In a situation where the last joint shareholder of a share(s) dies is addressed by the legal provisions concerning the transmission of shares under the Companies Act 2015. Below is a simple outline of the process:

1. Transmission of Shares: The legal representatives or executors of the deceased’s estate must submit a death certificate certified by the issuer and the relevant legal documents (confirmed grant of probate or letters of administration) to the company.
2. Companies’ Registrar: The registrar will update the shareholders’ register to show the new owner(s) as designated by the legal representatives.
3. Inheritance Process: Shares will be distributed according to the instructions in the deceased’s will or confirmed letters of administration.

The shares are not lost or cancelled; they are transferred to the legal heirs or representatives.

“I want to start a business but I don’t know where to start from.”

“I want to start a business but am afraid to start from scratch”

Are you thinking about dipping your toes into the Kenyan business world? Well, have you considered buying a ready-made business? The idea of building something from the ground up is tempting. But let’s face it: sometimes the smart move is to hop onto a train that is already moving. Whether you’re a seasoned business pro or a first-time owner looking to minimize risks, a ready-made business in Kenya could be your ticket to success.

Stick around as we dive into five compelling reasons why this might be the golden opportunity you’ve been waiting for. Trust me, by the end of this, you’ll be itching to explore the Kenyan business landscape!

1. Immediate Start:

With a ready-made business, you can start operations almost immediately after purchase. This saves time compared to starting a business from scratch, which involves lengthy setup processes like registration, acquiring licenses, and establishing infrastructure.

2. Flexibility in Industry Choice:

Ready-made businesses are available across various industries and sectors. This allows one to choose a business that aligns with interests, skills, and long-term goals.

3. Local Market Knowledge:

Buying a ready-made business can provide valuable insights and experience. It is possible to benefit from the seller’s knowledge of local regulations, consumer behaviors, and market trends.

4. Existing Customer Base:

A business that is already operational likely has an existing customer base. This provides a ready-made market for products or services, facilitating quicker revenue generation and business growth.

5. Opportunity for Expansion:

With an existing business as a foundation, this could involve expanding into new markets or diversifying the business’s product/service offerings.

6. Established Brand:

Ready-made businesses often come with an established brand name and reputation in the market as the brand may already be recognized and trusted by customers.

7. Access to Suppliers and Networks:

Established businesses often have relationships with suppliers, distributors, and other key stakeholders. This can make procurement processes smoother and help the buyer to benefit from established business networks.

Filling Annual Returns for Companies

Section 705 of the Companies Act stipulates that each company must furnish the Companies Registrar with its annual returns, comprising the following particulars:

1. Company name and registration number,
2. Registered office address,
3. Company type and principal business activities,
4. Details of directors and secretaries,
5. Financial statements or exemption statement if applicable,
6. Information regarding share capital, share classification, corporate and/or natural shareholders, and the number of shares held by each,
7. Details of indebtedness,
8. List of both past and present members.

Every company is obligated to submit successive annual returns to the Registrar, each of which should be current up to a date not exceeding the company’s return date, its incorporation anniversary, or the anniversary of that date. The initial annual return following the company’s incorporation must be lodged precisely 18 months after the date of incorporation.

Annual return or form CR29; This is a company’s legal document that has to be filed with Companies registrar annually to show the current picture of the company. It outlines the company’s organizational structure, distribution of shares, division of shares, nominal capital, and details of directors and shareholders, including their names and addresses. Furthermore, it includes information about the company’s current registered office and the particulars of the company secretary, if any.

As per Section 125 of the Companies Act in Kenya, it is compulsory for companies with share capital to submit an annual return. This return must be filed once every year and must adhere to a specific format. Additionally, it should be submitted within fourteen days following the annual general meeting.

On which other occasion are companies required to file return (interim return)?

• When there is a change of company directors (Appointment/Resignation)
• When transferring shares
• Change of address of the Directors
• Change of share capital of the company

What are the consequences for failure to file annual returns?

