two interrelated matters arising from the Applicant’s Notice of Motion dated 23rd July 2025 and the Respondent’s Notice of Preliminary Objection dated 1st August 2025.
2. The Applicant, who is the decree holder in CMCC No. 4206 of 2017, seeks orders to pierce and lift the corporate veil of the Respondent company and to hold its directors and shareholders personally liable for the unsatisfied decretal sum issued in that matter.
3. The application is supported by the Applicant’s affidavit sworn on the same date. It is premised on the contention that the Respondent company has deliberately failed, refused, and/or neglected to satisfy a lawful decree; that it has no attachable assets; and that it exists merely as a façade or shell entity designed to defeat execution and frustrate the course of justice.
4. In response, the Respondent opposed the application through a replying affidavit sworn on 1st August 2025 by Mr. James Karebe, its Chief Executive Officer, and contemporaneously raised a Notice of Preliminary Objection challenging both the competence of the application and the jurisdiction of this Court.
5. The essence of the Respondent’s objection is that the matters raised fall properly within execution proceedings, which ought to be undertaken before the trial court that issued the decree, and not by way of a miscellaneous application before the High Court.
6. The Respondent further contended that the Applicant has improperly invoked the Companies Act as a mechanism for enforcing a civil decree, thereby bypassing established execution procedures under the Civil Procedure Act and Rules.
7. The Applicant, on the other hand, maintained that the relief sought transcends ordinary execution. She asserted that the application invokes this Court’s statutory and equitable jurisdiction to interrogate and, where appropriate, disregard the corporate personality of a company alleged to have been used as an instrument of injustice.
8. The Applicant further submitted that the High Court is the only forum vested with jurisdiction to pierce the corporate veil under the Companies Act, and that the present proceedings are therefore properly before this Court.
9. Both the application and the preliminary objection were canvassed by way of written submissions. The Applicant’s submissions are dated 7th August 2025, while those of the Respondent are dated 30th October 2025.
Analysis and Determination
10. Having carefully considered the pleadings, affidavits, and submissions by the parties, the Court identifies the following issues:
i. Whether this Court has jurisdiction to entertain the application;
ii. If jurisdiction exists, whether the Applicant has met the threshold for lifting the corporate veil;
Whether this Court has jurisdiction (The Preliminary Objection)
11. The principles governing preliminary objections are well settled in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696. A preliminary objection must raise a pure point of law capable of disposing of the matter without recourse to contested facts.
12. The Respondent’s objection challenges the jurisdiction of this Court, principally on the basis that the present proceedings are, in substance, execution proceedings disguised as a corporate law application.
13. The Respondent argued that execution is governed exclusively by section 29 of the Civil Procedure Act and Order 22 of the Civil Procedure Rules, which require execution to be conducted by the court that passed the decree, namely the Chief Magistrates’ Court. On that basis, the Respondent asserts that the present application constitutes an abuse of process.
14. This argument is not without force. The law indeed provides a comprehensive framework for execution, including mechanisms for examination of company officers and discovery of assets under Order 22 rule 35. It is also correct that a trial court is not functus officio in respect of execution proceedings.
15. However, while the Respondent’s position correctly captures the general rule applicable to ordinary execution proceedings, the lifting or piercing of the corporate veil is a distinct remedy anchored in equity and statute. It is not a routine execution process.
16. Sections 100 and 780 of the Companies Act empower the High Court, upon application, to grant relief where it is demonstrated that the affairs of a company are being conducted in a manner that defeats the law or abuses the corporate form.
17. This position was reiterated in Regal Press Kenya Limited v Oakland Media Services Limited & another [2024] KEHC 1638 (KLR), where the Court held that Magistrates’ Courts lack jurisdiction to pierce the corporate veil, which jurisdiction is reserved exclusively for the High Court exercising its powers under the Companies Act and its inherent jurisdiction.
18. Consequently, the preliminary objection challenging this Court’s jurisdiction is without merit and is hereby dismissed.
Whether the Corporate Veil Should be Lifted
19. The doctrine of separate legal personality, as enunciated in Salomon v Salomon & Co. Ltd [1897] AC 22, establishes that a company is a legal entity distinct from its shareholders and directors. That principle, however, is not absolute.
20. Courts may pierce the corporate veil where the company is used as a façade to perpetrate fraud, evade existing legal obligations, or otherwise defeat the ends of justice.
21. In Agip (Kenya) Ltd v Highlands Tyres Ltd [2001] KLR 630, the Court held that the veil may be lifted where the company is a mere device or stratagem whose continued recognition would result in injustice.
