A company comes into existence when a number of persons come together with a view to exploit some business opportunity. These persons are called promoters.
The initial step that must be taken by promoters who are desirous of forming a company is registration and incorporating the entity as well as the preparation of constitution documents, shareholding details (if any) and management details to which at least seven of them will subscribe their names in case of a public company and two in case of private company. Act.”
Registration is the condition precedent to the formation of a registered company and failure to register a proposed company will mean that it does not legally exist.
Effect of Registration of a company
(a) The date mentioned in the certificate of incorporation is the date from which the company’s legal existence commences. Consequently, if an incorrect date is written in the certificate, that date would be regarded as the actual date on which the company was registered (conclusiveness of a certificate of incorporation).
(b) The company’s registration constitutes it “a body corporate”. It becomes a legal person or “corporation” whose name is that appearing in the memorandum of association. The certificate of incorporation is regarded as the company’s birth certificate and the date written on it is the company’s birthday.
(c) Once the company is registered it must be treated like any other independent person with rights and liabilities appropriate to itself.
Conclusiveness of the certificate of incorporation.
A certificate of incorporation given by the Registrar in respect of a company is conclusive evidence that all the requirements of the Companies Act in respect of registration have been complied with and nothing can be inquired into as to the regularity of the prior proceedings and the certificate cannot be disputed on any grounds whatsoever.
The certificate of incorporation has been considered conclusive on the following points:
1. That requirement of the Act in respect of registration of matters precedent and incidental thereto have been complied with. If after the receipt of certificate of incorporation by a company it is discovered that there were certain irregularities with regard to its registration, these will not affect the validity of the company.
2. That the association is a company authorized to be registered under the Act, and has duly been registered.
3. That the date borne by the certificate of incorporation is the date of birth of the company, i.e., the date on which company comes into existence.
Types of companies that can be registered in Kenya
There are essentially four types of companies that may exist in Kenya today. These are:
- Companies limited by shares
- Companies limited by guarantee
- Unlimited companies
- Subsidiary Company of a parent company
- Representative Offices/ Branch (Foreign companies)
THE PROCEDURE OF REGISTERING A COMPANY
- Open an ecitizen account. eCitizen is the online portal through which the Kenyan government conducts much of its official business. It’s free to use and easy to sign up for. When creating a personal account, you’ll need to type in your Kenyan ID number (found on government-issued identification) and your name. Also enter a working email address and create an account .If you’re a foreign citizen living in Kenya, you can use your Foreigner Certificate number instead of your Kenyan ID number. A Kenyan company can have directors who live abroad and are not Kenyan citizens. At least one of the director will have to be a Kenyan citizen, though, so that they can access eCitizen and submit certain forms.
- Upload a passport photo. eCitizen requires you to upload a recognizable passport photo of yourself before registering your eCitizen account. The photo that you use needs to have been taken within 6 months of when you’re registering your company.
- Navigate to the Business Registration Service home page. Select the Business Registration Service and proceed to make an application.
- Choose a business type to register. Once you’re in the Business Registration Service, make an application and choose the type of business you’d like to create.
- Choose and reserve a business name. The name may be rejected if it is too close to the name of an already-registered Kenyan business. You should hear back from the Registration Service within 2 business days regarding if the name is acceptable or not. If the name is accepted, the registrar will reserve the name for 30 days. You have this much time to complete the business registration.
- Pay for the name search. The Kenyan government requires potential business owners to pay a small fee to run the business-name search. You can pay online with a credit card or MPESA. The eCitizen site does not notify you via email once the name has been approved. So, you’ll need to log back in to your account on a daily basis to check if the approval has been granted. An amount of KShs.150 is roughly equivalent to $1.50 USD.
- Fill out the company registration form CR1. Begin by writing the company’s name and the location of its business office. Form CR1 also asks for the names and other personal information of all of the directors and shareholders of your Kenyan company (including any who may live abroad). Scan a copy of the ID cards and colour passport photos of all company directors and shareholders. Print these documents out and attach them to the completed form CR1. If you have company directors who live outside of Kenya, also include a copy of their government-issued ID from the country that they reside in.
- Write out the company’s directors’ addresses on form CR8. The Kenyan government requires businesses to provide the official residential addresses of the director or directors (including any directors who live outside of Kenya). Print out a copy of form CR8 and write in the name and business type of your company. Then write down the legal name and home address (not PO box) for all company directors. Sign and date the form to finalize it
- State your businesses’ nominal capital holdings on form BN6. The KRA requires all new businesses to declare their capital holdings. On form BN6, fill in your business’s name and your own name. Then, under the corresponding text boxes, provide the amount of capital that your company possess in Kenyan shillings. If your company is publicly traded, also state how many shares the company’s capital holdings are divided into.
