The government of Kenya has taken deliberate actions to promote and enhance openness in the government service delivery process through establishing a Beneficial Ownership Register. It is now a legal requirement that the name and address of the beneficial owners (if any) be entered in the companies’ registers of members which must be lodged with the Registrar of Companies within 30 days after completing its preparation (in accordance with section 93 (8) of the Principal Act) and which will be available for inspection by members of the public. Section 93 (9) further provides that any amendment to the register of members is to be lodged with the Registrar within 14 days after making the amendment.
The Companies Act, 2015 (The Principal Act) was amended by the Companies (Amendment) Act, 2017 (The Amendment Act) to include, amongst other things, the concept of “beneficial ownership” by including section 93A of the Principal Act. The Amendment Act establishes a register in order to record the information of beneficial ownership and control of Kenyan companies.
The Companies Act requires companies to keep a register of beneficial owners with the relevant information relating to the beneficial owners (Beneficial Ownership Information). The Companies Act, 2015 was amended in 2019 to introduce a requirement for every company to maintain a register of its beneficial owners and to submit a copy to the Registrar.
The purpose of disclosing Beneficial Ownership is to identify the real individuals who ultimately own, directly or indirectly, a company and benefit from it. A Beneficial Owner is a natural person who:
- holds at least 10% of its issued shares; or
- exercises at least 10% of its voting rights; or
- holds a right directly or indirectly to appoint or remove a director of the company; or
- exercises significant influence or control, directly or indirectly, over the company.
every company is required to submit a copy of the beneficial owners register within its 30 days of its preparation and all companies are required to comply
In 2020, regulations were published, elaborating clear details required to be provided in the register. Initially companies did not comply with these requirements because the Registrar had not yet established a beneficial ownership register within the registry system.
The Companies Registry of Kenya recently issued a notice stating the operationalization of the beneficial ownership registry. Effective from the 13th of October, 2020, every company is required to submit a copy of the beneficial owners register within its 30 days of its preparation and all companies are required to comply. However, this provision by The Companies Act hasn’t set an exact date by which companies are required to have prepared and submitted their beneficial ownership registers. Failure to submit the register renders a company non-compliant and is an offence committed by both the company and every officer of the company who defaulted.
The Companies Registry has also configured the eCitizen portal that existing companies are not able to submit any corporate changes on eCitizen unless they have first submitted their beneficial ownership details. The registry has also made it mandatory for beneficial ownership information to be provided prior to incorporation of new companies. Therefore, it’s important for all companies should begin the process of sifting through their direct or indirect chains of ownership in order to identify and document details of their beneficial owners.