State Corporations Act

Section 3. Establishment of state corporations by the President Section 3(1) The President may, by order, establish a state corporation as a body corporate to perform the functions specified in that order. Section 3(2)(a) have perpetual succession; Section 3(2)(b) in its corporate name be capable of suing and being sued; Section 3(2)(c) subject to this Act, be capable of holding and alienating movable and immovable property.

Section 4. Ministerial responsibility for state corporations Section The President shall assign ministerial responsibility for any state corporation and matters relating thereto to the Vice-President and the several Cabinet Secretary as the President may by directions in writing determine.

Section 5. Powers generally of state corporations Section 5(1) Subject to this Act, every state corporation shall have all the powers necessary or expedient for the performance of its functions. Section 5(2) After the commencement of this Act and notwithstanding subsection (1), the power of a state corporation to borrow money in Kenya or elsewhere shall be exercised only with the consent of the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") and subject to such limitations and conditions as may be imposed by the Treasury with respect to state corporations generally or specifically with respect to a particular state corporation . Section 5(3) A state corporation may engage and employ such number of staff, including the chief executive ("the person appointed and employed as such under(3) or the person for the time being exercising the executive powers of a state corporation;") on such terms and conditions of service as the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial res...

Section 5A. Exemption Section 5A(1) Subject to subsection (2), the President may, by notice in the Gazette , exempt a state corporation , not being a state corporation established under section 3 , from any of the provisions of this Act. Section 5A(2) Notwithstanding the provisions of subsection (1), an exemption granted under this section shall not exempt a state corporation from the provisions of sections 5 , 10A , 11 , 13 , 14 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , or 29 . Section 5A(3)(a) the provisions of the written law under which such state corporation is established; or Section 5A(3)(b) a declaration in that behalf under paragraph (b)(vii) of section 2 (now repealed),

Section 6. Composition of Boards Section 6(1)(a) a Chairperson appointed by the President who shall be non-executive unless the President otherwise directs; Section 6(1)(b) the chief executive ("the person appointed and employed as such under(3) or the person for the time being exercising the executive powers of a state corporation;") ; Section 6(1)(c) the Principal Secretary of the parent Ministry; Section 6(1)(d) the Principal Secretary to the National Treasury; Section 6(1)(da) the Attorney-General or his representative; Section 6(1)(e) not more than eleven other members not being employees of the state corporation , of whom not more than three shall be public officers, appointed by the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") . Section 6(2)(a) serves the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") with written not...

Section 7. Power to issue directions and to removeBoard Section 7(1) The President may give directions of a general or specific nature to a Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") with regard to the better exercise and performance of the functions of the state corporation and the Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") shall give effect to those directions. Section 7(2) Notwithstanding subsection (1), directions under this section may require that the memorandum and articles or any other documents establishing a state corporation , be amended to conform with any requirement of this Act where the same is inconsistent therewith. Section 7(3) Notwithstanding the provisions of any other written law or the articles of association establishing and governing a Board ("the Board constituted in accordance with(1) or the body or p...

Section 8. Meetings and procedure of Boards Section 8(1)(a) the Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") of every state corporation shall meet not less than four times in every financial year and not more than four months shall elapse between the date of one meeting and the date of the next meeting; Section 8(1)(b) a meeting of a Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") shall be held on such date and at such time as the Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") shall decide or, in the absence of such decision or on any occasion on which the Chairperson in consultation with the chief executive ("the person appointed and employed as such under(3)...

Section 9. Committees Section A state corporation may establish committees consisting of members of the Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") to deal with such matters as the Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") may specify and notice of establishment of any committee in accordance with this section whether established before or after the commencement of this Act shall be served on the State Corporations Advisory Committee ("the State Corporations Advisory Committee established by;") .

Section 10. Remuneration and expenses of Chairperson and members Section 10(1) The Chairperson and members of a Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") , other than the chief executive ("the person appointed and employed as such under(3) or the person for the time being exercising the executive powers of a state corporation;") , shall be paid out of the funds of the state corporation such sitting allowances or other remuneration as the Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") may, within the scales of remuneration specified from time to time by the Committee ("the State Corporations Advisory Committee established by;") , approve. Section 10(2) A Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direct...

