Everything You Need to Know About Company Registration in Kenya

The process of company registration in Kenya has been streamlined and digitized, making it more accessible and efficient for business owners. By registering your company, you not only comply with legal requirements but also position your business for growth and success.

A registered company enjoys numerous advantages, including limited liability protection, which shields personal assets from business liabilities. It also enhances your business’s credibility and trustworthiness in the eyes of customers, suppliers, and potential investors.

Moreover, a registered company can access various funding opportunities, government grants, and other support mechanisms that are often unavailable to unregistered entities.

In this article, we will delve into the intricacies of company registration in Kenya. Read on to understand the different types of companies you can register, the step-by-step registration process, and the essential requirements and post-registration obligations.

Types of Companies in Kenya

When deciding to register a company in Kenya, it’s essential to understand the different types of companies available and choose the one that best suits your business needs. Each type has its own characteristics, advantages, and legal requirements.

Here are the main types of companies you can register in Kenya:

Private Limited Company (Ltd)

A Private Limited Company is the most common type of business entity in Kenya. It is suitable for small to medium-sized businesses. Key features include:

Limited Liability: Shareholders are only liable for the company’s debts to the extent of their shareholdings.
Number of Members: It requires a minimum of one and a maximum of fifty shareholders.
Shares: Shares cannot be freely transferred and are typically held by family members or close associates.
Legal Entity: It is a separate legal entity, distinct from its owners.

Public Limited Company (PLC)

A Public Limited Company is designed for larger businesses that intend to raise capital from the public. Key features include:

Limited Liability: Similar to private companies, shareholders have limited liability.
Number of Members: There is no maximum limit to the number of shareholders.
Shares: Shares can be freely traded on the stock exchange.
Capital Requirements: Higher capital requirements and more stringent regulatory compliance compared to private companies.

Limited Liability Partnership (LLP)

A Limited Liability Partnership combines the benefits of a partnership and a company. Key features include:

Limited Liability: Partners have limited liability, similar to shareholders in a company.
Legal Entity: It is a separate legal entity from its partners.
Flexibility: Provides operational flexibility similar to a partnership while offering the benefits of limited liability.

This video answers common questions about registering a company in Kenya

Why Register: Benefits of Registering a Company in Kenya

Registering a company in Kenya offers numerous benefits that can significantly contribute to the success and sustainability of your business.

Here are some of the key advantages:

1. Legal Protection and Limited Liability

One of the most significant benefits of registering a company in Kenya is the limited liability protection it provides to its owners. This means that the personal assets of shareholders or directors are protected from the company’s debts and liabilities.

In the event of financial trouble, shareholders are only liable up to the amount they invested in the company.

2. Access to Funding and Grants

Registered companies have better access to various funding opportunities. This includes bank loans, government grants, and venture capital.

Financial institutions and investors are more likely to provide financial assistance to registered companies because they are perceived as more credible and stable compared to unregistered entities.

3. Enhanced Credibility and Trust

A registered company enjoys enhanced credibility and trustworthiness in the eyes of customers, suppliers, and potential business partners.

Being a legally recognized entity demonstrates that your business complies with local laws and regulations, which can attract more clients and foster better business relationships.

4. Perpetual Succession

Registered companies have perpetual succession, meaning that the company continues to exist even if the owners or shareholders change.

This ensures business continuity and stability, which is particularly important for long-term planning and operations.

5. Brand Protection

Registering your company allows you to protect your business name and brand. This ensures that no other entity can legally use your company’s name, which helps in building a unique identity and preventing brand confusion in the market.

6. Tax Benefits and Incentives

Registered companies can take advantage of various tax benefits and incentives offered by the government.

These may include deductions on business expenses, access to lower tax rates, and eligibility for tax credits. Proper registration and compliance with tax regulations can also prevent potential legal issues and penalties.

7. Ability to Enter into Contracts

A registered company can enter into contracts, sue, and be sued in its own name. This legal capacity allows the business to engage in various commercial activities, enter into binding agreements, and protect its interests through legal means.

8. Opportunities for Growth and Expansion

With a registered company, it’s easier to pursue growth and expansion opportunities. The credibility and formal structure provided by registration make it more feasible to attract new investors, enter new markets, and form strategic partnerships.

9. Professionalism and Formality

A registered company operates with a level of professionalism and formality that can instill confidence in stakeholders.

This includes maintaining proper records, adhering to regulatory requirements, and following standard business practices, all of which contribute to a positive business reputation.

10. Employee Benefits and Talent Attraction

Registered companies can offer formal employment contracts and benefits such as health insurance, retirement plans, and paid leave.

