The Finance Act, 2022 (“the Act”), published on 23rd June, 2022 introduced various changes to several statutes, amongst them, the Income Tax Act, Chapter 470 Laws of Kenya. Section 15 of the Act has amended Section 34(1)(j) of the Income Tax Act by increasing the tax on Capital Gains from 5% to 15%. Consequently, the sellers of land will now be required to remit 15% of the gains from such sale of land as Capital Gains Tax. While this increase could be a move to align the national tax rate to the regional CGT rates, and increase revenue collection in the local property sector, it is noted that this increase could slow down real estate transactions involving the sale of land. This CGT increase will take effect from 1st January, 2023, as provided in Section 1 of the Act.

On 4th May 2022, the Capital Markets Authority (“CMA”) published the Draft Capital Markets (Public Offers & Listing of Securities) Regulations, 2022 (“draft Regulations”) inviting the general public and stakeholders for comments pursuant to section 12A (3) of the Capital Markets Act. The draft Regulations seek to repeal the existing Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations 2002 (“existing Regulations”) which are deemed as being overly prescriptive, outdated and onerous thus hindering the growth of the capital markets in Kenya. The draft Regulations seek to address the pertinent shortcomings in the existing Regulations in a bid to encourage more listing of securities while also ensuring the protection of investors.   Some of the changes proposed by the draft Regulations include: Allowing SMEs to raise capital on the GEMS market (now referred to as SME Market Segment) at the time of listing – the existing Regulations only allow SMEs to list by introduction; Introduction of the SME Fixed Income Securities Market Segment – This will allow smaller companies (SMEs) to issue bonds (upto an aggregate amount of Kshs. 250 Million) to the market creating another avenue for SMEs to raise capital; Merging the Main Investment Market Segment and the Alternative Investment Market Segment – Transitional provisions have been provided; New provisions on shelf prospectus/shelf registration and green shoe options; Broadening the scope of transaction advisers and removing the requirement of having a nominated advisor for issuers of securities on the GEMS (now SME Market Segment); Reviewing the provisions on private offers to address current shortcomings; Introduction of Special Purpose Acquisition Companies (SPAC). The draft Regulations are available for download on the CMA website. The public has until 3rd June, 2022 to give comments of the draft Regulations.

On 31st March 2022, the Office of the Data Protection Commissioner (ODPC) issued a press notice notifying the public that the Regulations on the Registration of Data Controllers and Processors will come into effect from 14th July 2022. The Regulations inter alia, set out the requirements and procedures for registration as a data controller, data processor or both. Following this announcement, data controllers and processors will now be required to register as such with the ODPC on/around 14th July, 2022.  Entities with a turnover/revenue of below Kshs. five million (5,000,000) or those which have less than 10 employees are exempted from mandatory registration. The exemption does not apply for entities involved in the financial sector, health, gambling, hospitality industry, telecommunication sector or service providers, educational institutions, politics, property management including selling of land, direct marketing and entities dealing with genetic data.  The scheduled commencement date of this registration comes on the heels of the passage of the Data Protection (Registration of Data Controllers and Data Processors) Regulations, Data Protection (Complaints Handling and Enforcement Procedures) Regulations, 2021, and Data Protection (General) Regulations, by the Parliamentary Committee on Delegated Legislation on 17th February, 2022. The latter two are already in force and data controllers and processors are now required to fulfill their obligations as pertains to the realisation and protection of personal data of data subjects.

The Tax Appeals Tribunal (Amendment) Bill, 2021 (“the Bill”) proposes to make several changes to the Tax Appeals Tribunal Act (“the Act”). First, it introduces a timeline of 7 days from the date the decree or order was made by the Tribunal, within which an appellant can lodge an application for review. To qualify to lodge such an application, an appellant should not have not lodged an appeal for such decision or order at the High Court. It also specifies grounds for making such applications for review, which include discovery of new and important evidence, existence of an error apparent on the face of the record and/ or any other sufficient reason. This proposed change is an attempt to address the gaps that exist in the current law which neither establishes the timelines for lodging an application for review nor clarifies the instances in which such application may be lodged. The Bill also proposes digitization of the Tribunal’s processes by permitting electronic service and communication. Further, the Bill proposes to introduce a requirement for the chairperson and the members of the Tribunal to serve on a full- time basis, and to bar ex- KRA employees from being appointed as members of the Tribunal.

