Trademark Registration in Kenya
In Kenya, a trademark or service marks can be registered with the Kenya Industrial Property Institute (KIPI), and in pursuant to the Kenyan Trade Marks Act (Cap. 506).
Requirements for completing and filing applications
In order to register the trademark in Kenya, you require the following:
a) The full name and address of the entity which will own the mark.
b) 12 black and white or coloured prints of the mark. It is best to register the mark in black and white so that the protection of the mark may be extended to any colour combination in which you may wish to use the mark.
c) A translation into English of all words in the mark which are in any other.
d) A signed form of authorisation in favour of our firm which authorises us to file and deal with the trademark application. The form of authorisation can be filed within a month of filing the application.
Examination procedures and time scales
The trademarks registry carries out substantive examinations of all trademark and service mark applications firstly to satisfy itself that the marks meet the requirements for registerability (i.e. they are distinctive enough to qualify for registration, they are not descriptive of the character and quality of the goods for which they will be registered and on which they will be used and they are not laudatory words or combinations of words) and secondly to ascertain whether there are any other registered marks or pending applications for marks which are identical or sufficiently similar to the mark applied for as to be likely to result in confusion or deception of the public.
The trademarks registry will usually provide the official filing date and number for an application within seven days of filing of the application. It can take up to 2 to 3 months for the registry to issue an initial examination report. It generally takes our trademarks registry 3 to 6 months to register trademarks or service marks.
Use of registered mark
Under section 29 of the Kenya Trade Marks Act, if a registered mark is not used commercially in Kenya for a continuous period of five years, a third party can apply successfully to have it cancelled from the Kenya register. Use of a registered mark by a registered user is however deemed to be use by the registered owner. Such use will be a good defence to any cancellation action taken under section 29 of the Kenya Trade Marks Act by a third party.
Renewal Fees
When a trademark is eventually registered, the registration is backdated to the date on which the application was filed. The initial period of protection is ten years from that date. Thereafter the registration is to be renewed for successive periods of ten years.
Reasons for Registering a Trademark
Valuable Asset - The most important reason to register your trademark is to preserve your rights in this valuable asset. In many countries of the world, even though you have created a trademark and are using the trademark, if you do not register that trademark, you have no rights in it. A third party can misappropriate "your" trademark and obtain ownership rights by registering before you do. Although there are many other countries, in addition to Kenya, which provide certain rights to mere trademark users, asserting trademark rights based on mere use of a trademark is expensive and time consuming, not to mention the fact that you may fail if your usage is not sufficiently notorious. Thus, a trademark registration is a valuable asset for use in asserting your trademark rights against other parties. Furthermore, since a trademark registration is viewed as an asset, it can be used to collateralize a loan or it can often be sold to a third party.
Fend Off Other Parties - Trademarks can be misappropriated innocently by coincidence, or intentionally, by competitors, distributors, or professional trademark pirates. Trademark pirates can learn about new and upcoming trademarks by attending trade shows and watching the media and thereafter seeking to register these trademarks in strategic foreign countries. They hope to sell these trademarks at a handsome profit to the companies which introduced the trademark. If you register first, you not only foil the trademark pirate, you also make it easier for other parties to determine that the trademark is already protected when they do a trademark search on a new trademark that they are considering using.
Prevent Trademark Dilution - Another important reason to register trademarks is to prevent what is known as "dilution". Dilution occurs when a number of companies use similar trademarks on similar goods. Potential purchasers are then exposed to numerous trademarks that have certain similarities as to these related goods, and this minimizes the legal and practical value of a trademark as a source identifier. Other companies are much less likely to adopt a trademark which is similar to or identical to your trademark if you have taken the necessary steps to register it. If you do not register your trademark, it is much more difficult for other parties to become aware of your interest in the trademark.
Potential Loss of Goodwill - Another danger is the loss of good will which can arise by an infringing product or service of poor quality. This can happen when someone else enters the marketplace and commences the sale of goods or services with the same or a similar mark. If those goods or services are of poor quality, purchasers may well associate the poor quality item with your company, resulting in your loss of good will and sales. However, this is less likely to occur if you register your trademarks, since many companies take steps to avoid infringing a trademark of which they are aware.
Defensive Registrations - Trademarks can also be registered in nearly all countries in the world outside the United States as a defensive measure. In those countries, a company or individual need not use its trademark prior to obtaining a registration. Therefore, even in potential markets, you can prevent a third party from registering or using a trademark if you are the first party to obtain a registration. By obtaining a registration in advance of your use, you can be virtually assured of the unfettered ability to exclusively use your trademark in that country provided you begin use before the registration is subject to cancellation for non use.
