If you are director of a company incorporated in Kenya, you’re liable to a fine of up to KShs.0.5million if you fail to disclose owners of the company with the Registrar of Companies.

Under Section 93A of the Companies Act, 2015 and the Companies Beneficial Ownership Information) Regulations, 2020, all companies registered under the Act are required to keep a register of its beneficial owners and lodge the same with the registrar of Companies.

“Companies and directors of registered companies who willingly fail to register details of the beneficial owners are each liable to a fine not exceeding KShs. 500, 000,” says Felicia Samuel Tunji, a partner at MMS Advocates.

All officers and authorized persons of existing companies are required to comply with these provisions and submit a copy of the beneficial register within 30 Days of its preparations and to notify the Registrar within 14 days of any change in Beneficial Ownership Information.

Companies have been given a deadline of up to 31st January to enable them comply.

“Failure to comply with this requirement makes it an offence to the company and every officer of the company who is in default,” says Kenneth Gathuma, Director General Business Registration Services (BRS).

In an attempt to promote transparency in ownership of Kenyan companies and in line with the recommendation of the Financial Action Task Force on International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation, business owners are expected to maintain adequate and timely information on the beneficial ownership and control of legal persons.

“The Beneficial Ownership Register will create greater transparency in the ownership of companies in Kenya and support the government in the fight against corruption, money laundering and financing terrorism,” says Kenneth Gathuma, Director General Business Registration Services (BRS).

The requirement to register details of beneficial ownership applies to all companies in Kenya including public and private companies whether limited or unlimited, including companies that were formed before 2015.

Section 93 of the Companies Act was amended in 2017 to require a company to disclose information relating to beneficial owners of shares recorded in its register of members,” Africa Legal network says in a statement on their website.

“The Statute Law (Miscellaneous Amendments) Act No. 12 of 2019 clarified that every company incorporated or registered in Kenya will now be required to keep two separate registers: (i) a register of members; and (ii) a register of beneficial owners. The two registers are required to be lodged with the Registrar of Companies upon any change in legal or beneficial ownership of a company’s shares.”

The Act defines the beneficial owner as a natural person who ultimately owns or controls a legal person or arrangements 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 arrangement.

The Regulations apply to a beneficial owner who, whether directly or indirectly:

  • Holds at least 10% of the issued shares in the company either directly or indirectly;
  • Exercises at least 10% of the voting rights in the company either directly or indirectly;
  • Holds a right, directly or indirectly, to appoint or remove a director of the company; or
  • Exercises significant influence or control, over the company. Significant influence or control under the Regulations means ‘the ability to participate in decision making when it comes to matters relating to finances and financial policies of a company without necessarily having full control over them.’

“The Registrar of Companies is requiring all companies to comply with the Regulations and submit their respective beneficial ownership registers to the Companies Registry’s BO Register within 30 days of its preparation,” says Ms. Tunji.

The register should contain the following information: The names and addresses of the members (which has been made to include: the full name, National ID Card Number or Passport Number, KRA PIN, Nationality, Date of Birth, Postal Address, Residential Address, Current Phone Number, Current Email Address, Occupation, Nature of Ownership or Control, and any other information the Registrar may require from time to time); The date on which each person was registered as a member and any beneficial owners, if any; and the date on which any person ceased to be a member.

“If, after a company or any of its officers is convicted of an offence under subsection (10), the company continues to fail to comply with the relevant requirement, the company, and each officer of the company who is in default, commit a further offence on each day on which the failure continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such offence,” Sheila Munyi, Managing Partner at Ma Law Africa.

A Beneficial Ownership E-system manual is available on the BRS system to guide users.

Companies incorporated after December 2020 have already been registered by default and should only disclose information if there are any changes in the ownership.