A petition to dissolve a dormant transport company in Siaya County has taken an unexpected turn after the High Court declined to grant a self-initiated liquidation, citing a lack of evidence that the firm’s directors had formally resolved to wind it up.
The case arose after two directors moved to the High Court in Siaya, seeking orders to liquidate the company, which was incorporated on April 30, 2009.
The company, according to court filings, had no capital, no assets, and had never carried out any business since its registration.
“The Petitioners averred, inter alia, that the nominal capital for the company is NIL; that the paid-up capital or credited as paid up capital is NIL; that the company does not operate any business as none took off,” court documents show.
In their insolvency Petition of 2025, the two petitioners asked the court to make an order for the liquidation of the company and to grant any other orders the court deemed just.
They told the court that the company was effectively defunct and that its directors had resolved to have it struck off.
The petition was supported by a verifying affidavit dated January 30, 2025, and a joint witness statement dated May 9, 2025, in which the petitioners reiterated that the company never commenced operations and was free of debts or liabilities.
They stated that the directors had met on November 7, 2024, and passed a resolution to wind up the firm.
The case was not opposed by the Official Receiver (a government officer who acts as the liquidator for a company that has been ordered by a court to be wound up), who was listed as the respondent.
However, the court was still required to determine whether the petition met the statutory threshold for liquidation.
Justice David Kemei, presiding over the matter, noted that while the application appeared straightforward, the Insolvency Act sets out strict conditions under which a company can be liquidated by the court.
“A company may be liquidated by the court if the company has, by resolution, resolved that the company be liquidated by the court, OR that the court is of the opinion that it is just and equitable that the company should be liquidated,” he observed.
In examining the evidence, the judge noted that the petitioners had attached a document purporting to be the minutes of the company’s meeting held at Yala House in Siaya County on November 7, 2024.
The court, however, found that the minutes only recorded one agenda item — the opening and operation of an eCitizen account — and not any resolution authorising the liquidation of the company.
“Indeed, that resolution was made, and one of the directors (among those who filed the case) was authorised to open and operate an eCitizen account in respect to the company. There was no other resolution or business on that date,” Justice Kemei observed.
The court further noted that the directors’ claim that the company had “resolved to have the company liquidated” was unsupported by any documentary proof.
Since the law requires a formal resolution of the board before the court can issue a liquidation order, the judge concluded that the petitioners had failed to meet the legal standard.
Justice Kemei observed that even though the petition was unopposed, the court could not issue a liquidation order in the absence of a valid company resolution.
“As no resolution was made regarding the need to have the company liquidated, I find that the petition herein lacks merit,” he ruled.
“In the result, it is my finding that the petitioners’ petition dated 30th January 2025 is bereft of any merit,” the court concluded. “The same is dismissed with no order as to costs.”
The ruling effectively means that the company remains legally in existence despite having no business or assets.
The decision serves as a reminder that even when a company is inactive or dormant, the legal formalities of corporate governance remain binding.
