Your comprehensive guide to registering any formal business in Kenya.

Business Registration in Kenya

Mint is a creative agency based in Nairobi, Kenya, with a focus on enhancing brand communication. We provide marketing communication solutions that ensure your brand is covered in all promotional aspects.

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To deliver this value you must com-municate to your target audience. This should be carefully packaged to create an image your customers will come to associate with for years to

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This value can be communicated through various channels. Your brand should create consistency in its communication making it easy for your customers to identify with your

brand in print or online.

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Starting a new venture, launching a new product or even creating a merger is always exciting. It’s a new challenge and you look forward to delivering value to your customers.

Emma B. OgongoEmma is an Advocate of the High Court of Kenya. She graduated with an LL.B

(Laws) degree from Catholic University of Eastern Africa in the year 2011. She then

completed her post-graduate degree in Law at Kenya School of Law in 2012. Emma

is currently pursuing a Masters of Law (LLM) degree in Corporate Governance from

the University of Nairobi.

About The Author

Connect with Emma

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Contents

About the Author ............................................................. ii

Introduction ....................................................................1

Sole Proprietorships .......................................................... 2

Partnerships ................................................................... 4

Private and Public Companies............................................. 9

References ................................................................... 16

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Copyright

This document has been developed for your evaluation by Mint Graphics East Africa Ltd. It is furnished to YOU, with the understanding that it will not, without prior written consent of Mint Graphics East Africa Ltd, be reproduced, or used for purposes other than your evaluation.

Introduction

When we first registered Mint back in 2009, we barely knew how to go

about the issue. With scarce resources available we opted to register a

partnership without fully understanding its advantages and shortcomings.

3 years down the line, it was clear we needed a limited company if we

were to gain greater benefits. Larger corporations prefer to deal with

companies rather than partnerships or sole proprietorships depending on

your field of business. Mint Graphics was then incorporated to Mint

Graphics East Africa Limited in 2012.

This guide is for you if you are looking to register a business in Kenya. If

you have no idea what form of businesses would suit you, this will act as

a preliminary guide. We partnered with a lawyer to ensure the accuracy of

information provided.

Registration is the first step, building the brand starts from this moment

and it is crucial for you to have the right name for your brand.

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Sole Proprietorships

This is a type of business that is owned and run by one person

in which he/she introduces their capital, uses their own skills

and intelligence in the management of its affairs, assumes all

the risks of business and is solely responsible for the results of

its operations. The law does not recognize them as a separate

entity from their business meaning that should the business

suffer serious losses resulting in inability to pay its creditors,

the sole proprietor will be called upon to make good the loss

from their private resources.

For this kind of ownership, one has to register a business

name and this takes place in the following stages;

1. Name Search

The proposed business name must be reserved pending

registration. Application for reservation of a Business Name

should be made in writing and accompanied with the

prescribed fee.

Name Search Fill BN 2 Form Await Certificate

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2. Application Form BN 2

Once a name searched is approved, the applicant(s) is

required to complete a statement of particulars form also

known as a BN 2 Form.

3. Certificate of Registration

A certificate of Registration also referred to as BN 3 is

processed thereafter and issued to the sole proprietor.

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Sole Proprietorships Cont.

Advantages and Disadvantages

Advantages of a sole proprietorship include:

1. The process of forming a sole proprietorship is easy. It

only involves registering a business name.

2. The business is owned by one person therefore the owner

has full control of the business and decision making is

easy and fast.

3. Owner enjoys all the profits of the business.

Disadvantages of a sole proprietorship include:

1. Unlimited liability which means the owner is personally

liable for the business debts and the liability can extend to

the owners personal assets.

2. Raising capital to start a sole proprietorship may be

difficult since the initial funds are raised by the owner.

3. Lacks continuity as the business does not continue upon

death of the owner.

4. Bears all the losses of the business.

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Partnerships

A partnership is defined as the relationship that subsists

between persons carrying on a business in common with a

view to making a profit. There are two types of partnerships

namely;

1. Limited Partnerships

2. Limited Liability Partnerships

Partnerships Cont.

Limited Partnerships

Limited Partnerships are governed by the Partnerships Act no.

16 of 2012. This type of partnership has one or more general

partners with unlimited liability and one or more limited

partners with limited liability.

Registration

The first step in registering a Limited Partnership is conducting

a search of the proposed name at the Companies Registry. If the

name is found suitable it is approved by the Registrar and

reserved for thirty (30) days. The partnership name must

contain the words Limited Partnership in words or abbreviations

(LP).

