A limited liability company is a company whose owners are legally responsible for its debts only to the extent of the amount of capital they invested. The Company is a separate legal entity from its owners. The company has all legal rights as a legal person and can sue and be sued under its own name. The requirements to form a company in Kenya include the following:
Public or Private Limited Liability Company
The promoters of the Company would need to decide what type of Company they require registered. A limited liability company can either be:
(a) Private (Ltd) – where membership is limited to 50 shareholders and transfer of shares is restricted; OR
(b) Public (Plc) – where there is no limit on the number of shares and shares may be freely transferred.
a Unique Name for the Company
The company name should include the word Limited for a private limited company or Public Limited Company or Plc for a public limited company. The name of the company should not be (i) similar to existing names, (ii) imply a relationship with any government body or agency, local or foreign, (iii) be offensive or undesirable, among other restrictions. The Registrar of Companies have the final approval right on a name to be registered. It is usually advisable to submit at least three different names for the purposes of a name search, unless the name so required is proprietary in Kenya.
Defining the Business Purpose
Subscribers forming the company would be required to give a description of the core business of the Company to be formed. This information would also be useful for purposes of registering the Company as a tax payer with Kenya Revenue Authority (“KRA”). The processes at the Companies Registry are being aligned such that upon the Company being incorporated, the Personal Identification Number (“PIN”) of the Company would also be automatically be generated.
Memorandum of the Association
This particular document includes the names of those forming the company and also subscriber’s signatures. The document is static in nature and may not be amended post incorporation of the Company.
Article of Association
The Article of Association sets the rules to operate the company. It also includes companies operating details, internal management affairs, and legal responsibilities. The Articles of Association may be amended once the Company would have been incorporated to align it with the requirements of the Company, as these may change from time to time.
Registered Agent
For non-Kenyans to register a Company in Kenya, they will need to appoint a local Advocate or a Certified Secretary for this purpose as a Registered Agent. The promoters of the Company make use of these professionals to ensure that incorporation documents are managed and handled professionally and comply with all the requirements of the law. The Registered Agent may also provide the use of their physical address in Kenya as the registered Address of the Company.
Shareholders
There is a requirement for at least one Shareholder of the Company. The Share Capital of the Company would require to be allotted to the Subscribers to the memorandum and Articles of Association of the Company. At incorporation, the share capital of the company is not subject to Stamp Duty, irrespective of the amount.
Directors
There is a requirement for at least one of the Company Directors to be a natural person. The KRA also requires that at least one of the Directors of the Company should have an updated PIN issued by KRA.
Company Secretary
There is a requirement for all public companies to appoint a company secretary (“CS”). Private companies with a share capital less than Kenya Shillings Five Million (KES 5,000,000) are exempt from appointing a CS. If your company has no CS then the statutory duties and responsibilities fall to the director(s). There are onerous penalties for non-compliance with the ongoing company secretarial functions ordinarily undertaken by a CS and as such it is recommended that all entities should engage a professional CS to assist with the annual compliance and corporate governance requirements for the Company. The CS Profession is regulated by the Institute of Certified Secretaries.
Legal Address of the Company
There is a requirement for the Company to submit details of its Registered Address in Kenya. The Registered Address is comprised of the physical address within Kenya, telephone number and e-mail address.
Registration as an Employer
Once the Company is incorporated and registered as a Tax Payer, there would be a requirement to register the company with other Government Agencies upon its engaging its first employee(s) and to obtain certain sector specific licenses. We are happy to advise on and to assist with the registration as an employer and in obtaining the sector specific licenses.
If you are aware of the above simple procedures, you will be well on your way to start the business processes. If you think that it is an intimidating process, and don’t have a clue, then you need to talk to us at Liroja Services. We can give you professional advice, and get the job done in a hassle-free manner.