The office of the Attorney General published Guidelines to assist public and private entities in the Preparation of Procedures for the Prevention of Bribery and Corruption (“the Guidelines”). The Guidelines were published following the enactment of the Bribery Act, 2016 (“the Act”), and should be read together with the Act. The Act widened the scope of the fight against bribery and corruption by extending the fight to the private sector. Prior to the enactment of the Act in 2016, the law against corruption only targeted the public entities and state organs thus detaching itself from the realities of the expanded private sector. The Anti-Corruption and Economic Crimes Act, 2003, defines corruption as any act of bribery, fraud, embezzlement or misappropriation of public funds, abuse of office, breach of Trust, and an offence involving dishonesty in connection with any tax, rate or levy imposed by any written Act or law. The Guidelines require each State officer, public officer or person holding a position of authority in a private entity, to report knowledge or suspicion of an act of bribery or corruption within twenty-four hours of their discovery of such information. It provides that the entity or its directors, senior officer or other responsible person shall be liable, on conviction, to a fine not exceeding one million shillings or imprisonment for a term not exceeding ten years, or both, for the offence of failing to report any such activities within the specified duration. Additionally, a private entity commits an offence of bribery if a person associated with it, bribes another person intending to obtain or retain business for the private entity or obtain advantage in the conduct of business by the private entity. The Guidelines also provide for the elements to be considered when developing procedures for prevention of bribery and corruption including assessment of the risk of bribery and corruption within an entity, language to be used in the procedure, and establishment of implementation and enforcement structures. Notably, failure by an entity to establish the Procedures also amounts to an offence under the Act.

The Voluntary Tax Disclosure Program (VTDP) was introduced by the Finance Act, 2020, as part of the changes made to the Tax Procedures Act (TPA). The VTDP is a program which allows taxpayers to voluntarily disclose any tax liabilities, which were previously undisclosed to the Commissioner of Domestic Taxes, for the purposes of tax compliance where relief will be granted on penalties and interest on the tax disclosed. The aim of the VTDP is to encourage voluntary disclosure of undeclared taxes and payment of principal taxes by avoiding the imposition of punitive penalties and interest. This will (i) enhance tax compliance, (ii) improve revenue collection and (iii) bring more taxpayers under the tax net. Under the VTDP, the taxpayer is required to review total tax compliance and apply for amnesty on all areas of non-compliance. The program covers the period from 1st July 2015 to 30th June 2020 where undeclared tax liabilities were accrued by the taxpayer. However, there are exceptions where (i) the taxpayer is under audit, investigation or is a party to on-going litigation in respect of the tax liability or any matter relating to the tax liability; or (ii) the taxpayer has been notified of a pending audit or investigation by the Commissioner. This programme is set to run from 1st January 2021 to 31st December 2023. Applications must be made within this period for applicants to be eligible. The Commissioner has granted the following: (i) reliefs of 100% waiver for 100% remission of penalties and interest where the disclosure is made in the year 2021; this is scheduled to expire at the end of December, 2021, and (ii) 50% and 25% remission of penalties and interest where the disclosure is made in the years 2022 and 2023; this is scheduled to expire at the end of the years 2022 and 2023 respectively.

Section 15(7) of the Income Tax Act requires that a person who derives income from one or more specified sources submit a separate account and a separate computation in respect of each specified source. The Kenya Revenue Authority (KRA) published a notice on 22nd September, 2021 informing the public of the withdrawal of the waiver of this requirement. This waiver had been issued through a letter dated 7th February, 1979 addressed to the Institute of Certified Public Accountants (ICPAK). The withdrawal of this waiver is scheduled to take effect from 1st October, 2021. Henceforth, all taxpayers will be required to prepare a separate account in respect of each specified source of income. In the event of a loss, that loss may only be deducted from gains or profits of that person derived from the specified source in the following year or subsequent years of income, in so far as that loss has not already been deducted.

