Imagine lending more than USD 180,000 to a Kenyan company. The money is advanced, the agreement is signed, the years pass, and the borrower eventually defaults. You then turn to the Kenyan courts to recover what is owed, only to be met with an unexpected argument: you were never registered to do business in Kenya, so can you really sue here?
The money is not disputed. The debt is not disputed. What is suddenly in question is the lender’s right to walk through the courthouse doors. That is essentially the position Stichting Rabobank Foundation found itself in. What began as a fairly ordinary debt recovery dispute eventually became a much broader question about the position of foreign companies dealing with Kenyan businesses. Does an unregistered foreign company lose the ability to enforce its contractual rights in Kenya simply because it has not registered as a foreign company? Or are registration requirements and the right to enforce a contract two entirely different things?
The Court of Appeal has now provided an important answer. In Stichting Rabobank Foundation v Mwangi & another (Civil Appeal No. E090 of 2025) [2026] KECA 1550 (KLR), delivered on 31 July 2026, the Court overturned a High Court decision that had struck out Rabobank’s claim against a Kenyan borrower. In doing so, the Court drew an important distinction between a foreign company’s obligation to register in Kenya and its ability to approach the Kenyan courts to enforce a contractual right.
The dispute traces back to October 2016, when Stichting Rabobank Foundation, a Dutch entity, advanced USD 180,116 to AVA Chem Limited, a Kenyan company. The facility was secured by a personal guarantee from one of the borrower’s directors and was later restructured. The restructuring, however, did not resolve the problem. The borrower eventually defaulted, and the amount claimed by Rabobank had risen to USD 230,868.51. Rabobank therefore turned to the High Court in Nairobi to recover the money. At that point, the dispute took an unexpected turn.
AVA Chem did not simply defend the claim on the basis of whether the amount was owing. Instead, it questioned whether Rabobank was entitled to sue in Kenya at all. The argument rested on section 974 of the Companies Act, 2015, which requires a foreign company carrying on business in Kenya to register in accordance with the Act. AVA Chem’s position was straightforward: Rabobank had advanced money to a Kenyan company and was therefore carrying on business in Kenya. Since it had not registered, it should not be allowed to continue the proceedings. The High Court agreed. On 25 July 2024, it upheld the preliminary objection and struck out Rabobank’s claim.
For a foreign lender, that conclusion carried consequences far beyond the particular dispute. If advancing a loan to a Kenyan company automatically amounted to carrying on business in Kenya, and failure to register could prevent the lender from enforcing the loan, then a foreign creditor could potentially find itself with a valid contractual claim but no practical route to recover the debt through Kenyan courts. That was the question the Court of Appeal had to confront.
At the heart of its reasoning was a distinction that can easily get lost in the technical language surrounding foreign companies: being required to register in Kenya is not the same thing as being stripped of the ability to enforce a contract in Kenya. Rabobank was incorporated in the Netherlands. Its failure to register in Kenya did not somehow erase its separate legal personality. Nor did it mean that every contractual right it had acquired ceased to exist once a dispute reached Kenyan soil.
The Court essentially refused to read section 974 as imposing a penalty that Parliament had not expressly created. The provision regulates foreign companies carrying on business in Kenya. It does not say that an unregistered foreign company ceases to exist, loses its capacity to sue, or is automatically barred from enforcing contractual rights before Kenyan courts and that distinction matters. A regulatory obligation may require a foreign company to register but that does not necessarily mean that every consequence imaginable can be attached to non-registration. The Court was therefore unwilling to turn a registration requirement into a complete bar to access to justice without a clear statutory basis for doing so.
In other words, non-registration may create a regulatory problem, but it does not automatically make a contractual claim disappear. There was, however, another question that could not simply be brushed aside. Section 974 applies to a foreign company that is “carrying on business” in Kenya. So, before determining what consequences might follow from non-registration, the Court had to consider whether Rabobank’s activities actually brought it within that description. The Court rejected the idea that lending money to a Kenyan company automatically means that the lender is carrying on business in Kenya.
Instead, the question must be determined from the circumstances of each case, including the nature, frequency and continuity of the company’s activities, where contracts are negotiated and performed, whether it has offices, employees or agents in Kenya, and the extent of its commercial presence. The Court also distinguished a loan from a debenture, noting that a financial transaction does not automatically fall within the activities contemplated under section 974(2) of the Companies Act.
For foreign lenders, the decision brings welcome certainty. A Kenyan borrower cannot defeat a foreign lender’s claim simply by pointing out that the lender is not registered here. A creditor with a valid debt is not turned away at the door. The judgment does not also make registration irrelevant. A foreign company that maintains a sustained commercial presence in Kenya may still be required to register, and other regulatory requirements may apply as well. This matters even more as Kenya’s framework for non-deposit-taking credit providers continues to develop. A foreign lender now has two questions to ask itself: whether its activities amount to carrying on business in Kenya, and whether its lending falls within some other regulatory regime altogether.
Strip away the details, and the Rabobank decision stands for a simple distinction. A foreign company’s regulatory obligations are one matter; its ability to enforce its contractual rights before Kenyan courts is another. Mix the two up, and a lender with a perfectly good claim can lose it without anyone ever examining whether the money was owed.