Britam gets court's nod to shed off Sh5 billion from its share capital to clear losses

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A commercial court sitting in Nairobi has allowed Britam Holdings plc shareholders to reduce their share capital reserves from Sh13 billion to offset its Sh5.8 billion accumulated loss.

While agreeing with the private insurer, Justice Benjamin Njoroge said that neither the Capital Markets Authority (CMA)  nor the Nairobi Securities Exchange (NSE) opposed the move.

He observed that both CMA and NSE did not respond to the case despite being informed about it.

“Despite such service, no objections have been raised. In the absence of any evidence of prejudice, and having fully complied with all statutory and regulatory requirements, there is no legal or factual basis for declining to confirm the proposed reduction,” ruled Justice Njoroge.

Britam held its Special General Meeting on May 21, 2026.

Its legal director, Hilda Njeru, explained that the shareholders agreed to reduce the company’s share premium to Sh7.3 billion by cancelling the Sh 5.8 billion loss as at December 13 last year.

She asserted that the proposed move would not disadvantage creditors. Instead, the special resolution will keep Britam afloat.

 “The reduction is just, equitable and in the best interests of the company and its stakeholders,” she said.

 The firm banked on Sections 386 (4), 408, and 410 of the Companies Act. It also relied on disclosure regulations to argue that the balance sheet restructuring was meant to deal with the losses that have accumulated over time.

The Judge observed that despite this, there would be no reduction of liability for unpaid capital, while the shareholding structure, plus the share capital and shareholders’ equity, would remain untouched.

Justice Njoroge had directed the firm to serve all the creditors, CMA and NSE on June 2 this year.

However, none of them came on board or replied.

“The court confirms that the applicant duly served all identified creditors, the CMA and the NSE in compliance with the court's directions,” he observed.

The law allows companies to shed off part of the share capital to stabilise troubled firms. However, it cannot do the same without the court’s nod, as Section 408 requires it to apply for a court order to confirm the resolution for reduction.

It is, however, a clear-cut process, as the law also allows creditors to oppose such a move. "As soon as a company has passed a resolution for reducing its share capital, it shall apply to the court for an order confirming the reduction. The court may, in any special circumstances of the case it considers appropriate, direct that section 409 is not to apply in relation to a specified class or specified classes of creditors," the law reads in part.

In the meantime, the court may also dismiss the plea for a reduction if it is not clear whether each creditor of the company who is entitled to object to the reduction of capital had consented or if the debt had been discharged or terminated or secured.

“If the court confirms the reduction, it may order the company to publish, as per the court direction, the reasons for reduction of capital, or such other information as the court considers necessary to provide the public with full and detailed information about the reduction,” it reads.