ADVOKS GLOBAL · KENYA
Companies Act
494. Consequences of unlawful distribution
Edition: 2024-12-27 · In force
494. Consequences of unlawful distribution
(1)This section applies to a distribution, or part of a distribution, that is made by a company to one of its members in contravention of this Part.(2)If, at the time of the distribution, the member knew or had reasonable grounds for believing that a distribution to which this section applies was made in contravention of this Part, the member is liable—(a)to repay to the company the amount of the distribution or the relevant part of it; or(b)in the case of a distribution made otherwise than in cash, to pay the company an amount equal to the value of the distribution or part at that time.(3)Subsection (2) does not affect any obligation imposed apart from this section on a member of a company to repay a distribution or part of a distribution that was unlawfully made to the member.(4)This section does not apply in relation to—(a)financial assistance given by a company in contravention of—(i)section 443 (assistance by public company for acquisition of shares in its private holding company); or(ii)section 442 (assistance for acquisition of shares in public company); or(b)a payment made by a company in respect of the redemption or purchase by the company of shares in itself.