On 20th September 2021, the High Court of Kenya ruled that the amendment to section 12D of the Income Tax Act which introduced minimum tax, is unconstitutional. Minimum tax was introduced under the Finance Act, 2020 to be charged at the rate of one per cent (1%) of the gross turnover of a business beginning from 1st January, 2021. However, individuals and companies remitting employment tax and PAYE, rental income tax, turnover tax for small-sized firms, as well as capital gains tax and proceeds from mining or oil exploration taxes were exempted from payment of this minimum tax. The High Court ruling comes as a relief for companies that were wary of paying the prescribed levy on total sales from the beginning of 2021, even as they had to cope with the economic fallout occasioned by the coronavirus pandemic.  This decision will not only ensure that many businesses are productive but it will also provide an opportunity for loss-making businesses to bounce back and generate the much-needed revenue to support themselves.

The Finance Act, 2021, which came into force on 29th June, 2021, introduced some amendments to the Insurance Act. The definition of the term “broker “has been redefined in the Insurance Act, Chapter 487 of the Laws of Kenya (“the Act”) to include foreign reinsurance brokers who do not have a residence or a place of business in Kenya. Previously, the Act did not permit brokers who neither undertook direct insurance business nor had a place of business or a resident representative in Kenya, to practice insurance business in Kenya. Another addition to the Act is the requirement for all registered and licensed insurers to pay the annual fee stipulated under the Act. This amendment is a re-introduction of the annual fee which was payable by insurers until 2017 when the Act was amended discontinuing the payment of annual fees. Notwithstanding this reinstated requirement on insurers, the Act is not clear on the purpose for which this annual fee is pegged.

The Ministry of Lands and Physical Planning on 16th July, 2021 issued a new Gazette Notice No. 7146, revoking the previous Gazette Notice Numbers 11348 of 2020, and 520, 1706 and 1707 of 2021. These Notices had previously indicated the properties to be affected by the conversion process. The new Notice also includes a new list of all the properties affected by conversion, and provides that persons affected may lodge an objection within 90 days from the date of publication of the Notice, which is accessible here. Landowners are therefore encouraged to confirm whether their properties are affected, and lodge any complaints, within the prescribed 90 days.

The Finance Act, 2021, has introduced several changes to the Excise Duty Act (“the Act”). It is now a requirement for the gazette notices on partial or whole grants of remission of excise duty in respect of beer or wine made from agricultural products to be tabled in the National Assembly for approval or annulment, prior to their issuance by the Cabinet Secretary. Further, where excise duty has been paid for internet data services by a licensed person who purchased the data in bulk for resale, the Act has introduced a provision for the offsetting of excise duty payable by that person on internet data services supplied to the final consumer. The Act has also introduced excise duty on imported pasta, imported eggs, imported onions, imported potatoes, potato crisps, and potato chips, and locally manufactured chocolates. Additionally, excise duty at the rate of 7.5% has been introduced on betting, gaming, lotteries, and price competition. The Act also provides that the fees and commissions earned in respect to loans are now subject to excise duty, and the excise duty payable for telephone and internet data has been increased to 20% from 15%.

The Finance Act, 2021, published on 30th June, 2021, has introduced tax exemptions for registered family trusts by making amendments to various tax laws including the Income Tax Act and the Stamp Duty Act. The Income Tax Act now incorporates several exemptions that apply to registered family trusts. For instance, property that is transferred or sold for the purpose of transferring title or transferring the proceeds of such sale into a registered family trust is now exempted from income tax. Further, the income or principal sum of a registered family trust and any capital gains relating to the transfer of title of immovable property to a registered family trust, is also exempted from income tax. Additionally, the Stamp Duty Act now exempts a conveyance or transfer, or an agreement for a conveyance or transfer, in favour of a registered family trust from payment of stamp duty. A registered family trust is further exempted from stamp duty as is the case for a will, codicil or other testamentary disposition. These benefits serve as an attempt to encourage more people to plan their personal estates using registered family trusts in order to enjoy the tax incentives provided by the law.

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.

With the increasing statutory requirements for companies in Kenya including the requirement to update Beneficial Ownership Registers, most shareholders with dormant companies are looking to dissolve their companies to avoid the risks of non-compliance. The infamous mode of dissolving a company is liquidation, as it is most commonly known. However, another mode that is available for dormant companies is strike off. Strike off is the process where a company that has been inactive for a long time and that has few or no obligations is removed from the register of companies. The effect of this removal is that the company ceases to exist and it can no longer trade in its name. This effectively means that it will also not be liable to meet any statutory requirements relating to companies. Strike off is also less costly compared to liquidation where the company has to incur the cost of an insolvency practitioner. However, there are certain requirements that companies need to meet to qualify for strike off.  

