Share buyback is the process where a company repurchases its own shares from its existing shareholders. Companies buy back their own shares for various reasons. The process of share buybacks in Kenya is regulated by the Companies Act, which generally restricts share buyback but provides exceptions where a company may be allowed to do so pursuant to its compliance with certain requirements. Some of the requirements that must be met for a share buyback to be valid include: (a) only fully paid-up shares can be repurchased; and (b) the repurchase should be financed by distributable profits or proceeds from a fresh issue of shares. Financing of the repurchase from the capital of the company is allowed but under very stringent requirements. Although provided under our laws, share buybacks are not common in Kenya.  Nation Media Group is currently involved in the country’s first ever share buyback through the Nairobi Securities Exchange.  It is likely that more companies will consider this option in the future.

Conversion of Titles: What Land Owners should understand about the Process – Conversion is the statutory process of migrating all parcels of land from repealed land registration statutes to a unitary regime under the current Land Registration Act, No. 3 of 2012. The titles issued under the repealed statutes will be cancelled and replaced with new titles under the new regime. However, the ownership of the properties, the parcel size and the interest conferred should not be affected by this conversion process, and land owners have a right to object to the conversion process if any of the new details are inconsistent with the details in their current title. The process of conversion includes the publication of a notice by the Ministry of Lands and Physical Planning providing a list of all the properties to be affected by the conversion process. The Gazette Notice should also state the ‘old’ Land Reference Numbers, the new Parcel Numbers and the size of the properties. Owners of the affected properties would then have 90 days from the date of the notice to lodge any complaints regarding the conversion. The Ministry has already issued a number of notices and the objection periods for these have already lapsed. More Gazette Notices are expected to be issued. Land owners are therefore encouraged to confirm whether their properties are affected, and lodge any complaints, within the prescribed timelines.

A Free Trade Agreement (FTA) is an agreement between two or more countries to facilitate trade and eliminate trade barriers. On 6th February 2020, the United States and Kenya announced the launch of negotiations to conclude a comprehensive and reciprocal FTA that would be the first of its kind between the United States and a sub-Saharan African country. The FTA is intended to cover various areas, including goods market access, technical barriers to trade, agriculture, industry, digital trade and investment, and intellectual property.

Deadline for Updating Beneficial Ownership Registers – Companies were given an extension of up to 31st July 2021 to update their Beneficial Ownership Registers. Companies are advised to urgently prepare and submit a register of their beneficial owners or face the consequences for non-compliance. The Beneficial Ownership Register was introduced by the Companies Act 2015 and the Companies (Beneficial Ownership Information) Regulations 2020. The said Act and Regulations make it an offence for a company, and every officer of that company, to fail to comply with this requirement. Directors of a company risk being fined up to Kshs. 500,000/= each if they fail to update the company’s beneficial ownership register within the stipulated time that lapses on 31st July 2021.

Effect of Sectional Properties Act 2020 on long-term leases – By a Notice dated 7th May 2021, the Ministry of Lands and Physical Planning notified the public that it will no longer register long-term leases supported by architectural drawings for units in buildings with effect from 10th May, 2021. This is in accordance with the Sectional Properties Act 2020 (“the Act”) which requires that all properties contained in long-term leases be properly georeferenced and approved by Survey of Kenya. In compliance with the Act, the Ministry has issued draft regulations which, once enacted, will guide the process of converting long-term leases registered on the basis of architectural drawings to conform to the Act and the Land Registration Act, 2012. The Ministry has also assured the public that unit owners of the affected long-term leases will not incur additional stamp duty upon conversion provided that the requisite stamp duty was paid as part of the registration formalities of the long-term leases.

Data Protection in Action: How the Draft Data Protection (General) Regulations aim to protect your personal data – The Draft Data Protection (General) Regulations 2021 (“the Draft Regulations”) were recently published for public consultation. They elaborate the rights and duties of the data subjects, data controllers and data processors, and also provide the procedures for enforcing the said rights and duties. Some of the rights that data subjects enjoy include: right to consent to the use of their personal data, right to request for their data to be rectified or deleted, right to object to the commercial use of their data, right to have their personal data anonymised or pseudomised, right to notify the Data Commissioner of any data breach, among other rights. The Draft Regulations also provide that any server used for processing personal data for actualising public goods or services such as education or elections must be located in Kenya. The Draft Regulations are therefore aimed at substantively implementing and effecting the provisions of the Data Protection Act.

