Recently, I was being considered for appointment as a Company Secretary in a private limited company. During the discussion, one question stood out: “Do we really need a Company Secretary?”

Under Section 243 of the Companies Act, 2015, a private company must appoint a Company Secretary if its paid-up share capital is Kshs 5 million or more. This particular company’s share capital exceeded that threshold — so they were considering a share reduction.

That conversation led us to reflect on how many Boards approach share capital reorganisation — often only when it becomes a compliance issue, rather than as a strategic tool.

💡 What is a Share Capital Reorganisation?
It’s the restructuring of a company’s existing share capital — without altering its net assets — to better reflect financial reality, ownership structure, or strategic goals.
The Companies Act, 2015 allows several types of reorganisation. Let’s unpack the key ones:
🔼 Share Capital Increase
A company can increase its share capital by creating new shares to:
✔️ Raise additional funds for growth,
✔️ Bring in new investors, or
✔️ Reward directors and employees through equity incentives.
This requires filing of the relevant documents with the Registrar of Companies and payment of Stamp Duty at 1%.
👉 An increase can strengthen a company’s capital base .
🔽 Share Capital Reduction
A reduction does the opposite — but with strategic intent. Common reasons include:
✔️ Offsetting accumulated losses,
✔️ Returning excess capital to shareholders, or
✔️ Cleaning up an overstated balance sheet.
This can be done by:
✍ Special resolution, and
✍ Either a court order OR solvency statement procedure.
👉 It’s a delicate exercise requiring transparency, creditor protection, and statutory compliance — but when done right, it signals strong governance and financial prudence.
⚖️ Other Capital Reorganisation Options
💡 Share Split (Subdivision): Divide existing shares into smaller units to improve liquidity or flexibility.
💡 Share Consolidation: Merge several shares into fewer, higher-value shares for simplicity.
💡 Bonus Shares: Issue new shares from retained earnings to existing shareholders — rewarding loyalty without changing ownership ratios.

🧭 The Governance Takeaway
Reorganising share capital isn’t just a technical process — it’s a governance decision. Boards should ensure:
✅ That there is a clear rationale and full documentation of their share capital reorganisation.
✅ Proper shareholder approval.
✅ Accurate filings with the Registrar.
✅ Early engagement of a qualified Company Secretary to guide compliance.

🏁 Final Thought
A company’s share capital tells a story — of growth, stewardship, and financial integrity. Whether you’re increasing or reducing it, do so with foresight, transparency, and good governance at the centre. Because ultimately, capital decisions reflect corporate maturity.