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[ESTABLISHING A BUSINESS ENTITY IN KENYA]
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 Beneficial Ownership Disclosure Requirements In line with global anti-money laundering (AML) standards and Kenya's commitments under the Financial Action Task Force (FATF), the Companies Act, 2015 (as amended by the Companies (Beneficial Ownership) Regulations, 2022), mandates comprehensive disclosure of beneficial ownership for all companies incorporated or registered in Kenya. Effective from January 1, 2023, and with enforcement intensified in 2024, every private limited company, public company, and limited liability partnership must maintain an internal register of beneficial owners—defined as individuals who ultimately own or control 25% or more of the shares, voting rights, or influence over management decisions—and file this information with the Business Registration Service (BRS) via the eCitizen portal. Private companies were required to submit beneficial ownership registers by November 30, 2024. Public companies faced an earlier deadline of October 31, 2024. As of November 2025, the BRS reports over 70% compliance, with ongoing amnesties for late filers until December 31, 2025, to avoid penalties. Any changes to beneficial ownership (e.g., due to share transfers or restructurings) must be reported within 14 days. Failure to file or maintain accurate records attracts fines of up to KES 500,000 per offense, director disqualification, and potential striking off the company register. The BRS issued directives in
October 2024 emphasizing enforcement, with 399,595 companies yet to comply as of that date. Publicly listed companies on the Nairobi Securities Exchange are exempt from filing but must disclose via annual reports. The rationale for this requirement is to enhance transparency in business dealings, particularly for foreign investors establishing entities in Kenya, by mitigating risks of illicit finance. For NIFCA-certified firms, beneficial ownership disclosure is integrated into the certification process, ensuring alignment with AML due diligence under the Proceeds of Crime and Anti- Money Laundering Act, 2009 (as amended). Foreign companies The law governing 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 described 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
ILN Corporate Group – Establishing a Business Entity Series
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