Licensing the Trademark - Another reason for registering trademarks is the monetary value of a trademark registration per se. Besides being a property right which can be sold or collateralized, a trademark can be licensed. Quite often, companies enjoy substantial revenue in royalties from licensing their trademarks. If a trademark is licensed, however, it is very important, not only to register the trademark, but also to record the license agreements, where possible. License agreements must be carefully drafted to assure quality control of the licensed products and/or services by the trademark owner. A trademark license should be reviewed by an attorney who is knowledgeable in these matters, since the improper drafting or enforcement of a license agreement or the failure to record a license agreement can result in the invalidity of the trademark.
Cyrus
Tuesday, November 16, 2010
Establishment of a Charitable Foundation in Kenya
Establishment of a Charitable Foundation in Kenya
A charitable foundation under Kenyan laws can be established either as:
(a) a company limited by guarantee; or
(b) a charitable trust.
(A) Incorporation of company limited by guarantee
A company limited by guarantee under the Kenyan Companies Act can be incorporated either with or without share capital. However, in most cases companies limited by guarantees are incorporated without share capital. A company limited by guarantee may be a private company or a public company. A private company must have a minimum of 2 and a maximum of 50 members. On the other hand, a public company must have a minimum of 7 members but there is no statutorily prescribed maximum number of persons. Private companies enjoy a number of privileges including an exemption from the requirement to file annual accounts at the Companies Registry.
Although incorporation of a company limited by shares in Kenya is relatively straight-forward process, incorporation of charitable companies is a length process due to security verifications that are conducted against the promoters of such a company before incorporation.
Procedure of incorporation
A summary of the information required for the purposes of incorporation and the costs involved are set out below;
1. An application is made to reserve the proposed name with the Registrar. The Registrar has the right to reject names he considers undesirable or which are similar to the names of existing companies. It is therefore advisable to apply for 2 or 3 alternative names. The name must include the word “Limited”. However, this requirement can be dispensed in case of charitable companies (essentially companies limited by guarantee).
2. Preparation of the Memorandum and Articles of Association of the company.
The Memorandum sets out the objects of the company in detail. In the case of companies limited by guarantee, the Companies Act require the memorandum of association to state the minimum amount which each members guarantee to contribute to the assets of the companies in the event of liquidation and this amount is left at the discretion of the promoters. It is necessary to set out all the anticipated activities of the company as part of its main objects of association.
The Articles will contain the regulations for conducting the company’s affairs. It will be necessary to consider various matters including: the size of the board of directors, the quorum for meetings of members and directors, whether the directors are subject to retirement by rotation, any special rights conferred on members to appoint directors etc.
3. The Memorandum and Articles of a private charitable company must be signed by at least 2 persons who state the minimum amount they undertake to contribute in the event of liquidation of the company.
4. The Memorandum and Articles and a Statement of the Nominal Capital are then lodged for stamping with duty.
5. After stamping, the documents are presented to the Registrar of Companies together with the following prescribed forms:
(a) Particulars of the registered office. The full physical and postal address of the registered office must be supplied. This includes the land reference number.
(b) Particulars of the directors and company secretary including their full names, usual postal address, nationality and business occupation. It is usual to have a minimum of 2 directors. There are no unusual restrictions as to who may be appointed a director. In particular, there is no requirement that a director be a resident or citizen of Kenya. Companies may also act as directors.
(c) A Declaration of Compliance by the advocate attending to the incorporation of the company.
6. For companies limited by guarantee, the documents are usually forward to the Director of National Intelligence Service in order to carry out further investigation and inquiries on the objects of the proposed company. This process may take 2 to 3 months and if the National Intelligence Service approves the incorporation of the proposed company, these documents are sent back to the Registrar of Companies for incorporation.
7. Incorporation is complete when the Registrar issues a Certificate of Incorporation which must be displayed at the registered office. At this stage, the Attorney General will usually exempt the company from using the word “limited” as part of its name.
Post-incorporation
Common seal
The company will require a common seal for executing certain types of documents (e.g. office leases). Common seals are manufactured locally at a cost of approximately KShs.2,500 and we should be pleased to make the necessary arrangements.
Licences and other registrations
Most companies will require some form of government or local authority licence before commencing business depending upon the nature of the business. We should be pleased to provide specific advice on the licences which may be required. There will also be a number of tax registrations which must be attended to including:
• the obtaining of a PIN number
• various employee related tax registrations (Pay As You Earn, National Social Security Fund, National Hospital Insurance Fund and Local Authority Service Charge)
• value added tax (where appropriate)
Effects of Registration
Upon incorporation, the Foundation 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.