This helps attract and retain top talent, as potential employees are more likely to join a legally recognized and well-structured organization.

Requirements for Company Registration in Kenya

Before you start the process of registering your company, it’s important to ready the following:

Three proposed names for the company. You must submit three names while applying. The business registration service will assign you the first available name. If none of the names are available, you’ll be asked to choose other names.
Articles of Association. Articles of association govern the operations of a company. While registering a company, you must decide whether to adopt the standard articles of association or have a lawyer draft customized articles. Customization is necessary if there are unique rules you need to set.
Nature of business. You need to state the nature of your business and choose the best match from a comprehensive list of business sectors.
Target business start date. You must specify the date your business will start operating.
Estimated annual turnover. You’ll need to specify your estimated annual turnover, which will affect the tax bracket the government automatically assigns to you.
Number of employees. You must specify the number of employees you have who earn more than Ksh 13,500.
Shareholder details. You’ll need to attach the national ID, passport photo, and KRA certificate of every shareholder. You must also state their occupations.
Company details. You’ll need to specify the company’s registered address, including the county, district, locality, street, and building. You’ll also need to give the official email address the company intends to use.
Share capital and percentage of each shareholder. If the company has multiple shareholders, you must specify the percentage of the company that each shareholder will have.

How to Register a Company in Kenya

Registering a company in Kenya involves a series of steps that have been streamlined through the online business registration service, making the process efficient and accessible.

Here is a step-by-step guide to registering your company:

1. Name Search and Reservation

The first step in registering a company is to conduct a name search and reserve your desired company name. This can be done online through the eCitizen platform.

Log in to eCitizen: Create an account or log in to your existing account on the eCitizen platform.
Conduct a Name Search: Use the Business Registration Service (BRS) to search for your desired company name to ensure it is not already taken or too similar to existing names.
Reserve the Name: If the name is available, reserve it for a period of 30 days by paying the required fee.

2. Prepare Documents

You will need to prepare several documents required for company registration. These typically include:

Memorandum and Articles of Association: These documents outline the company’s objectives, structure, and internal regulations.
Form CR1: Application for registration of a company.
Form CR2: Memorandum of particulars for a company with share capital.
Form CR8: Notice of residential address of directors.
Directors’ and Shareholders’ Information: Copies of national IDs or passports and KRA PIN certificates of all directors and shareholders.

3. Filing for Registration

Submit the necessary forms and documents for registration.

Online Submission: Log in to the eCitizen platform and navigate to the Business Registration Service section.
Fill Out Forms: Complete and submit the required forms online.
Upload Documents: Upload the prepared documents, including the Memorandum and Articles of Association and other supporting documents.

4. Payment of Fees

Pay the registration fees, which can vary depending on the type and size of the company.

Fee Structure: Public limited companies and private limited companies pay Ksh 10,650 while limited liability partnerships pay Ksh 25,000.
Payment Methods: Various payment methods are available, including mobile money, bank transfers, and credit/debit cards.

5. Issuance of Certificate of Incorporation

Once the registration is approved, you will receive a Certificate of Incorporation.

Processing Time: The processing time can vary but usually takes a few days to a week.
Download Certificate: You can download the Certificate of Incorporation from the eCitizen platform.

Post-Registration Requirements

Once your company is registered and you have received the Certificate of Incorporation, there are several post-registration requirements and actions you need to take to ensure your company is fully operational and compliant with Kenyan laws.

Here are the key post-registration steps:

1. Opening a Corporate Bank Account

Documentation Required: Provide the bank with the Certificate of Incorporation, the company’s KRA PIN certificate, Memorandum and Articles of Association, and identification documents of the directors.
Choosing a Bank: Select a bank that meets your business needs, considering factors such as banking fees, services offered, and convenience.

2. Registering for Value Added Tax (VAT)

VAT Registration: If your company’s annual turnover exceeds KES 5 million, you must register for VAT through the KRA’s iTax portal.
VAT Compliance: Once registered, you must file monthly VAT returns and comply with VAT regulations.

3. Obtaining Business Permits and Licenses

Local Authority Permits: Apply for a Single Business Permit from your local county government. The requirements and fees vary depending on the nature and size of your business.
Industry-Specific Licenses: Depending on your business activities, you may need additional licenses from regulatory bodies (e.g., health licenses for food businesses, trade licenses for retail operations).

4. Compliance with Labour Laws

NSSF Registration: Register your company and employees with the National Social Security Fund (NSSF) for social security contributions.
NHIF Registration: Register your company and employees with the National Hospital Insurance Fund (NHIF) for health insurance contributions.
Employment Contracts: Ensure that all employees have written contracts that comply with the Kenyan Employment Act.

