The Registrar of Companies has issued a Public Notice on the 13th October 2020 requiring all companies to keep and lodge with the Registrar of Companies a register of its beneficial owners. Every Company is thus required to comply with the Public Notice and submit a copy of the Beneficial Ownership Register within 30 days of its preparation. The Public Notice is pursuant to The Companies (Beneficial Ownership Information) Regulation 2020 (the Regulation).
On the 30th October 2020 the Business Registration Service has issued a Beneficial Ownership e-Register Manual (version 1).You can find the manual here.
Why has the Regulation been introduced?
At the time of writing, Kenya is one of the seven out of the fifty four African countries to introduce the legislation requiring the registration of Beneficial Ownership information. The other six African countries are Botswana, Egypt, Ghana, Mauritius, the Seychelles and Tunisia.
Notification and Registers of Beneficial Ownership are one of the legislative tools to provide transparency and play an important role in the fight against corruption, tax evasion and money laundering.
What is Beneficial Ownership?
The purpose of disclosing Beneficial Ownership is to identify the real individuals who ultimately own, directly or indirectly, a company and benefit from it. A Beneficial Owner is a natural person (and not a corporate or a body) who:
- holds at least 10% of its issued shares; or
- exercises at least 10% of its voting rights; or
- holds a right directly or indirectly to appoint or remove a director of the company; or
- exercises significant influence or control, directly or indirectly, over the company.
The primary motive behind the concept of Beneficial Ownership in context of companies is that a direct legal owner of company shares may not necessarily be the individual (the indirect owner) ultimately controlling and benefitting from those shares.
How do you comply with the Regulation?
Most Kenyan private companies should have no issues in complying with the Regulation since the beneficial owners are usually the existing shareholders (direct owners) of the company.
To comply it will simply be a case of the company compiling, or asking a lawyer, corporate secretary or a relevant expert in the field to prepare the register of Beneficial Ownership and filing it with the Registrar of Companies within the stipulated time frame.
What information is required to be complied and disclosed to the registrar of companies?
The Regulation stipulates it is the duty of a company to take reasonable steps to identify its beneficial owners and enter in its register of beneficial owners the following particulars in respect of its beneficial owner:
- full name;
- birth certificate number, national identity card number or passport number;
- personal identification number;
- nationality;
- date of birth;
- postal address;
- business address;
- residential address;
- telephone number;
- email address;
- occupation or profession;
- nature of ownership or control;
- the date on which any person became a beneficial owner of the company;
- the date on which any person ceased to be a beneficial owner; and
- any other relevant detail the Registrar may from time to time require.
Is the information of Beneficial Ownership made public by the registrar or the company?
No.The regulations clearly state that beneficial ownership information shall not be made available to the public. The information shall not be part of an official search (known as CR12) of a private company.
Any competent authority described as Attorney-General, any criminal investigation agency, law enforcement agencies, authorities that supervise and monitor the financial sector, including the Financial Reporting Centre and the Kenya Revenue Authority have the right to the information upon a written request to the Registrar.
Additionally, a company in possession of the information shall not use or disclose any information about its beneficial owner, except
- for communicating with the beneficial owner concerned;
- in order to comply with any requirement of the Regulations; or
- in order to comply with a court order.
What are the penalties for non-compliance with the Regulation?
If a company fails to comply with the requirements of the Regulation, the company, and each officer (director) of the company who is in default, commits an offence and on conviction are each liable to a fine not exceeding KES. 500,000.
This post is intended to be of general use only and should not be relied upon without seeking expert legal advice.
Amit Gadhia
Advocate of the High Court of Kenya.
Solicitor of England and Wales (practicing freelance).
Certified International Privacy Professional-Europe (CIPP/E).
Certified Company Secretary (Kenya).
Corporate Governance Professional (ICSA – UK)