(B) ADVICE ON INCORPORATION OF A FOUNDATION UNDER THE TRUSTEES (PERPETUAL SUCCESSION) ACT
Under the laws of Kenya, it is possible for a foundation to be incorporated under the Trustees (Perpetual Succession) Act (Chapter 164 of the Laws of Kenya). This Act in section 3(1) thereof provides that, “Trustees who have been appointed by anybody or association of persons established for any religious, educational, literary, scientific, social, athletic or charitable purpose, or who have constituted themselves for any such purpose, may apply to the Minister …..for a certificate of incorporation of the trustees as a corporate body.”
EFFECT OF INCORPORATION
One the trustees of a charitable entity have been incorporated under the Act, they become a body corporate with a perpetual succession and all other legal indicia appertaining to a body corporate. Section 3(3) of the Trustees (Perpetual Succession) Act states that, once incorporated “the trustees shall thereupon become a body corporate by the name described in the certificate, and shall have perpetual succession and a common seal, and power to sue and be sued in their corporate name and, subject to the conditions and directions contained in the certificate, to hold and acquire, and by instruments under the common seal to convey, transfer, assign, charge and demise any movable or immovable property or any interest therein now or hereafter belonging to, or held for the benefit of, the trust concerned in the same manner and subject to such restrictions and provisions as trustees might so do without incorporation”.
INCORPORATION PROCEDURAL REQUIREMENTS
For the trustees to get incorporated, they should prepare a Trust Deed. The Trust Deed inter alia defines:
• the objects of the Trust;
• the Name of the Trust;
• the powers of the trustees;
• the powers to change and appoint additional trustees;
• resignation and removal of trustees; and
• meeting of trustees.
Execution and stamping of the Trust Deed
Once the trust deed has been approved by the trustees, the deed should be signed as appropriate and thereafter stamped with nominal duty of KShs.200.
Stages of Incorporation
The incorporation of a charitable trust involves two stages:
(a) Registration under the Registry of Documents Act
After stamping being stamped with duty, the trust deed should be presented for registration at the Registry of Documents at Ardhi House. The Registry of Documents is established under the Registry of Documents Act (Chapter 285 of the laws of Kenya). The registration under this Act takes about 1 or 2 weeks.
It should be noted that registration under the Registration of Documents Act does not make a trust into a body corporate. However, once the trust is registered under this Act, the trustees can commence implementing the objects of the trust as a simple trust.
(b) Incorporation under the Trustees (Perpetual Succession) Act
After registration under the Registry of Documents, a certified copy of the trust deed and a petition for incorporation prepared in the prescribed form should be lodged with the Minister for Lands for incorporation of the trust. The petition must state, among other things, that the trustees are desirous of being incorporated under the Act and give a pictorial representation of the common seal of the trust, which must be rounded in shape and with the name of the trust inscribed thereto. The Minister for Lands normally takes about 2 to 3 months after presentation of the petition to issue the Trustees with a Certificate of Incorporation.
TRUSTEES
Please note that the first trustees of an incorporated trust are nominated in the trust deed, and their names will be noted in the certificate of incorporation of the trust. Thereafter, these trustees may retire and new ones appointed as per the provisions of the trust deed. Moreover, additional trustees may be appointed as per the provision of the trust deed. Every change of trustees must be reported to the Registrar of Documents in the prescribed form and noted in the original certificate of incorporation of the Trust.
Nationality of Trustees
The trustees of an incorporate trust may be individuals, both local and foreigners, or a body corporate in the nature of a trust corporation, or a mixture of both. However, the Trustee Act provides that a foreign trustee who remains out of Kenya for a period exceeding 12 months may be removed from office by the remaining trustees.
The trustees are duty bound to comply with the provisions of the trust deed establishing the trust as well as the applicable legal provisions. Trustees must also act in the best interest of the trust and avoid conflict of interest situations. The trustees are however permitted to delegate some of their functions to a committee of trustees or employees of the trust.
When incorporated the trustees are require to exercise their powers and make decisions through resolutions of the board of trustees at duly constituted meetings of trustees. Meetings may also be held through an electronic medium which allows participants to communicate with each other e.g. teleconference or video conference, if this is provided for in the trust deed. Most trust deeds also provide that a resolution assented to in writing by all the trustees shall be deemed to have been duly made notwithstanding the absence of a meeting to resolve the matter.
Normally, the trust deed will also contain a provision empowering the trustees to enact regulations to govern the conduct of their meetings including order of business, voting rights, procedure of recording minutes.
ADVANTAGES OF INCORPORATION AS A CHARITABLE TRUST
(a) The trust becomes a body corporate with:-
• perpetual succession and common seal, whose existence is not affected by the death or other incapacities of its trustees;
• legal capacity to own property in its own name;
• ability sue and be sued in its own name; and
• ability to hire employees in its own name.
