THE GOVERNMENT OWNED ENTERPRISES BILL, 2025
Status Timeline
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Public Review
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Debate
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Executive
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Final
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Reconstitution of State Corporations into Public Companies
Under Clause 4 and the Fourth Schedule, designated state corporations currently governed by specific sectoral Acts will be reconstituted into public limited liability companies under the Companies Act (Cap. 486). All assets, liabilities, contracts, and staff of the existing entities will automatically transfer to the newly formed successor companies, with full exemption from stamp duty, registration fees, and related taxes.
Strict Standards for Board Composition and Recruitment
Clause 10 establishes a standardized board structure for GOEs, consisting of an independent chairperson, six independent directors, two designated public officers (from the National Treasury and the relevant Ministry), and the Chief Executive Officer as an ex-officio, non-voting member. Independent directors must be selected through a competitive process managed by a newly established Search and Selection Panel (Clause 13).
Mandatory Commercial Performance and Financial Autonomy
Under Clause 9, GOEs must operate as commercial entities that are for-profit, self-financing, and self-sustaining. The Bill requires GOEs to be financed substantially from commercial activities rather than regular state budget appropriations, minimizing fiscal risks and liabilities to the national government.
Structured Funding for Non-Commercial Public Service Obligations
Clauses 29 to 31 establish a transparent mechanism for 'public service obligations'—non-commercial activities assigned to a GOE by the government. These activities must be costed separately, independently audited, and fully funded through specific budgetary allocations rather than cross-subsidized from the enterprise's commercial revenues.
Repeal of Thirteen State Corporation Statutes
Clause 40 and the Third Schedule repeal thirteen standalone Acts of Parliament, including the Kenya Ports Authority Act (Cap. 391), Kenya Railways Corporation Act (Cap. 397), Postal Corporation of Kenya Act (Cap. 411), Kenya Broadcasting Corporation Act (Cap. 221), and the Agricultural Finance Corporation Act (Cap. 323), consolidating their legal frameworks under the Companies Act.
Bill No.
No. 40 of 2025
Gazette No.
Supplement No. 143 of 2025
Sponsor
Kimani Ichung'wah
Background
The Government Owned Enterprises Bill, 2025 is designed to reform the governance, financial sustainability, and institutional structure of state-owned commercial entities in Kenya. By establishing a central ownership framework under the National Treasury, the Bill aims to separate the regulatory roles of sectoral ministries from the commercial operations of government-owned businesses, bringing them under the regulatory framework of the Companies Act (Cap. 486).
Key Amendments
- Transition to Companies Act (Cap. 486): The Bill shifts the legal basis of commercial state corporations from specific statutory Acts of Parliament to the Companies Act. New GOEs may only be established as companies.
- Repeal of Sectoral Acts: The Third Schedule repeals 13 statutory Acts, including:
- The Agriculture Finance Corporation Act (Cap. 323)
- The Kenya Airports Authority Act (Cap. 395)
- The Kenya Literature Bureau Act (Cap. 209)
- The Kenya Ports Authority Act (Cap. 391)
- The Kenya Railways Corporation Act (Cap. 397)
- The Agricultural Development Corporation Act (Cap. 444)
- The National Cereals and Produce Board Act (Cap. 338)
- The Housing Act (Cap. 117)
- The Postal Corporation of Kenya Act (Cap. 411)
- The Kenya Broadcasting Corporation Act (Cap. 221)
- The National Mining Corporation Act (Cap. 306)
- The Kenya Meat Commission Act (Cap. 363)
- The Kenya Post Office Savings Bank Act (Cap. 493B)
- Sectoral Amendments: The Bill amends the Tourism Act (Cap. 381) by repealing sections 40 through 50, the Crops Act (Cap. 318) by repealing sections 9 and 10, and the State Corporations Act (Cap. 446) by adding GOEs established under this new Act to its definitions.
New Obligations
- Self-Sustainment and Profitability: GOEs are legally obligated under Clause 9 to be profitable, self-sustaining, and self-financing, utilizing commercial income streams that support their activities without annual legislative appropriations.
- Business Plans and Performance Contracts: Boards must adopt annual business plans aligned with their strategic plans (Clause 26) and enter into annual performance contracts with the Cabinet Secretary for the National Treasury.
- Financial Transparency and Disclosures: Clause 34 requires GOEs to maintain correct transaction records, prepare auditable financial statements, and disclose all transactions with directors or their close relatives. Clause 33 mandates publishing audited annual reports and anti-corruption activity reports on both the National Treasury website and the individual enterprise's website.
Transitional Provisions
- Vesting of Assets and Liabilities: Under the Fourth Schedule, all properties, rights, assets, liabilities, and obligations of dissolved statutory corporations will automatically transfer to their successor limited companies on the commencement date.
- Continuity of Agreements and Contracts: All deeds, bonds, and instruments subsisting immediately before the commencement date remain binding and enforceable against the successor companies.
- Exemptions from Fees: Transfer of property to the successor companies under the transition process is exempt from registration fees, stamp duty, or other taxes.
- Continuity of Staff and Boards: Existing employees will transition to the successor companies on their current terms of service. Current board chairpersons, independent directors, and CEOs will continue serving for the remainder of their unexpired terms.
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