Section 10A. Financial year Section Notwithstanding anything to the contrary in any written law, the financial year of every state corporation shall be from the 1st of July in a year to the 30th of June in the next year. [Act No. 12 of 2003 , 3rd Sch.]

Section 11. Annual estimates Section 11(1) Every state corporation shall cause to be prepared and shall, not later than the end of February in every year, submit to the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") and to the Treasury for approval, estimates of the state corporation 's revenue and expenditure for the following financial year accompanied by proposals for funding all projects to be undertaken by the state corporation , or the implementation of which will continue during the financial year to which those estimates relate. Section 11(2) No annual estimates and proposals for funding projects shall be implemented until they have been approved by the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") with the concurrence of the Treasury.

Section 12. Expenditure not included in annual estimates Section No state corporation shall, without the prior approval in writing of the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") and the Treasury, incur any expenditure for which provision has not been made in an annual estimate prepared and approved in accordance with section 11 .

Section 13. Dealing with assets Section 13(1)(a) if they are current assets in the normal course of business carried on by that state corporation ; Section 13(1)(b) where the disposal and the utilization of the proceeds have been taken into account in an annual estimate prepared and approved in accordance with section 11 ; Section 13(1)(c) by way of sale or otherwise with the approva! of the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") and the Treasury where such disposal has not been taken into account in the estimates. Section 13(2) Subject to subsection (1), the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") for the time being responsible for finance may, in consultation with the Committee ("the State Corporations Advisory Committee established by;") , make rules for the acquisition and disposal of assets by state corpora...

Section 14. Books of accounts, records and audits Section 14(1) Every state corporation shall keep or cause to be kept proper books recording all the property, undertakings, funds, activities, contracts, transactions and other business of the state corporation . Section 14(2) The Cabinet Secretary for the time being responsible for finance may prescribe the form of any book required to be kept under subsection (1) and unless a form has been prescribed, a form suitable for the purpose shall be used. Section 14(3) The accounts of every state corporation shall be audited and reported on annually in accordance with the Public Audit Act ( Cap. 412B ). Section 14(4) Deleted by ActNo. 12 of 2003, 3rd Sch. [Act No. 2 of 2002 , Sch., Act No. 12 of 2003 , 3rd Sch.]

Section 15. Accountability Section 15(1) A Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") shall be responsible for the proper management of the affairs of a state corporation and shall be accountable for the moneys, the financial business and the management of a state corporation . Section 15(2) The chief executive ("the person appointed and employed as such under(3) or the person for the time being exercising the executive powers of a state corporation;") of a state corporation may be summoned by the Public Investments Committee ("the State Corporations Advisory Committee established by;") to answer on behalf of the Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") any question arising from a report, including a special report, of the Auditor-General concerning the state corporation [Act No. 2 of 2002 , Sch., Act No. 12 of 2003 , 3rd Sc...

Section 16. Renewal of depreciating assets,etc. and disposal of surplus funds Section 16(1) Every state corporation shall make provision for the renewal of depreciating assets by the establishment of sinking funds and for contributions to suoh reserve and stabilization funds as may be required. Section 16(2) Where there are any surplus moneys after making the provision required by subsection (1) the surplus moneys shall be disposed of in such manner as the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") , in consultation with the Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") , may, in writing, direct. Section 16(3) Notwithstanding subsection (2), the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent...

Section 17. Restriction on loans toBoardmembers and staff Section Notwithstanding any other written law establishing a state corporation or its memorandum and articles of association no state corporation shall grant to a member of the Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to carry out functions relating to the overall direction and management of a state corporation;") or staff any loan or advance or arrange any credit facility for him except in accordance with regulations made by the state corporation under this section and approved by the Treasury, but in the absence of those regulations such loan, advance or credit facility may be granted in accordance with terms and conditions approved by the Committee ("the State Corporations Advisory Committee established by;") .

