If you’re looking to start a business in Kenya, registering a company is one of the first legal steps. The process is straightforward, and with the right guidance, you can avoid delays and mistakes. This guide breaks down everything you need to know, including costs, legal requirements, and why hiring a lawyer can save you time and money.
Why Register a Company in Kenya?
Registering a company in Kenya gives your business a legal identity. This not only protects your assets but also builds credibility with clients and investors. Under Kenyan law, registered companies enjoy certain rights, such as the ability to enter into contracts, own property, and sue or be sued.
The Companies Act, 2015, governs company registration in Kenya. It offers several types of business structures, such as:
- Private Limited Companies (Ltd): The most common form.
- Public Limited Companies (PLC): For businesses that want to trade shares publicly.
- Limited Liability Partnerships (LLP): Combining partnership with limited liability protection.
- Sole Proprietorship: Suitable for small businesses with one owner.
For this article, we’ll focus on how to register a private limited company.
Requirements for Registering a Company in Kenya
Before you begin, you need to gather some essential information. Here are the key requirements:
- Proposed Company Name: The name must be unique and comply with the guidelines set by the Registrar of Companies.
- Shareholders and Directors: At least one director and one shareholder are required. These can be the same person.
- Share Capital: There’s no minimum share capital, but it must be declared.
- Memorandum and Articles of Association: These legal documents outline the company’s structure and operations.
- Physical Address: The company must have a registered office in Kenya.
- Copies of ID/Passport: For all shareholders and directors.
- KRA PIN: Every director must have a Kenya Revenue Authority Personal Identification Number.
Once you have all these details, you can proceed to the registration process.
Step-by-Step Guide to Registering a Company
1. Name Search and Reservation
The first step is to perform a name search. You can do this online via the eCitizen portal, which is the official government platform. The name must be distinctive and not resemble any existing company.
- Cost: KSh 150
- Time: 1-2 days
Once approved, the name is reserved for 30 days. You can extend this period by paying an additional fee.
2. Prepare the Memorandum and Articles of Association
These are critical documents outlining the business structure, the roles of shareholders and directors, and the company’s objectives. You can draft these documents yourself or hire a lawyer to ensure compliance with the Companies Act.
Hiring a legal expert is beneficial, as errors in these documents could delay the registration process. Moreover, they ensure the documents align with the Third Schedule of the Companies Act, which provides the standard form for these documents.
3. Fill Out the Company Registration Forms
Once you have the necessary documents, you must complete Form CR1 (Application to Register a Company), Form CR2 (Memorandum of Nominal Capital), and Form CR8 (Notice of Registered Address).
These forms are available on the eCitizen portal. Make sure you fill them out accurately to avoid any complications.
4. Submit Your Application
After completing the forms, submit your application through the eCitizen portal. Ensure you attach all required documents, including:
- Copies of ID/Passport and KRA PIN for directors and shareholders.
- Memorandum and Articles of Association.
- The company’s physical address.
5. Pay the Registration Fees
Once your application is complete, you’ll need to pay the company registration fees. The cost varies depending on your share capital but typically ranges between KSh 10,000 and KSh 30,000. This includes the stamp duty fees for your Memorandum and Articles of Association.
6. Certificate of Incorporation
If everything is in order, you will receive a Certificate of Incorporation. This official document confirms your company’s legal status. You can now open a bank account, apply for licenses, and begin trading.
- Time: 5-10 working days.
Legal Considerations
Kenyan law requires companies to maintain certain records, file annual returns, and comply with tax obligations. The Companies Act, mandates companies to file returns annually with the Registrar of Companies. Failure to comply can lead to penalties or even deregistration.
It’s also important to note that while foreign nationals can register companies in Kenya, at least 30% of the shares must be held by Kenyan citizens for certain sectors, such as telecommunications. This requirement is stipulated under the Foreign Investment Protection Act.
Case Law: Company Mismanagement
In the case of Shivabhai Patel v. Consolidated Bank of Kenya Ltd (2019), the court addressed issues of directorship and management in a registered company. It emphasized that all companies must follow their Memorandum and Articles of Association, particularly in appointing directors and allocating shares. This case underscores the importance of having well-drafted legal documents at the time of registration.
Why Hire a Lawyer?
Although the process can be done online, there are benefits to hiring a lawyer. A legal expert ensures your documents comply with the law and that the registration process is seamless. Lawyers can also advise on the best business structure, draft the Memorandum and Articles of Association, and handle any legal issues that may arise post-registration.
Moreover, a lawyer will ensure that your company is compliant with other statutory requirements, such as tax registration and obtaining relevant licenses. Legal mistakes can be costly, and getting it right from the beginning sets your business up for success.
Frequently Asked Questions
1. How long does it take to register a company in Kenya?
The registration process typically takes 5-10 working days after submitting your application.
2. How much does it cost to register a company in Kenya?
The registration fees range from KSh 10,000 to KSh 30,000, depending on your share capital.
3. Do I need a lawyer to register a company?
While it’s not mandatory, hiring a lawyer ensures that your documents are legally sound and can prevent costly mistakes.
4. Can foreigners register a company in Kenya?
Yes, foreign nationals can register companies in Kenya. However, certain sectors require at least 30% of the shares to be held by Kenyan citizens. Note however that this is different from the registration of a Foreign Company to operate in Kenya.
Conclusion
Registering a company in Kenya is a crucial step toward establishing your business. While the process is straightforward, getting expert legal advice can save you time, and money, and avoid potential legal pitfalls. With your company legally registered, you’ll be ready to explore business opportunities, sign contracts, and grow your venture. If you need assistance with company registration, Wacu Mureithi & Co. Advocates is here to help. Reach out today for a consultation and let us guide you through every step of the process.