The Nairobi Securities Exchange (NSE) launched the Ibuka program in late 2018 with the aim of preparing micro, small and medium-sized companies (MSMEs) for listing on the NSE. The 10-month program is designed to host companies, ideally MSMEs, on two non-trading boards, that is, the Incubator Board and the Accelerator Board. The program also seeks to promote growth and development of Kenyan MSMEs by providing them with access to financial advisors and consultants to assist the companies structure their businesses, enhance their visibility/brand recognition, develop their capability to access the capital markets and get exposure to local and international investors. The Ibuka Program has helped MSMEs attract financing for expansion which they would not have been able to access otherwise because most investors and financiers consider MSMEs risky ventures. At least 18 companies have joined the Ibuka Program including Safaricom Investment Cooperative, Rentco East Africa Limited and Mookh Africa. Ultimately, the goal of the Ibuka Program is to increase the number of companies listed on the NSE.

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.

Validation of Nairobi Block 110 Title Deeds: Final chance for affected plot owners to verify their ownership details - The Ministry of Lands and Physical Planning (the “Ministry”) recently suspended land transactions involving Nairobi Block 110 title deeds following several complaints of fraudulent land transactions. The purpose of this suspension is to enable the Ministry review and verify the ownership details of all the properties registered under the Nairobi Block 110 register. In this regard, the Ministry will conduct an exercise to validate the ownership details of all affected plot owners from 24th May 2021 to 4th June 2021 at the Survey of Kenya offices in Ruaraka. Affected plot owners are required to present the following documents for review: (i) certified copies of title deeds, grants, transfers and sale agreements, (ii) certified copies of share certificates and payment receipts issued by Thome farmers, and (iii) certified copies of identification documents including National ID, KRA PIN Certificates for individuals and certified copies of Certificate of Registration, CR12 and KRA PIN Certificate for companies/institutions. These documents should be submitted in sealed envelopes.

The Draft National Insurance Policy: Possible Review of the Insurance Legal Framework in Kenya - The National Treasury recently published the Draft National Insurance Policy (“Draft Policy”), dated March 2021, following a decline in the performance of the insurance industry in the recent years. The National Treasury notes the high levels of underwriting losses which is a big threat to the insurance industry and its role as a sustainable risk management tool in Kenya.  The Draft Policy was therefore developed with the main objective of creating a vibrant and competitive financial sector through the development of a fair, safe, customer-centric, competitive and stable insurance industry. It aims at addressing the challenges that hinder the development of the industry including: low level of public awareness on insurance products and services; low penetration rate and coverage; concentration of insurance in main urban areas; slow adoption of technology by the industry; low contribution of life insurance in the overall insurance industry business; limited underwriting capacity of the insurance industry; gaps in the legal and regulatory framework; relatively poor financial performance by most of the general insurance companies and poor perception about the insurance industry. If the Draft Policy is adopted, it is likely to prompt the review of insurance laws, regulations and guidelines.

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.

Have you nominated a beneficiary under your insurance cover, pension, sacco or investment scheme? In Kenyan law, the benefits payable under such covers or plans do not form part of the estate of the nominator upon their demise which means that they cannot be passed under a will and cannot be subject to probate/administration proceedings. Thus, the right of the nominated beneficiary will override the right of an heir despite any attempt to bequeath the benefits in a will. It is therefore crucial for you to keenly consider who your preferred nominees will be and the allocation of the share of the funds that you will give each of your nominees. It is also advisable to update your nominations regularly to ensure that you include your intended beneficiaries.

The appointment of private valuers to conduct valuation of immovable property for stamp duty purposes is a welcome change for many who have been frustrated by the delays in valuation by government valuers. Buyers may now elect to have the valuation of their property conducted by any of the appointed private valuers. However, unlike the free services offered by a government valuer, buyers who opt for a private valuer will bear the costs of the valuation in addition to the stamp duty payable. The valuation fees will vary depending on the value of the land and will be charged in accordance with the Valuers Act.

  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.

