Can a director be personally liable for company debts?
Companies Act, 2015; Insolvency Act, 2015 · sources read 5 Oct 2026
Usually no: once registered, a company is a separate legal body that owes its own debts. But a director can be ordered to pay into the company's assets for fraudulent or wrongful trading when it is liquidated, and is personally liable for company debts if they manage a company while disqualified.
- Deadline
- An application to disqualify an unfit director normally can't be made more than two years after the company became insolvent, unless the court allows it.
- Where
- High Court (through the liquidator, Attorney General or Official Receiver); Business Registration Service for company records
Steps
- If a company in liquidation was run to cheat creditors, the liquidator can ask the court to order those who knowingly took part to contribute to the company's assets.
- If a director knew or ought to have known the company could not avoid insolvent liquidation, the liquidator can ask the court to order them to contribute.
- The Attorney General (or the Official Receiver, if directed) can apply to court to disqualify an unfit director of an insolvent company.
Watch out
- Anyone who helps run a company while disqualified, or while an undischarged bankrupt, is personally liable for the company's debts from that time.
- A court won't order a wrongful-trading contribution if the director took the steps they reasonably should have to limit creditors' losses.
- Fraudulent trading is also a crime: up to 10 years in prison or a fine up to KSh 10 million, or both.
Who this covers
- Every registered company is its own legal body, separate from its directors and shareholders
- Directors and other officers of a company
Official sources (2)
- Companies Act, 2015 (No. 17 of 2015) new.kenyalaw.org · read 4 Oct 2026
- Insolvency Act (No. 18 of 2015), Revised Edition 2021 new.kenyalaw.org · read 5 Oct 2026