Company registration in Kenya can be an exciting and rewarding experience, but it can also be daunting if you don’t know where to start. It involves navigating through various legal requirements and procedures set forth by the Kenyan government. It is essential to understand the different legal structures available and the process of company registration in Kenya to ensure compliance and legitimacy.
Here’s a quick overview of registering a company in Kenya, designed to simplify the remote registration process for potential investors.
How to Register a Company in Kenya| Online Company Registration in Kenya
1. Create an eCitizen account.
– Visit the eCitizen website and create an account as either a Kenyan citizen, a foreign resident, or a foreigner.
– For foreigners, a local director may be required for tax purposes.
2. Company Name Search & Reservation
– Navigate to the Business Registration Service section of eCitizen and submit 1 to 3 proposed company names in order of preference.
– Once approved, your chosen name will be reserved for a period of 30 days.
3. Prepare Required Documents
Get the following forms and documents ready:
a) CR1 – Company Registration Form. It gathers essential details about the business, such as:
– The proposed company name
– The type of company (for example, a Private Limited Company or a Company Limited by Guarantee)
– Whether the company will use the model articles of association
– Information about the initial directors, company secretary, and authorized signatories
– The company’s share capital and initial ownership structure
b) CR2 – Model Memorandum for a Company with Share Capital. This is used for companies with share capital and details the share structure and shareholders.
Understanding Shareholder Rights in Kenya Under Section 14(2)(c) of the Companies Act
Section 14(2)(c) of the Companies Act outlines the key rights attached to shares in a company. These rights include:
– Voting Rights: Shareholders have the power to vote on company decisions, including special rights that may apply in particular situations.
– Dividends and Profit Distribution: Shareholders are entitled to receive a portion of the company’s profits or other financial distributions.
– Participation in Capital Returns: Shareholders have the right to partake in the company’s capital returns, including during liquidation or winding up.
– Share Redemption: Shareholders may have the option to redeem their shares, subject to the terms and conditions set by the company.
This guide helps foreign investors and local entrepreneurs understand the legal protections and benefits of holding shares in a Kenyan company.
c) CR8 – Notice of Residential Address or Change of Address of Directors [Section 138 of the Companies Act, 2015]. This form is used to register the physical address of the company directors and shareholders.
d) Statement of Nominal Share Capital – Shows the company’s total share capital, the types of shares, and the value of each share.
e) Form BOF1 (Register of Beneficial Owners) – Lists the real owners of the company, their share percentages, contact details, and how their ownership was verified.
Also, gather these documents for each director/shareholder:
– Copy of National ID or Passport
– Recent Passport photo (digital copy)
– KRA PIN certificates for Local directors and shareholders.
N/B– A company is required to appoint a secretary only when its paid-up capital reaches KES 5 million or above.
4. Submit Your Registration Online
– Go back to your eCitizen account.
– Upload all signed and scanned forms and supporting documents.
5. Pay the Registration Fee
The cost of registering a company in Kenya is approximately KES 10,750, payable electronically via M-Pesa or other approved payment methods. Then, submit your application for review and approval.
6. Receive approval and documents.
Once your application has been reviewed and approved, you will receive a notification along with the following documents:
– A Certificate of Incorporation
– A CR12 form (shows company directors/shareholders)
– A Company KRA PIN
7. Post-Registration Steps
To ensure full compliance and get your business up and running, complete these important steps:
(a) Register with the Kenya Revenue Authority (KRA)
Activate your company’s KRA PIN and register for the relevant taxes, such as:
– Value Added Tax (VAT)
– Pay As You Earn (PAYE) for employee salaries
– Corporate Income Tax
(b) Apply for Business Permits and Licenses
Depending on the industry and location, you may need additional licenses from your county government or regulatory bodies (e.g., health, construction, education).
(c) Register with the Social Health Authority (SHA) for employee medical coverage, and with the National Social Security Fund (NSSF) to provide retirement benefits for your staff.
(d) Bank Account: A corporate bank account is crucial for efficiently managing your company’s finances, processing payments, and handling payroll.
Documents Required to Open a Business Bank Account:
– Certificate of Incorporation
– Company KRA PIN
– Form CR12 (showing directors and shareholders)
– Memorandum and Articles of Association
– Valid Business Permit
– Copies of Directors’ IDs and KRA PINs
Options for Company Registration in Kenya for Foreigners
Foreign investors looking to open a company in Kenya have two options when it comes to Business Registration in Kenya:
1. A Subsidiary: Foreign investors can establish a wholly owned subsidiary in Kenya through a parent company registered in another jurisdiction. Once registered, the subsidiary is treated as a Kenyan resident company and is subject to the standard corporate tax rate of 30%.
