Doing Business in Kenya - RSM International

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3.0 Types of Business Entities3.1 Types of Business Entities and Their FormationProceduresIn Kenya, an investor may establish or participate in a business venture in a numberof ways. The principal types of business enterprises in Kenya are:• Registered companies (private and public);• Branch offices of companies registered outside Kenya;• Partnerships;• Sole proprietorships; and• Societies.3.1.1 Registered Companies (Private and Public)Companies are registered as limited liability companies and are regulated by theCompanies Act (Cap 486). Kenya’s legal system is based on English law and practice.A wide range of legal services are locally available.Limited companies may be public or private. A private company is prohibited frominviting the general public to subscribe for its shares and it cannot have more than50 members excluding persons in employment of the company. A public companymay offer its shares to the general public. There is no maximum number of membersand its shares are freely transferable. It may be able to raise capital by listing itsshares on a stock exchange.The process of registering a company in Kenya may take up to four weeks andincludes:• Reservation and approval of a name by the Registrar of Companies. Thecompany name reservation lasts 30 days and can be renewed for a similarperiod. The associated cost is Shs 100 per each name submitted for reservation.• Preparation of the Memorandum of Association (setting out amongst otherthings the object of the company and its authorised and issued capital) andArticles of Association (setting out the procedures governing the operationsof the company). A private company will require at least 2 subscribers, while apublic company will require at least 7.• Completion of various forms including Statement of Nominal Capital, Particularsof Directors and Shareholders, Situation of Registered Office and Certificate ofa Lawyer involved in the Formation of the Company. In addition to the above,a public company is required to complete Consent to Act as Directors, List ofPersons who have Consented to Act as Directors and the Statement in Lieu ofProspectus forms.16DOING BUSINESS IN KENYA
• Stamping of the Memorandum of Association and Articles of Association andthe Statement of Nominal Capital at the Lands Office together with paymentof stamp duty on Nominal Capital. Stamp duty payable is 1% of the capital, plusa fixed fee of Shs 2,060 for the stamping of three copies of the Memorandumand Articles of Association and two copies of the Statement of Nominal Capital.• Filing of the forms above (including a stamped copy of the Statement of NominalCapital) together with one stamped copy of the Memorandum of Associationand Articles of Association with the Registrar of Companies. The filing fees areShs 2,800 (public company: Shs 3,000) for the first Shs 100,000 of capital,and thereafter Shs 120 for each Shs 20,000 of Nominal Capital subject to amaximum filing fee cap of Shs 60,000.• Issue of a Certificate of Incorporation by the Registrar of Companies. For publiccompanies, in addition to the Certificate of Incorporation, the Registrar willissue a Trading Certificate.The Companies Act also allows for the formation of a company limited by guaranteeand not having a share capital. These are normally used for the formation ofcharitable foundations and not-for-profit entities. There are special requirements forthe formation of such companies, and the period of formation may take up to 1 year.3.1.2 Branch Office of an Overseas CompanyA company incorporated outside Kenya may carry on business in Kenya through abranch. In order to establish a branch, the following documents and details mustbe submitted to the Registrar of Companies within 30 days of establishing such abranch:• A certified copy of the Charter, Statutes or Memorandum and Articles of thecompany, or other instruments defining the constitution of the company;• A list of the directors and the secretary of the company;• A statement of all existing charges entered into by the company affectingproperties in Kenya;• Names and postal addresses of one or more persons resident in Kenyaauthorised to accept, on behalf of the company, service of notices required tobe served on the company;• Full address of the registered or principal office of the company in its homecountry; and• Full address of place of business in Kenya.The filing fees payable is Shs 6,800. Once the process is complete, the Registrar willissue a Certificate of Compliance. The process may take up to 4 weeks.Companies that may want to have representative or liaison offices are required toregister using the above process.DOING BUSINESS IN KENYA17
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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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