When annual returns are not submitted, the following consequences may ensue:

• Requests such as the appointment and resignation of directors, transfer of shares, registration of debentures and charges, etc., shall not be processed by the Registrar.
• The company is also at risk of being struck off the register of companies.
• Upon conviction, both the company and any defaulting officers are liable to a fine not exceeding Kshs. 200,000, with an additional daily fine of Kshs. 20,000.00 until the situation is rectified.

What is the process of filing annual returns?

• Set up your eCitizen account. You can establish your eCitizen account by visiting www.eCitizen.co.ke and choosing the ‘create an account’ option.
• Connect your business – if it was registered prior to the migration to the eCitizen portal (2016).
• Submission & validation of the beneficial ownership information form.
• Lodging Annual Returns.
• Payment.
• Receipt issuance and processing of return filings.

Local Registered Address

Division II, section 19(c) of the Companies Act 2015, states that a company must have a registered office. The requirement for a locally registered address under the Companies Act 2015 holds several significances:

• Legal Compliance: Under the Companies Act 2015, every company registered in Kenya must have a registered office address within the country. This is a legal requirement to ensure that companies have a physical location where official documents and notices can be served.
• Communication: The registered address serves as the official point of contact for the company. It ensures that government agencies, stakeholders, and members of the public have a reliable address to communicate with the company.
• Jurisdiction: Having a local registered address establishes the jurisdiction of the company within Kenya. It clarifies the legal framework under which the company operates and is subject to regulations, taxes, and other laws applicable in Kenya.
• Transparency and Accountability: A local registered address enhances transparency and accountability by providing a visible location where the company conducts its business activities. This promotes trust among stakeholders and helps prevent fraudulent or deceptive practices.
• Accessibility: The requirement for a local registered address ensures that the company is easily accessible for regulatory purposes, such as inspections, audits, or legal proceedings. It facilitates the smooth functioning of regulatory processes and compliance checks.

Company Secretary

Who is a Company Secretary?

A company secretary is a senior position in a private company or public organization, normally in the form of a managerial position or above. They are the named representative on legal documents, and it is their responsibility to ensure that the company and its directors operate within the law.

The Position of a Company Secretary in the Companies Act, 2015 makes it mandatory for all public companies incorporated under the Act to have at least one Company Secretary. In addition, the Companies Act provides that there will be a mandatory requirement for a private company to have a company secretary only if it has a paid-up capital of five million Kenya shillings or more (Section 243). The Companies Act, 2015 further states the qualifications that must be held by a person who is appointed as Company Secretary of company with such person required to hold a practising certificate issued under the Certified Public Secretaries of Kenya Act. A director who appoints a Company Secretary without adhering to the qualifications set out by statute for the position is, upon conviction, liable to pay a fine of KShs. 200,000/- (Section 246).

What is the role and importance of company secretary in company law?

The Company Secretary serves as a guardian of compliance, a facilitator of communication between the board of directors and other stakeholders, and a custodian of corporate records. Despite the name, the role is not clerical or secretarial.

In summary, the Companies Act 2015 of Kenya underscores the indispensable role of a company secretary in ensuring regulatory compliance, facilitating transparent governance practices, and maintaining effective communication within the organization. Their appointment is instrumental in upholding legal standards, fostering accountability, and enhancing stakeholder confidence, thereby contributing to the overall success and sustainability of the company.

Annual General Meetings

What is an annual general meeting?

An AGM is a formal assembly where a company’s shareholders convene to discuss and decide on key matters pertaining to the organization’s management and financial health. It provides shareholders with a direct opportunity to interact with the board of directors, ask questions, and raise concerns.

Section 310 of the companies Act 2015, mandates that public companies must hold an annual general meeting within or by the end of the six months of its financial year. Private companies are not required to hold an annual general meeting, although they can elect to provide for them in their articles if they wish or if they are a traded company (a corporation whose shareholders have a claim to part of the company’s assets and profits).