(b) The trust is eligible to apply for and obtain:-
• tax exemption from the Kenya Revenue Authority pursuant to paragraph 10 of the First Schedule to the Income Tax Act;
• exemption of land rates payable on its immovable properties; and
• exemption on stamp duty when buying land and property pursuant to section 52(2) (b) of the Stamp Duty Act.
CHANGE OF NAME AND DISSOLUTION
An incorporate trust may by means of a resolution change its name by mean of a special resolution which must be registered at the Lands Office and noted in its original certificate of incorporation. An incorporated trust also may by means of a special resolution resolve to dissolve, in which case its assets could be transferred to another charitable entity with similar objects.
A charitable foundation under Kenyan laws can be established either as:
(a) a company limited by guarantee; or
(b) a charitable trust.
(A) Incorporation of company limited by guarantee
A company limited by guarantee under the Kenyan Companies Act can be incorporated either with or without share capital. However, in most cases companies limited by guarantees are incorporated without share capital. A company limited by guarantee may be a private company or a public company. A private company must have a minimum of 2 and a maximum of 50 members. On the other hand, a public company must have a minimum of 7 members but there is no statutorily prescribed maximum number of persons. Private companies enjoy a number of privileges including an exemption from the requirement to file annual accounts at the Companies Registry.
Although incorporation of a company limited by shares in Kenya is relatively straight-forward process, incorporation of charitable companies is a length process due to security verifications that are conducted against the promoters of such a company before incorporation.
Procedure of incorporation
A summary of the information required for the purposes of incorporation and the costs involved are set out below;
1. An application is made to reserve the proposed name with the Registrar. The Registrar has the right to reject names he considers undesirable or which are similar to the names of existing companies. It is therefore advisable to apply for 2 or 3 alternative names. The name must include the word “Limited”. However, this requirement can be dispensed in case of charitable companies (essentially companies limited by guarantee).
2. Preparation of the Memorandum and Articles of Association of the company.
The Memorandum sets out the objects of the company in detail. In the case of companies limited by guarantee, the Companies Act require the memorandum of association to state the minimum amount which each members guarantee to contribute to the assets of the companies in the event of liquidation and this amount is left at the discretion of the promoters. It is necessary to set out all the anticipated activities of the company as part of its main objects of association.
The Articles will contain the regulations for conducting the company’s affairs. It will be necessary to consider various matters including: the size of the board of directors, the quorum for meetings of members and directors, whether the directors are subject to retirement by rotation, any special rights conferred on members to appoint directors etc.
3. The Memorandum and Articles of a private charitable company must be signed by at least 2 persons who state the minimum amount they undertake to contribute in the event of liquidation of the company.
4. The Memorandum and Articles and a Statement of the Nominal Capital are then lodged for stamping with duty.
5. After stamping, the documents are presented to the Registrar of Companies together with the following prescribed forms:
(a) Particulars of the registered office. The full physical and postal address of the registered office must be supplied. This includes the land reference number.
(b) Particulars of the directors and company secretary including their full names, usual postal address, nationality and business occupation. It is usual to have a minimum of 2 directors. There are no unusual restrictions as to who may be appointed a director. In particular, there is no requirement that a director be a resident or citizen of Kenya. Companies may also act as directors.
(c) A Declaration of Compliance by the advocate attending to the incorporation of the company.
6. For companies limited by guarantee, the documents are usually forward to the Director of National Intelligence Service in order to carry out further investigation and inquiries on the objects of the proposed company. This process may take 2 to 3 months and if the National Intelligence Service approves the incorporation of the proposed company, these documents are sent back to the Registrar of Companies for incorporation.
7. Incorporation is complete when the Registrar issues a Certificate of Incorporation which must be displayed at the registered office. At this stage, the Attorney General will usually exempt the company from using the word “limited” as part of its name.
Post-incorporation
Common seal
The company will require a common seal for executing certain types of documents (e.g. office leases). Common seals are manufactured locally at a cost of approximately KShs.2,500 and we should be pleased to make the necessary arrangements.
Licences and other registrations
Most companies will require some form of government or local authority licence before commencing business depending upon the nature of the business. We should be pleased to provide specific advice on the licences which may be required. There will also be a number of tax registrations which must be attended to including:
• the obtaining of a PIN number
• various employee related tax registrations (Pay As You Earn, National Social Security Fund, National Hospital Insurance Fund and Local Authority Service Charge)
• value added tax (where appropriate)
Effects of Registration
Upon incorporation, the Foundation 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.
(B) ADVICE ON INCORPORATION OF A FOUNDATION UNDER THE TRUSTEES (PERPETUAL SUCCESSION) ACT
Under the laws of Kenya, it is possible for a foundation to be incorporated under the Trustees (Perpetual Succession) Act (Chapter 164 of the Laws of Kenya). This Act in section 3(1) thereof provides that, “Trustees who have been appointed by anybody or association of persons established for any religious, educational, literary, scientific, social, athletic or charitable purpose, or who have constituted themselves for any such purpose, may apply to the Minister …..for a certificate of incorporation of the trustees as a corporate body.”