2. Independent Local Company: This type of a company is ideal for new ventures without a parent company. Here a Foreigner can own 100% of a Kenyan company. The shareholders / Directors can be one or more. Corporate Tax is at a rate of 30%
3. Foreign Branch: An existing foreign company can register a branch office in Kenya, formally recognizing its presence. Branch offices are taxed at a higher corporate rate (37.5%) compared to locally registered companies (30%).
Foreign business registration in Kenya has become easier than ever, thanks to government efforts aimed at attracting foreign investment.
Companies Registered in Kenya
Before choosing company registration services in Kenya, it is essential to select the appropriate legal structure that best suits your business goals and objectives. Here are some of the registered Companies in Kenya
1. Sole proprietorships
Sole proprietorships / Business Names are often registered by Kenyans looking to operate a small business using a name other than their own. There is no legal separation between the owner and the company. Hence, all the liabilities fall on the business owner, which makes it a high risk for personal assets if anything goes wrong.
2. Partnership
Partnerships involve two or more individuals pooling resources together to run a business. Businesses registered as a partnership are similar to sole proprietorships in that all liabilities fall on the individual partners.
3. Limited Liability Partnerships
The New Companies Act provides for the registration of limited liability partnerships. The setup is the same as that of a general partnership; the only difference is that the partners’ liability is limited, reducing their exposure.
4. Limited Liability Companies (LLCs) | Private limited company registration in Kenya
Limited liability companies (LLCs) are Kenya’s most common business entities because they are easy to set up, comply with, and protect owners from personal liability. The New Companies Act permits sole ownership in limited liability companies. The owners of an LLC can be natural or legal persons of Kenyan or foreign origin.
An LLC offers a straightforward process with minimal legal complications for those interested in private company registration in Kenya.
5. Branch Companies in Kenya
Foreigners looking to do business in Kenya can register a branch of their foreign company in Kenya. The significant difference between a branch company and an LLC registered by foreign owners in Kenya is that the Branch company will be regarded as a foreign entity and hence attract a slightly higher corporate tax.
6. Companies Limited by Guarantee
These are legal entities typically established to operate as nonprofits. They enjoy all the advantages of a legal person in Kenya.
7. Public companies in Kenya
Registration of a public company in Kenya requires a minimum of 7 shareholders and two directors. The company has no restriction on the maximum number of shareholders and can sell its shares to the public. Registering a public company in Kenya follows the same process as registering a private company.
Company Registry in Kenya
The Kenya Registrar of Companies is a government department responsible for company registration in Kenya and regulating and administering companies and business entities operating within the country. It enforces multiple legal frameworks, including the Companies Act, 2015, the Registration of Business Names Act, and the Limited Liability Partnerships Act. Additionally, it plays a crucial role in implementing provisions under the Insolvency Act, 2015, the Hire Purchase Act, and the Movable Property Security Rights Act, 2017.
Core Functions:
- Registering a business in Kenya (Private Limited Companies, Public Limited Companies)
- Registering Business Names and Limited Liability Partnerships
- Maintaining records on registrations
- Issuing certificates of incorporation
- Enforcing compliance with relevant laws
Requirements for Company Registration in Kenya
To successfully register a company in Kenya, submit the following requirements for registration of a private limited company in Kenya;
1. Proposed Company Names
At least 3 name options for your new company, in order of preference.
2. Business Activities Description
A brief but clear explanation of the nature and operations of the proposed business.
3. Parent Company Details (if applicable)
If a parent company is involved as a shareholder, you must include a notarized copy of its Certificate of Incorporation and a list of all its beneficial owners.
4.Identification Documents
Copies of valid travel passports / ID Cards for all directors and shareholders.
5. Photographs
Recent passport-sized photos of all directors and shareholders.
6. Contact and Personal Information
Postal and physical addresses, email addresses, phone numbers, and occupations for each director and shareholder.
7. Shareholding Structure
Indicate the percentage of shares assigned to each shareholder.
Investment Opportunities in Kenya
Kenya stands out as a key investment destination in East Africa, thanks to its stable economy, skilled workforce, and growing market. Before registering a company in Kenya, investors can explore a range of promising sectors, including manufacturing, agriculture, ICT and BPO, construction, livestock, tourism, and healthcare. Other emerging areas include the creative economy, mining, forestry, and the blue economy, offering diverse opportunities for both local and foreign entrepreneurs.
Cost of Company Registration in Kenya
The total cost of registering a limited company in Kenya typically ranges from KES 10,750 (approximately USD 100) to KES 25,000 (USD 195). This amount generally caters for the following:
- Name Search and Reservation: Verifying the availability of your desired business name
- Company Registration: Submitting incorporation documents through the eCitizen/BRS system
- Certificate of Incorporation: The official document confirming your business is legally recognized
The actual fee for registration of a company in Kenya may vary depending on the type of company and its authorized share capital. Additional expenses might arise from stamp duty, professional service charges (if you hire an agent or consultant), and foreign ownership considerations, especially if the company has non-Kenyan shareholders or directors
How Long Does It Take to Register a Company in Kenya
It takes approximately 7 days after payment is made and all required documents, along with duly completed forms, are submitted.