After the name is approved and reserved, an application for

registration of the limited partnership is lodged at the Companies

Registry. The application is accompanied with a statement

specifying

a) the name under which the limited partnership is to be

registered;

b) the names and addresses of the proposed general partners;

c) the name of each proposed limited partner and the amount

of capital contribution made by the partner to the partnership;

d) the location and address of the proposed registered office;

and

e) if the application relates to an existing general partnership,

the date of its formation

Certificate

Once the registrar receives the application for the registration

of a Limited Partnership and the registration fees, he shall register

it as a Limited Partnership and issue it with a registration

certificate. This process of registering a Limited Partnership

takes about 2-3 weeks.

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Advantages and Disadvantages

Below are some advantages of using a partnership as a form of

business:

1. There is no minimum nominal capital required to set up a

Limited Partnership.

2. Easy to register a Limited Partnership.

3. Partners share the responsibility of running the partnership

thereby making the most of their abilities.

Below are some disadvantages of using a partnership as a form

of business:

1. Liability is only limited for the limited partners. General

partners have unlimited liability.

2. Partners can only be natural persons.

3. Limited Partnerships does not have a separate legal identity

from the partners and cannot invest in land or enter into

contracts in its own name.

4) A partnership can be dissolved as a result of death, insanity,

resignation and other incapacities of any of its partners.

Partnerships Cont.

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Limited Liability Partnerships

Limited Liability Partnerships are governed by the Limited

Liability Partnership Act no. 42 of 2011. An LLP must have

at least two partners. A partner in an LLP may be a body

corporate such as a company or a natural person. All partners

in an LLP have limited liability.

A Limited Liability Partnership is a body corporate with

perpetual succession which means that a change in partners

does not affect the existence, rights and obligations of the

Limited Liability Partnership.

An LLP is a separate legal entity from its partners, it can sue

and be sued in its own name. It can acquire, own and hold

property.

Registration

A name search is conducted at the Companies Registry to

establish if the proposed names are available for registration.

The name must contain the words "Limited Liability Partnership"

or an abbreviation of the same (LLP). A name is then reserved

pending registration for a period of thirty (30) days.

Once the name is reserved, a statement of particulars (form

LLP1) is then filled with the relevant information and lodged

with the Registrar. The form is accompanied by the registration

fee.

Certificate of Registration

The Registrar may then register the LLP and issue a certificate

of registration. The Process of registration takes about 2-3

weeks.

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Partnerships Cont.

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Advantages and Disadvantages

Advantages of a Limited Liability Partnership are as below:

1. An LLP enjoys the benefits of both a partnership and a

Limited Liability Company.

2. An LLP is a separate legal entity from its partners. It can

acquire/own/hold and dispose of movable and immovable

properties (including land) and can sue and be sued in its

own name.

3. A partner may be a natural person or a body corporate

such as a company.

4. The partners are not personally liable for the partnership’s

debts or other obligations.

5. Continues to exist even upon death or exit of one or

more partners.

Disadvantages of a Limited Liability Partnership are as

below:

1. An LLP is liable for a wrongful act or omission committed

by a partner to another person in the course of the business

of the LLP.

2. Admission of new partner is not easy. It involves creating

a supplementary agreement containing details of the new

partners and their contribution. As a result, the existing

partners have to revise or change the contribution held

by them due to admission of new partners in the LLP

agreement.

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Partnerships Cont.

CompaniesThere are five types of companies provided for under this

section:-

1. Public

2. Private

3. Limited by shares

4. Limited by guarantee

5. Unlimited

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A registered company is formed by registration under the

Companies Act No. 17 of 2015. A company may either be

incorporated as a public or as a private Company.

Registered companies are classified into:-

(a) Public Limited Liability Company – This can be formed

by any no. of persons but must have at least two directors.

(b) Private Limited Liability Company – This can be formed

by any number of persons but has a maximum number

of 50 persons. It must have at least one director.

(c) Limited by shares – if the liability or its members is

limited by its memorandum to the amount if any unpaid

on the shares held by them.

(d) Limited by guarantee - if the liability of its members is

limited by its memorandum to an amount which the

members have undertaken to contribute to the assets of

the company in the event of its being wound up.

(e) Unlimited - if it does not have any limit on the liability

of its members.

Companies Cont.

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A company may be incorporated by means of a special Act

of parliament. A statutory company has no shareholders

and its initial capital is provided by the treasury. It is

expected to operate according to commercial principles

and to make profit. If it makes losses and becomes unable

to pay its debts, its property can be attached by its creditors

but it cannot be wound up on application of any creditor.

However, the government will come to its aid if it has no

cash or other assets to pay its creditors. Examples include -

Kengen, Kenya Pipeline, Kenya Railways, KTDA, KVDA

etc.

