Disclosure of Beneficial Ownership in Kenya

Disclosure of Beneficial Ownership in Kenya

Kenyan Companies required to Disclose Beneficial Ownership in Kenya

Introduction

Kenyan companies are now required to submit details of their beneficial owners to the Registrar of Companies (ROC). In 2019, the Companies Act, 2015 was amended to introduce a requirement for every company to maintain a register of its beneficial owners and to submit a copy of this register to the Registrar. In February 2020, Companies (Beneficial Ownership Information) Regulation 2020 was published and the submission of the register with the ROC became operational from 13 October 2020.

Beneficial Owner

The Companies Act 2015, defines a Beneficial Owner to mean the natural person who ultimately owns or controls a legal person or legal arrangement or the natural person on whose behalf a transaction is conducted, and includes those persons who exercise ultimate effective control over a legal person or legal arrangement.

The BO regulation sets out four criteria below for the identification of a BO:

1) Holds at least 10% of the issued shares in a company either directly or indirectly

2) Exercises at least 10% of the voting rights in the company either directly or indirectly

3) Holds a right, directly or indirectly, to appoint or remove a director of the company

4) Exercises significant influence or control, directly or indirectly, over the company

Reportable BOs

To establish the chain of control within a Kenyan company, the BO particulars of the following Local/Foreign persons would require to be established and only the particulars of individuals are to be entered in the register of BOs.

  1. a) Companies limited by shares e) Limited partnerships
  2. b) Companies limited by guarantee f) Trusts
  3. c) State owned enterprises g) Individuals
  4. d) Limited liability partnerships

Information required

The register of beneficial owners should contain particulars of each beneficial owner as follows:

1. Full Name

2. Birth certificate number, ID / Passport number

3. Nationality

4. Date of birth

5. Postal, business and residential address

6. Telephone No & email address

7. Occupation / Profession

8. PIN Certificate

9. Passport Photo

10. Nature of ownership or control

11. Date when the natural person became a beneficial owner of the company

12. The date on which any person ceased to be a beneficial owner

13. Any other relevant detail the registrar may require from time to time

Register of Beneficial Owners

Every company in Kenya, where ownership or control in a company is exercised through direct or indirect chain will have to prepare and maintain a register of beneficial owners. All companies are required to submit a copy of their beneficial ownership register within 30 days of its preparation on to the E-Register of ROC.

It is now also compulsory for new companies to provide these details at the time of incorporation.

The company should take reasonable steps to ensure that the register of BO is prepared in good time and kept up-to-date.

Any changes in the register of BOs should be filed with the registrar within 14 days of the change by filing an ‘amended register of beneficial owners’.

Implications

If a company fails to comply, the company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding Kenya Shillings five hundred thousand (KES 500,000) for a first offence and an additional fine of KES 50,000 per day for continuing non-compliance.

Failure by the beneficial owner to provide the required details within 14 days of the company’s request will result in the company restricting the shares’ voting rights and board rights of the non-compliant beneficial owner.

If not complied with, the company has the authority, under the Regulations, to serve a warning notice to the beneficial owner requesting them to comply with the notice within 14 days, or the interest of the beneficial owner in the Company will be restricted.

Disclosure & Access to BO particulars

The register of BO particulars should only be accessed by the officers of the company and competent authorities upon submitting a written application for the same.

The Company shall not disclose the information except for the purposes of communicating with the Beneficial Owner and for the purposes of complying with the Regulations or to comply with a court order.

The Registrar of Companies is also obligated to keep the information confidential and shall only make the information available to a competent authority upon written request.

Effective date and Deadline

The earliest date to be entered in the register of BOs is 21st February 2020 – the date the regulation came into effect. While the current compliance cut off date is 31st July 2021.

Actions required

Companies should now begin identifying the natural persons that constitute beneficial owners of the company and consider the basis of classification.

The required particulars under the Regulations must include a statement of the nature of the interest.

Kindly contact our team for any further clarification and assistance in preparing the registers and submission to the registry.