Unregistered Foreign Companies Can Sue in Kenyan Courts

The question of whether a foreign company not registered in Kenya can access Kenyan courts has been a subject of significant judicial debate. For litigators, this issue represents a classic procedural bottleneck, capable of derailing a claim before it is heard on its merits. The debate has now been settled, at least at the appellate level, by the Court of Appeal, offering a definitive position that practitioners must assimilate into their strategy.

The Historic Conflict

The controversy has always revolved around the interpretation of Section 974 of the Companies Act, 2015, which prohibits an unregistered foreign company from “carrying on business” in Kenya. Historically, a strict judicial view emerged that equated any commercial activity, such as advancing a loan, with “carrying on business” in Kenya.

This restrictive position was starkly illustrated in the High Court decision in Stichting Rabobank Foundation v Ava Chem Limited & Another [2024] KEHC 9931 (KLR). The court held that Rabobank, a Dutch lender, was effectively carrying on business in Kenya by extending a financial support agreement to a local entity. For failing to register under the Companies Act, the court struck out its debt recovery suit for want of locus standi.

This approach effectively treated the regulatory requirement for registration as a jurisdictional prerequisite for accessing justice. A similar restrictive logic was adopted in Root Capital Incorporated v Tekangu Farmers Co-operative Society Ltd & another [2016] KEHC 3735 (KLR), where a foreign company's suit was barred on comparable grounds.

The Constitutional Pivot and the High Court Departure

A shift began with the High Court's decision in Bruton Gold Trading LLC v Amadi (t/a Amadi Associates Advocates) & 6 others [2025] KEHC 12657 (KLR). The court distinguished between the legal capacity of a company and its right to sue. It held that a company’s legal personality is derived from its incorporation in its home jurisdiction, not from its registration in Kenya.

The court in Bruton Gold reasoned that the right to sue is premised on a “sufficient or legitimate interest” in the matter before the court, and that the constitutional guarantee of access to justice allows any “person” (which includes a juristic person) to bring a claim for the enforcement of rights.

This decision framed Section 974 of the companies Act, 2015 as a regulatory provision concerning the conduct of business, not a statutory bar to litigation. The Bruton Gold ruling departed from the Rabobank High Court decision and created a clear conflict in the jurisprudence of courts of equal status.

The Definitive Position

The Court of Appeal has now decisively resolved this conflict. In Stichting Rabobank Foundation v Mwangi & another (Civil Appeal E090 of 2025) [2026] KECA 1550 (KLR), the appellate court overturned the High Court's restrictive ruling. The court held that the High Court had erred by conflating the prohibition on "carrying on business" with the capacity to sue. It established three critical principles.

First, the court clarified that Section 974 of the Companies Act, 2015 is a regulatory provision aimed at governing the conduct of foreign companies operating within Kenya. The statute does not extinguish a foreign company's juridical personality nor does it preclude it from enforcing legal rights before Kenyan courts. Had Parliament intended to impose such a litigation disability, it would have done so expressly .

Second, the court confirmed that non-registration is not a bar to the institution of proceedings. A foreign company may legitimately approach Kenyan courts to protect property, defend claims, recover debts, or enforce arbitral awards arising from international commercial transactions.

Third, the Court of Appeal firmly held that whether a foreign company is “carrying on business” in Kenya is a contested factual question. The court determined that this question cannot be properly determined as a pure point of law at the preliminary objection stage. The court emphasised that entering into a transaction with a Kenyan party, without more, does not constitute “carrying on business” for a foreign lender. This finding is a potent weapon for a plaintiff’s advocate facing a preliminary objection, as it relegates the core question to a full trial where the party raising the objection must discharge its evidential burden.

Implications for Practice

The Court of Appeal’s decision is now the binding precedent. For a practitioner, this provides a clear answer to a persistent challenge. However, the law remains nuanced.

The plaintiff’s advocate must be prepared to argue that the Rabobank Court of Appeal decision is the definitive statement of the law. The preliminary objection raised under Section 974 must be met with the argument that it is a mixed question of law and fact, and therefore an improper basis for striking out a suit. The *Mukisa Biscuit *test remains good law that a preliminary objection must be a pure point of law. The question of whether a foreign company is carrying on business is a factual inquiry that requires the court to examine the nature, frequency, and extent of the company's activities in Kenya.

For the defendant’s advocate, the strategic play has shifted. While a preliminary objection is no longer a silver bullet, the issue is not dead. The defendant can still plead that the foreign entity was carrying on business without registration, but this becomes an issue for trial.

Furthermore, foreign entities that are engaged in continuous or systematic business operations in Kenya, beyond an isolated transaction, remain under a statutory obligation to register.

The Court of Appeal's decision does not remove the regulatory requirement to register under the Companies Act if the entity’s activities meet the threshold of "carrying on business”. Failure to do so may attract regulatory sanctions, but it will no longer be an automatic bar to the enforcement of contractual rights in court.

This decision has enhanced the standing of the Republic of Kenya as a predictable and fair jurisdiction for dispute resolution, while maintaining the sovereign regulatory framework for foreign companies operating within its borders.

Authored by Benson Odiwuor Otieno; Advocate of the High Court of Kenya

This article is a publication of the Litigation Practice Notes series, featured in The BOLD Newsletter. For questions, clarifications, or suggestions on this or related subjects, contact the author directly at insights@bensonodiwuor.com/ info@bensonodiwuor.com.