ADVOKS GLOBAL · KENYA
Microfinance Act
38. Liquidation of an institution by the Central Bank
Edition: 2024-12-27 · In force
38. Liquidation of an institution by the Central Bank
(1)Where an institution becomes insolvent, the Central Bank may appoint the Deposit Protection Fund Board to be a liquidator of the institution and the appointment shall have the same effect as the appointment of a liquidator by the High Court under the provisions of the Companies Act (Cap. 486).(2)Any reference in the Companies Act (Cap. 486) to the “relevant date” and “commencement of the winding-up” shall be deemed to be a reference to the date on which the Deposit Protection Fund Board is appointed as liquidator.(3)An institution shall be deemed to be insolvent where—(a)it is unable to pay its debts within the meaning of the Companies Act (Cap. 486);(b)a winding-up order is made against the institution or a resolution of creditors to voluntarily wind up the business is passed under the Companies Act (Cap. 486);(c)the institution is unable to pay sums due and payable to its depositors; or(d)the Central Bank determines that the value of the assets of an institution is less than the amount of its liabilities.(4)In exercising its functions under this section, the Deposit Protection Fund Board shall be subject to the supervision of the High Court which may, upon the application of an interested party, or where the High Court deems it fit, appoint a committee of inspection which shall have the same powers as a committee of inspection appointed under the Companies Act (Cap. 486).(5)No person shall be appointed a receiver or manager of an institution without the prior approval of the High Court.(6)The High Court shall not grant an approval under subsection (5) unless the Central Bank certifies that it does not intend to exercise its powers under this section.(7)Where a receiver or a manager of an institution has been appointed and a manager or liquidator is appointed under the provisions of this Part, the powers of the receiver or manager may only be exercised to the extent authorized by the Central Bank or the High Court.