Companies in Kenya
The principal business forms which investors may use in Kenya are:
- • Private and Public limited companies;
- • General and Limited partnerships; and
- • Branches of foreign companies.
Private companies limited by shares are therefore the most popular legal form of business in Kenya.
Following ongoing digitization efforts by the Government of Kenya, companies are registered through an online Business Registration Services portal with the Registrar of Companies. This has significantly improved the turnaround time for incorporation of Companies.
During the incorporation, due consideration needs to be given to the shareholding restrictions that may exist in a Company’s sector of operation e.g. in some sectors there are requirements that a certain percentage of the shareholding of the company be held by Kenyan citizens.
Once a company is registered, a Certificate of Incorporation is issued, and this certificate is conclusive evidence of the company’s legal existence. After incorporation, every company must file annual returns at the Registry.
Investors are encouraged to conduct due diligence exercises prior to engaging in business with any company.
Limitation of Liability
Under Kenyan Company Law liability of the members of a company is limited by shares (company limited by shares) or by guarantee (company limited by guarantee). A company limited by shares has liability of its members limited to the amount, unpaid on the shares respectively held by them. A company limited by guarantee has liability of its members limited to such amount as members undertake to contribute to the company in the event of its being wound up.
Private vs. Public Companies
Companies with limited liability can be either private or public. A private company is one where the right to transfer shares is restricted, the maximum number of members is limited to 50 and the public cannot be invited to subscribe to its shares. Transferring shares in a public company is not restricted and these shares, if listed, can be traded on the stock exchange.