22. Similarly, in Mohamed Fugicha v Methodist Church in Kenya [2016] eKLR, the Court emphasized that while separate corporate personality is a foundational principle of company law, it must not be abused to shield wrongdoing or frustrate justice.
23. In the present case, it is not disputed that there exists a valid and unsatisfied decree against the Respondent, and that attempts at execution have been unsuccessful. However, the Applicant has not placed before this Court cogent evidence demonstrating fraud, misrepresentation, or deliberate wrongdoing on the part of the directors or shareholders.
24. Allegations of frustration of execution, without more, do not amount to fraud. The mere inability of a company to satisfy its obligations does not, of itself, justify the lifting of the corporate veil.
25. Commercial failure or insolvency cannot be equated with abuse of corporate personality. To hold otherwise would fundamentally undermine the doctrine of limited liability and expose company directors to personal liability in every case of corporate default.
26. In this matter, there is no evidence that the Respondent company was incorporated or operated as a sham, nor that it existed solely as a device to defeat creditors. The Court has not been shown evidence of diversion of assets, commingling of funds, or deliberate stripping of corporate value.
27. The law provides structured avenues for dealing with judgment debtors, including examination of directors under Order 22 rule 35, garnishee proceedings, and insolvency mechanisms. The extraordinary remedy of piercing the corporate veil cannot be invoked in the absence of clear evidence of wrongdoing or abuse.
28. Accordingly, the Court finds that the Applicant has failed to meet the legal threshold required to justify lifting the corporate veil. Consequently, the Court makes the following orders:
i. The Preliminary Objection dated 1st August 2025 is dismissed.
ii. The Notice of Motion dated 23rd July 2025 is dismissed for want of merit.
iii. The Applicant remains at liberty to pursue execution through the mechanisms provided under the Civil Procedure Act and Rules.
iv. Each party shall bear its own costs
29. It is so ordered.
DATED, SIGNED, AND DELIVERED AT NAIROBI
THIS 10TH DAY OF APRIL 2026
HON. MR. JUSTICE MOSES ADO
Judge of the High Court
In the presence of: -
C/A – Moses
N/A.…………………. for the Applicant
N/A….………………. for the Respondents
1. This ruling determines two interrelated matters arising from the Applicant’s Notice of Motion dated 23rd July 2025 and the Respondent’s Notice of Preliminary Objection dated 1st August 2025.
2. The Applicant, who is the decree holder in CMCC No. 4206 of 2017, seeks orders to pierce and lift the corporate veil of the Respondent company and to hold its directors and shareholders personally liable for the unsatisfied decretal sum issued in that matter.
3. The application is supported by the Applicant’s affidavit sworn on the same date. It is premised on the contention that the Respondent company has deliberately failed, refused, and/or neglected to satisfy a lawful decree; that it has no attachable assets; and that it exists merely as a façade or shell entity designed to defeat execution and frustrate the course of justice.
4. In response, the Respondent opposed the application through a replying affidavit sworn on 1st August 2025 by Mr. James Karebe, its Chief Executive Officer, and contemporaneously raised a Notice of Preliminary Objection challenging both the competence of the application and the jurisdiction of this Court.
5. The essence of the Respondent’s objection is that the matters raised fall properly within execution proceedings, which ought to be undertaken before the trial court that issued the decree, and not by way of a miscellaneous application before the High Court.
6. The Respondent further contended that the Applicant has improperly invoked the Companies Act as a mechanism for enforcing a civil decree, thereby bypassing established execution procedures under the Civil Procedure Act and Rules.
7. The Applicant, on the other hand, maintained that the relief sought transcends ordinary execution. She asserted that the application invokes this Court’s statutory and equitable jurisdiction to interrogate and, where appropriate, disregard the corporate personality of a company alleged to have been used as an instrument of injustice.
8. The Applicant further submitted that the High Court is the only forum vested with jurisdiction to pierce the corporate veil under the Companies Act, and that the present proceedings are therefore properly before this Court.
9. Both the application and the preliminary objection were canvassed by way of written submissions. The Applicant’s submissions are dated 7th August 2025, while those of the Respondent are dated 30th October 2025.
Analysis and Determination
10. Having carefully considered the pleadings, affidavits, and submissions by the parties, the Court identifies the following issues:
i. Whether this Court has jurisdiction to entertain the application;
ii. If jurisdiction exists, whether the Applicant has met the threshold for lifting the corporate veil;
Whether this Court has jurisdiction (The Preliminary Objection)
11. The principles governing preliminary objections are well settled in Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696. A preliminary objection must raise a pure point of law capable of disposing of the matter without recourse to contested facts.