Maintain Statutory Records

These include Register of Member/Directors/Secretaries, Minute Book, Certificate of Incorporation and Articles of Association.

Accounting Records ^ Financial Statements

Division 10, section 683 of the Companies Act 2015, directs that of a company shall lodge with the Registrar of companies annually for each financial year the financial statement, certain documents and reports required by section 686, 687 or 688. Companies must maintain accurate accounting records and prepare financial statements annually unless they qualify for an exemption as provided under the Companies Act.

Changes in the Company

Division 2, section 138 of the companies Act 2015, directs that of a company may undergo various changes such as the appointment or resignation of directors, changes in shareholding, and amendments to the company’s articles of association or registered office. These changes can also include alterations to the financial year-end. According to the Companies Act of 2015, companies are required to notify the Registrar of Companies about these changes. Failure to comply with this requirement can result in financial penalties for the company officials who violate the regulations.

Filing of Ultimate Beneficial Ownership

As of 2020, companies must comply with the Beneficial Ownership regulations by disclosing their Ultimate Beneficial Owners (UBO), creating a Register of Beneficial Owners, and submitting it to the Registrar of Companies. The Companies’ Registry has confirmed that the Beneficial Ownership Information is confidential and assured companies that their data will be kept private.

Employee Deduction

Employees’ salaries or wages are a very important subject especially when it comes to managing monthly deductions in Kenya. These statutory deduction figures and the other organization’s monthly deductions continue changing due to the country’s law amendments. The Employment Act of Kenya, Section 19(1), permits the employer to deduct any amount from an employee’s wage as a contribution to a fund or program that the employee has consented to support and that has been approved by the commissioner for labor. Among the fundamental statutory deductions are:

1. PAYE (Pay As You Earn) under the Income Tax Act Cap 470.
2. NHIF (National Hospital Insurance Fund) under NHIF Act Cap 255 and NHIF Act No. 9 of 1998.
3. NSSF (National Social Security Fund) under NSSF Act No. 45 of 2013.
4. NITA (National Industrial Training Authority) under the Industrial Training (Amendment) Act, 2022.”
5. Housing levy under the Finance Act 2023.

Companies are urged to comply and file the necessary filings to avoid the above complications. As it has been repeatedly proven it is easier and more cost-effective to comply than to deal with the repercussions of non-compliance.

Conclusion

Compliance with statutory obligations is non-negotiable for companies. It is integral to maintaining legal standing, preserving reputation, and fostering trust with stakeholders. Prioritizing compliance safeguards against legal repercussions and ensures sustainable business operations.

A foreign company, registered outside of Kenya, that intends to conduct business within the country has the option to establish either a branch office or a subsidiary in Kenya. While a subsidiary is classified as a local company and is subject to compliance regulations comparable to those applicable to domestically owned enterprises, a branch office is distinct and is categorized as a foreign entity according to Part XXXVII of the Companies Act, 2015.

The Companies Act, 2015, bears significant resemblance to the Companies Act of 2006 in the United Kingdom, outlining obligatory compliance criteria as follows:

1. Business Registration – Foreign companies are obligated to register their business entities with the Registrar of Companies in Kenya. This typically entails submitting the necessary documents to the registrar of companies and remitting registration fees.
2. Registered Office – A registered foreign company must establish and maintain a registered office in Kenya. Any change to the registered office must be communicated to the Registrar within seven days. Furthermore, a registered foreign company is required to prominently display its business hours and affix easily legible letters on the exterior of each office and accessible place where its business is conducted.
3. Local Representative – Under the Companies Act of 2015, a foreign company seeking registration in Kenya must appoint at least one local representative who must reside within the country. The local representative is not obliged to hold shares in the foreign company. Their responsibilities, as outlined in Section 981 of the Act, include:
   • Ensuring compliance with the Act on behalf of the foreign company, handling necessary filings with the Registrar of Companies, and maintaining an open registered office during business hours for receipt of communications and notices.
   • Acting as the primary liaison between the foreign company, Kenyan government agencies, and the general public. Actions taken by the local representative are binding on the foreign company, and they are authorized to receive legal processes on behalf of the company. It is imperative for anyone accepting the role of a local representative to ensure they are adequately empowered by the foreign company to fulfill their duties.
   • Handling tax compliance matters of the company.
   • Remaining available during office hours.
   • Submitting a notice of any change in the office address for registration with the Registrar.
4. Annual Compliance – A registered foreign company is required to lodge a copy of its financial statements, prepared in accordance with the laws applicable to the company in its place of origin, at least once every calendar year. These statements must be accompanied by a written statement, supported by a statutory declaration, verifying their authenticity. Documents prepared in languages other than English must be accompanied by certified translations.
5. Communication and Documentation – A registered foreign company must include its name and other specified information in all documents and communications pertaining to its business in Kenya.
6. Changes – The Act mandates that a registered foreign company must inform the Registrar within one month of any changes to the following information or documentation related to the foreign company:
   • Its constitution or any other document submitted during registration.
   • Directors.
   • Powers of directors residing in Kenya and members of a Kenyan board of directors.
   • Local representative(s).
   • Name or address of the local representative.
7. Tax Registration & Compliance – Foreign companies are required to register with the Kenya Revenue Authority (KRA) for tax purposes, including obtaining a Tax Identification Number (TIN) and fulfilling obligations such as corporate tax, Value Added Tax (VAT), and withholding tax. Corporate tax is levied annually at a rate of 37.5 percent on taxable income.
8. Winding Up – Within twenty-one days of a registered foreign company ceasing business operations in Kenya, being dissolved, or deregistered in its place of origin, the local representative in Kenya must lodge a notice of this fact with the Registrar for registration. It is important to note that foreign companies ceasing operations at a place of business for a continuous period of six months are considered to have closed their businesses.

Other statutory compliances include;

1. Work Permits – Foreign employees working in Kenya may require work permits or visas. Companies should ensure their employees have the necessary permits to work legally in the country.
2. Employment Laws – Compliance with Kenyan labor laws is essential. This includes regulations concerning employment contracts, minimum wages, working hours, and health and safety standards.
3. Data Protection – Compliance with data protection laws is crucial. The Data Protection Act governs the collection, processing, and storage of personal data by foreign companies operating in Kenya.
4. Environmental Regulations – Companies involved in activities with potential environmental impacts must comply with environmental regulations. This may involve obtaining environmental impact assessments and adhering to waste management and pollution control requirements.
5. Intellectual Property Protection – Protecting intellectual property rights is important. Foreign companies should register trademarks, patents, and copyrights to safeguard their intellectual property assets in Kenya.

Conclusion

Statutory compliance is essential for foreign companies. It ensures legal adherence, risk mitigation, and stakeholder trust. Prioritizing compliance underscores commitment to ethical business conduct, pivotal for sustained success in international markets.

To register a Limited Liability Partnership (LLP) under the Companies Act 2015 the following specific set of requirements are followed.

Propose at least three unique names in order of preference for the business and submit it for reservation through the eCitizen portal. The names should comply with the requirements specified in the Companies Act, such as not being similar to existing company names.

Preparation of Incorporation Documents:

• Prepare and fill out Form LLP1: It includes the names of the partners, phone numbers, postal addresses, ID numbers & residential details.
• A professional certificate & letter of no objection. One of the partners is required to provide a professional certificate to proof mastery in the field for example field in accountancy
• LLP Agreement: This is a legal document that governs the establishment, operation, and dissolution of an LLP. It entails:
  • Partnership Details,
  • Partners,
  • Contributions,
  • Management and Decision-Making,
  • Profit Distribution and Loss Sharing,
  • Meetings and Communication,
  • Admission and Withdrawal of Partners,
  • Dissolution,
  • Liabilities and Indemnification,
  • Confidentiality and non-compete,
  • Governing Law and Amendments.

