Kenya has a market-based economy and is generally considered the economic, commercial, and logistics hub of East Africa. With the strongest industrial base in East Africa, Kenya has been successful in attracting venture capital investments. According to recent reports, startups in Kenya raised over $571m in 2021. More and more foreign companies and investors are setting up local and regional operations to take advantage of Kenya’s strategic location, comprehensive air routes, and status as a regional financial center. Business registration in Kenya is also straightforward. Kenya’s Business Regulatory Service (BRS) recently updated its service charter to improve business delivery timelines required to register a business in Kenya.
Can A Foreigner Do Business in Kenya?
Absolutely, foreigners wishing to do business in Kenya must register a company. They are required to register with the e-citizen portal and proceed to obtain the company registration documents.
Business Registration Requirement in Kenya
The requirements for Registering a Company in Kenya include the following:
- Proposed Company/Business name
The proposed business name search is conducted to ensure it is not similar to an existing registered business. If approved, it is reserved for 30 days. BRS requires a minimum of 3 names to be submitted.
- Objectives of the Business
This is essentially the business that the company is being set up to carry out. This business must be entirely legal and not against public policy.
- Names of the Directors, contact details and email
For transparency and accountability purposes, KRA requires that the director’s information be indicated on the application for registration.
- Proof of Identification
A valid and unexpired proof of identification must be provided for each director during the registration process. For foreigners who are legally residing in Kenya, a foreign national registration certificate – Alien card and for non-resident aliens, an international passport is required.
- Passport Photo
A clear and recent passport photograph must be provided for each director and officer of the company.
- KRA PIN
All directors whether resident or non-resident are required to provide a Kenya Revenue Authority (KRA) Personal Identification Number (PIN) certificate copy to prove registration with the tax authority.
In addition, the following forms must be signed by all directors and submitted during registration
- Form CR1 – This is the company registration form.
- Form CR2 – This is the Memorandum of company with share capital
- Form CR8 – This is the notice of registered address form and
- Statement of Nominal capital by all Directors.
The Certificate of Incorporation is received from the Kenyan Registrar of Companies after submitting all required documents. If a branch was registered. A certificate of compliance will be issued.
Business Registration in Kenya
There are two business forms open to foreigners in Kenya. These are registering a local company or registering a foreign branch. Most individuals and groups prefer to register a local company for the reasons explained below. Now let’s look at the process for registering these entities in greater detail.
- Local Company/Subsidiary
The procedure of incorporating a local company by a foreigner is similar to the registration of a local company by a citizen but for the requirements. There are different types of companies but most foreign individuals or entities opt for a private company limited by shares.
- Branch Office
This can be open for companies with a reduced level of activity. These don’t generally require incorporation in Kenya, but to register one, certain financial disclosures are required by the parent company.
How Much Does it Cost To Register a Company In Kenya?
Sidebrief charges $1,000 to register Companies in Kenya for foreigners. We have 3 tiered pricing plans, sign up here to have full access to all pricing.
Procedure For Registration Of a Foreign Company In Kenya
Companies incorporated outside Kenya can do business in Kenya by registering a branch or registering a local company which is a subsidiary. The latter is highly recommended for some reasons.
Firstly, while there are many benefits of each option, I should mention that choosing to start your company as a local or subsidiary offers taxation benefits. When a company is registered as a Branch, it is regarded as a foreign entity and is subsequently required to pay 37.5% tax. On the other hand, a subsidiary is viewed as an independent organization and should only provide 30% tax to the Kenya Revenue Authority. A local company is taxed as a resident entity with local tax benefits available.
Secondly, when it comes to the governance structures of the entities, the branch of a Foreign Company is restricted in terms of its directorship such that it is tied to that of the Company registered in the Country of origin. The statutory records to be registered in Kenya are an absolute reflection of the registered documentation in the Country of origin. But, a local or subsidiary’s directorship may vary from that of its holding Company as the two entities are legally separate and is governed by its own Constitution different from that of its holding Company.
Other reasons include that the subsidiary/local company may or may not carry out the same business as its parent company; it has a separate legal personality from the parent company and this means that the liabilities of the subsidiary/local company do not accrue to the parent company.
Registration of a foreign company in Kenya starts with an application being made to the Registrar of Companies in the prescribed form. The application must be sent to the Registrar of Companies, together with the relevant documentation listed above and the applicable fee. Following the submission of the required documents to the Registrar of Companies, the Registrar will process the application and, if approved, will issue the Foreign Company with a unique company number that will serve as its identification number as well as a Certificate of Compliance indicating that it is properly registered. Upon registration, they are required to obtain a Company PIN and register for NSSF (National Social Security Fund) and NHIF(National Health Insurance Fund). Further, they are also required to obtain a business permit from the County Government in which they would like to operate. Foreign companies are registered in a special register called the Foreign Companies Register.
What Are The Requirements To Register A Foreign Company In Kenya
- A certified/notarized copy of the foreign company’s certificate of incorporation or registration in its place of origin. If the company’s certificate of incorporation and charter is not in English, a certified translation should be provided.
- A certified/notarized copy of the company’s constitution, the Charter, Statutes, Articles or other instruments defining the constitution of the company or the equivalent, If the company’s constitution is not in English, a certified translation should be provided.
- The company’s registered office in its country of origin.
- Registered address of the Foreign company in the County of Registration.
- A list containing the names and personal details of the directors and shareholders of the company (Email address, Telephone number, postal address and residential addresses).
- Appointment of local representative (Name and contact details).
- A Company Resolution to open a Registered Branch in Kenya.
It is important to note that for one to register a foreign Company in Kenya, the company is advisable to have a local representative. The role of this person is to act as a liaison for the company and ensure it’s compliant with all the statutory requirements relating to its operation in Kenya. Additionally, the local representative will notify the Registrar of Companies of events affecting the Company.
Of course, it is vital to state the need to consult with experts who have worked on incorporation processes in Kenya, as well as regulators within the space. The essence of this is to have a better viewpoint on ever changing laws.
Sidebrief is a RegTech startup that has helped founders, entrepreneurs, and business owners across borders to register their companies with ease and comply with regulations. We provide the tools for founders to start and scale businesses across borders from a single interface.