Tips to Make Your Business Registration in Kenya a Smooth Process
To make the registration of a company in Kenya a smooth process, consider these tips:
1. Engage a Professional or Consultant: Hiring a consultant can help you navigate the complexities of registration.
2. Ensure all documents are accurate and complete: Double-check your documents to avoid delays.
3. Follow up with the Registrar of Companies: Regular follow-ups can help speed up the process.
4. Prepare for Post-Registration Compliance: Plan for post-registration requirements to avoid fines and penalties.
Summary Table for Company Registration in Kenya
| Criteria | Subsidiary Company | Foreign Company |
|---|---|---|
| Time Required for registering a company in Kenya | Approximately 10 days | Approximately 10 days |
| Time to Open a Bank Account | Around 5 days | Around 5 days |
| Eligibility to Invoice and Hire | Within 15 days of registration | Within 15 days of registration |
| Minimum Directors and Shareholders | At least 1 director | Not required |
| 100% Foreign Ownership Allowed | Yes | Yes |
| Ability to Employ Expatriate Staff | Yes | Yes |
| Tax Identification Registration | Mandatory | Mandatory |
| Access to Double Tax Treaties | Yes | Yes |
| Eligibility for Government Tenders | Yes | Yes |
| Access to Trade Financing | Yes | Yes |
| Import and Export Licensing | Yes | Yes |
| Conversion to a Public Limited Company | Possible | Not applicable |
| Work Permits for Foreign Employees | Yes | Yes |
| Multi-Currency Bank Accounts | Available | Available |
Company Registration in Kenya FAQs
Foreign investors seeking to register a business in Kenya may face challenges such as lengthy administrative procedures, regulatory compliance requirements, minimum capital thresholds, and certain local ownership restrictions. While Kenya offers a favorable investment environment, navigating the registration process can be difficult without professional assistance.
Kenya offers vast investment prospects for foreign investors, driven by its rapidly growing economy. Key sectors with high potential include agriculture and agribusiness, technology and ICT, manufacturing, renewable energy, infrastructure development, real estate, and financial services.
No, it is not mandatory to register a business in Kenya. However, it is good practice for ease of doing business, compliance, and ensuring your intellectual property is protected
To register a company in Kenya, visit the eCitizen website and create an account. Navigate to the Business Registration Service and start an application for a Private Limited Company. Propose 3-5 company names. Fill in the required details, including office address and shareholder information. Upload necessary documents like CR1 and CR2. Pay the registration fee (KES 10,750 to KES 25,000). After approval, which takes up to 7 days, download your Certificate of Incorporation and CR12. This process ensures your company is legally registered.
A private company needs at least one director, or it can have as many as outlined in its articles of incorporation. If multiple directors are selected, at least one must be a human. Unless specified otherwise in the articles of incorporation, there’s no restriction on the maximum number of directors.
Yes, every company is required to have a registered office for successful registration. This office must be a physical location where notices and other communications can be received on behalf of the company. However, it doesn’t need to be the location where the company conducts its daily operations
A Cr12 is applied on eCitizen (BRS) by clicking on make application and then choosing the official Search option. Then enter the company name you want to search for, Choose the company you want from the list, enter the applicant’s details, confirm that you have provided all the details, Pay KES 650, and then go ahead and download the Cr12
In Kenya, obtaining a CR12 certificate usually takes 3 to 5 days. The timeline can vary based on the completeness of your application and any necessary approvals.
A CR12 certificate in Kenya is valid for one calendar year, or 12 months, from the date it is issued. Therefore, to maintain compliance, businesses must renew their CR12 certificate before it expires each year.
Each registered private company is required to have at least one individual director. In contrast, a public company must have at least two directors, one of whom must be an individual.
No, a minor cannot be a company director in Kenya. The law states that only individuals at least 18 years old can be appointed directors. Any appointment of a director who is under the age of 18 is considered void.
The company’s management must act swiftly. The remaining directors should notify the Registrar of Companies about the death. The director’s death does not dissolve the company; however, the board may need to appoint a new director to fill the vacancy. Following the company’s articles of association and relevant laws is essential to ensure proper succession and maintain compliance. Legal advice might be necessary to address any potential impacts on the company’s operations and governance
A single individual can own a company. This is known as a sole proprietorship or a one-person company, where the owner serves as both the sole shareholder and the director.
A private company can have a single director. However, a public company or a company limited by guarantee is required to have a minimum of two directors.
Conclusion:
At Afrisetup, we simplify the process of opening a business by alleviating the hassle of navigating the numerous steps involved. Whether you’re a local entrepreneur or a foreign investor, trust us to streamline the process and lift the burden off your shoulders. Focus on building your business while we handle the paperwork for you. Do you need assistance with company registration in Kenya?
Feel free to contact us today for expert advice.