A Guide to The Corporation Under the Sectional Properties Act in Kenya

The Sectional Properties Act, 2020 (“the Act”) replaced Kenya’s old sectional titles regime and, in doing so, introduced a single defining institution: the Corporation. Despite its name, a corporation is not a company incorporated under the Companies Act, 2015. It has no conventional shareholders or share capital. It arises automatically by operation of the Sectional Properties Act upon registration of a sectional plan, and membership follows ownership of the sectional units.

Every unit owner in a registered sectional development, whether an apartment, maisonette, townhouse or office unit, is automatically bound up in this body, yet many owners, boards and even developers remain unclear on what it actually is, how it is governed, and how it differs from the management companies that preceded it. This guide answers the questions we are asked most often by our clients at Njaga & Co. Advocates LLP on this subject.

What is “the Corporation” under the Sectional Properties Act?

The Corporation is a statutory body corporate established automatically, under Section 17 of the Sectional Properties Act, 2020, the moment a sectional plan is registered at the Land Registry. It is formally named “The Owners, Sectional Plan No. [the number given to the plan on registration]” and comprises every person who owns a unit within that sectional plan. It is sometimes referred to informally as the “management corporation” or “owners’ corporation”, though neither term appears in the Act itself; the statute simply calls it “the Corporation”.

In practical terms, a corporation is the collective legal vehicle through which all owners of units in a sectional development manage the shared affairs of that development.

The Corporation should not be confused with the land/the building itself or with the common property. The Corporation does not own the common property. Under section 6(2) of the Act, common property is held by all unit owners as tenants in common in shares proportional to the unit factors of their respective units. Read our Article on Co-owning Property in Kenya

Unlike a company registered under the Companies Act, the Corporation does not carry out commercial business to generate profits; its mandate is strictly to manage, administer, and maintain the common property (such as security structures, lifts, gardens, driveways, and outer structural walls) for the mutual benefit of all unit owners.

What is the legal foundation of the Corporation?

The Corporation is founded and governed by Part III (sections 17 to 42) of the Sectional Properties Act, 2020, together with the Sectional Properties Regulations, 2021, which supply in the Second Schedule the default by-laws that apply from first registration. Section 17(1) is the operative provision: on registration of a sectional plan, a Corporation is constituted by that fact alone, without any further act of incorporation. This is a markedly different legal foundation from the pre-2020 model, where the equivalent body was a private company incorporated under the Companies Act.

How is a corporation formed in Kenya?

The Corporation is not formed through an ordinary company incorporation process. Its formation is tied to the registration of the sectional plan.

Under section 4(3), the sectional plan is accompanied by an application for registration of the Corporation and a list of the owners of units. Under the Regulations, the application for registration of the Corporation is made in Form SP 7.

The broad process is therefore:

1. a licensed surveyor prepares the sectional plan from the approved building plan and in accordance with the Act and Regulations;
2. the sectional plan identifies the units and includes the prescribed schedule of unit factors;
3. the prescribed application for registration of the Corporation and the list of owners accompany the sectional-plan application;
4. the Registrar closes the register of the mother parcel, opens a separate register and issues a certificate of title (or certificate of lease) for each unit, and simultaneously issues a certificate of registration of the Corporation in Form SP 10.
5. On first registration, the Corporation is automatically governed by the standard by-laws set out in the Sectional Properties Regulations, 2021, until the members adopt or amend their own by-laws by special resolution (section 29).

Under section 17(1), the Corporation is constituted upon registration of the sectional plan. Its legal existence is therefore statutory rather than contractual.

Where a sectional plan and sectional titles had previously been registered without registration of a Corporation, regulation 24 provides a corrective procedure under which the owners may apply in Form SP 7 for registration of the Corporation.

Is incorporation of the Corporation optional?

No. Once the statutory requirements are satisfied and the sectional plan is registered, section 17 provides that the Corporation shall be constituted.

The Corporation is therefore an integral incident of sectional ownership, not an optional residents’ association which owners may elect to join or refuse to join.

What are the key characteristics of the Corporation?