 The Landlord and Tenant Bill 2021 (“the Bill”) seeks to consolidate all the laws on residential and commercial tenancies and to ensure regulation of the rental sector in Kenya. It applies to both residential and business premises (with some exceptions) and proposes various provisions including establishment of tribunals, limits on rent increases, termination notices, among others. On rent increases, the Bill provides that rent can only be increased after 12 months for residential premises and 24 months for business premises. The landlord also has to give a 90-day notice for the increase in rent to be valid. On termination notices, the Bill provides that, unless there is a breach of covenant by the tenants or the term of the tenancy has expired, landlords have to give at least 24-month notice of termination for business premises and 12-month notice for residential premises. The Bill was published in February 2021 and is still undergoing review in Parliament.

Vide the recently published Insurance Professionals Registration Bill 2020, the National Assembly proposes to make provision for the registration and regulation of insurance professionals in Kenya. The Bill provides for the establishment of the Insurance Institute of Kenya, the Insurance Professionals Examinations Board and the Registration of Insurance Professionals Committee. These bodies will examine, register, regulate professional conduct and maintain the level of standard of services provided by insurance professionals.

Generally, trademarks last for period of 10 years and the owner is required to renew the licence if they want to continue protecting their marks. If there is no renewal application, the Registrar will notify the owner of its expiry and the owner will have 60 days to make the application for renewal or risk the mark being removed from the register. In line with this, the Registrar of Trademarks informed the public of its intention to remove 2496 trademarks by a notice dated 15th February 2021. Affected owners only have 30 days from 15th February 2021 to apply for the renewal of their marks or risk them being removed from the Register. Once removed, the owner will incur restoration fees in addition to the renewal fees to restore the mark to the Register.

Pursuant to the new Stamp Duty Act (Valuation of Immovable Property) Regulations 2020, the Chief Government Valuer has now appointed private valuers in private practice to carry out valuation of immovable property for stamp duty. Previously, valuation could only be conducted by government valuers which created a lot of backlog that delayed the registration of transfers of interest in land. A list of the private valuers appointed has been published for access by the public.

The Ministry of Lands is in the process of cancelling title deeds in Nairobi issued under the repealed Land Acts and replacing them with new titles under the Land Registration Act 2012. The issuance of the new titles will commence on 1st April 2021 after the registers of the old titles are closed. Owners of affected properties will be required to surrender their old titles and apply for their replacement after the Ministry publishes a notice to that effect. The new titles will be issued under the new regime but the ownership, size and other interests registered against the title will be retained.

  The Lands Registry in Nairobi has converted some land reference numbers in Nairobi to new parcel numbers. These properties will be issued with new cadastral maps which can be accessed at the Nairobi Lands Registry. The affected properties have been published in this Kenya Gazette and owners of the affected properties who are aggrieved by the conversion have been invited to make their complaints to the Registrar before 1st April 2021. After 1st April 2021, all transactions relating to the affected properties will be carried out in a new register.

On 11th December 2020, the President signed into law the Sectional Properties Bill 2019. The new Act repeals the Sectional Properties Act of 1987 and will now be the substantive law that governs matters regarding sectional properties including the division of buildings into units to be owned by individual proprietors. 

For a person to be able to publicly auction immoveable property (e.g. land), they are required by law to register a prohibitory order against the title of the land first. This is what is known as attachment of property. It is only after attachment that a person can move to court to have the property sold by public auction. 

Section 9(9) of the Banking Act provides that where one institution transfers its assets and/or liabilities to another institution, no transfer fees, stamp duty, registration fees, licence duty or other charges shall be payable. Institutions, in this case, refers to a bank, financial institution (other than a bank) and a mortgage finance company.

Section 4 of the Act specifies that the Act applies to the processing of personal data by a data controller or data processor (1) who is established or ordinarily resident in Kenya and processes personal data while in Kenya or one (2) who is not established or ordinarily resident in Kenya, but processes personal data of data subjects located in Kenya.

These Regulations have now been gazetted through Legal Notice No. 190 of 2020. Among other issues, the Regulations require non-residents to account for the VAT made on taxable supplies made on a digital market place. The Regulations also specify the scope of digital services that are subject to VAT, the registration requirements for foreign businesses providing digital services and instances for appointment of a tax representative. Importantly, any non-resident offering digital services in Kenya is required to register within six months from the date of publication of the Regulations.

Obtaining the consent of the data subject before collecting, recording, organizing, structuring, storing, adapting, altering, disclosing or disseminating personal data is underscored under the Data Protection Act, 2019. Although there is no prescribed form of consent under the Act, the law requires that any consent to the processing of personal data must be express, unequivocal, free, specific and informed. Notably, it is the data processor or controller who has the responsibility of proving that the data subject consented to the processing of their personal data in the event of a dispute.

Can Directors of a company institute a suit even when the company is under administration? The Court of Appeal in Odera Obar & Co. Advocates v Charter House Bank Limited [2018] eKLR held that even in the case where a company is under statutory management, the corporate structure of the company remains intact until it is wound up/liquidated. This means that directors have the power to institute a suit on behalf of the company despite the company being under statutory management.

