What a Kenyan Director Actually Signs Up For: The Duties, and the Personal Liability

In brief

• The Companies Act, 2015 wrote the directors’ duties into the statute itself. They now bind anyone who acts as a director, whether or not the title was ever formally conferred, and they are backed by remedies that reach the director personally.
• Because the duties are owed to the company, they tend to surface when ownership or management changes hands, when a liquidator is appointed, or when shareholders fall out. By then the director’s conduct is already fixed, and the only question is what the record shows.
• A director’s real protection lies in process: decisions taken at properly convened meetings, interests declared before the debate begins, professional advice taken where the board lacks the skill, and all of it minuted at the time.

Board seats in Kenya are handed out the way harambee or funeral committees are formed, warmly and without much discussion of what the law attaches to the title. The Companies Act, 2015 attaches a great deal. It gathered the duties that had developed over a century of case law and set them out in the statute, where any litigant, liquidator or regulator can now read them, and it backed them with remedies against the director personally. This article explains the duties as the Act states them, who is bound by them, how they are enforced in Kenya, and the working habits that keep an honest director out of trouble. It is written for the people who hold board seats, for the founders and investors who appoint them, and for the professionals deciding whether to accept a seat.

Who the law treats as a director

The duties attach to the function rather than the title. An appointed director is plainly bound. So is a person who acts as a director without ever being appointed, and so is anyone on whose instructions the board is accustomed to act. This catches the founder who resigned from the board but still runs it from the shareholder’s seat, the investor whose nominee votes as instructed, and the spouse who signs nothing yet decides everything. Kenyan business has many boards that exist on paper while one person governs in fact, and the Act was drafted with that reality squarely in mind. Anyone in that position carries the same duties, and the same liability, as the names on the register.

The duties as the Act sets them out

The statutory list is short enough to summarise. A director must act within the powers the company’s constitution confers, and use them for the purposes for which they were given. A director must promote the success of the company for the benefit of its members as a whole, having regard among other things to the long term, to employees, to relationships with suppliers and customers, and to the company’s reputation. A director must exercise independent judgment, a duty every nominee director should read twice, because the investor who appointed you may propose but the vote you cast must be your own. A director must exercise reasonable care, skill and diligence, judged against what is reasonably expected of someone in the role as well as the knowledge and skill that particular director actually has, so an accountant on the board is held to an accountant’s standard. Finally, a director must avoid conflicts between personal interest and the company’s, must not accept benefits from third parties for acting or not acting as a director, and must declare the nature and extent of any interest in a proposed transaction before the company enters into it. None of this is exotic law, yet it is breached regularly in Kenyan boardrooms by decent people who have never read the list.

When the duties are enforced, and by whom

The duties are owed to the company itself, and for years that comforted directors of closely held companies, since the company was in practice themselves. The comfort does not survive three familiar situations. The first is insolvency. Once a liquidator or administrator is appointed, the duties are enforced by someone looking backwards with the full file open, and the Insolvency Act adds separate exposure for directors who allowed the company to trade on when there was no reasonable prospect of avoiding insolvent liquidation. The second is a shareholder dispute. The derivative claim allows a member to sue in the company’s name for a wrong done to it, so an informal related-party arrangement that nobody questioned at the time can be pleaded years later as a breach. The third is regulation. Regulators treat governance as a licensing matter, and the fit and proper assessments that guard entry to banking, capital markets and the licensed professions take a close interest in directors of companies that failed badly. Beyond these sits the disqualification regime, under which a director found unfit can be removed from every boardroom at once, together with a growing number of statutes that impose liability on officers directly, from unremitted statutory deductions to data protection and environmental breaches. The company’s separate legal personality shields shareholders from its debts far more reliably than it shields directors from their decisions.

The habits that protect a director

The law does not require directors to be right. It requires them to be careful, loyal and honest, and it accepts evidence. In practice the protective habits are straightforward. Decisions of any consequence should be taken at properly convened meetings rather than settled on WhatsApp and ratified by silence. Interests should be declared at the start of the relevant item and recorded, with the interested director’s abstention noted where the constitution requires it. Where a matter goes beyond the board’s own competence, professional advice should be obtained and seen to be obtained, because a director who reasonably relied on it has the strongest of the care-and-skill defences. Management information should actually be read, and the awkward question asked and minuted even where it changes nothing, since the minute recording your dissent is what separates you from the majority when the decision is later examined. A director who keeps these habits can be wrong in good company. A director who does not is left defending years-old judgment from memory, and memory is a poor witness.

What happens next

This article opens our Corporate Governance series on the law of running Kenyan companies well. Over the course of the week the series takes up the board and how it should be built, the general meeting and its rules, the company secretary and the registers the law requires, and the governance of the family company, where everything in this article meets Sunday lunch. Where a board wants its position examined rather than assumed, that is the work of a governance audit, and our dedicated page explains what one involves.

Frequently asked questions

Am I exposed if I am only a non-executive director?

Yes. The duties apply to executive and non-executive directors alike, and the standard of care, skill and diligence expects a non-executive to attend, read, question and understand rather than merely lend a name. The role carries a lighter workload, but the law does not distinguish.

Can the company or the shareholders excuse me from the duties in advance?

Not in any general way. The constitution can authorise certain conflicts within limits, and the company can ratify certain breaches, but blanket exemptions and indemnities against liability for breach of duty to the company are ineffective. Directors’ insurance is lawful and worth having.

I was appointed by an investor. May I vote as instructed?

You may listen to your appointer and usually will, but the duties of independent judgment and of promoting the company’s success are yours personally. A vote cast against the company’s interest on instructions is a breach by you, not by the investor.

What is the risk if the company is heading into insolvency?

The focus of the duties shifts towards creditors, and trading on when there is no reasonable prospect of avoiding insolvent liquidation exposes directors to orders for personal contribution. The moment a board begins to doubt solvency is the moment to take advice and minute it.

Does resigning protect me?

Resignation ends your duties for the future but answers nothing for the past, and a resignation on the eve of collapse rarely reads well. What protects you is the record of how you acted while you served.

Peter Maina is a Partner of Peter Maina & Company Advocates. This article states the law as at 19 October 2026. It is general information, not legal advice. For advice on a directorship, a board dispute or a governance audit, reach out on e-mail peter@pmlaw.co.ke or WhatsApp +254 714 644 080.