The High Court at Milimani has cleared Britam Holdings Plc to reduce its share premium account by Sh5.875 billion to offset accumulated losses.
Justice Benjamin Njoroge confirmed the special resolution passed by Britam's shareholders on May 21, approving the reduction of the company's share premium from Sh13.237 billion to Sh7.362 billion.
The reduction is intended to eliminate the company's accumulated losses, which stood at Sh5.875 billion as at December 31, 2025, and does not involve any return of capital to shareholders or diminution of assets.
“It was submitted that this does not involve any reduction of unpaid share capital, return of capital, or distribution to shareholders,” court documents show.
“The applicant explained that the proposed reduction will not prejudice creditors, as the company will remain able to meet its obligations as they fall due…It contends that the reduction is just, equitable and in the best interests of the company and its stakeholders.”
The application sought two principal orders from the court.
First, whether the insurer had fully satisfied all statutory requirements and regulatory disclosures without prejudicing its creditors.
The second underlying legal question was whether the proposed balance sheet realignment was just, equitable and legally sound in the absence of any opposition from creditors, the Capital Markets Authority, or the Nairobi Securities Exchange.
The application was supported by an affidavit from Hilda Njeru, who provided the factual foundation for the company's petition.
"On May 21, the applicant's shareholders passed a Special Resolution approving the reduction of the company's share premium from Sh13,237,451,000 to Sh7,362,199,000 by cancelling Sh5,875,252,000," Njeru said in her sworn statement.
The shareholding structure, issued share capital and shareholders' equity would remain unchanged.
The company therefore sought the court's confirmation of the Special Resolution, contending that the reduction was just, equitable, and in the best interests of the company and its stakeholders.
On June 2, the court directed Britam to serve all its creditors, the Capital Markets Authority and the Nairobi Securities Exchange.
The applicant duly complied with those directions by serving all identified creditors and the regulators within the prescribed period.
There was no formal respondent or objecting party in the matter, as the motion proceeded without opposition.
Justice Njoroge, in allowing the application, noted the court has dealt with similar applications, citing a previous case where the court approved a similar reduction of a share premium account.
The judge also referenced a case where the court allowed a comparable application.
The ruling turned on the interpretation of Section 386(4) of the Companies Act, which provides that the provisions of the Act relating to the reduction of a company's share capital apply as if the share premium account were part of its paid-up share capital.
The judge also considered Section 408, which requires a company to apply to the court for an order confirming a reduction of share capital and Section 410.
The section grants the court discretion to confirm the reduction on such terms and conditions as it considers appropriate.
"The court confirms that the applicant duly served all identified creditors, the CMA and the NSE in compliance with the court's directions. 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," Justice Njoroge stated.
“Consequently, I allow the application and order that the Special Resolution passed by the shareholders of the applicant on July 15, 2020, for the reduction of the share premium account of the applicant be and is hereby approved/confirmed by this court.”
The court ordered that the applicant shall bear its own costs
