The parcel is registered in the name of a limited company, and the person negotiating introduces himself as a director. Before a deposit is paid, the company’s own records, not the assurances of the individual, determine who can sell and on what terms. A company is a separate legal person. It acts through its board and, where its constitution requires, through its members, so a transfer signed without authority can be challenged long after completion. The buyer’s protection lies in documents the company has generated and filed, and in checks made at the registries.
Why a company sale is different
A company holds land in its corporate name, and the title deed will show the company, not the individuals behind it. The board of directors manages the company, but the constitution may reserve particular decisions to the members, and it may impose limits on what the directors can do without approval. Authority therefore has to be traced in a chain: from the constitution, to a resolution of the correct organ, to the person who signs the transfer.
The person at the table may be a director, an employee, a relative of the controlling shareholder or a broker. None of those roles, by itself, proves authority to sell this property at this price. The same caution applies where the seller is a company in a group and the land is held by a subsidiary: the entity on the title is the party whose transfer the registry will register.
The CR12 and what it proves
A CR12 is an official extract from the register of companies, issued by the Business Registration Service, showing the company’s directors and shareholders. Applications are made through the Business Registration Service, including its services on eCitizen. A current CR12 should be compared with the title, the sale agreement and the identity documents of the people who will sign.
Three checks matter. First, the company name and registration number on the CR12 must match the proprietor named on the title exactly; similar names are a common source of confusion and, occasionally, of fraud. Second, the directors shown must include the people who purport to act, and their identities should be verified against official identification. Third, the CR12 should be recent, because directorships and shareholdings change and an extract obtained months earlier may not reflect the current board.
A CR12 proves who holds office and who holds shares at the date of the extract. It does not prove that those directors have authorised this sale. That is the work of the resolution file.
Board and member approval: the resolution file
Ask for a board resolution that approves the sale, identifies the property and the price, and names the signatories. The resolution should be dated, signed by the directors who passed it, and provided as a certified copy. Check it against the constitution. If the constitution requires member approval for a disposal of this kind, or if the land is the company’s principal asset, a resolution of the members should also be produced.
Where a signatory acts under a power of attorney, read the power and confirm that it covers a sale of land and is still in force. Where the company uses a seal, confirm the arrangements for its use. Keep the whole file: the constitution, the resolutions, the signatories’ identity documents and the CR12. A buyer who later needs to defend the transfer will need the same documents that supported it.
Charges, insolvency and other encumbrances
A company can charge its land as security for a loan, and a fixed or floating charge over the company’s assets can capture the property. Search the register of charges kept under the Companies Act, 2015, and search the land title as well. If a charge is registered, the sale needs a discharge or the lender’s release at completion, and the completion mechanics should be agreed in advance.
Check the company’s status before completion. A company in liquidation, administration or receivership cannot simply sell through its board; the sale must be made by the liquidator, administrator or receiver, and the documents should show that authority. A company that has been struck off the register presents a different problem, because it may have to be restored before it can deal with land.
The land itself may carry caveats, cautions or restrictions, and agricultural land within a land control area needs Land Control Board consent. These are title questions, not company questions, and they need their own searches and applications.
Tax and completion documents
Confirm the company’s tax position with the Kenya Revenue Authority, including its PIN details and any capital gains tax or other tax that applies to the disposal. Stamp duty on the transfer is assessed on the instrument, and the sale agreement should state which party bears it and when it will be paid. Arrears of land rent and county rates should be cleared before registration, with clearance certificates obtained.
The transfer should name the company exactly as it appears on the title and the CR12, and the signatories should sign in the capacity recorded in the resolution. Where completion is staged, set out what is exchanged at each stage, including the discharge of any charge, the transfer, the consents and the completion statement. A final official search before lodgement confirms that nothing has been registered since the buyer’s earlier search.
Before you pay a deposit: a checklist
| Document or check | What it should show | What it does not prove |
|---|---|---|
| Current CR12 | Company name, number, directors and shareholders | Authority to sell this property |
| Company status search | Active registration, no liquidation or striking off | That charges over the land have been cleared |
| Board resolution | Approval of the sale, price and named signatories | That member approval was obtained where required |
| Constitution | Rules on board and member authority | That the rules were followed on this occasion |
| Official title search | Proprietor, tenure and registered encumbrances | That the seller’s tax position is settled |
| Register of charges | Fixed and floating charges over company assets | That the charge has been discharged |
The table is a working list, not a substitute for the documents. Where the seller proposes a share sale instead of a transfer of the land, the due diligence shifts to the company’s liabilities, contracts and tax history, and the buyer should take advice on the structure before agreeing to it.
Primary sources
- Business Registration Service: Companies Registry, including its published guidance on applying for an official search (CR12).
- eCitizen, for Business Registration Service applications.
- Companies Act, 2015, Kenya Law.
- Kenya Law, for the Land Registration Act, 2012 and the Land Control Act.
- State Department for Lands and Physical Planning: land registries, for the registry serving the county where the land is situated.
- Kenya Revenue Authority, for stamp duty and tax guidance.
This article is general information, not legal advice.