You can outsource this work to a HR compliance professional or hire one to be part of your team.

5. Filing Annual Returns and Complying With Tax Obligations

Annual Returns: File annual returns with the Registrar of Companies to keep your company’s registration status active and up-to-date. This includes submitting financial statements and other required information.
Income Tax: File annual income tax returns and pay any taxes due.
PAYE: Register for Pay As You Earn (PAYE) and remit employee income tax deductions to the KRA.
Other Taxes: Depending on your business activities, ensure compliance with other taxes such as excise duty and customs duty.

6. Maintaining Statutory Registers

Register of Members: Keep an updated register of shareholders.
Register of Directors and Secretaries: Maintain records of the company’s directors and secretaries.
Register of Charges: Record any charges created by the company over its assets.

7. Holding Annual General Meetings (AGMs)

AGM Requirements: Private companies are required to hold an AGM within 15 months of the previous AGM. Public companies must hold AGMs annually.
Meeting Minutes: Maintain minutes of AGMs and other significant meetings as part of the company’s records.

8. Keeping Accurate Financial Records

Bookkeeping: Maintain accurate and up-to-date financial records, including income statements, balance sheets, and cash flow statements.
Auditing: Depending on the size and nature of your company, you may need to have your financial statements audited annually by a certified public accountant.

It’s advisable to procure the services of a professional accounting services provider to help with bookkeeping and finance.

How Professional Company Registration Services Can Help

Navigating the company registration process in Kenya can be complex, especially for first-time entrepreneurs. Professional services can offer invaluable assistance to ensure a smooth and efficient registration process.

Here’s how professional services can help:

1. Expertise and Knowledge

In-Depth Understanding: Professional service providers have extensive knowledge of the legal and regulatory requirements for company registration. They stay updated on changes in laws and regulations, ensuring compliance.
Experience: With years of experience, professionals can handle potential issues and obstacles that may arise during the registration process.

2. Time and Effort Savings

Streamlined Process: Professional services can streamline the registration process, saving you time and effort. They handle paperwork, follow up on applications, and ensure that all requirements are met promptly.
Focus on Core Activities: By outsourcing the registration process, you can focus on other essential aspects of your business, such as planning, strategy, and operations.

3. Accurate Documentation

Proper Documentation: Professionals ensure that all required documents are correctly filled out, signed, and submitted. This minimizes the risk of errors that can delay the registration process.
Compliance Assurance: They verify that your documentation complies with the legal standards and requirements set by the Registrar of Companies.

4. Personalized Guidance

Tailored Advice: Professional service providers offer personalized advice based on your business needs and goals. They help you choose the most suitable type of company structure and guide you through the registration process.
Ongoing Support: They provide ongoing support and advice even after the registration is complete, helping you meet post-registration requirements and stay compliant with legal obligations.

5. Handling Complex Cases

Foreign-Owned Companies: For foreign investors, professional services can navigate the additional requirements and documentation needed to register a foreign-owned company in Kenya.
Special Licenses and Permits: Professionals can assist in obtaining industry-specific licenses and permits, ensuring that your business can operate legally and smoothly.

6. Cost-Effective Solutions

Avoiding Penalties: By ensuring compliance with all legal requirements, professional services help you avoid costly penalties and fines that may arise from non-compliance.
Efficient Process: Their expertise can lead to a faster registration process, which can be more cost-effective in the long run by allowing your business to start operations sooner.

7. Enhanced Credibility

Professional Image: Using professional services can enhance your business’s credibility. A professionally registered company is seen as more reliable and trustworthy by clients, suppliers, and investors.

8. Comprehensive Service Offerings

Additional Services: Many professional service providers offer a range of additional services, such as bookkeeping, tax advisory, legal consulting, and business strategy. This can provide comprehensive support for your business beyond just registration.
Holistic Approach: They can take a holistic approach to your business needs, offering integrated solutions that help you grow and succeed.

Frequently Asked Questions About Company Registration in Kenya

Can a foreigner register a company in Kenya?

Yes, a foreigner can register a company in Kenya. However, additional documentation such as a notarized copy of the parent company’s certificate of incorporation (if applicable) and a board resolution may be required. Foreign directors may also need to obtain work permits.

Do I need a lawyer to register a company?

While it is not mandatory to have a lawyer to register a company, engaging professional services, including legal assistance, can help ensure that all legal requirements are met and that the process is completed efficiently.

How much does it cost to register a company in Kenya?

The cost of registering a limited company in Kenya is Ksh 10,650, which is paid to the government. However, there are usually additional charges for documents or services offered by professionals, including legal advice and the drafting of articles of association. The total cost can range from KES 10,000 to KES 50,000.