Effective October 13, the Government rolled out an automated system for notification of details of beneficial owners of companies. In addition, the company registration portal has been updated to require a person incorporating a new company to provide among other details, the company’s total ownership, the direct ownership details, the voting rights by each shareholder expressed as a percentage of the company’s total voting rights, the type of control/influence a particular shareholder would have in the company and the type of right that the particular shareholder may have to appoint/remove directors

The Kenya Information and Communications (Consumer Protection) Regulations, 2010 provide for various rights of consumers of ICT services. These include (1) the right to be charged only for the products and services they subscribe to, (2) the right to personal privacy and protection against unauthorized use of personal information and (3) the right to be protected from unfair trade practices by licensees. The Regulations also require licensed service providers to provide easily understood information about its complaint handling processes. Last week, the Communications Authority of Kenya published the draft Guidelines that will assist licensees to comply.

The Ministry of Transport, Infrastructure, Housing, Urban Development and Public Works published the National Construction Authority (Defects Liability) Regulations, 2020 in April this year. The Regulations, which have received opposition from contractors and lobby groups in the construction industry, aim at conferring protection to developers of commercial properties by regulating the limitations on period within which a contractor may be liable for defects in the building. The Regulations have also introduced a latent defect liability period to cater for concealed structural flaws that may not be detectable during the ordinary patent defects liability period.

The Companies (Beneficial Ownership Information) Regulations, 2020 were published in February this year to operationalize the provisions of the Companies Act on keeping of records regarding a company’s beneficial ownership. While the Government has announced plans to roll out an automated system for notifications to the registry by next month, the company’s obligation to keep records of beneficial owners as well as the consequences of default already exist.

Many businesses have experienced and continue to experience reduced turnover, as a result of the ongoing pandemic. This development has hampered many businesses’ ability to service their credit facilities on time, increasing chances of insolvency proceedings being initiated. In an article published in today's issue of the Business Daily, we  explore the various options available to businesses with constrained capital flow and advise on how they can remain afloat while at the same time meeting their financial obligations

As part of the Government’s efforts to enhance the ease of doing business, the Ministry of Lands and Physical Planning published the Land Registration (Electronic Transactions) Regulations, 2020 in July. The Regulations provide for among other matters, the establishment of the electronic land registry, the procedure and requirements for registration of users, conduct of official search, as well as the valuation, stamping and registration formalities through the LIMS portal.

The proposed Value Added Tax (Digital Marketplace Supply) Regulations, 2020 provide that all suppliers of digital services including e-books, mobile applications, music, online gaming, software, e-tickets and services such as ride hailing apps like Uber shall register for VAT. This requirement also applies to suppliers from foreign countries who, although are non-resident, supply to recipients in Kenya.

An amendment introduced by the Tax Laws (Amendment) Act, 2020 removed insurance agency and brokerage services from the list of exempt supplies under the Value Added Tax Act. Following a petition filed by the Kenya Insurers Association challenging the amendment, the High Court on 16th July 2020 issued conservatory orders suspending implementation of the amendment pending the hearing of the main petition.

The Kenya Revenue Authority Act was amended by the Finance Act, 2020 to introduce a limitation of action provision to the effect that legal actions against KRA are to be instituted within a period of 3 years from the date of the matter complained of. In the case of a continuous injury, legal action can only be instituted within six months from the cessation of the act. Further, a one-month notice is now required to be served upon the Commissioner- General prior to commencing the proceedings.

The Finance Act 2020 introduced a Voluntary Tax Disclosure Programme through which a person discloses their tax liabilities so that the Commissioner grants them relief from penalties and interests. The Programme will run for a period of 3 years with effect from 1st January 2021. Depending on the year the disclosure is made, the person will enjoy remission on interest and penalties on the tax liability of 100%, 50% and 25%. Notably, the Bill proposes that the person who makes such disclosure shall not be prosecuted for the liability disclosed and the disclosure shall be confidential.

The recently passed Finance Act 2020 has amended the Capital Markets Act by granting the Authority power to licence, approve and regulate private equity and venture capital companies that have access to public funds.

The High Court issued orders allowing companies to conduct virtual AGMs if they find it impracticable to conduct physical meetings in the manner required under their Articles of Association and the Companies Act due to the Covid-19 pandemic restrictions. In the case filed by the Kenya Private Sector Alliance Limited, the court extended the avenue for virtual meetings to all companies. The court had earlier in April made orders touching only on listed companies.

The Land Registration (Amendment) Bill, 2020 seeks to establish the office of a Complaints Reviewer at the Lands Registry and the Survey of Kenya. The key role of the office shall be to receive and adjudicate on complaints by Kenyans relating to registration and survey of land in an effective and impartial manner.

