Kenya is a fast-growing country in East Africa. This jurisdiction may appear as a suitable option for export-oriented manufacturers as doing business here is cost-effective in most cases. The country also has a rapidly developing e-commerce business hub and telecommunication sector. If you consider this jurisdiction as potentially suitable for establishing your business presence, this can be actually made in one of the next forms.
Major Forms of Legal and Business Presence
If you think about becoming present in Kenya, you may do this in one of the next major forms:
- Private Company Limited by Shares – an entity where the liability of each shareholder is limited to the invested amount only. The maximum number of shareholders is 50 in this case. General demands for the exact amount of statutory capital are absent here. Still, certain restrictions concerning the transfer of the shares should exist. The company is also prohibited from making public offerings of its shares to the public.
- Public Company Limited by Shares – a corporate entity where the liability of each shareholder is also restricted to the value of owned shares only. Still, the company may freely offer its shares to the public. For a publicly listed company, the statutory capital should be at least KES 6.75 million.
- Partnership – a business arrangement for conducting joint commercial activity where business partners are jointly and severally liable for the result of the partnership’s operation.
- Limited Liability Partnership – a business option where cannot be more than 20 partners among which should be (i) at least one general partner who bears the unlimited financial liability for the results of the partnership’s operation and actually manage such partnership and (ii) one or more limited partners whose liability is restricted to the contributed amounts only without the right to operate to partnership’s activity.
- Branch – an opportunity for an overseas company to perform in Kenya the same types of commercial activities as abroad.
- Society – a type of formation that is arranged for the purpose of promotion of the economical interests of its participants (these are trade associations, for instance, and similar organizations). 10 members at least should form a society.
Registration Requirements and Steps
The business registration process in Kenya, preliminary looks this way:
- Identifying exactly the type of business you are going to incorporate in Kenya.
- Choosing and verifying the name for a future entity. The chosen name should be reserved.
- Arranging the registered office of a future entity.
- Collecting data about founders, beneficial owners and entity’s management.
- Drafting the statutory documents.
- Lodging the package of documents to the Registrar.
- Registration for tax and social security purposes.
- Opening a corporate bank account.
- Obtaining licenses and permits (optional).
Legal and Regulatory Framework
The local legal system is based on the model of English common law. There are no restrictions or required approvals for foreign investors. It is comparatively easy to enter this country and conduct business there.
The Companies Acts, the Registration of Business Names Act, the Partnership Act, the Limited Liability Partnership Act, the Societies Act, the Export Processing Zones Act are major legal acts governing the incorporation and running of a business in Kenya. The Business Registration Service, the Ministry of Industrialization, Trade and Enterprise Development, the Kenya Revenue Authority, the Capital Markets Authority are major regulatory authorities of this jurisdiction.
Advantages of the Jurisdiction
Setting up a company in Kenya may be promising in view of the next potential benefits:
- Stable economic environment
- Good access to many trade markets (the East African Community, the Common Market for Eastern and South Africa, for instance)
- Good infrastructure
- Encouragement of foreign investments (providing tax exemptions in local Export Processing Zones, for example)
Tax System of Kenya
In this block, you may see major tax highlights you should be aware of while assessing an option of the company registration in Kenya:
- Corporate income tax rates – (a) 30% – for resident entities (b) 37.5% – for non-resident entities
- Personal income tax rate – 30%
- VAT rate – 16%
- Withholding tax rates (for non-residents) – (i) dividends – 15% (ii) interests – 15-25% (iii) royalties – 20%.
- Capital gains tax rates – (i) corporate – 5% (ii) individual – 5%.
How Prifinance Specialists May Assist You
If you intend to create a company in Kenya, Prifinance specialists may provide you with well-grounded consideration of this option as well as suggest alternatives. Reach us for more precise discussions and suggestions for all registration-related and business matters.