299
[ESTABLISHING A BUSINESS ENTITY IN KENYA]
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 their partners. This means that it can sue and 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 the 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 for LLPs a) An LLP must be formed by two 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 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 a company d) An LLP’s statutory compliance is not as rigorous as that of 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 a partnership. iv) Companies Companies are registered under the Companies Act 2015. There are two main types of companies in Kenya, and these are 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 the transfer of shares, while a public company does not have a similar limitation. Companies have very detailed governance and maintenance regulations. A brief listing is provided 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 the company Secretary-Part XII of the Act
ILN Corporate Group – Establishing a Business Entity Series
Made with FlippingBook Ebook Creator