- Pay the Stamp Duty based on the amount of capital your company has. An agency called the Kenya Revenue Authority (KRA) oversees stamp duty collection. The KRA will reach out once your business name has been registered and instruct you how to pay the Stamp Duty. They’ll ask you to provide the Kenyan ID number of all of your company’s employees and shareholders. The amount of money that you pay will be equal to 1% of your company’s nominal capital, but the minimum is Kes. 2,140 based on the minimum nominal capital of Kes. 2,000. As part of completing the Stamp Duty requirements, you’ll also be charged Kes. 100 for each document (i.e., each shareholder’s personal information) that the KRA must approve.Sending in the required information and paying the Stamp Duty should take between 5–10 days to complete.
- Draft a Memorandum and Article of Association to outline your business objectives. The Kenyan government requires new businesses to file 2 documents which describe the objectives, rules, subscribers, and authorized share capital of your company: the Memorandum of Association and Article of Association. Draft these documents before filing your final registration paperwork. These documents are typically prepared by an advocate, but can also be drawn up by an administrative assistant or the company’s director. The Memorandum of Association details your business’s name, location, its business object, states the value of each company share, and specifies how many shareholders the company has. The Article of Association contains the company’s rules and regulations. It lists each member’s liability, the powers of the company directors, the rights of all company members, and how directors are to be appointed and removed from their position.
Your company documents will be prepared and each director will be required to sign the Memorandum & other documents as follows;
- Form CR1 – Application Form for Company Registration
- Form CR2 – Memorandum
- Form CR8 – Notice of Residential Address of Director(s)
- Notice of Nominal Capital Share
- Cessation Form (for those applicants who are upgrading their business to a limited company)
- File the completed forms and pay the fee at a Kenyan Registrar’s office. Collect the CR1, CR8, and BN6 forms as well as the Memorandum and Article of Association (along with all accompanied scanned and copied documents) and seal them in a large envelope. Mail these documents to the Registrar’s office. Or, if you live in Nairobi, deliver them to the Business Registration department in person. To finish registering your company, you’ll also need to pay the mandatory fee of Kes. 10,650 either through the eCitizen portal or by check or credit card at the Registrar’s office.
- Download your business certificate from the eCitizen platform. The Kenyan government will take roughly 1 week to review all of the forms that you’ve sent in, make scans and copies, and register your business with the KRA. Once everything has been approved and your business is officially registered, the business certificate will be posted online in your eCitizen portal. The amount of time this takes can vary. You may need to wait for a period of about 21 days.
Director and company details required
- Full names – your full names as displayed on your ID/Passport will be used on the application
- Occupation – you will need to state your occupation e.g. IT Consultant, marketing consultant, finance consultancy, consultant etc. If you don’t have any occupation, don’t worry, you can simply put either a businessman or businesswoman.
- Postal address – you will need to provide your postal address. If you don’t have one, you can register it with Posta Kenya.
- Physical Residential address – This information will be used on the Form CR8 to comply with the Company Act which requires all directors to provide their residential address. You’ll need to provide LR number or house number, building name (if any), street name, town name, country.
- Share Allocations – each director will need to be allocated at least 1 share. Remember that the total number of shares available for allocation is 1,000 shares. You can plan to allocate your 1,000 shares using percentages such as 60%/40%, 50%/50%. However, if you are just the sole director then you can have 100% share ownership.
- Proof of Identity documents – you will need to provide the following documents for registration, without them your application will be rejected.
- Copy of ID or Passport – you can scan or photocopy your identification document
- Copy of KRA PIN certificate – all Kenyan directors/shareholders will need to provide KRA PIN, however, foreigners won’t need to provide one for the registration
- Photos – must have a clear background and show all your facial features, just like a passport photo. Please avoid submitting photos that have someone wearing sunglasses, hats; this could cause your application to be rejected by the Registrar.
- Company Name Suggestions – you’ll need to come up with up to 2 company name that you would like to check its availability
- Nature of business – with the new Company Act 2015, you can now do all trade of consultancy business without any restrictions.
- Location of business premises – you will need to provide the location details of your office including LR Number or Plot Number, Building name (if any), Street name, Town name. If you don’t have a business premise yet, then you can provide your home address then make the changes later once you have secured business premises.
Finally, one needs to get a Company Seal, which is a device that include your company name on documents and is also used as a signature of the company. This can be purchased from a stationer.
There is also statutory requirement which includes;
- Registering for a Personal Identity Number, Value Added Tax & Pay-As-You-Earn with the Kenya Revenue Authority.
- One needs to Register with the National Hospital Insurance Fund which assist in medical contribution for ones employees. There is also a requirement to register with the National Social Security Fund. It is necessary and mandatory to contribute to one employee’s retirement fund.
- Also one requires registering for a Business Premises License which is done with the local county office