Understand the Jurisdictions Setup Requirement Before Proceed Your Company Incorporate in Kenya
There are investors interested in incorporating their own company in Kenya nowadays. They are attracted to this East African country because it maintains a free enterprise economy. Kenya is also East and Central Africa’s most robust economy based on GDP.
If you are planning on doing business in Kenya, you need to set up a “public limited company”, or PLC. This is in accordance with the Companies Act of the country, which also differentiates a PLC from a privately incorporated company. For a privately incorporated company, you can use the term “Limited” in the company name.
The PLC acronym, according to the law, refers to companies that are both limited yet public at the same time. However, it can be rather tricky to put up a PLC since there are three kinds of law. These are common law, Islamic law and customary law. Businessmen usually prefer the PLC designation because of the tax implications in Kenya.
There are a few industries though where the government doesn’t allow foreign investors to set up any kind of company, namely:
- Stock market
- Air services
- Information and Communication Technology
Be Patient With Incorporation Process
When you register a company in Kenya, the PLC structure is the most common legal entity in the country. But even though it is legal to set up a PLC, some may protest at the long span of time to process this kind of business setup in the country. You can expect the process to last up to six weeks to finalize.
The good news though is that you do not have to provide any minimal capitalization in a bank account. So, you do not have to pay a minimum share capital. You are also not expected to confine yourself to just one particular currency. As long as Kenya accepts the currency you use, you’re in the clear.
Sole Shareholder Company Not Allowed
One drawback to setting up a PLC is that you can only set it up if you have other shareholders. This means you cannot set up a sole shareholder PLC company. For the additional shareholders, you may choose de facto shareholders or nominees. You may also select a Corporate Shareholder for your PLC.
Foreign investors are also allowed to invest in a PLC in Kenya. The limit is 51% ownership only. The law does not permit corporate directors. You need to name at least two directors during incorporation. There must be a disclosure with regards to directors’ information. This way, the government will legally acknowledge your company. You must also name a corporate secretary.
In a PLC, shareholders must conduct annual meetings for legal purposes. You are also legally obligated to name a registered legal firm to serve your PLC. The PLC is required to pay this firm every year, according to Kenya law.
Take note that you have to file your accounts annually. There may be a yearly audit as well, on a case to case basis.
If you are eager to try to incorporate your own company in Kenya, you may contact us for assistance. We can also assist you in setting up a branch instead, if necessary. Be sure you have the complete documents and requirements to optimize the incorporation time and avoid delays.