EFFECT OF INCORPORATION
One the trustees of a charitable entity have been incorporated under the Act, they become a body corporate with a perpetual succession and all other legal indicia appertaining to a body corporate. Section 3(3) of the Trustees (Perpetual Succession) Act states that, once incorporated “the trustees shall thereupon become a body corporate by the name described in the certificate, and shall have perpetual succession and a common seal, and power to sue and be sued in their corporate name and, subject to the conditions and directions contained in the certificate, to hold and acquire, and by instruments under the common seal to convey, transfer, assign, charge and demise any movable or immovable property or any interest therein now or hereafter belonging to, or held for the benefit of, the trust concerned in the same manner and subject to such restrictions and provisions as trustees might so do without incorporation”.
INCORPORATION PROCEDURAL REQUIREMENTS
For the trustees to get incorporated, they should prepare a Trust Deed. The Trust Deed inter alia defines:
• the objects of the Trust;
• the Name of the Trust;
• the powers of the trustees;
• the powers to change and appoint additional trustees;
• resignation and removal of trustees; and
• meeting of trustees.
Execution and stamping of the Trust Deed
Once the trust deed has been approved by the trustees, the deed should be signed as appropriate and thereafter stamped with nominal duty of KShs.200.
Stages of Incorporation
The incorporation of a charitable trust involves two stages:
(a) Registration under the Registry of Documents Act
After stamping being stamped with duty, the trust deed should be presented for registration at the Registry of Documents at Ardhi House. The Registry of Documents is established under the Registry of Documents Act (Chapter 285 of the laws of Kenya). The registration under this Act takes about 1 or 2 weeks.
It should be noted that registration under the Registration of Documents Act does not make a trust into a body corporate. However, once the trust is registered under this Act, the trustees can commence implementing the objects of the trust as a simple trust.
(b) Incorporation under the Trustees (Perpetual Succession) Act
After registration under the Registry of Documents, a certified copy of the trust deed and a petition for incorporation prepared in the prescribed form should be lodged with the Minister for Lands for incorporation of the trust. The petition must state, among other things, that the trustees are desirous of being incorporated under the Act and give a pictorial representation of the common seal of the trust, which must be rounded in shape and with the name of the trust inscribed thereto. The Minister for Lands normally takes about 2 to 3 months after presentation of the petition to issue the Trustees with a Certificate of Incorporation.
TRUSTEES
Please note that the first trustees of an incorporated trust are nominated in the trust deed, and their names will be noted in the certificate of incorporation of the trust. Thereafter, these trustees may retire and new ones appointed as per the provisions of the trust deed. Moreover, additional trustees may be appointed as per the provision of the trust deed. Every change of trustees must be reported to the Registrar of Documents in the prescribed form and noted in the original certificate of incorporation of the Trust.
Nationality of Trustees
The trustees of an incorporate trust may be individuals, both local and foreigners, or a body corporate in the nature of a trust corporation, or a mixture of both. However, the Trustee Act provides that a foreign trustee who remains out of Kenya for a period exceeding 12 months may be removed from office by the remaining trustees.
The trustees are duty bound to comply with the provisions of the trust deed establishing the trust as well as the applicable legal provisions. Trustees must also act in the best interest of the trust and avoid conflict of interest situations. The trustees are however permitted to delegate some of their functions to a committee of trustees or employees of the trust.
When incorporated the trustees are require to exercise their powers and make decisions through resolutions of the board of trustees at duly constituted meetings of trustees. Meetings may also be held through an electronic medium which allows participants to communicate with each other e.g. teleconference or video conference, if this is provided for in the trust deed. Most trust deeds also provide that a resolution assented to in writing by all the trustees shall be deemed to have been duly made notwithstanding the absence of a meeting to resolve the matter.
Normally, the trust deed will also contain a provision empowering the trustees to enact regulations to govern the conduct of their meetings including order of business, voting rights, procedure of recording minutes.
ADVANTAGES OF INCORPORATION AS A CHARITABLE TRUST
(a) The trust becomes a body corporate with:-
• perpetual succession and common seal, whose existence is not affected by the death or other incapacities of its trustees;
• legal capacity to own property in its own name;
• ability sue and be sued in its own name; and
• ability to hire employees in its own name.
(b) The trust is eligible to apply for and obtain:-
• tax exemption from the Kenya Revenue Authority pursuant to paragraph 10 of the First Schedule to the Income Tax Act;
• exemption of land rates payable on its immovable properties; and
• exemption on stamp duty when buying land and property pursuant to section 52(2) (b) of the Stamp Duty Act.
