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[ESTABLISHING A BUSINESS ENTITY IN KENYA]
b) Rights and duties of partners c) Expulsion and admission of partners d) Non-compete clause e) Dissolution of partnerships
hold the LLP liable for improperly kept books. d) An LLP must have a registered office in Kenya. e) The LLP Act also has provisions on winding up An LLP has several advantages over both companies and partnerships: a) An LLP has perpetual succession unlike a partnership. This means that LLPs remain unaffected by exits. b) An LLP has corporate identity and legal personality unlike a partnership. This means that an LLP can sue and be sued in its own name. It can also hold property. c) An LLP is easier to wind up than companies d) An LLP’s statutory compliances are not as rigorous was companies LLPs are suitable for some professional trades and short-term businesses. An LLP provides a stronger hedge of protection in terms of personal liability than partnerships. iv) Companies Companies are registered under the Companies Act 2015. There are two main types of companies in Kenya and that is companies limited by shares or companies limited by guarantee. Companies can also be classified as private or public companies. A private company is one having 1-50 members while a public company has more than 50 members. A private company has restrictions in terms of transfer of shares while a public company does not have a similar prescription. Companies have very detailed governance and maintenance regulations. A brief listing is
In Kenya dissolution of partnerships is either through expiration of term, death, bankruptcy, illegality or via court order. The liability of partners is joint, and partners are jointly liable for the wrongs of their co- partners in the firm. Where a partner has a debt, creditors can charge his share in the partnership property. iii) Limited liability partnerships Limited liability partnerships ( LLPS) are recognised in Kenya under the Limited Liability Partnership Act No. 42 of 2011 ( LLP Act). LLPS are corporate bodies with perpetual succession and legal personality separate from its partners. This means that it can sue\be sued and also hold property in its own name. Exit of partners does not affect the existence of an LLP unlike a partnership which can be dissolved by exit of partners. LLPs can be formed either by natural persons or corporate entities. The Act is flexible in that it allows founders of LLPs to draft their own LLP deed or adopt the LLP deed as provided for in the LLP Act. Corporate governance provisions LLPs a) An LLP must be formed by 2 or more persons and the Act allows the persons to either be corporate or natural. b) The LLP must nominate a manager whose role is set out in the Act c) An LLP must keep proper books of accounts. The registrar of LLPs can ask to see the books of account and can
ILN Corporate Group – Establishing a Business Entity Series
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