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[ESTABLISHING A BUSINESS ENTITY IN KENYA]
provided for below of the major governance provisions b) Shareholder rights are covered under Part VIII of the Companies Act c) Directors’ regulations are covered under Part IX of the Act d) Provision for company secretary-Part XII of the Act e) Resolutions and company meetings-Part XIII of the Act f) Provisions on share capital-Part XIV g) Provisions on company accounting practices-Part XXV h) Provision on auditing-Part XXVII i) Provision on foreign companies-XXXVI Foreign companies The law as to the operation and opening of companies in Kenya is the Companies Act of 2015. A business seeking to expand into the Kenyan Market has the option of registering a branch of the foreign parent company or incorporating a subsidiary. A subsidiary is defined under section 2 of the Companies Act as a company of which another company is its holding company. A subsidiary undertaking/company is equally defined as an undertaking of which the other undertaking is its parent. As per the Laws of Kenya, a company is considered a Holding Company if it: (a) Controls the composition of that other company’s board of directors; (b) Controls more than half of the voting rights in that other company; (c) Holds more than half of that other company’s issued share capital; Or
(d) Is a holding company of a company that is that other company’s holding company. (Take for example a company named X which is the holding company of company U. Company X may also have a company (company Y) above it which is its holding company. A parent undertaking on the other hand is an undertaking that: (a) holds a majority of the voting rights in the other undertaking; (b) is a member of the other undertaking and has the right to appoint or remove a majority of its board of directors; (c) has the right to exercise a dominant influence over the other undertaking — (I) because of provisions contained in the other undertaking's articles; or (ii) because of a control contract; (d) has the power to exercise, or actually exercises, dominant influence or control over the other undertaking; or (e) is a member of the other undertaking and controls alone, under an agreement with other shareholders or members, a majority of the voting rights in it; These definitions are contained in Section 2 of the Companies Act, 2015. Notably, the Act fails to provide for the definition of a Branch under its definitions section.
ILN Corporate Group – Establishing a Business Entity Series
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