CHANGE OF NAME AND DISSOLUTION
An incorporate trust may by means of a resolution change its name by mean of a special resolution which must be registered at the Lands Office and noted in its original certificate of incorporation. An incorporated trust also may by means of a special resolution resolve to dissolve, in which case its assets could be transferred to another charitable entity with similar objects.
Establishment of Business in Kenya by a foreign company or corporation
If a foreign incorporated company or corporation intends to establish presence in Kenya, there are two options that are available. It can be incorporated in Kenya as;
(a) a locally incorporated private company; or
(b) registered as a branch office of a foreign company.
(a) Locally incorporated private company
Incorporation of a company in Kenya is relatively straight-forward in most cases. Companies are usually incorporated as private companies limited by shares. A private company is a company which restricts the right to transfer its shares, limits the number of shareholders to 50 (excluding employees), prohibits offers to the public of its shares and debentures and cannot issue bearer shares. A private company must have a minimum of 2 shareholders.
Advantages
Private companies enjoy a number of privileges including an exemption from the requirement to file annual accounts at the Companies Registry.
Procedure
A summary of the information required for the purposes of incorporation and the costs involved are set out below;
1. An application is made to reserve the proposed name with the Registrar. The Registrar has the right to reject names he considers undesirable or which are similar to the names of existing companies. It is therefore advisable to apply for 2 or 3 alternative names. The name must include the word “Limited” unless special dispensation is obtained (essentially confined to charitable bodies).
2. Preparation of the Memorandum and Articles of Association of the company.
Unless special minority protection is required, these will be very much in standard form. The Memorandum sets out the objects of the company in detail and particulars of its authorised share capital. It is necessary to set out all the anticipated activities of the company as part of its main objects of association. We will therefore need a reasonably comprehensive description of the company’s proposed business. This need not extend to normal ancillary powers (e.g. borrowing powers) which we will include as a matter of course.
It is usual to incorporate the company with a nominal amount of authorised share capital (Shs.2,000) which can be increased at a later date. Stamp duty of 1% is payable on authorised share capital. Although the obligation to pay for shares can be expressed in any currency, the actual share capital of the company is invariably designated in Kenya Shillings.
The Articles will contain the regulations for conducting the company’s affairs. It will be necessary to consider various matters including: whether the issue and transfer of shares are to be subject to pre-emption rights, the size of the board of directors, the quorum for meetings of shareholders and directors, whether the directors are subject to retirement by rotation, any special rights conferred on shareholders to appoint directors etc. In the case of a wholly-owned subsidiary, most of these will be designed for ease of administration. .
3. The Memorandum and Articles must be signed by at least 2 persons who will subscribe for at least one share each. In most cases, the initial subscription is done by 2 partners of Sichangi Partners Advocates in order to quicken the process. The shares subscribed will be held in trust for the intended shareholders whose names and addresses will be required for the purposes of preparing the necessary declarations of trust. The shares can then be transferred after incorporation. Stamp duty of Shs.200 (approximately US$3) are payable on the declarations of trust and subsequent share transfers.
4. The Memorandum and Articles and a Statement of the Nominal Capital are then lodged for stamping. Due to past frauds, there are now extensive audit procedures in place at the stamp duty office as a result of which two (2) working weeks must be allowed for stamping.
5. After stamping, the documents are presented to the Registrar of Companies together with the following prescribed forms:
(a) Particulars of the registered office. The full physical and postal address of the registered office must be supplied. This includes the land reference number.
(b) Particulars of the directors and company secretary including their full names, usual postal address, nationality and business occupation. It is usual to have a minimum of 2 directors. There are no unusual restrictions as to who may be appointed a director. In particular, there is no requirement that a director be a resident or citizen of Kenya. Companies may also act as directors.
(c) A Declaration of Compliance by the advocate attending to the incorporation of the company.
6. Incorporation is complete when the Registrar issues a Certificate of Incorporation which must be displayed at the registered office.
Post-incorporation
Common seal
The company will require a common seal for executing certain types of documents (e.g. office leases). Common seals are manufactured locally at a cost of approximately Shs.2,300 (US$30) and we should be pleased to make the necessary arrangements.