For Limited liability partnership registration requirements;

• At Least three names for search and reservation (in order of preference)
• Postal address of the partnership
• A new email address for the partnership
• Phone number of the partnership
• Registered office of the partnership (house name, Plot number, Town name & road)
• Nature of the business – the business that the partnership is formed to do eg; manufactucturing, real estates, construction, etc. A description of the activities the business will engage in.

For natural persons partners

• ID copies (strictly for Kenyans) & passport/Alien card for foreigners
• Passport photos
• KRA pin
• Phone numbers (should not be shared)
• Email addresses (must be active for correspondences from the companies’ registry and should not be shared).
• Postal addresses
• Residential details (Town, estate name & street/road)

For a corporate partners;

• Incorporation certificate copy;
• KRA pin copy;
• Phone number;
• Email address;
• Postal address

Payment of Fees:

• Payment of the prescribed registration fees.

Review and Approval:

• The Registrar of Companies will review the application and documents submitted.

Certificate of Registration:

Upon approval, the Registrar will issue a Certificate of Registration.

The LLP is now officially registered and can commence its business activities.

1. Unique Business Name: At least three unique names are placed for search and reservation on the BRS portal.

2. BN2 form – stipulates the proprietors’ personal details.

For business name registration requirements;

• At Least three names for search and reservation (in order of preference)
• Nominal capital structure (number of shares & value of each share)
• Number of shares each director/shareholder to hold
• Postal address of the company
• A new email address for the company
• Phone number of the company
• Registered office of the company (house name, Plot number, Town name & road)
• Nature of the business – the business that the company is formed to do eg; manufactucturing, real estates, construction, etc. A description of the activities the business will engage in.

For natural person proprietors

• ID copies (strictly for Kenyans) & passport/Alien card for foreigners
• Passport photos\
• KRA pin
• Phone numbers (should not be shared)
• Email addresses (must be active for correspondences from the companies’ registry and should not be shared).
• Postal addresses
• Residential details (Town, estate name & street/road)

For a company proprietor;

• Incorporation certificate copy;
• KRA pin copy;
• Phone number;
• Email address;
• Postal address

Business Activities Description: A description of the activities the business will engage in.

Registration Fees: Payment of applicable registration fees.

Submission: Submit the completed registration forms along with any required documents and payment of registration fees through the BRS portal.

Review and Approval: The registration authority will review the application to ensure that all requirements have been met. If everything is in order, they will approve the registration.

Requirements for Foreign Company Registration:

1. Legal Representative: Appoint a legal representative who is ordinarily resident in Kenya. This representative will act as the agent for the foreign company in Kenya and accept legal documents and notices on its behalf.
2. Documents Required: Prepare and submit the following documents:
   • Notarized copy of the company’s charter, statutes, memorandum, and articles of association (translated into English).
   • Parent company’s directors and shareholders details;

For Directors & shareholders

• passport/Alien card copies
• Passport photos
• Phone numbers (should not be shared)
• Email addresses (must be active for correspondences from the companies’ registry and should not be shared).
• Postal addresses
• Residential details (Town, estate name & street/road)

For a company shareholder;

• Incorporation certificate copy;
• Phone number;
• Email address;
• Postal address
• Document Submission: Upload the required documents through the BRS portal.
• Payment of Fees: the prescribed registration fees is paid online through the BRS portal.
• Review and Approval: The Registrar of Companies will review the submitted documents. If all requirements are met, the Registrar will issue a Certificate of Registration.
• Post-Registration Obligations: After registration, the foreign company must comply with all legal and regulatory requirements in Kenya, including tax registration, reporting obligations, and any other obligations specified by law.

