Doing Business in Kenya - RSM International

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usiness permits. For a medium trader, shop, or retail service with 5 to 20 employeesand/or premises 50-300 sq.m. (fair location) the fee payable is Shs 5,000, and for amid-size business with over 50 employees and premises in excess of 300 sq.m., thefee ranges from Shs 20,000 to Shs 50,000, depending on the nature of the business.2.8 Competition LawOn 1st August 2011, The Competition Act, 2010 came into force in Kenya and replacedthe Restrictive Trade Practices, Monopolies and Price Control Act (RTPA), Cap504. This new Act, in addition to placing general prohibitions on restrictive tradepractices, controlling mergers and acquisitions and concentration of economicpower, aims to protect consumers and the public at large from unfair and misleadingmarket conduct by criminalising false or misleading statements of or unconscionableconduct by tradesmen, banks, retailers, wholesalers, insurers, brokers, businesses,suppliers, service providers, manufacturers etc. in connection with the promotion/marketing, supply or possible supply of goods and/or services. It establishes thepowers and functions of the Competition Authority (the Authority) which is mandatedto implement the Act.This Act has an impact on every sector and player in the economy, includingimporters and exporters and applies to the private sector as well as the public sector(Government, state corporations and local authorities) in so far as they engage intrade. The Act also applies to conduct outside Kenya of Kenyan citizens or residents,companies incorporated or carrying on business in Kenya and persons supplyinggoods or services into or within Kenya.The Act places a general prohibition against anti-competitive agreements. Anyagreement which has as its object or effect, the preventing, restricting or distortingcompetition in Kenya falls within the ambit of prohibition e.g. price fixing, division ofmarket areas, collusive tendering, minimum retail prices, distortion or restriction ofcompetition etc. It also prohibits businesses from abusing their dominant position ina market. A business has a dominant position if it produces, supplies, distributes orotherwise controls 50% or more of the total goods or services which are producedor rendered in Kenya or a substantial part of Kenya. This law governs transactionsoutside Kenya as long as the transaction touches a Kenyan entity or asset generatedor protected in Kenya.Consumer rights are also protected under this Act and it is an offence to supplygoods to customers where the products do not meet the laid out product safetystandards. Hence, businesses operating in Kenya will need to be more cautious abouttheir product and service offering to consumers and their products must comply withconsumer safety standards.14DOING BUSINESS IN KENYA
A huge chunk of the Act regulates mergers. Approval of mergers and takeovers arenow the responsibility of the Authority and not the Minister of Finance as was thecase under the RTPA.A merger occurs when one or more undertakings directly or indirectly acquire orestablish direct or indirect control over the whole or part of the business of anotherundertaking. Mergers may be achieved by a purchase or lease of shares, acquisitionof an interest, or purchase of assets (where an asset is any real or personal property,whether tangible or intangible, intellectual property, goodwill, chose in action, right,licence, cause of action or claim and any other asset having a commercial value)of an entity, exchange of shares between or among undertakings which results ina substantial change in ownership structure through whatever strategy or meansadopted by the concerned undertakings or even through amalgamations and verticalintegration. The acquisition of a controlling interest in a section of the business of anundertaking capable of itself being operated independently is also considered as amerger whether or not the business in question is carried on by a company.Furthermore, any acquisition of an undertaking under receivership by anotherundertaking either situated inside or outside Kenya or an acquisition by whatevermeans of the controlling interest in a foreign undertaking that has a controllinginterest in a subsidiary in Kenya, constitutes a merger.Mandatory approval by the Authority for a merger is required if a transaction fallswithin the scope of the Act. An application should be made at any time prior tothe consummation of the merger or takeover - this is understood to mean beforecompletion or closing of the deal takes place. The Authority is bound, subject tocertain exceptions, to make a determination on a merger application within 60 daysof receipt of the notification by the Authority.Any merger carried out in the absence of an authorising order by the Authority,will be of no legal effect, and no obligations imposed on the participating partiesby any agreement in respect of the merger are enforceable in legal proceedings. Inaddition, failure to observe this requirement could lead to imprisonment for a termnot exceeding 5 years or to a fine not exceeding Shs 10,000,000 or both. In additionto these penalties, the Authority may impose a financial penalty in an amountnot exceeding 10% of the preceding year’s gross annual turnover in Kenya of theundertaking or undertakings in question.DOING BUSINESS IN KENYA15
Page 7: 2.0 General2.1 IntroductionKenya li
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Page 17 and 18: • Stamping of the Memorandum of A
Page 19 and 20: the Registrar within a statutory pe
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Page 26 and 27: territory or domestic market. Motor
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Page 30 and 31: 4.2.6 Business with Non-Resident Pe
Page 32 and 33: Installments Due Date RateNon-Agric
Page 34 and 35: The current Personal Income Tax rat
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Page 38 and 39: partnership in which the husband or
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Page 42 and 43: Where the taxpayer still disputes w
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Page 52 and 53: A credit note should be serially nu
Page 54 and 55: However, where a motor vehicle or o
Page 56 and 57: Where there is no tax payable a ‘
Page 58 and 59: granted or is partly granted, the b
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Page 62 and 63: Transit VisasThese are visas requir
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Class K is for persons who have an
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5.3.2 WagesAlthough the Employment
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NSSF provides the employee with a l
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6.0 ACCOUNTING6.1 Statutory Framewo
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7.0 INTELLECTUAL PROPERTYRIGHTSKeny
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Years 1 Shs 1,000Year 2 Shs 1,500Ye
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8.0 Listing Rules8.1 The Capital Ma
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• At the date of application, the
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8.3 Payable FeesCompanies pay an in
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9.0 Investing in Kenya9.1 General I
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9.3 Foreign Ownership of Shares and
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Contact Details - RSM AshvirRSM Ash
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Appendix of Acronyms used in the Bo
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Notes90DOING BUSINESS IN KENYA
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