The Finance Act, 2019 introduced provisions subjecting income earned or accrued through making of supplies via a digital market place in Kenya to VAT. In a bid to operationalize this, the National Treasury has now published the Draft Value Added Tax (Digital Marketplace Supply) Regulations, 2020 pending implementation of the tax. Notwithstanding the likely pitfalls in implementation, businesses need to ready themselves for the roll out once the regulations come into force.

The Finance Bill 2020, seeks to amend the Kenya Revenue Authority Act to introduce a limitation of actions provision. The proposed amendment requires that legal proceedings against KRA may only be instituted within a period of 12 months from the date of the complained act, neglect or default

A voluntary tax disclosure program is a program through which governments waive penalties and/or interest on unpaid tax liabilities or unfulfilled filing requirements in exchange for the eligible taxpayers voluntarily disclosing certain information with respect to their liability. The programs provide an opportunity for governments to realize more revenues while avoiding costly and contentious audits, litigation and criminal proceedings. The Finance Bill, 2020, seeks to amend the Tax Procedures Act, 2015 to introduce such a program.

The Finance Bill, 2020 proposes a voluntary tax disclosure programme where a person discloses their tax liabilities in order to be granted relief from penalties and interests. The Commissioner is empowered to grant the relief sought if satisfied with the facts disclosed by the applicant.

Through a proposed amendment to the Capital Markets Act, the Finance Bill, 2020 seeks to empower CMA to license, approve and regulate private equity and venture capital companies that have access to public funds. Currently, a venture capital company may operate without CMA approval save that they may voluntarily be registered under the Capital Markets (Registered Venture Capital Companies) Regulations in 2007.

The Tax Laws (Amendment) Bill, 2020 was signed into law on Saturday 25th April 2020. The law aims at cushioning the public against the financial effects of Covid-19 pandemic. Wondering when provisions of the Act shall come into force? Section 1 of the Act provides that save for an amendment to section 5(2) of the Value Added Tax Act, 2013, all other provisions of the Act, including on individual rates of tax for various income bands, came into force on the date of assent, which was on Saturday.

Where a pandemic negatively impacts a borrower’s ability to meet contractual obligations, the borrower and the financial institution will be required to re-negotiate and agree on repayment modalities. In addition, except as otherwise allowed, a party may not commence execution or enforce a security or terminate a lease over immovable property due to non-payment of rent. Lastly, where a pandemic has affected the financial capacity of a tenant to meet their obligations, parties may agree on how the tenant shall meet their obligation at the end of the pandemic.

Are you considering remote-working, compulsory leave, pay-cuts, termination, redundancy and such measures for your employees during this Covid- 19 situation? Are you contemplating being relieved from other existing contracts in light of the pandemic?

VAT on Digital Market Supplies. The Finance Act, 2019 introduced provisions subjecting income earned or accrued through making of supplies via a digital market place in Kenya to VAT. In a bid to operationalize this, the National Treasury has now published the Draft Value Added Tax (Digital Marketplace Supply) Regulations, 2020 pending implementation of the tax. Notwithstanding the likely pitfalls in implementation, businesses need to ready themselves for the roll out once the regulations come into force.  

On January 24, 2020, the Court of Appeal upheld a judgement of the High Court of Kenya affirming that a chargee is not obligated to pay Capital Gains Tax (CGT) in exercising its statutory power of sale. (21st Feb 2020)

Wondering what Data Protection Principles should guide your handling of data? The Data Protection Act, 2019 requires data to be (1) Processed in accordance with the right to privacy of the data subject, (2) processed lawfully, fairly and in a transparent manner, (3) collected for explicit, specified and legitimate purposes.

The Finance Act 2019 has expanded the definition of taxable income to include income accruing through a digital marketplace. The National Treasury is expected to come up with regulations to operationalize the same. Stay in touch with us for updates on this. (31st January 2020)

Requires the collection of data to be done from an individual and not through third parties. Find out more about this and circumstances under which exceptions are allowed. (24th Jan 2020)

Is the Data Protection Act, 2019 limited to entities established in Kenya? Well, the Act primarily applies to entities established or resident in Kenya. However, it also applies to entities established outside Kenya or which are non-resident, but which process personal data of persons located in Kenya. Now you know! (13th Dec 2019)

The Data Protection Act, 2019 outlaws the use of personal data for commercial purposes, unless the data subject consents to it or the use is permitted under law. Find out more about restrictions imposed on use of personal data for commercial use, by contacting us. (6th Dec 2019)

Investee companies of real estate investment trusts are now exempt from corporation tax. This has been effected through amendments introduced to the Income Tax Act by the Finance Act 2019. (29th Nov 2019)