REGISTRATION OF FOREIGN CORPORATIONS IN KENYA

INTRODUCTION

Many foreign companies do find it worthwhile to invest in Kenya. The purpose of this article is to give an exposition of the various methods of registration of foreign corporate presence in Kenya. From this article, the reader should be in a position to decide the model to be used for purposes of foreign direct investment.

There are various options that a foreign company or corporation has with regard to establishing a presence in Kenya. These are listed as follows:

1. Registration of a new local company
2. Registration of a subsidiary company of the main foreign company
3. Opening a registered branch office of the parent company

These are discussed in separate headings hereunder:

1. Registration of a new local company

man hands write register paper

The Companies Act No. 17 of 2015 of the Laws of Kenya is the main statutory provision for all companies in Kenya and by extension registration of a company by a foreigner in  Kenya. The first step is the reservation of a name, in this case, you would be reserving a name similar to the name of the mother company. Once successfully reserved, the directors of the company will need to share the following:

• A copy of their passport bio-data page
• Passport photos of all directors
• E-mail addresses
• Postal addresses
• Residential physical addresses.

In addition to the above, the following information is also needed:

• The name of the company
• The nature of the business of the company
• The company’s residential physical address
• E-mail addresses of the company
• Postal address of the company

It takes between two weeks to one month to have a local company registered.

2. Registeration of Subsidiary Company

There is a minimal distinction in the procedure in which a subsidiary company is registered as opposed to registering a foreign company. The main distinction being that any party seeking to register a subsidiary must produce a certificate of incorporation together with the memorandum
and articles of association of the mother company.

The rationale behind this isthat a subsidiary can only exist if the mother entity is legally recognized by the law governing the republic in which the mother company carries out its business. Thememorandum and articles of association are produced to show there are provisions allowing the
mother company to open subsidiaries.

Both the Certificate of Incorporation and the memorandum and articles of association of the mother company must be notarized in the parent country. The original notarized copies of the same will be used during the application for registration of the subsidiary company. The rest of the procedure and data needed for registration of a subsidiary in Kenya is similar to the registration of a company by a foreigner as enumerated above. Despite the fore mentioned, it is of upmost important to keep in mind the following key points:

• Both a foreign company and a subsidiary company must have at least one director who is of Kenyan Origin. Kenyan origin in this regard means a person who is Kenyan by birth and has attained majority age therefore has a national identity card. The rationale behind is that he/she will be available for purposes of serving documents on behalf of the company. Further the process of registration of companies in Kenya has been digitized and is conducted using the
  national identity card number of the Kenyan citizen. The only possible exception to this is where one of the foreigners comes to Kenya, applies for an Alien Identity card and a work permit, together with consent from the Ministry of Foreign Affairs.
• A foreign company cannot conduct business in Kenya unless it is duly registered in Kenya or an application is pending for registration in Kenya but the same has not been processed within the prescribed period.
• Conducting business is defined to comprise of, but not limited to offering debentures in Kenya or being a guarantor for debentures offered in Kenya.
•  In its application for registration in Kenya, a foreign company must appoint a local representative in Kenya who not only accepts service of process but also makes sure that the foreign company complies with the law.

Registration of companies in Kenya by Kenyan citizen is a digitalized procedure and is carried out in the e- citizen portal. Accordingly, all returns and other information which a foreign company may be required to file
under the new Act are currently based on a manual process.

3. Registration of a Branch Office of the Parent Company

Another option for legally being recognized in Kenya, is by way of opening a registered branch of the parent company in Kenya. This is a faster process for foreign investors, and a good alternative to registering a subsidiary company. For us to open the registered branch, we would need the following:

• A Company Resolution to open a Registered Branch in Kenya;
• The Company Memorandum and Articles of Association which should indicate theavailability of the option of opening a branch in a foreign country;
• The Certificate of Incorporation of the Company;
• List of directors of the parent company with details as to full names, postal address,nationality and business occupation;
• Full address of the registered principal office of the parent company;
• Full address of the place of business in Kenya.

Registration of a branch office takes on average 2 weeks. It is thus more expedient for foreign investors seeking to break into the Kenyan market. In a separate article, we will discuss the different tax implication for the three options.