Companies incorporated or registered in Kenya are now required to maintain a register of their beneficial owners and to submit a copy of this register to the Registrar of Companies. The move, provided for by an amendment to the Companies Act last year, is designed to comply with international standards on transparency.
The Companies (Beneficial Ownership Information) Regulations, which set out the details required to be provided in the register as well as other obligations, were published in February, but companies were not able to comply until the Beneficial Ownership E-Register had been set up. This was brought into operation on 13 October.
Under the regulations, a company is required to submit a copy of its register of beneficial owners to the Registrar of Companies within 30 days of its preparation, as well as to notify any subsequent changes in the particulars or identities of the beneficial owners.
A company’s beneficial owner is any natural person who; either directly or indirectly holds at least 10% of the issued shares of the company; exercises at least 10% of the voting rights in the company; holds a right to appoint or remove a director of the company; or exercises “significant influence or control” over the company. Significant influence means participation in the finances and financial policies of a company without necessarily having full control over them.
The details of the beneficial owners to be included in the register include: full name; birth certificate number; national identity card number or passport number; PIN; 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 and/ or ceased to be a beneficial owner; and any other relevant detail that the Registrar of Companies may from time to time require.
A company should not use or disclose any information about its beneficial owners except for purposes of communicating with the concerned owner or in compliance with a court order. The information may only be disclosed to the public in case of request by a competent authority.
A company has the authority to notify any person that it believes to be a beneficial owner and require them to provide the particulars to be entered in the register. If a recipient fails to respond to a notice within 21 days and also a warning notice within 14 days, then the company can restrict the relevant shares, voting rights or right to appoint or remove a board member.
If a company fails to comply with the requirements to disclose its beneficial owners, the company and every officer who is in default would each be liable to fines of up to KES500,000 (USD4,500) for a first offence with an additional fine of KES50,000 for each day of continuing non-compliance.
Additionally, the Companies Registry has configured the eCitizen portal such that existing companies are not able to submit any corporate changes unless they have first submitted their beneficial ownership details. The registry has also made it mandatory for beneficial ownership information to be provided prior to incorporation of new companies.