How to register a company in Kenya
How to register a company in Kenya
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Kenya is located on the Eastern Region of the African Continent. It is also well known for its tourism especially its safaris as it has a number of national parks and reserves for wildlife. It also has surprisingly nice beaches in the coastal region which fronts the Indian Ocean. The country has a population of 48 million as at January 2017. You may seek to know right information of how to register a company in Kenya.
The country’s economy mainly depends on tourism as it contributes 61% to its Gross Domestic Product. It also depends on agriculture where coffee and tea are its cash crops. It has also started quite recently to export fresh flowers to Europe. The country’s currency is called Kenya shilling (KES).
Before you start a business, you need to decide the type or nature of business that you want to pursue. Once you have decided then you would need to incorporate a company.
Types of companies available in Kenya
The types of companies available are normally quite similar anywhere in the world. The companies are –
- Sole proprietorship – As with any sole proprietorship, the business is run and owned by a single person. If this type of entity trades under a business name, the name has to be registered under the Registration of Business Names Act. The Registrar will then issue a Certificate of Registration.
- Partnerships –This type of entity is restricted to 20 partners. If the number of partners exceeds 20, the company would need to be registered under the Companies Act. If the entity doesn’t trade under the partner’s names, the business name must be registered.
- Limited liability partnership – For this type of partnership, there must be a manager who must be a Kenyan resident.
- Limited companies – There are basically 2 types of limited companies. They are
- a) Private limited – For this type of company, there is a minimum of 2 members to a maximum of 50 members. There is no minimum authorized capital but there must be at least 1 director. The transfer of shares in this company is restricted and not freely transferable. There is also no requirement to publish its financial accounts and this is right information of how to register a company in Kenya as foreigner.
- b) Public limited – A public company must have a minimum of 7 members and there is no maximum number of members. This type of company is normally used for public listed companies. There must have at least 2 directors and the minimum authorized capital is KES6.75 million. The company can sell or transfers its shares to the public. It must have a company secretary and it must publish its accounts. These accounts must also be filed with the Registrar.
- Branch office – A company that is registered outside of Kenya but still does business in Kenya is through a branch office. It is also known as a foreign company. However 30% of its shareholdings must be held by Kenyans.
How to register a limited liability company in Kenya
Kenya ranks quite high in the Ease of Doing Business report at 92 out of 190 countries (2017 data). The following process will help how to register a limited liability company in Kenya –
- Reserve a company name –The applicant must submit a form with the reserved names to the Nairobi Huduma Centre. There is a charge of KES100 per reserved name. Once the payment is made, the name will be reserved for 30 days or can be extended to a maximum of 60 days from the reservation date. This process takes one day on the average and can also be done online or through a text messaging service. However the applicants will still need to go to the Huduma Centre to receive the final approval.
- Apply for Kenya foreign company registration-incorporation – The applicant company are provided with a standard Articles of Association. However additions to this standard format can still be done. The application must be submitted with the following documents and this is the way of how to register a company in Kenya–
- Forms which show the Notice of Appointment of Directors and their particulars and also a Notice to show the address or any change of address of the directors.
- Application to register the company limited by shares
- Memorandum and Articles of Association
- Statement of nominal capital
- Application for name reservation
- Copy of ID of the directors
- Copy of PIN certificate
- Passport photo of each director together with the contact details
There is a flat fees of KES10,000 for each application and this process takes about 12 days.
- Register for taxes – This is done at the Kenya Revenue Authority and takes about 1 day. The personal Tax Identification Number (PIN) of the directors and the company Tax Identification Numbers are required to register for the Value Added Tax (VAT), local service tax and Pay-As-You-Earn (PAYE) tax. The PIN certificates of at least 2 signatories are required. They can either be 2 directors or 2 shareholders or a director and a company secretary. Once the PIN for the directors are obtained, they can then apply for the company PIN, VAT and PAYE. If the Kenya Revenue Authority has not received the confirmation about the company’s registration, a copy of the Certificate of Incorporation must be submitted.
- Apply for business permit –The applicant company must apply this permit with the City Council. The fees will vary based on the size of the business as follows-
– Large trader, shop or retails service with 21-50 employees with business premise with a size of 300-3,000 square meters or at a prime location, the fees are KES30,000.
– Medium trader, shop or retail with 5-20 employees and premise of 50-3,000 square meters, the fees are KES15,000
Company registration fee in Kenya
Read how to register a company in Kenya and in addition to this there is an application fee of KES200.
- Register with the National Social Security fund – This fund provides the employee a lump sum amount at the point of retirement.Normally a portion of this is paid by the employer and another portion by the employee. The employee’s portion is usually deducted from the salary. As at June 2014, the enactment of the National Social Security Fund Act (2013) states that 12% contribution must be made. The employer and employee both pays equal halves of the amount.
- Register with the National Hospital Insurance Fund – The employee must contribute a fixed sum to this fund and is deducted from their salary. This is basically to cover the medical costs.
- Make a company seal – This step is optional but most companies still make a seal. The seal may be needed for official documents such as bank loans, agreements etc.