Section 18.Inspector-General (Corporations) Section 18(1)(a) to advise the Government on all matters affecting the effective running of state corporations; Section 18(1)(b) to report periodically to the Cabinet Secretary ("the Cabinet Secretary for the time being assigned ministerial responsibility for a state corporation and matters relating thereto by the President underand "parent Ministry" shall be construed accordingly;") on management practices within any state corporation ; Section 18(1)(c) to report to the Auditor-General and any cases where moneys appropriated by Parliament are not being applied by state corporations for the purposes for which they were appropriated. Section 18(2)(a) to call for and inspect all books, records, returns and documents which in his opinion relate to the accounts of, or to execution of the functions of, any state corporation ; Section 18(2)(b) to enter and inspect the premises, including any plant and installaltion thereon, of any state corporation ; Section 18(2)(c) to attend meetings of any state corporation or of a Board ("the Board constituted in accordance with(1) or the body or person, by whatever name called, carrying out or empowered to...

Section 19. Powers ofInspector-General (Corporations) after investigations Section 19(1)(a) to disallow any item of account which is contrary to the law or to any direction lawfully given to a state corporation ; Section 19(1)(b) to surcharge the amount of any expenditure so disallowed upon the person responsible for incurnng or authorizing the expenditure; Section 19(1)(c) to surcharge any sum which has not been duly brought to account upon the person by whom that sum ought to have been brought into account; Section 19(1)(d) to surcharge the amount of any loss or deficiency upon any person by whose negligence or misconduct the loss or deficiency has been incurred; Section 19(1)(e) to certify the amount due from any person upon whom he has made a surcharge. Section 19(2) The Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations) shall, as soon as practicable after certifying the amount of surcharge; furnish the person surcharged with a certificate of surcharge in the prescribed form. Section 19(3)(a) he voted in favour of it; or Section 19(3)(b) he did not cause his vote against the resolution to be recorded in the minutes. Section 19(4)...

Section 20. Application for written reasons forInspector-General (Corporations) decision Section The Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations) shall, on the application of any person aggrieved by a disallowance or surcharge made under section 19 , within fourteen days of the application furnish the person with reasons in writing for the decision. [Act No. 2 of 2002 , Sch.]

Section 21. Appeals against decision ofInspector-General (Corporations) Section 21(1) Any person who is aggrieved by a disallowance or surcharge, may, within thirty days of the date of the certificate of surcharge, appeal by written memorandum to the Tribunal ("the State Corporations Appeal Tribunal established by") . Section 21(2) The Tribunal ("the State Corporations Appeal Tribunal established by") shall, on appeal, have power to confirm, vary or quash the decision of the Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations), and to remit the case to the Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations) with such directions as the Tribunal ("the State Corporations Appeal Tribunal established by") thinks fit for giving effect to the decision on appeal. [Act No. 2 of 2002 , Sch.]

Section 22. The State Corporations AppealTribunal Section 22(1) There shall be a Tribunal ("the State Corporations Appeal Tribunal established by") , to be known as the State Corporations Appeal Tribunal ("the State Corporations Appeal Tribunal established by") , which shall consider and determine appeals under section 21 . Section 22(2) The Cabinet Secretary for the time being responsible for finance shall provide the Tribunal ("the State Corporations Appeal Tribunal established by") with such facilities, material and funds as are necessary for the proper conduct of its functions. Section 22(3)(a) a Chairperson who shall be a person qualified by law to be appointed a judge, appointed by the President; Section 22(3)(b) the Council of the Law Society of Kenya from amongst advocates of not less than seven years' standing; and Section 22(3)(b)(i) the Council of the Law Society of Kenya from amongst advocates of not less than seven years' standing; and Section 22(3)(b)(ii) the Council of the Institute of Certified Public Accountants of Kenya from amongst accountants of not less than seven years' standing. Section 22(4) The Attorney-General shall appoint a public officer to be secretary...

