Kenya Entity Setup

Limited liability companies in Kenya are separate and distinct entities from their owners and are registered for tax as a separate entity. It has its own rights, obligations and a life separate from its owners. It requires a minimum of at least one director and a maximum of 50 members.  

A branch office is registered in Kenya as an extension of its parent company and not as a separately incorporated entity. The liabilities of a branch office extend to its parent company.

Two or more people come together to form an organization with the purpose of carrying on a business. Partner contribute their share which can be in the form of their expertise, money and or property, etc. They are liable for any/all debts taken on by the business or by the other partners and share in all the affairs ie assets, profits and liabilities. 

These types of companies in Kenya are known for their simplicity and ease of setup. They are the easiest form in which one can operate.  The owner and the business are regarded as one and therefore the owner assumes all the risks of the business and is personally liable to the extent of all his or her assets that are used in the business and those that are not.

Foreigners looking to establish a business in Kenya are not subjected to any specific capital requirements.

Foreign investors can own up to 100% of a company, except in securities, insurance, power and lighting, and any other sectors identified by the government as posing a security risk to the country. 

A local director can either be a person who is a Kenyan citizen or a foreigner who is a resident of Kenya.

Company Secretaries are a legal requirement for to operate a business in Kenya. This is outlined in Chapter 534 of the laws of Kenya. This position is set out by Kenyan law to fulfill compliance matters required for any company to be in business.

A local registered address is a minimum requirement for opening a company in Kenya.

BRS department is an entity under the office of the Attorney General and in charge of business name registration in Kenya. Their primary responsibility is to ensure that all necessary certificates are issued to Kenyan businesses and companies. However, the actual process of name searches and registration is via an online system, eCitizen. All registered businesses in Kenya go through a similar registration process, although the costs and requirements vary.

Prepare the necessary documents as outlined in the Incorporation Documents section. Once collected a local professional will prepare the corporate resolutions and Articles of Association.

The Companies Registry administers (i) The Companies Act, 2015; (ii) The Registration of Business Names Act, Cap 499 Laws of Kenya; and (iii) The Limited Liability Partnerships Act. No 42 of 2011. If all the documents and details are duly submitted, Business Name Registration in Kenya takes a maximum of 5 days to get the approval and the Business Name registration Certificate.

For a company to obtain a KRA PIN, KRA’s adopted practice is that at least one of the directors of the company must have a KRA PIN. For a company with no local directors, this would mean that at least one of the foreign directors must obtain a KRA PIN to facilitate the company’s registration for tax in Kenya. This does not however mean that the foreign director will become a tax resident in Kenya. Provided that the foreign director does not generate any income in Kenya, there will be no tax liability for them in Kenya. Such directors will however be required to file annual tax returns even in the case where they have not earned any income in Kenya in which case they would file nil tax returns every year. There are numerous service providers in Kenya who offer tax filing services.

The final step is to decide the bank to work with. Singapore has world class banking infrastructure that startups and hyper growth companies alike benefit from. The process of establishing a bank account can be an unexpectedly long process that many companies do not sufficiently plan for. This can include extensive application documents, notarized director documents, KYC documentation and in person signatures. Although having a local director is not a requirement for most banks, the absence of such a director would expose the company to certain practical hurdles in both opening and operating a bank account in Kenya. Many banks insist that when opening a bank account, the company should submit not only the company’s KRA PIN, but a KRA PIN issued to at least one of its directors. Common local banks in Kenya include Equity Bank, Kenya Commercial Bank, Barclays Bank of Kenya, Diamond Trust Bank, Cooperative Bank, Central Bank of Africa and Standard Chartered.

KRA is charged with collecting revenue on behalf of the government of Kenya. The core functions of the Authority are: – To assess, collect and account for all revenues in accordance with the written laws and the specified provisions of the written laws.

The National Social Security Fund was established in 1965 through the Act of Parliament Cap 258 of the Laws of Kenya. It initially operated as a Department of the Ministry of Labour until 1987 when the act was amended, transforming the fund into a state corporation under the management of a board of trustees. Under the National Social Security Fund Act of 2013, both employed and the self-employed and their dependents qualify as contributing members. The Act on pension requires all Kenyans that are above 18 years of age to register to the program.

A key organization in Kenya that promotes industrial training and workforce development. Established under the Industrial Training Act of 2011, NITA plays a vital role in bridging the skills gap, enhancing productivity, and fostering economic growth in the country. As per the Industrial Training (Amendment) Act of 2011, employers are required to contribute to the training levy, which is used to fund various training programs and initiatives. By registering with NITA and paying the training levy, employers fulfill their legal obligations and contribute to the development of a skilled workforce.

PAYE is a system of tax collection whereby employers are required to deduct tax from the employment income of their employees and remit the tax to the Kenya Revenue Authority.

The Work Injury Benefits Act, 2007 requires all employers to obtain and maintain an insurance policy to cover them against any liability that they may incur under The Work Injury Benefits Act, 2007 to any of their employee. The Act provides that the employer is liable to pay compensation to an employee injured while at work.