Hello

Welcome to Kenyan Lawyer blog, an informative and educative blogs that is meant to educate and inform you on legal development in Kenya and on business issues. You can reach me via mainacy@gmail.com

Karibu sana.

Tuesday, November 16, 2010

Registering a NGO/ Charitable Organisation in Kenya

Registration of NGOs under Kenyan Law

The Non-Governmental Organisations Co-Ordination Act 1990 (Section 2) defines an NGO as “a private voluntary grouping of individuals or associations, not operated for profit or for other commercial purposes but which have organized themselves nationally or internationally for the benefit of the public at large and for the promotion of social welfare, development charity or research in the areas inclusive of, but not restricted to, health, relief, agriculture, education, industry and the supply of amenities and services”.

As this definition includes both local and foreign NGO’s the procedure for registration is similar for both. The only difference is that foreign NGO’s are subject to some additional requirements. The additional requirements in the case of such foreign NGO’s are as follows:

• the organization has to furnish the constitutions of its other branches around the world;
• 1 out of 3 officials of the Kenya branch must be a Kenyan citizens; and
• the officials must be of outstanding character. In the wake of the 11th September 2001 terrorist attack in the USA the NGO’s Board now requires satisfactory references to vouch for the NGOs officials.

Registration Process
The procedure for the registration of an NGO is contained in Sections 10-11 of the Act and Part III of the Regulations (L.N. 152/1992). All applications are to be submitted to the Non-Governmental Organisations Co-Ordination Board, which is based in Nairobi.

Approval of Names
Before an application for registration is made, approval must be obtained from the Director of the Non-Governmental Organizations Board for the name of the NGO to be registered. The application should be made on Form 2, Schedule 1 and should be accompanied by the reservation fee is Kshs.500 (approximately US$ 7).
On receipt of the application and the fees, the Director shall carry out a name search and shall notify the applicant if the name has been approved or not and in the later case, the grounds for rejection will be stated.
If the name is approved it will be entered in a register for reserved names for a period of thirty days or for a longer period not exceeding sixty days. This period commences from the date of notification of name approval to the applicant.
Application for Registration
The application should be in Form 3, Schedule 1. The information to be supplied is basically that set out in Section 10 (3) of the Act which requires the application to be made by the Chief Officer of the proposed organisation and should specify:
a) Other officers of the organisation.. Form 3 specifically states that the personal particulars of the NGO’s three officers must be supplied. These officers must supply two recent passport photographs be resident in Kenya or must intend to take up residence in Kenya once the organization is operational. In practice, after an application is submitted the NGO Board staff will interview at least one official of the proposed NGO on the background of the organization and its funding arrangements.
b) The Head office and postal address of the organisation
c) The sectors of the proposed organisation
d) The districts, divisions and locations of the proposed activities
e) The proposed average annual budgets. These should be an estimate of the proposed spending on various activities. All sources of funding will have to be specified in the application and any national and international affiliation must be disclosed. The NGO Board has indicated that local NGOs must have a “base capital” of Kshs.10,700 (approximately US$ 135) and international NGOs a “base capital” of Kshs.20,700 (approximately 260) or else their registration will not be approved. This is an example of a requirement which has developed ad hoc and is not prescribed in either the Act or the Regulations.
f) The duration of the activities
g) All sources of funding
h) The national and international affiliation and the certificates of incorporation

The application forms must be accompanied by:
a) Five copies of a letter from the sponsor, that is the person or body providing primary financial and material support towards the project.. The letter from the sponsor confirming that it will provide financial and material support to the NGO must be submitted with the application for registration.
b) Two copies of the Organisation’s constitution as well as copies of the constitutions, deeds or statutes of any branches in countries other than Kenya.
c) Two current passport sized photos of the applicant duly endorsed by the sponsor or referee
d) Certificate of registration outside Kenya
e) A copy of the minutes of the proposed Organisation authorising the filing of the application
f) A notification of the location of the office and postal address of the proposed organisation in Form 4, Schedule 1 signed by the chief officer of the proposed organisation
g) The application fee. The application fee for registration of an International NGO is set at Kshs. 22,000. The NGO Board tends to treat NGOs that have foreign sponsors as international NGOs and they must therefore pay the higher registration fee
The application should be typewritten and signed by the Chief Officer of the proposed organisation.

Additional Information
The NGO board and the Director may, under the Act and the Regulations, request for further or better information on the proposed organisation as he may require. Pursuant to this provision the application should include particulars of the founders of the proposed organization, whether Kenyan or foreign. The Board will then carry out “background checks” on the founders; it is not revealed what these entail but it can be assumed that security checks are carried out.
Constitution
The proposed NGO must have a constitution specifying its objects. The NGO Board issues guidelines stating what registration will be rejected if the proposed constitution does not comply with these guidelines.
a) The constitution must be subscribed to by at least three members. Non-natural legal persons are permitted to be subscribers and members of NGOs.
b) the NGO’s name
c) the NGO’s objects and administrative units
d) The custody, use and investment of the funds and property of the Non-Governmental Organisation and the designation of the persons responsible thereof.
e) persons or entities for whom membership is open
f) structure and management of the NGO including
 titles of officers, trustees, auditors and their terms of office and methods of election, appointment, dismissal and suspension
 composition of committees and their terms of office and methods of election, appointment, dismissal and suspension
g) quorums for and dates of general meetings
h) financial year and periodicity of audit of accounts
i) inspection of books and list of members
j) formation of branches
k) manner of amending the NGO’s name, constitution or rules
l) manner of disposal of the NGO’s property on dissolution.
m) The Schedule also requires that the purpose for which an NGO’s funds may be used must be specified. In particular, every constitution must prohibit the distribution of the NGO’s funds and assets among its members. Clauses which may constitute loopholes for such distribution to members or officials are also prohibited unless they provide for the legitimate reimbursement of expenses incurred in carrying out the NGO’s objects. The constitution should also contain rules governing the awarding of contracts to members or officials.