Licences and other registrations
Most companies will require some form of government or local authority licence before commencing business depending upon the nature of the business. We should be pleased to provide specific advice on the licences which may be required. There will also be a number of tax registrations which must be attended to including:
• the obtaining of a PIN number
• various employee related tax registrations (Pay As You Earn, National Social Security Fund, National Hospital Insurance Fund and Local Authority Service Charge)
• value added tax (where appropriate)
(b) Registration as a branch of a foreign Company
The above company may also establish liaison or branch office .In that case, it will have to register itself as a foreign company under Section 366 of our Companies Act. The documents required to be filed at the company’s registry to enable us to complete the necessary returns and file them at the companies Registry with all other necessary documents are:
a) A certified true copy of the Memorandum and Articles of Association of the company certified as a true copy by a notary public and notarised true copy of Certificate of Incorporation.
b) The present physical and postal address of the company. We will type this information into the necessary return once you provide us with this information.
c) The full names, addresses, nationalities and occupations of each of the directors and the company secretary. We will type this information into the necessary return once you provide this information.
d) The full name and physical and postal address of someone in Kenya who is appointed as the representative to accept service of papers on behalf of the company in Kenya. If you wish one of our partners can be named initially but you will subsequently have to appoint the representative who is sent to Kenya to run the office or a firm of accountants for this purpose. The accountants will also have to file the necessary tax returns for the company with the tax authorities (see below).
1. Procedure and time scale
The returns containing the information referred to in (b) to (d) above have to be signed by the person referred to in (d) above. Once this is done and we have been provided with the notarised copies of the documents referred in (a) we can lodge the application at the Companies Registry to register the company. It generally takes about 2 to 3 4 weeks from the date of filing such papers for the Registry to issue the Certificate of Compliance which signifies the registration of the company.
4. Various other requirements
Any expatriates who are to operate the company’s branch office in Kenya will need class A entry permits under the provisions of the Immigration Act before they can start to operate the Nairobi Office and they will in due course have to obtain PIN numbers for tax purposes.
The company will have to make PAYE deductions and certain other statutory deductions from the monthly salaries of employees in the Nairobi Office and file certain statutory returns in connection with such deductions from time to time. A local firm of accountants can advise you on these requirements once the company is registered.
The company will only have to pay Kenya corporation tax on any income which it derives from its activities in Kenya. Tax is not charged on funds sent into Kenya to finance the operation of such liaison offices.
Provided that the liaison office does not import, export retail or wholesale goods or services it will not require a trade licence under the Trade Licensing Act if it does this then it will have to obtain a trade license. No other licences, authorities or consents are presently required under the laws of Kenya to operate a liaison or branch office of a foreign company.
5. Opening of a bank account
A local bank will require a certified true copy of the Certificate of Compliance when the bank account is to be opened in the name of the foreign company. The account can be a foreign currency account into and out of which foreign currency can be freely remitted for the company’s expenses whenever they are incurred. The Certificate of Compliance will be issued by the Companies Registry on registration of the company and we can certify as many photocopies as you wish as true copies
If you require more information on this, please do not hesitate to contact me via mainacy@gmail.com
(a) a locally incorporated private company; or
(b) registered as a branch office of a foreign company.
(a) Locally incorporated private company
Incorporation of a company in Kenya is relatively straight-forward in most cases. Companies are usually incorporated as private companies limited by shares. A private company is a company which restricts the right to transfer its shares, limits the number of shareholders to 50 (excluding employees), prohibits offers to the public of its shares and debentures and cannot issue bearer shares. A private company must have a minimum of 2 shareholders.
Advantages
Private companies enjoy a number of privileges including an exemption from the requirement to file annual accounts at the Companies Registry.
Procedure
A summary of the information required for the purposes of incorporation and the costs involved are set out below;
1. An application is made to reserve the proposed name with the Registrar. The Registrar has the right to reject names he considers undesirable or which are similar to the names of existing companies. It is therefore advisable to apply for 2 or 3 alternative names. The name must include the word “Limited” unless special dispensation is obtained (essentially confined to charitable bodies).
2. Preparation of the Memorandum and Articles of Association of the company.
Unless special minority protection is required, these will be very much in standard form. The Memorandum sets out the objects of the company in detail and particulars of its authorised share capital. It is necessary to set out all the anticipated activities of the company as part of its main objects of association. We will therefore need a reasonably comprehensive description of the company’s proposed business. This need not extend to normal ancillary powers (e.g. borrowing powers) which we will include as a matter of course.
It is usual to incorporate the company with a nominal amount of authorised share capital (Shs.2,000) which can be increased at a later date. Stamp duty of 1% is payable on authorised share capital. Although the obligation to pay for shares can be expressed in any currency, the actual share capital of the company is invariably designated in Kenya Shillings.
The Articles will contain the regulations for conducting the company’s affairs. It will be necessary to consider various matters including: whether the issue and transfer of shares are to be subject to pre-emption rights, the size of the board of directors, the quorum for meetings of shareholders and directors, whether the directors are subject to retirement by rotation, any special rights conferred on shareholders to appoint directors etc. In the case of a wholly-owned subsidiary, most of these will be designed for ease of administration. .
