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|Registration of Business Enterprises|
For people wishing to carry on business for gain or other purposes there are various forms of Â entities that can be registered under Kenyan Law, these are:-
a, Limited Liability Companies (Private or Public)
Under the Companies Act (Chapter 486 Laws of Kenya), a replica of the English Companies Act of 1948, a Limited Liability Company may take either of two forms:-
i Company Limited by Shares:
ii Companies Limited by Guarantee:
The Companies Act allows a Company to be created in which members do not subscribe to shares but rather agree that in the event of liquidation they will, if required, pay an agreed amount.Â In other words, the memberâ€™s liability is limited to the extent of the guarantee each gives.Â The members of this entity are under no liability so long as the company remains a going concern; they are liable to the extent of their guarantees only if the Company is wound up and a contribution is needed to pay off its debts.
Companies limited by guarantee are formed for purposes other than the profit of their members.Â This form of Incorporation is widely used by charitable organisations, churches, colleges, schools etc.Â It is a more modern and convenient substitute for the trust.
The mode of incorporation of the two types of Companies is more or less the same save that for a company limited by guarantee the initial subscribers to the Memorandum and Articles of the Company have to go through a vetting process conducted by the National Security Intelligence Services to verify their backgrounds.
Under the Companies Act a Company Limited by shares may either be private or public.Â A private Company is defined as one which, (a) Limits membership to 50 persons, (b) restricts the right to transfer shares and (c) prohibits any invitation to the public to subscribe to its shares.Â Companies not coming within this definition are described as Public Companies.
b, Sole Proprietorship and Partnerships
Sole proprietorships and partnerships are registered as business names under the Registration of Business Names Act (Chapter 499, Laws of Kenya)
There is provision for limited partnerships under the Limited Partnerships Act (Chapter 30, Laws of Kenya under which partnership membership is limited to 20 persons.
c, Foreign Companies
Part X of the Companies Act provides for the establishment of a Â place of business or representative offices for foreign companies.Â Under the Act a foreign Company is not to be deemed to have a place of business in Kenya solely on account of its doing business through an agent in Kenya at the place of business of the agent.
Under Section 366 (1) of the Companies Act, foreign companies which have established a place of business in Kenya are required to furnish the Registrar of Companies with certified copies of the charter, statutes or memorandum and articles of the company, a list of directors and secretary of the company and a statement of all subsisting charges, the names and address of the person(s) authorized to receive process and the full address of the principal or registered office of the Company.
The Registrar, upon receiving the above documents, issues the company with a Certificate of Compliance with the Act.