Kenyan Corporate services

Introduction

Incorporation of a company in Kenya is a straightforward process and takes about 4 weeks to finalize.

Types of companies

There are five types of companies:

1. Private company limited by shares

   This type of company has a share capital and the liability of each member is limited to the amount, if any, unpaid on their shares. A private company cannot offer its shares for sale to the general public and may not have more than fifty (50) members.

2. Unlimited company

   This type of company has no limit on the liability of its members.

3. Public limited company

   A public company has a share capital and limits the liability of each member to the amount unpaid on their shares. It may offer its shares for sale to the general public and may be listed as the securities

4. Company limited by guarantee

   This type of company does not have share capital; its members are guarantors rather than shareholders. The liability of members is limited to the amount they agree to contribute to the company’s assets if it is liquidated.

5. Foreign Companies

   This type of Company is a Branch of a Company registered outside of Kenya, that has established a place of business in Kenya (For more details, see PN/07 – Foreign Companies).

Required documents

To incorporate a company the following documents should be lodged at the Companies Registry for registration:

1. company registration form (Form CR1)
2. application for reservation of a company name (Form CR14)
3. memorandum of association
4. particulars of the directors and secretary (Form CR2and Form CR10
5. statement of nominal capital
6. articles of association (however if model articles are adopted in entirety, there is no need for a copy to be lodged at the Companies Registry for filing)
7. notification of the residential address of directors and company secretary (Form CR8 and CR12)
8. copy of the Kenyan national identification of each director and secretary or, a copy of the Kenyan foreigner certificate, or in the case of a director who is not a Kenyan citizen and is not resident in Kenya, a copy of that director’s passport,
9. a passport-sized photograph of each director and the company secretary (please see Note 11 below on the requirement to appoint a company secretary).

Structural Requirements

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Reporting Requirements

Every company must file an annual financial statement and report each year. The requirements vary according to your company status with more details required for a Public Company listed on the Nairobi Stock Exchange (NSE).

Filing Annual Reports

Companies are required to prepare and submit to the Registrar annual returns made up to a date not later than the date that is from time to time the company’s return date. The date of the return would be the anniversary date of the company’s incorporation or the date when the Company last lodged its returns if different from the incorporation date.

Filing of Financial Statements.

Directors of a company are required to lodge with the Registrar financial statements for each financial year. Public Companies and Companies Limited by Guarantee have 6 months from the end of the financial year to file their financial statements. While Private Companies have 9 months from the end of the financial year to file their financial statements. The statements are to be filed together with the accompanying reports. These are the Auditors’ and Directors’ reports.

Companies must also file:

1. Changes in the structure of the company
2. Ultimate Beneficial Ownership of the company

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Taxation Requirements

Value Added Tax (VAT)

• VAT must be paid Monthly
• VAT is mandatory if the business earns an annual income above Kshs. 5 million
• VAT is levied on the consumption of taxable goods & services
• Currently and in general the VAT rate is 16%

Turnover Tax

• Turnover Tax must be submitted Quarterly
• Turnover Tax is mandatory if the business earns an annual income between 500,000/= & Kshs. 5 million
• Turnover Tax is an Indirect tax, chargeable at 3% of total sales

Corporation Tax

• Corporation Tax is liable on the Company’s worldwide trading profits
• The rate of Corporation Tax is currently 32.5%
• It is advisable to seek the services of a taxation advice consultant to ensure compliance