Linking of a company is a process where the physical records of a company are migrated to the Business Registration Service digital platform. Generally, companies are required to be linked for any changes to be made to the company such as the appointment/removal of a director. The procedure of updating the beneficial ownership register of a company also makes it a requirement for a company to linked before it can be initiated. Thus, a company must first finalize on the linking process before it can proceed to update its beneficial ownership register which needs to be updated by 31st January 2021.

The Registrar of Companies has given all officers and authorized persons of a company upto 31st January 2021 to prepare and submit a register of its beneficial owners or face consequences for non-compliance. Directors of a Company risk being fined upto Kshs. 500,000/= each if they fail to update the company’s beneficial ownership register within the stipulated time. So, who is a beneficial owner? A beneficial owner of a company is a natural person who, directly or indirectly: (1) holds at least 10% of the issued shares in a company;(2) exercises at least 10% of the voting rights in the company;(3) holds a right to appoint or remove a director; or(4) participates in the financial policies of the company even if they do not have full control over them. Any natural person who meets any of the three thresholds above must be included in the beneficial ownership register of the company by 31st January 2021. 

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.

Many contracts contain a provision indicating the law that will govern the contract and the parties. Where a contract indicates that it will be governed by foreign law, that is, laws that are not Kenyan laws, parties will be required to prove their case according to the provisions of the said foreign law and the court will determine liability, or lack thereof, only on the basis of the foreign law. This is despite the fact that the case is being heard in a Kenyan court.

The law requires any person intending to commence or carry out  any type of specified projects under the Environmental Management and Co-ordination Act, 1999 to (1) undertake a full environmental impact assessment study and (2) submit an environmental impact assessment study report to NEMA, in order to be licensed. The projects in respect of which a study is required include local roads and facility access roads, business premises including shops, stores, and urban market sheds, establishment of multi-dwelling housing developments, water supply and distribution infrastructure projects, processing and manufacturing industries, power and infrastructure projects, LPG filling plants, waste disposal and treatment plants or onsite wastewater treatment plants among others.

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.

The maximum amount of the penalty that may be imposed on an individual for infringement of the Act may is Kenya Shillings Five Million (Kshs. 5,000,0000/=). In the case of an undertaking, the maximum amount is Kshs. 5,000,000/= or one per centum (1%) of its annual turnover of the preceding financial year, whichever is lower.

On 29th October 2020, the High Court of Kenya at Nairobi declared 23 laws, including the Finance Act 2018 and the Insurance (Amendment) Act 2019, passed by the National Assembly unconstitutional. The Constitution requires the Senate to be involved in discussions of bills concerning counties before they are passed into law, which was not done in the case of the 23 laws. However, the court suspended the orders nullifying the laws for a period of 9 months from the date of the judgment within which the National Assembly is required to regularize the laws. Should they fail to do so, the laws shall stand nullified.

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 Companies (Amendment) Bill, 2020 as well as the Companies (General) (Amendment) Regulations, 2020 seek to allow companies to hold virtual or hybrid meetings. Virtual meetings happen when people conduct meetings regardless of their location, using video, audio, and text, to link up online to share information and data in real-time without being physically located together. Meetings on the other hand are held when a subset of the people attending the meeting are located together in the same place while the other participants join the meeting virtually. The proposed law requires companies opting for the virtual or hybrid meetings to provide clear instructions of accessing and participating in the proceedings of the meeting.

Under the Unclaimed Financial Assets Act, 2011, where assets other than money are delivered to the Unclaimed Financial Assets Authority, the owner is entitled to receive from the Authority any dividends, interest, or other income realized or accruing on the assets at or before liquidation or conversion of the assets into money. However, in prescribed instances, the Authority may upon issuance of relevant notifications after the receipt of the abandoned assets sell such assets at a public auction

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

Through a proposed amendment to the Public Finance Management Act, 2012 the government seeks to implement a scheme by which private borrowers who do not have sufficient security shall receive guarantees from the government for their borrowings. This scheme would be available to SMEs that are tax compliant and have valid business permit or trade licence from the county governments. The beneficiaries of the scheme would be required to bind themselves to comply with the laws and any conditions that may be imposed with respect to the guarantee.

On Tuesday September 1st 2020, the Competition Authority of Kenya launched their automated case management system. The system has been developed to receive online applications for mergers and acquisitions, exemptions, registration of complaints by consumers, registration of complaints relating to restrictive trade practices among others. The Authority has further issued a notification that it will no longer be receiving manual applications for these processes.