3. The Memorandum and Articles must be signed by at least 2 persons who will subscribe for at least one share each. In most cases, the initial subscription is done by 2 partners of Sichangi Partners Advocates in order to quicken the process. The shares subscribed will be held in trust for the intended shareholders whose names and addresses will be required for the purposes of preparing the necessary declarations of trust. The shares can then be transferred after incorporation. Stamp duty of Shs.200 (approximately US$3) are payable on the declarations of trust and subsequent share transfers.
4. The Memorandum and Articles and a Statement of the Nominal Capital are then lodged for stamping. Due to past frauds, there are now extensive audit procedures in place at the stamp duty office as a result of which two (2) working weeks must be allowed for stamping.
5. After stamping, the documents are presented to the Registrar of Companies together with the following prescribed forms:
(a) Particulars of the registered office. The full physical and postal address of the registered office must be supplied. This includes the land reference number.
(b) Particulars of the directors and company secretary including their full names, usual postal address, nationality and business occupation. It is usual to have a minimum of 2 directors. There are no unusual restrictions as to who may be appointed a director. In particular, there is no requirement that a director be a resident or citizen of Kenya. Companies may also act as directors.
(c) A Declaration of Compliance by the advocate attending to the incorporation of the company.
6. Incorporation is complete when the Registrar issues a Certificate of Incorporation which must be displayed at the registered office.
Post-incorporation
Common seal
The company will require a common seal for executing certain types of documents (e.g. office leases). Common seals are manufactured locally at a cost of approximately Shs.2,300 (US$30) and we should be pleased to make the necessary arrangements.
Licences and other registrations
Most companies will require some form of government or local authority licence before commencing business depending upon the nature of the business. We should be pleased to provide specific advice on the licences which may be required. There will also be a number of tax registrations which must be attended to including:
• the obtaining of a PIN number
• various employee related tax registrations (Pay As You Earn, National Social Security Fund, National Hospital Insurance Fund and Local Authority Service Charge)
• value added tax (where appropriate)
(b) Registration as a branch of a foreign Company
The above company may also establish liaison or branch office .In that case, it will have to register itself as a foreign company under Section 366 of our Companies Act. The documents required to be filed at the company’s registry to enable us to complete the necessary returns and file them at the companies Registry with all other necessary documents are:
a) A certified true copy of the Memorandum and Articles of Association of the company certified as a true copy by a notary public and notarised true copy of Certificate of Incorporation.
b) The present physical and postal address of the company. We will type this information into the necessary return once you provide us with this information.
c) The full names, addresses, nationalities and occupations of each of the directors and the company secretary. We will type this information into the necessary return once you provide this information.
d) The full name and physical and postal address of someone in Kenya who is appointed as the representative to accept service of papers on behalf of the company in Kenya. If you wish one of our partners can be named initially but you will subsequently have to appoint the representative who is sent to Kenya to run the office or a firm of accountants for this purpose. The accountants will also have to file the necessary tax returns for the company with the tax authorities (see below).
1. Procedure and time scale
The returns containing the information referred to in (b) to (d) above have to be signed by the person referred to in (d) above. Once this is done and we have been provided with the notarised copies of the documents referred in (a) we can lodge the application at the Companies Registry to register the company. It generally takes about 2 to 3 4 weeks from the date of filing such papers for the Registry to issue the Certificate of Compliance which signifies the registration of the company.
4. Various other requirements
Any expatriates who are to operate the company’s branch office in Kenya will need class A entry permits under the provisions of the Immigration Act before they can start to operate the Nairobi Office and they will in due course have to obtain PIN numbers for tax purposes.
The company will have to make PAYE deductions and certain other statutory deductions from the monthly salaries of employees in the Nairobi Office and file certain statutory returns in connection with such deductions from time to time. A local firm of accountants can advise you on these requirements once the company is registered.
The company will only have to pay Kenya corporation tax on any income which it derives from its activities in Kenya. Tax is not charged on funds sent into Kenya to finance the operation of such liaison offices.
Provided that the liaison office does not import, export retail or wholesale goods or services it will not require a trade licence under the Trade Licensing Act if it does this then it will have to obtain a trade license. No other licences, authorities or consents are presently required under the laws of Kenya to operate a liaison or branch office of a foreign company.
5. Opening of a bank account
A local bank will require a certified true copy of the Certificate of Compliance when the bank account is to be opened in the name of the foreign company. The account can be a foreign currency account into and out of which foreign currency can be freely remitted for the company’s expenses whenever they are incurred. The Certificate of Compliance will be issued by the Companies Registry on registration of the company and we can certify as many photocopies as you wish as true copies
If you require more information on this, please do not hesitate to contact me via mainacy@gmail.com
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