1. It is a statutory body corporate: Its existence comes from the Sectional Properties Act rather than the Companies Act or a private contract
2. Has Perpetual Succession: The Corporation exists continuously as long as the sectional plan remains registered. Ownership changes of individual units do not affect its existence.
3. Separate Legal Capacity: It can sue and be sued in its corporate name regarding any matter touching on the common property, contracts entered into by the Corporation, or enforcement of by-laws.
4. Non-Profit Entity: It operates on a cost-recovery/budgeted assessment basis through management levies collected from unit owners.
5. Has a Common Seal: Used for the execution of the documents on behalf of the corporation.
6. It has no conventional share capital or shareholders: Owners are members by reason of ownership of units, not because shares in the Corporation have been issued or transferred to them. To learn more about shares, read our article “Share Transfer Process in Kenya”
7. It cannot carry on trading activities: Section 21 gives the Corporation the powers reasonably necessary to perform its statutory and by-law duties but expressly prohibits it from carrying on trading activities.
8. Its mandate centres on administration of the sectional development: Among its duties under section 20 are maintaining common property, insuring the development as required, paying insurance premiums, complying with lawful notices, administering common property, enforcing by-laws and doing what is reasonably necessary to ensure the property is properly managed.
9. Its powers are exercised through a Board, subject to the owners in general meeting: Section 26 provides for a Board of Management. Subject to restrictions or directions imposed at a general meeting, the powers and duties of the Corporation are exercised and performed by the Board.
10. Its economic liabilities are ultimately connected to unit ownership: The separate personality of the Corporation should not be mistaken for the limited-liability structure of an ordinary company. Notably, section 18(4) provides that where judgment is entered against the Corporation, the proprietors of units at that time are deemed to have guaranteed payment by the Corporation of the amount awarded.

Who are the members of the Corporation?

Section 17(3) defines membership exhaustively: it consists of every person who is the registered owner of a unit in the parcel to which the sectional plan relates, together with any person entitled to the parcel once the sectional arrangement is terminated. Membership is not applied for, subscribed to or purchased, it attaches automatically to ownership of a unit and ceases automatically on transfer of that unit. There is no separate share register, no share certificates and no admission process of the kind used by a company.

Where a company, trust vehicle or other legally competent entity is the registered owner of a unit, membership follows that registered ownership; the human representatives exercising the member’s rights do so for the registered owner.

Is there “shareholding” in a Corporation, and how is voting determined?

There are no shares. Instead, each unit carries a “unit factor” a whole number endorsed on the schedule attached to the sectional plan, reflecting that unit’s proportionate value or size relative to the whole development. Under section 24, the voting rights of an owner are determined directly by the unit factor of their unit; an owner with a larger unit factor carries proportionately greater voting weight. Contributions to the administrative fund under section 20(2) are also levied in proportion to unit factors, so financial obligation and voting power are calibrated to the same measure.

What is a unit factor and why is it so important?

The Act defines a unit factor as the unit factor determined for the relevant unit and shown in the schedule of unit factors endorsed on the registered sectional plan.

Under regulation 7(2), each unit must be assigned a unit factor so that the total unit factors for all units in the parcel equal 10,000.

Form SP 5 to the Regulations recognizes that unit factors may be determined by reference to factors such as:

• floor area;
• selling price or value;
• location or position of the unit; or
• a combination of relevant factors.

The Regulations recommend floor area as the generally convenient basis where no other consideration calls for a different equitable approach.

The unit factor is important because it connects the unit to, among other things:

1. its proportionate undivided share of the common property under section 6(2);
2. the owner’s voting rights under section 24;
3. the weighting of votes when a poll is taken; and
4. the economic allocation inherent in the sectional scheme, including proportionate obligations under the Act.

The unit factor should therefore be examined during legal due diligence. A purchaser should not assume that two apartments in the same development necessarily carry identical governance or common-property interests merely because each represents “one unit”.

How are ordinary decisions, special resolutions and unanimous resolutions distinguished?

An ordinary resolution is passed by a simple majority at a properly convened meeting. A special resolution requires at least 75% of those entitled to vote, representing at least 75% of the total unit factors, used, for example, to amend the by-laws of the corporation. A unanimous resolution requires every person entitled to vote, representing the totality of unit factors, and is reserved for the most significant decisions: disposing of common property, granting an owner exclusive-use rights over common areas, accepting or granting easements and restrictive covenants, and terminating the sectional arrangement altogether.

How is the Corporation governed?

Governance operates at two levels: the members in general meetings and the Board of Management.

1. Members in general meeting: Owners exercise the powers reserved to them by the Act and by-laws. The Board is subject to restrictions imposed or directions given at a general meeting.
2. Board of Management: Section 26 requires every Corporation to have a Board constituted in accordance with the by-laws. Under the prescribed by-laws, the Board generally consists of not fewer than three and not more than nine persons; where there are not more than two owners, all owners may constitute the Board. Changes in Board membership must be notified to the land registry within 15 days under section 26(2).
3. First owners’ meeting: Under section 27, the developer must convene the meeting at which a Board is elected within:
4. 90 days from the date 50% of the units are sold; or
5. 180 days from the date the first unit is sold,

whichever occurs first.

