Britam Wins Court Approval to Reduce Share Premium by KES 5.9 Billion to Offset Losses

Britam Holdings Plc has received court approval to reduce its share premium account by KES 5.875 billion as part of a balance-sheet restructuring exercise aimed at offsetting accumulated losses recorded at the end of 2025.

The High Court confirmed the insurer and investment group’s application to reduce its share premium from KES 13.237 billion to KES 7.362 billion after shareholders approved the move through a special resolution passed on 21 May 2026.

The reduction involves the cancellation of KES 5.875 billion from the company’s share premium account, with the amount being applied against accumulated losses of the same value reported as of 31 December 2025.

Britam said the restructuring is an internal reclassification within shareholders’ equity and does not involve any cash payment, return of capital to shareholders, change in ownership structure, reduction in issued share capital, or change in total shareholders’ equity.

Court Approves Britam Share Premium Reduction

The approval followed an Originating Motion filed by Britam Holdings dated 26 May 2026, seeking confirmation of the share premium reduction and approval of the updated Statement of Capital reflecting the company’s revised capital structure.

The application was supported by an affidavit from Hilda Njeru, who stated that shareholders had approved the reduction of the company’s share premium account from KES 13.237 billion to KES 7.362 billion by cancelling KES 5.875 billion.

The company told the court that the reduction was intended solely to eliminate accumulated losses and did not involve reducing unpaid share capital, returning capital to shareholders, or distributing funds.

“The reduction is intended solely to offset the Applicant’s accumulated losses, which stood at KES 5,875,252,000 as at 31 December 2025,” the company stated in court documents.

No Impact on Shareholders’ Equity or Ownership

The court noted that the proposed reduction represented a balance-sheet restructuring exercise and would not affect Britam’s ownership structure, issued share capital, or overall shareholders’ equity.

The company argued that the restructuring would not prejudice creditors because Britam would continue meeting its financial obligations as they fall due.

Under the Companies Act, creditor objections apply where a proposed capital reduction involves a reduction in liability for unpaid share capital or payment of paid-up capital to shareholders.

The court found that those circumstances did not apply in Britam’s case.

Creditors, CMA and NSE Raised No Objections

Following directions issued by the court on 2 June 2026, Britam served its creditors, the Capital Markets Authority (CMA), and the Nairobi Securities Exchange (NSE) with notices regarding the proposed reduction.

The company confirmed that all identified creditors, regulators, and relevant parties were served within the required period. The court noted that no creditor, regulator, or other party filed an objection against the application.

“Despite such service, no objections have been raised,” the court stated, adding that there was no evidence of prejudice arising from the proposed reduction.

Court Relies on Previous Share Premium Reduction Cases

In approving the application, the court considered previous cases involving similar share premium reductions, including applications by Io Health Limited and EABL International Limited.

The court noted that companies may seek approval for capital restructuring where statutory requirements have been met and where the process does not negatively affect creditors or shareholders.

The court found that Britam had complied with the requirements under Sections 386(4), 408 and 410 of the Companies Act, as well as applicable disclosure requirements.

Britam to Bear Own Legal Costs

The High Court allowed Britam’s application and confirmed the reduction of the company’s share premium account in line with the special resolution passed on 21 May 2026.

The court also approved the accompanying Statement of Capital showing the company’s capital structure after the reduction. Britam will bear its own costs associated with the application.

The approval allows the insurer to complete the accounting adjustment, reducing its accumulated losses by applying the cancelled share premium balance without altering its shareholding structure or capital ownership.