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.

Through a Gazette Notice published last week, the Government published the National Information Communications and Technology (ICT) Policy Guidelines, 2020. Among other issues addressed in the Policy, is the government’s stated commitment to encourage equity participation in ICT companies. In particular, the policy provides that only companies with at least 30% substantive Kenyan ownership will be licensed to provide ICT services. The Guidelines further provide that licensees will have 3 years to meet the local equity ownership threshold subject to an extension in specified instances.

The Central Bank of Kenya (Amendment) Act, 2020 proposes to amend Section 4A of the Central Bank of Kenya Act, 2014 to empower the CBK to regulate and supervise the conduct of (1) providers of digital financial products and services, (2) digital credit providers and digital credit service providers, (3) providers of financial products and services, and (4) financial services.

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 Business Laws (Amendment) Act, 2020 (the “Act”), which was signed into law earlier in March amended several statutes with the aim of facilitating the ease of doing business in Kenya. A number of amendments introduced by the Act have now reinforced the use of digital and electronic signatures in legal transactions.

On Monday this week, the Director of Occupational Safety and Health Services issued an Advisory that requires employers who plan to reopen their workplaces to carry out appropriate occupational safety and health risk assessments prior to reopening. The Advisory is issued to further compliance with the legal provisions requiring occupiers of workplaces to carry out appropriate risk assessments in relation to the safety and health of persons employed. It also requires employees to come up with a COVID-19 Preparedness Policy Statement that address all aspects of COVID-19 readiness. The policy, which shall form part and parcel of the Employer’s Occupational Safety and Health Policy is to address among other issues, arrangements for dealing with suspected and confirmed COVID-19 cases and clear guidelines and specific requirements when sick or ill staff may be absent to attend hospital. It is also to include protocols on client handling and standard operating procedures in light of the Covid 19.

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.

Since the roll-out of the online land services by the Ministry of Lands, land searches on the Ministry’s LIMS portal were only restricted to property registered at the Nairobi Registry. This is expected to change as the Ministry of Lands is currently expanding the roll-out to include searches for properties registered within the central registry as well as the district registries. 

The Companies Act, 2015 requires all companies, except single member companies to hold members’ meetings annually. The Government restrictions on public gatherings to curb the spread of the Covid-19 pandemic have proved to be a challenge to some companies planning to conduct these meetings. Earlier this week, the Business Registration Service published guidelines on the conduct of hybrid and virtual general meetings. The Guidelines contain the options available for companies and the considerations that they will need to make.

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.

Leases on commercial properties bear a special feature in the sense that most property owners do not usually include termination clauses in the lease documents, to avoid the restrictions under the controlled tenancies regime. Where a lease however has a force majeure clause, one can invoke it to be relieved from their obligations in the event that performance is rendered impossible due to unforeseen circumstances beyond their control.

Through an amendment introduced by the Tax Laws (Amendment) Act, 2020, members of retirement schemes have now been allowed to access a portion of their benefits for purchase of residential houses. Previously, the law allowed members to use part of their benefits only for securing mortgage loans. In particular, it permitted members to assign 60% of their accrued benefits to their schemes in exchange for the scheme furnishing guarantees to prescribed institutions financing the purchase. The relevant Regulations specifying the requirements and procedures that one would need to follow in order to access the benefits for house purchase have been published, with public participation ending today.

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.

Do parties to a lease for office space have relief in light of Covid – 19? Find out more about the rights, obligations and options for parties to a lease in the event of a pandemic, by writing to us.

Is your business relieved from statutory obligations and filings on account of the Covid – 19 pandemic? No. Except where a regulator or relevant government body has issued a communication granting relief or extending the period for compliance, your business is still required to comply with its statutory obligations within the specified timelines.

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)

Outlaws the abuse of buyer power by companies and individuals? To find out what conduct amounts to abuse of buyer power. (14th Feb 2020)

Ever wondered why developers opt to incorporate management companies in developments? Check out our publication on Management Companies in Residential Properties in Kenya. (7th Feb 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)

Gives one the right to be informed of the use to which their personal data is to be put and to correction and deletion of false or misleading data about them. What other rights do the owners of the data have under this law? Find out more by contacting us. (17th Jan 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. For formal advice on other principles, get in touch with us.  (10th Jan 2020)

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)