Doing Business in Kenya - RSM International

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3.1.3 PartnershipThe law relating to partnerships is largely contained in the Partnership Act 1981.A partnership is restricted to a maximum of 20 persons, each of whom is jointlyand separately liable for all debts incurred. If these numbers are exceeded, thepartnership must be registered under the Companies Act.A partnership may be formed by any kind of agreement. This need not be formalbut is usually in writing. If the partnership does not trade under the names of thepartners, the business names to be used by the partnership must be registered underthe Registration of the Business Names Act, Chapter 499 of the Laws of Kenya.A Partnership is required to file the statement of particulars form with the Registrarof Companies together with a filing fee of Shs 800. The form has to be signed by allthe partners. Partnership agreements do not have to be filed with the Registrar ofCompanies. The Registrar will then issue a Certificate of Registration. The processmay take up to four weeks.A limited partnership may be formed. The same maximum limit on the number ofpartners applies, but at least one partner must be a general partner who is liable forall the debts of the partnership without a limit. A limited partner cannot take part inthe management. Limited partnerships are governed by the Limited Partnership Act(Chapter 30 of the Laws of Kenya) and are subject to registration with the Registrarof Companies.3.1.4 Sole ProprietorshipA sole proprietor is personally liable for all debts incurred. Where a proprietor doesnot trade under his personal names, the business names used by the proprietor haveto be registered under the Registration of Business Names Act. The proprietor isrequired to file the Statement of Particulars form with the Registrar of Companiestogether with a filing fee of Shs 800. The Registrar will then issue a Certificate ofRegistration. The process may take up to four weeks.3.1.5 SocietiesSocieties are usually formed for the purposes of trade associations and similarorganisations. They are regulated under the Societies Act.A society can either be registered or exempted from registration. An exemptedsociety is one whose procedure is the same as that of a registered society but differsin that it is not required to file Annual Returns with the Registrar of Societies as isrequired of registered societies.The society must submit the application and the notification of registered officeor postal address of the society together with the society constitution in duplicateaccompanied by a registration fee of Shs 2,000. The application is considered by18DOING BUSINESS IN KENYA
the Registrar within a statutory period of not more than 120 days. Upon registeringa society or exempting it from registration, the Registrar shall issue to the society acertificate of registration or exemption in the prescribed form.3.1.6 Personal Identification Number and VAT RegistrationAll businesses are required to obtain a Personal Identification Number (PIN). Thisis the tax registration document. An application for a PIN is to be made to theKenya Revenue Authority (KRA) and can be done online (on their website www.revenue.go.ke). Such application can only be done after completing the companyregistration formalities and obtaining the Certificate of Incorporation/Registration.On rare occasions, a taxpayer may be required to personally take the Certificate ofIncorporation/Registration to KRA offices for uploading onto their database wherethe information fails to import automatically from the Companies Registry database.When undertaking the PIN registration online, the taxpayer is required to endorse thetax obligations in the systems which are applicable to it. These include corporationtax, PAYE, income tax, withholding tax, etc.Where the taxpayer is required to register for Value Added Tax (VAT), suchregistration can be done by endorsing the VAT obligation whilst undertaking the PINregistration online.All employees and directors/partners/sole proprietor are also required to have anindividual PIN. This can also be done online.3.1.7 Accounting Period EndsThe financial period end needs to be agreed at the time of submission of theapplication of the PIN. The Income Tax Act permits incorporated businesses tochoose any period end. However, certain laws e.g. the Banking Act and the InsuranceAct require banks and insurance companies to have an accounting period endingon 31st December of each year. Unincorporated businesses (partnerships and soleproprietors) are also required to have accounting periods ending on 31st December.Incorporated businesses which are not required to have a 31st December ending, canchange their period end with prior written approval of the Commissioner by givingat least a 6 months’ notice before the date to which the financial statements areintended to be made up to.Unless required by law e.g. for financial institutions, the first period end for thepreparation of audited financial statements can be 18 months from the date ofcommencement of business.DOING BUSINESS IN KENYA19
Page 7: 2.0 General2.1 IntroductionKenya li
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Page 17: • Stamping of the Memorandum of A
Page 21: 3.2.3 Thin CapitalisationThin capit
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Page 26 and 27: territory or domestic market. Motor
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Page 32 and 33: Installments Due Date RateNon-Agric
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Page 54 and 55: However, where a motor vehicle or o
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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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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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