Kenya Court of Appeal Clarifies Enforcement Rights of Foreign Lenders
The Kenya Court of Appeal has ruled that a foreign entity should not be denied access to Kenyan courts solely because it is not registered as a foreign company under the Companies Act, 2015 (Companies Act). In this alert, we examine what the decision means for the Kenyan loan market and why offshore investors should pay close attention to ongoing regulatory developments concerning the licensing and regulation of non-deposit taking credit business in Kenya.
High Court Ruling
Stichting Rabobank Foundation (Rabobank), a foreign incorporated lender, advanced a loan of USD 180,116 to a Kenyan entity, AVA Chem Limited, in October 2016 under a financial support agreement. The loan was guaranteed by a director of the borrower. When the borrower defaulted, Rabobank sued the borrower and its director in the High Court of Kenya to recover USD 230,868.51.
The borrower filed a preliminary objection on the basis that Rabobank was not registered in Kenya as a foreign company under section 974 of the Companies Act, 2015. It argued that by advancing the loan to a Kenyan borrower, Rabobank was carrying on business in Kenya without registration and therefore lacked capacity or standing to maintain the debt recovery proceedings before the Kenyan courts.
On 25 July 2024, the High Court upheld the borrower’s preliminary objection, holding that the cross-border financing by the foreign lender constituted carrying on business in Kenya and struck out Rabobank’s debt recovery suit for want of locus standi. Rabobank appealed to the Court of Appeal.
Court of Appeal Judgment
On 31 July 2026, the Court of Appeal, in Stichting Rabobank Foundation v Mwangi & another (Civil Appeal E090 of 2025) [2026] KECA 1550 (KLR), reversed the High Court ruling. The Court of Appeal held that the High Court had adopted an overly restrictive interpretation of section 974 of the Companies Act. It held that section 974 regulates the conduct of foreign companies that are carrying on business in Kenya but does not extinguish their juridical personality or preclude them from enforcing legal rights before Kenyan courts. The Court of Appeal emphasised that a foreign company does not lose its capacity to contract, sue or be sued merely because it has not registered under the Companies Act.
The Court of Appeal also found that whether Rabobank was in fact carrying on business in Kenya was a contested factual question that could not properly be determined as a pure point of law at the preliminary objection stage. That question remains for the High Court to determine when the substantive suit resumes.
Why Offshore Investors Should Remain Cautious
While the Court of Appeal’s judgment provides welcome clarity from a corporate law and access to court perspective, the regulatory landscape governing the provision of credit to Kenyan residents continues to evolve. In 2024, Kenya enacted the Business Laws (Amendment) Act, 2024, which amended the Central Bank of Kenya Act to expand the mandate of the Central Bank of Kenya (CBK) over non-deposit-taking credit business. The emerging framework defines non-deposit-taking credit business broadly by reference to the granting of loans or credit facilities, whether digitally or otherwise, to members of the public or a section of it, with or without interest, and whether secured or unsecured. That definition may be wide enough to capture certain offshore lending arrangements, depending on their structure, frequency and factual context.
In August 2025, CBK circulated the draft Central Bank of Kenya (Non-Deposit-Taking Credit Providers) Regulations, 2025 for public comment. CBK has since progressed the regulatory process, including through a regulatory impact statement in 2026. The proposed framework is designed to operationalise CBK’s powers to regulate non-deposit-taking credit providers that are not otherwise regulated under another Kenyan legal framework.
Key Takeaways for Offshore Investors
The Court of Appeal judgment is an important development for offshore financiers seeking to enforce contractual rights against Kenyan counterparties. It confirms that non-registration under the Companies Act does not, by itself, deprive a foreign company of juridical personality, capacity to enforce contractual rights, or access to Kenyan courts. However, the decision should not be read as resolving all regulatory questions affecting offshore credit provision to Kenyan residents. The High Court must still determine, on the facts, whether Rabobank was carrying on business in Kenya, and offshore investors should closely monitor how CBK finalises and applies the proposed non-deposit-taking credit provider regime. Until that framework is settled, foreign lenders should assess Kenyan Companies Act registration and CBK licensing or registration risk on a transaction-specific basis.
Article by Peter Mwaura and Vivian Kemboi
This article is prepared for general information. It is not, and does not aim to be, comprehensive. Given the general nature of its content, it should not be considered legal advice. For specific advice, please contact [email protected] in our Kenya office.