Section 23. Appeals to the High Court Section 23(1) The Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations) or the person surcharged may, if aggrieved by the decision of the Tribunal ("the State Corporations Appeal Tribunal established by") , within thirty days appeal to the High Court which shall have power to confirm, vary or annul the decision of the Tribunal ("the State Corporations Appeal Tribunal established by") . Section 23(2) The procedure in and relating to appeals in civil matters from subordinate courts to the High Court and the powers of the High Court in such appeals shall govern appeals from the Tribunal ("the State Corporations Appeal Tribunal established by") to the High Court under this Act. Section 23(3) The decision of the High Court under this section shall be final and shall not be subject to further appeal. [Act No. 2 of 2002 , Sch.]

Section 24. Payment and recovery of sums certified to be true Section 24(1) Every sum certified by the Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations) to be due from a person shall be paid by that person to the state corporation within thirty days after it has been so certified or, if an appeal with respect to the sum has been made, within fourteen days after the appeal has been disallowed, abandoned or has failed by reason of the non-prosecution thereof. Section 24(2) The Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations) shall take all necessary steps in any competent court to recover from the persons surcharged any sum which is not paid in accordance with subsection (1). Section 24(3) In any proceedings for the recovery of any sum which is not paid in accordance with subsection (1) the certificate of the Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations) shall be conclusive evidence that the sum is due and payable by the person surcharged. Section 24(4) On the production of the certificate of the Inspector ("the Inspector-General (...

Section 25. Expenses of theInspector-General (Corporations) Section 25(1) Any expenses incurred by the Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations) in the defence of any allowance, disallowance or surcharge shall, so far as not recovered from any other party and except as may otherwise be ordered by the High Court or the Tribunal ("the State Corporations Appeal Tribunal established by") , be reimbursed to him by the state corporation the subject of investigation. Section 25(2) The costs and expenses incurred by the Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations) in any legal proceedings taken under section 24 (2) shall, if not recovered from any other source, be borne by the state corporation the subject of investigation. [Act No. 2 of 2002 , Sch.]

Section 26. Establishment ofCommittee Section 26(1)(a) a Chairperson appointed by the President; Section 26(1)(b) the Principal Secretary to the National Treasury; Section 26(1)(c) the Director of Personnel Management; Section 26(1)(d) the Inspector ("the Inspector-General (Corporations) appointed as such under;") -General (Corporations); Section 26(1)(e) eight other members appointed by the President. Section 26(2) The Committee ("the State Corporations Advisory Committee established by;") may co-opt any person for such purpose and for such period as it may determine. Section 26(3) The President shall appoint a public officer to be secretary to the Committee ("the State Corporations Advisory Committee established by;") . Section 26(4) Subject to directions by the President, the Committee ("the State Corporations Advisory Committee established by;") shall determine its own procedure. Section 26(5) The members and the secretary of the Committee ("the State Corporations Advisory Committee established by;") shall be paid out of public funds such remuneration and in such manner as the President may approve. [Act No. 18 of 1986 , Sch., Act No. 13 of 1988 , Sch., Act No. 2 of 2002 , Sch....

Section 27. Functions of theCommittee Section with the assistance of experts where necessary, review and investigate the affairs of state corporations and make such recommendations to the President as it may deem necessary;

Section 28. Dissolution of state corporations Section Where the Committee ("the State Corporations Advisory Committee established by;") advises that a state corporation shall be dissolved then nothing in this Act shall be construed as derogating from the procedure by which the state corporation would be dissolved under the law by or under which it was established.

Section 29. Offences and penalty Section A state corporation which, or an officer thereof who, fails to render or submit or make available for inspection any record, book, account or information required by or pursuant to this Act, or which or who restricts the Auditor-General (Corporations) or the Inspector ("the Inspector-General (Corporations) appointed as such under;") in the performance of his duties shall be guilty of an offence cognizable to the police and punishable by a fine not exceeding ten thousand shillings or imprisonment for a term not exceeding three years or both and section 23 of the Penal Code ( Cap. 63 ) shall, where the offence is committed by state corporation, apply mutatis mutandis . [Act No. 13 of 1988 , Sch.]

Section 30. Regulations Section The President may make regulations generally for the better carrying into effect of the provisions of this Act and the powers conferred by this section may be assigned in accordance with section 18 of the Constitution.