FORMS OF BUSINESS ENTERPRISES LEGALLY PERMITTED

The principal trading and business entities in Kenya are registered companies (private and public), branch offices of foreign companies, sole proprietorship, partnerships and co-operatives. Most large scale business are conducted through limited liability companies under "The Companies Act.

The choice of a particular form of business entity involves considerations such as its operations, tax savings, incentives, among others. Foreign investors normally require professional services and advice in this matter. Ordinary business companies require to be registered and licensed under the law. The establishment of banks, insurance companies, building societies and financial institutions requires specific government approval.

Sole Proprietorship 

It is any business undertaking conducted by one person, and has unlimited liability and any income derived therefrom is taxable in the owner's hands. The business name must be registered with Registrar of Business Names and should not include the  word "Limited".

Partnership

Partnerships are governed by Common Law, but the terms and conditions set out in a partnership agreement take precedence between the partners. The Companies Act 1962 restricts a profit making partnership to a maximum of 20 partners. The restriction does not apply to a partnership of certain professions exempted by the Government. Generally, partners are jointly liable for all the debts of partnership, provided they were incurred in the name of, and with the authority, of the partnership.

Limited Liability Company

The formation of a Limited Liability Company is governed in Kenya by The Companies Act 1962 which restricts members of private companies to between 2 and 50 shareholders whilst limiting the minimum number of shareholders in a public company to seven. Once a company's name has been reserved with the Registrar of Companies, a printed Memorandum and Articles of Association should be prepared by a lawyer and submitted to the Registrar for registration. Both `private' and `public' companies must end their names with the word "Limited".

A limited company must file its annual financial statements with the Registrar of Companies where they are open to inspection by the public.

Public Limited Company may offer shares to the public if it is accepted by the Nairobi Stock Exchange after approval by the public Issues Committee of The Treasury and the Central Bank of Kenya. 

FORMATION OF COMPANY

Registration Procedure: A company is registered by filling the following documents with the Registrar of Companies:

• Memorandum of Association is the fundamental document under which the company is granted incorporation. It must include the company's name, its objects, details of its share capital, number of shares which each subscriber undertakes to take up and a statement to the effect that the liability of shareholders is limited.
• Articles of Association are the rules regulating a company's internal operations. A company can prepare its own Articles of Association or adopt model articles contained in The Companies Act with or without modification.
• Foreign Companies: A company incorporated outside Kenya may establish and carry on its activities in Kenya without forming a separate locally registered company.

PROCEDURES FOR ESTABLISHING A COMPANY IN KENYA

The principal types of business enterprises in Kenya are:

• 1. Registered Companies (Private and Public)
• 2. Branch offices of companies registered outside Kenya
• 3. Partnerships
• 4. Sole Proprietorships
• 5. Co-operatives

Companies are registered as limited liability companies as in 1 and 2 above, and regulated by the Companies Act (Cap 486). Kenya's legal system is based on English law and practice. A wide range of legal services are locally available.

Company Registration

The initial step in forming a company is to register the proposed company name with the Registrar of Companies at the Attorney General's Chambers in Nairobi. The Memorandum and Articles of Association should be filed with the Registrar of Companies who, upon satisfaction, issues the Certificate of Incorporation.

OPENING A BRANCH OFFICE OF AN OVERSEAS COMPANY

An overseas company wishing to open a branch office in Kenya should deliver the following to the Registrar of Companies:

• A certified copy of the Charter, Statutes or Memorandum and Articles of Association of the Company, or other instruments defining the constitution of the company;
• A list of the directors and secretary of the company, giving full names, nationality and other directorships of companies in Kenya;
• A statement of all existing charges entered into by the company affecting properties in Kenya;
• Names and postal addresses of one or more persons resident in Kenya authorised to accept, on behalf of the company, service of notices required to be served on the company;
• Full address of the registered or principal office of the company in its home country; and,
• Full address of place of business in Kenya.

Both private and public companies may allot shares for considerations other than cash. Companies should inform the Registrar of Companies of such allotments and submit a written contract constituting the title of the allottee.

PATENTS AND TRADE MARKS

Patents are regulated by the Industrial Property Act and administered by the Kenya Industrial Property Office(KIPO), while trademarks are regulated by the Trade and Service Marks Act (Cap 506) and administered by the Registrar of Trademarks at KIPO. The duration of trademarks is seven years from the date of filing and renewable every 14 years.

WORK PERMITS

The Government allows investors to have key expatriate staff in senior management positions or where locals with specific skills are not available. Work permits for such expatriates are issued by the Immigration Department and are valid for two years, renewable on application.

IMPORT AND EXPORT PROCEDURES

There is no import licensing except for a few items restricted for security, health or environmental reasons detailed in the Imports, Exports and Essential Supplies Act (Cap 502).

During the Budget for Fiscal Year 2001/02 the Minister agreed to waive the 2.75% Import Declaration Form (IDF) fees applicable on imported goods used for manufacturing goods for exports under the Export Promotion Programme Office (EPPO) scheme. Manufactures under the EPPO will however have to pay Kshs. 5000 which is processing fees.

GENERAL BUSINESS INFORMATION

Business Hours

Government offices operate on a five-day week while most private businesses are run on a six-day week. The official working hours are 8 a.m. to 5 p.m. on weekdays, with a one-hour lunch break. Sunday is not a working day.

Tourist and Transit Visas

A visitor should be in possession of valid travel documents and a return ticket. Visas will be issued as appropriate.

Customs

Personal effects may be imported duty free. The importation of firearms and game trophies is restricted, and pornographic literature is prohibited. Domestic animals and pets may be imported provided they have valid veterinary certificates.