Requirements for Public Company Registration:

1. Company Name Reservation: a unique name for the company is required and verification of its availability through the BRS portal.

For Directors & shareholders

• ID copies (strictly for Kenyans) & passport/Alien card for foreigners
• Passport photos
• KRA pin
• Phone numbers (should not be shared)
• Email addresses (must be active for correspondences from the companies’ registry and should not be shared).
• Postal addresses
• Residential details (Town, estate name & street/road)

For a company shareholder;

• Incorporation certificate copy;
• KRA pin copy;
• Phone number;
• Email address;
• Postal address

The following documents are autogenerated on the ecitizen portal, including:

• Statement of Nominal Capital: It states the initial share capital of the company (number of shares and value per share).
• Form CR1 – Includes director’s name, ID number, Postal address, email address and phone number.
• Form CR2 – states the number and consideration of the total number of shares taken by each shareholder
• Form CR8 – lists the residential details of directors.
• Form CR10 – The company secretary’s details including name, phone number, email addresses and postal addresses.
• Form CR12 – residential details of the secretary

2. Directorship: Appoint a minimum of two directors. Majority director must be Kenyans.

3. Registered Office: Provide a registered office address located in Kenya. This address will serve as the official correspondence address for the company.

4. Company Secretary: A public company must have a qualified company secretary

Online Submission: All the are uploaded through the BRS portal. The prescribed registration fees is paid online.

Review and Approval: The Registrar of Companies will review the submitted documents for compliance with the Companies Act 2015. If everything meets the requirements, the Registrar will issue a Certificate of Incorporation.

Post-Registration Obligations: After receiving the Certificate of Incorporation, fulfill any post-registration obligations such as obtaining tax registration, opening a bank account, and obtaining any necessary licenses or permits for the company’s operations.

To register a company limited by guarantee in Kenya under the Companies Act 2015 through the Business Registration Service (BRS) portal, specific steps are followed:

1. Name Reservation:

• Choose at least three unique names for reservation that complies with the naming regulations provided by the BRS.
• Reserve the chosen names through the BRS portal to ensure its availability.

2. Preparation of Documents:

• Articles of Association: This document contains the company’s name, internal rules governing the company’s operations, including the rights and obligations of members, directors, and officers.
• Form CR1 – Includes director’s name, ID number, Postal address, email address and phone number.
• Form CR3 (memorandum of association) – indicates the names of the subscribers and their postal addresses.
• Form CR8 – lists the residential details of directors.

For Directors & shareholders

• ID copies (strictly for Kenyans) & passport/Alien card for foreigners
• Passport photos
• KRA pin
• Phone numbers (should not be shared)
• Email addresses (must be active for correspondences from the companies’ registry and should not be shared).
• Postal addresses
• Residential details (Town, estate name & street/road)

For a company shareholder;

• Incorporation certificate copy;
• KRA pin copy;
• Phone number;
• Email address;
• Postal address

3. Registration on the BRS Portal:

• Create an account on the BRS portal if you haven’t already done so.
• Log in to your account and access the company registration section.

4. Submission of Documents:

• Upload the prepared documents onto the BRS portal, ensuring they meet the requirements specified by the BRS.

5. Payment of Fees:

• Pay the requisite registration fees through the BRS portal

6. Verification and Approval:

• The BRS will review the submitted documents to verify compliance with the Companies Act and other applicable regulations.
• If everything is in order and meets the requirements, the BRS will approve the registration.

7. Issuance of Certificate of Incorporation:

• Upon approval, the BRS will issue a Certificate of Incorporation, officially recognizing the company as a legal entity.
• The Certificate of Incorporation will include details such as the company’s name, registration number, date of incorporation, and type of company (limited by guarantee).

8. Post-Incorporation Compliance:

• After incorporation, ensure compliance with ongoing legal obligations, such as filing annual returns, holding general meetings, and maintaining proper records.