6. Annual general meetings: Section 28 requires an AGM every year and provides that it must be convened within 15 months of the immediately preceding AGM. The prescribed by-laws require at least 21 days’ notice for an AGM or other general meeting.

Statutory by-laws govern such matters as proxies, voting, Board procedure, financial administration and quorum. They apply on first registration unless lawfully amended.

What are the principal duties of the Corporation?

Section 20 places substantive obligations on the Corporation. Among them, the Corporation must or may, as the section specifies:

• perform duties imposed by its by-laws;
• insure buildings and improvements against fire unless all proprietors unanimously resolve otherwise;
• obtain other legally required or expedient insurance and pay premiums;
• keep the common property in good repair;
• comply with lawful repair or works notices from county governments and public bodies;
• control, manage and administer common property;
• enforce the by-laws, leases, licences and relevant insurance contracts;
• engage a property manager or other necessary professionals;
• establish and maintain an administrative-expense fund; and
• levy the required contributions upon proprietors.
• The Corporation may also establish an Internal Dispute Resolution Committee and may use technology in executing its duties.

Do the provisions of the Companies Act, 2015 apply to the Corporation?

No. Section 17(6) of the Sectional Properties Act expressly disapplies the Companies Act to the Corporation. This is a deliberate legislative choice: the Corporation is a sui generis statutory body, not a company, and its members are not shareholders. In practice this means no memorandum and articles of association, no statutory annual returns to the Registrar of Companies, no company secretarial filings, and no exposure to winding-up under the ordinary insolvency regime applicable to companies. The Corporation is instead regulated entirely by the Sectional Properties Act and its Regulations, and dissolves automatically on termination of the sectional property (section 50).

Corporation vs. Management Company

Before the 2020 Act, most Kenyan multi-unit developments were structured around long-term sub-leases (commonly 99 or 999 years) coupled with a private company — the “management company”, which held the reversionary interest in the mother title and owned the common areas. Buyers received a lease over their unit and were allotted a share in the management company. The table below sets out how that model compares with the statutory Corporation.

How does a development transition from a management company to a Corporation?

This question mainly arises in older developments structured through long-term leases or sub-leases and a management company.

Section 13(2) required pre-Act long-term sub-leases intended to confer ownership of apartments, flats, maisonettes, town houses or offices to be reviewed so as to conform to the modern sectional framework. The original statutory two-year compliance period has elapsed, but the conversion framework remains critically relevant to legacy schemes, and section 13(6) empowers the Registrar to register a restriction against the parcel where a proprietor or developer fails to comply.

The transition broadly involves:

1. Audit & Sectional Survey: Engage a licensed surveyor to prepare draft Sectional Plans from existing building plans and verified ground boundaries.
2. Resolution & Application: The management company, developer, or unit owners pass a resolution to apply for conversion to the Registrar of Lands.
3. Registration & Cancellation: The Registrar registers the Sectional Plan, closes the old sub-lease registers, cancels the mother title’s reversionary leasehold structure, and issues independent Sectional Titles.
4. Automatic Creation of Corporation: The statutory Corporation comes into existence instantly upon plan registration.
5. Asset Records & Liability Transfer: The old management company must transfer all administrative records, service charge balances, reserve funds, utility accounts, and maintenance contracts to the newly formed Corporation. The management company can then be formally wound up or struck off.

Who may initiate the conversion from long-term leases to sectional units?

Section 13(4) permits the developer, the management company, or an owner of a unit to initiate conversion; under the Sectional Properties Regulations, where shares in the management company have already been transferred to the individual owners, the management company itself may apply.

Section 13(5) also empowers the Registrar to dispense with production of the original title in the circumstances prescribed where the developer is unwilling or unavailable to surrender it for conversion.

What records and information can owners or purchasers seek from the Corporation?

The Act creates meaningful information rights. Under section 36, an owner, purchaser or chargee may make a written request to the Corporation, which should supply that information within 21  days, for prescribed information, including matters such as:

• contributions due in respect of a unit;
• litigation, judgments and certain demands affecting the Corporation;
• management and recreational agreements;
• the Corporation’s budget and financial statements;
• the by-laws; and
• minutes of general meetings and Board meetings.

Section 39 separately deals with access to insurance policies.

These provisions are particularly valuable in purchaser due diligence because title ownership alone does not reveal the Corporation’s financial health, arrears, pending disputes or major management commitments.