Private Companies

According the Companies Act, a private company means a

company which by its articles:-

(a) Restricts the right to transfer its shares.

(b) Limits the number of its members to fifty not including

persons who are in employment of the company.

(c) Prohibits any invitation to the public to subscribe for any

shares or debentures of the company.

Public Limited Companies

Most public companies are initially private companies that are

subsequently converted to public companies when they

invite members of the public to subscribe to their shares and

debentures. There is a requirement under the Companies Act

that when the membership of a private company exceeds

fifty, then it must convert to a public company.

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Companies Cont.

Requirements for Registration of Limited Liability Companies (Cap 486 Laws of Kenya)

1. Proposed name must be reserved pending registration

(Name can only be reserved for thirty days). Application

for reservation should be made in writing and be

accompanied with the requisite fee.

2. Documents for incorporation of company (i.e. memorandum

and Articles of Association) should be drawn by a

lawyer, who should submit the same to the Registry

together with the prescribed forms and fees. These

forms are obtainable at the Registry.

4. Certificate of Incorporation is processed within 7(seven)

days of presentation of PROPERLY completed forms.

5. Refusal of registration is communicated in writing to the

applicant.

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Companies Cont.

Advantages and Disadvantages

Registering a company in Kenya has the following advantages:

1. A company is a separate legal entity from its members.

It can acquire/own/hold and dispose of movable and

immovable properties (including land) and can sue and

be sued in its own name.

2. Has a perpetual succession, that is, the existence of a

company is not affected by death of a member.

3. Easy to raise funds. Companies have a wide range of

sources of funds. It can raise funds from subscription of

its shares and debentures by the members of the public

through the issue of prospectus. Moreover, both private

and public company can raise the business capital by

issue of preference shares.

4. The liability of a member in a company is limited. In

case of a company limited by shares, the members’

liability is liability to the amounts subscribed by

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Companies Cont.

members in the share capital of a company. Where

shares are fully paid, even in the events of the liquidation

of the company by its creditors, its members cannot be

called upon to put more funds to satisfy the claims by

any unpaid creditors. In a company limited by guarantee,

a member liability is limited to the amount guaranteed in

the event of liquidation, which is usually a nominal

amount.

Disadvantages of registering a company are as below:

1. Not easy to form as compared to sole proprietorships

and partnerships. Has a number of formalities.

2. Slow decision making process. Unlike a sole proprietorship,

the day-to-day decisions are entrusted to the Board of

Directors of the company.

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If you’re looking to establish solid beginnings for your brand, then Mint has the right solution for

you. A solid beginning starts with a brand identity that your customers will associate with for years

to come. Your brand’s journey starts here today with these packages...

VIEW PRICING AND ORDER

Already Registered?

Hit & RunThis package is for you if you’re looking to develop an identity on the fly. You need something fast and affordable.

With this package you get:A Brand Identity

Logo for print and web applicationsLogo guide

Business StationeryBusiness card design + 200 cards

Letterhead Soft copy + 50 printoutsComplementaries

Personalized Card Holder

StandardThis package is for you if you want the necessary tools and marketing material to get your business started. With this

package you get:A Brand Identity

Logo for print and web applications Logo guide

Business StationeryBusiness card design + 400 cards

Letterhead Soft copy + 100 printouts Business forms - 16 books (8 Receipts, 4

Invoices, and 4 Deliveries)Marketing Collaterale-profile (up to 16 pages)

Complementaries 2 Personalized Card Holders

Mug branded with your new Identity.

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Start-up KitThis package is designed for SMEs to provide you with a one stop solution for

your new businessBrand Identity

Logo for print and web applicationsLogo guide

Business StationeryBusiness card design + 500 cards

Letterhead Soft copy + 250 printoutsBusiness forms - 16 books (8 Receipts, 4

Invoices, and 4 Deliveries)Marketing Collaterale-profile (up to 16 pages)

e-brochureSME Website

Website design matching your new IdentityComplementaries

2 Personalized Card HoldersMug branded with your new Identity

5 T-shirts branded with your new Identity

1. Partnership Act no. 16 of 2012

2. Limited Liability Partnership Act no. 42 of 2011

3. Limited Partnership Act, Cap 30 Laws of Kenya

4. Companies Act, Cap 486 Laws of Kenya

5. Justus Omollo, limited liability partnerships and

other forms of partnership in Kenya.

References

www.mint.co.ke | enquiries@mint.co.ke+254 20 269 5087 | +254 773 745 753

P.O. Box 74290 - 002002nd floor, Left Wing Phoenix House, Kenyatta Avenue, Nairobi, Kenya.

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