12. The Respondent’s objection challenges the jurisdiction of this Court, principally on the basis that the present proceedings are, in substance, execution proceedings disguised as a corporate law application.
13. The Respondent argued that execution is governed exclusively by section 29 of the Civil Procedure Act and Order 22 of the Civil Procedure Rules, which require execution to be conducted by the court that passed the decree, namely the Chief Magistrates’ Court. On that basis, the Respondent asserts that the present application constitutes an abuse of process.
14. This argument is not without force. The law indeed provides a comprehensive framework for execution, including mechanisms for examination of company officers and discovery of assets under Order 22 rule 35. It is also correct that a trial court is not functus officio in respect of execution proceedings.
15. However, while the Respondent’s position correctly captures the general rule applicable to ordinary execution proceedings, the lifting or piercing of the corporate veil is a distinct remedy anchored in equity and statute. It is not a routine execution process.
16. Sections 100 and 780 of the Companies Act empower the High Court, upon application, to grant relief where it is demonstrated that the affairs of a company are being conducted in a manner that defeats the law or abuses the corporate form.
17. This position was reiterated in Regal Press Kenya Limited v Oakland Media Services Limited & another [2024] KEHC 1638 (KLR), where the Court held that Magistrates’ Courts lack jurisdiction to pierce the corporate veil, which jurisdiction is reserved exclusively for the High Court exercising its powers under the Companies Act and its inherent jurisdiction.
18. Consequently, the preliminary objection challenging this Court’s jurisdiction is without merit and is hereby dismissed.
Whether the Corporate Veil Should be Lifted
19. The doctrine of separate legal personality, as enunciated in Salomon v Salomon & Co. Ltd [1897] AC 22, establishes that a company is a legal entity distinct from its shareholders and directors. That principle, however, is not absolute.
20. Courts may pierce the corporate veil where the company is used as a façade to perpetrate fraud, evade existing legal obligations, or otherwise defeat the ends of justice.
21. In Agip (Kenya) Ltd v Highlands Tyres Ltd [2001] KLR 630, the Court held that the veil may be lifted where the company is a mere device or stratagem whose continued recognition would result in injustice.
22. Similarly, in Mohamed Fugicha v Methodist Church in Kenya [2016] eKLR, the Court emphasized that while separate corporate personality is a foundational principle of company law, it must not be abused to shield wrongdoing or frustrate justice.
23. In the present case, it is not disputed that there exists a valid and unsatisfied decree against the Respondent, and that attempts at execution have been unsuccessful. However, the Applicant has not placed before this Court cogent evidence demonstrating fraud, misrepresentation, or deliberate wrongdoing on the part of the directors or shareholders.
24. Allegations of frustration of execution, without more, do not amount to fraud. The mere inability of a company to satisfy its obligations does not, of itself, justify the lifting of the corporate veil.
25. Commercial failure or insolvency cannot be equated with abuse of corporate personality. To hold otherwise would fundamentally undermine the doctrine of limited liability and expose company directors to personal liability in every case of corporate default.
26. In this matter, there is no evidence that the Respondent company was incorporated or operated as a sham, nor that it existed solely as a device to defeat creditors. The Court has not been shown evidence of diversion of assets, commingling of funds, or deliberate stripping of corporate value.
27. The law provides structured avenues for dealing with judgment debtors, including examination of directors under Order 22 rule 35, garnishee proceedings, and insolvency mechanisms. The extraordinary remedy of piercing the corporate veil cannot be invoked in the absence of clear evidence of wrongdoing or abuse.
28. Accordingly, the Court finds that the Applicant has failed to meet the legal threshold required to justify lifting the corporate veil. Consequently, the Court makes the following orders:
i. The Preliminary Objection dated 1st August 2025 is dismissed.
ii. The Notice of Motion dated 23rd July 2025 is dismissed for want of merit.
iii. The Applicant remains at liberty to pursue execution through the mechanisms provided under the Civil Procedure Act and Rules.
iv. Each party shall bear its own costs
29. It is so ordered.
DATED, SIGNED, AND DELIVERED AT NAIROBI
THIS 10TH DAY OF APRIL 2026
HON. MR. JUSTICE MOSES ADO
Judge of the High Court
In the presence of: -
C/A – Moses
N/A.…………………. for the Applicant
N/A….………………. for the Respondents