The Constitution of an NGO must comply with the prescriptions of the Second Schedule of the Regulations. Preferably this should be prepared by a Kenyan Advocate.

Most constitutions provide for a governing council in the form of a board of management to manage the day to day activities of the NGO. The board may appoint a chairman but not a president.

The board’s powers and rules for voting would depend on the constitution of the NGO in question, they are not prescribed by law. Generally, matters are decided by a majority of votes. Constitutions tend to require the disclosure by members of any interests in contracts. Such members are usually not permitted to vote on such matters.

The constitution of an NGO may contain provisions indemnifying members of the board and of the NGO against all costs, losses and expenses they may incur by reason of any contract they enter into or act or thing they do in good faith.

Refusal of registration
The Board has power to refuse to register a proposed NGO if it is satisfied that:
a) its proposed activities or procedures are not in the national interests; or
b) the applicant has given false information in the application; or
c) based on a recommendation of the National Council Organizations (which acts as a collective forum for all NGOs registered under the Act), the applicant should not be registered.
Where the Board does refuse to register an NGO, it must notify the applicant of its refusal within 14 days of its decision in Form 6, Schedule 1. The Act does not specify what an applicant’s rights are if the Board fails to comply with this requirement.

If the applicant feels aggrieved, an appeal from the Board’s decision may be made to the Minister responsible for NGOs. Such an appeal must be made within 60 days from the date of the Board’s decision. The Minister must in turn make his decision within 30 days of receiving the appeal and may request written comments on the matter from the NGO Council.
If the applicant is still not satisfied with the decision of the Minister then a final appeal lies with the High Court of Kenya.

Effects of Registration
Upon registration an NGO becomes a body corporate capable in its name of:

a) suing and being sued;
b) taking, purchasing or otherwise acquiring, holding, charging or disposing of movable and immovable property;
c) entering into contracts; and
d) doing or performing all such things or acts necessary for the proper performance of its functions under the NGO Co-ordination Act.

As a result of its corporate status an NGO registered under the NGO Co-ordination Act does not enjoy any immunities against prosecution such as those available to diplomatic or consular missions.

The NGO Regulations provide that an NGO cannot:

a) change its name or constitution; or
b) become a branch of or in any way affiliated or connected with any organization or group of a political nature which is established outside Kenya; or
c) dissolve itself

without the written consent of the NGO Co-ordination Board.

NGOs tend to be viewed by the Kenyan authorities as potential vehicles for political subversion. In this regard the Kenyan government has repeatedly warned that NGOs interfering in matters of a political nature risk being struck off the NGO register, although it is difficult to determine whether such warnings have ever been implemented in practice.

The NGO Council has adopted a code of conduct that must be followed by all NGOs. If a person feels that an NGO has breached the code then such a complaint may be directed to the NGO Council. The complaint must be in writing setting out the particulars of the alleged breach.

Complaints may be directed to the Chief Executive Officer, National Council of NGOs, Nairobi.

As a body corporate, an NGO may also be sued by its beneficiaries.

(a) The advantages of registering as an NGO include:
(i) Exemptions from duty on imported equipment and goods required for the NGO’s activities in Kenya under certain circumstances.
(ii) Exemptions from Value Added Tax on the NGO’s income generating activities under certain circumstances.
(iii) Exemptions from income tax on the NGO’s expatriate employees.
(iv) Limited liability on members if so provided under the NGO’s constitution.
(v) Applications may be recommended by the NGO Board for Entry Permits in respect of expatriate employees.
(b) The disadvantages of forming an NGO include:
(i) Lengthy delays in the registration process which can be over a year arising from a lengthy vetting process which involves the NGO’s Board seeking of recommendations/objections from relevant government departments or ministries.
(ii) Compliance with various rules. The application for registration as an NGO is to be made in the prescribed form and it must be accompanied with amongst other things, a detailed budget and a certified copy of the constitution of the organisation which must comply with various matters set out in the NGO Rules. Once registered, it must comply with the Code of Conduct for NGOs.
(iii) Various reporting requirements. An annual report has to be made in the prescribed form and submitted to the NGO Board on or before 31st May in every year. Such annual reports outline the projects undertaken by the NGO and how the funds received by donors have been utilized in the projects. The reports become part of the public record and can be inspected by any person upon payment of a fee. In addition, returns have to be filed whenever there are changes in the registered office or postal address or changes of officers or their titles.
(iv) Various restrictions. Once registered, an NGO must not:
• amend its name or constitution and;
• become a branch of or affiliated to or connected with any organisation of a political nature established outside Kenya
except with the prior written consent of the NGO’s Board.

1 comment:

Anonymous said...

The information was very helpful. I have but one question. What is the average total cost to set up an NGO or some kind of non-profit organization?