What should a purchaser investigate about the Corporation before buying a sectional property in Kenya?

A prudent purchaser should go beyond the unit title and investigate the governance and financial position of the Corporation. Depending on the transaction, comprehensive due diligence should include:

• the registered sectional plan and unit-factor schedule;
• the Corporation’s certificate of registration;
• registered by-laws and amendments;
• current Board details and material resolutions;
• service-charge and contribution statements for the unit;
• budgets, financial statements and reserve/capital expenditure position;
• outstanding litigation or judgments against the Corporation;
• insurance policies;
• existing property-management, recreational and service agreements;
• exclusive-use arrangements affecting parking, gardens, terraces, storage or other common areas; and
• evidence that any legacy management-company assets and liabilities were properly transitioned.

This review helps establish not only what the buyer owns, but also what collective financial and governance obligations the buyer is entering. You can learn more about Apartment Ownership in Kenya Under Sectional Titles.

What are common legal risks involving Corporations in sectional developments?

Recurring risks include:

• failure to register the Corporation despite registration of the sectional plan;
• continued use of a legacy management company as though it were the statutory Corporation;
• failure to transfer legacy assets, liabilities or records during conversion;
• missing or inequitable unit factors;
• invalid amendments to by-laws which were never properly passed or registered;
• developers retaining practical control beyond the statutory handover structure;
• unpaid contributions and cautions against individual unit titles;
• inadequate insurance or reserve funding;
• unapproved exclusive appropriation of common property such as parking bays, rooftops or gardens; and
• confusion between the Corporation’s governance role and the functions delegated to a property manager.

What happens if the Corporation or an individual fails to comply with the Act?

The Act contains both civil consequences and criminal penalties.

Under section 57(3), where a Corporation fails to comply with the Act, a member of the Board who is knowingly a party to the failure commits an offence and is liable on conviction to a fine not exceeding KES 250,000.

Board membership should therefore be treated as a genuine statutory governance responsibility, not merely an honorary residents’ committee position.

For individuals, non-compliance with the Act relating to the sale-disclosure obligations in section 43, or the conversion obligations in section 13, attract a fine of up to KES 20 million or imprisonment for one year.

Frequently Asked Questions

Q: Do I need to sign anything to become a member of the Corporation?
A: No. Membership is automatic on becoming the registered owner of a unit, and it ends automatically when you transfer that unit.

Q: Does an owner receive shares in the Corporation?
A: No conventional corporate shares are issued. The owner holds the sectional unit, a proportionate undivided interest in common property and statutory membership rights in the Corporation.

Q: Does the Corporation own the common property?
A: No. The unit owners hold the common property as tenants in common in shares proportional to their respective unit factors. The Corporation controls, manages and administers it under the Act.

Q: Does each apartment have exactly one equal vote?
A: Not necessarily. The Act ties voting rights to unit factors. Under the prescribed by-laws, a show of hands gives each person entitled to vote one vote, but on a poll the voting weight corresponds to the unit factors represented.

Q: Can a developer control the Corporation indefinitely?
A: The Act contains a statutory handover mechanism. The developer must convene the meeting for election of a Board within the section 27 timelines: 90 days after 50% of the units are sold or 180 days after the first unit is sold, whichever occurs first.

Our Services at Njaga & Co. Advocates LLP

Our conveyancing and property team advises developers, investors, Corporations, boards of management and individual owners across the full life cycle of sectional property in Kenya. Our services include:

• sectional-property legal due diligence, including review of the parent title, sectional title, sectional plan, unit factors, encumbrances, approvals, by-laws and Corporation records;
• purchase and sale of apartments and other sectional units, including drafting, reviewing and negotiating agreements for sale and completion documentation;
• registration of sectional plans and sectional units and coordination with licensed surveyors and the relevant land registry;
• registration of Corporations under the Sectional Properties Act and regularisation where sectional titles exist without a properly registered Corporation;
• conversion of long-term leases and sub-leases to sectional titles, including review of reversionary interests and legacy management-company structures;
• transition from management companies to statutory Corporations, including transfer of assets, liabilities, contracts, records and appropriate company-law winding-up advice;
• drafting, reviewing, amending and registering Corporation by-laws;
• advisory governance, including Boards, AGMs, special and unanimous resolutions, proxies, voting rights and unit factors;

Disclaimer: This article provides general information and does not substitute legal advice on specific circumstances of any individual or organization. While the information is accurate as of the date published, we cannot guarantee it remains accurate at the time you read it or that it will stay current. Before acting on any of this information, please seek professional legal advice tailored to your situation.