OBLIGATIONS OF A SUBSIDIARY OR A FOREIGN COMPANY IN KENYA
(Foreign Companies series:2)
In our previous Foreign Companies series 1 insight CONDITIONS & RESPONSIBILITIES OF FOREIGN COMPANIES REGISTERED IN KENYA – A.O.Wanga Advocates, we discussed the conditions and responsibilities of Foreign Companies registered in Kenya. In this series 2 insight we outline the obligations of Subsidiary companies or Foreign Companies registered in Kenya. To begin with, The Companies Act No. 17 of 2015 defines a Subsidiary Company or a Foreign Company as a company incorporated outside Kenya and which intends to carry on business in Kenya.
Below is an overview of the obligations imposed by the Companies Act on Subsidiary Companies or Foreign Companies in Kenya:
| RELEVANT PROVISION UNDER THE COMPANIES ACT | OBLIGATION | CONSEQUENCE OF NON-COMPLIANCE |
| Section 974 | REGISTRATION A foreign company shall not carry on business in Kenya unless it is registered under the Act or it has applied to be registered and the application has not been dealt with within the prescribed period. | If a foreign company carries on business in Kenya without being properly registered, the company and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding Ksh. 5,000,000.00. |
| Section 975 | REQUIREMENTS FOR REGISTRATION For a Foreign Company to be registered in Kenya, it must furnish the Registrar with the following documents and/or information: a certified copy of its current certificate of incorporation or registration in its country of origin or a document of similar effect.a certified copy of its constitution.a list containing the names of its directors and shareholders and their personal details (passport number, email, phone number, passport size photographs and residential addresses).A notice of address of its principal place of business in its place of origin.A notice of the prescribed place of business in Kenya. | The Registrar shall not effect registration. |
| Section 976 and 977 | NAME & USE OF ALTERNATIVE NAMES a Foreign Company may be registered in Kenya using its Name as registered in its place of origin or may propose an alternative name to be registered in Kenya. | |
| Section 978 | CHANGE OF NAME a foreign company may change its name and the Registrar is permitted to issue a certificate of compliance on change of name. | |
| Section 979 | REQUIREMENT FOR A LOCAL REPRESENTATIVE The Registrar may not register a foreign company in Kenya unless the company has at least one local representative (The local representative must either be a Kenyan citizen or a foreign with Kenyan work permit). | The company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding Ksh. 500,000.00. |
| Section 980 | CHANGE OF LOCAL REPRESENTATIVE Within one (1) month after a person who is a local representative of a registered foreign company has died, resigned or otherwise ceased to hold office as such; the company must lodge with the Registrar for registration a notice to the effect that the person has ceased to be a local representative of the company in Kenya. Within one month after a local representative of a registered foreign company has changed his or her residential address in Kenya, the company shall lodge with the Registrar for registration a notice giving details of the change. | The company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding Ksh. 200,000.00. |
| Section 981 | LIABILITY OF LOCAL REPRESENTATIVE A local representative of a registered foreign company is answerable for the doing of all acts, matters and things that the company is required by or under the Act to do; and is personally liable to a penalty imposed on the company for a contravention of or failure to comply with the Act if the Court hearing the matter is satisfied that the local representative should be so liable. | |
| Section 983 | REGISTERED OFFICE A registered foreign company shall establish and maintain a registered office in Kenya to which all communications and notices may be addressed. The company shall ensure that its registered office is kept open on each business day from at least 10 a.m. to 12 noon and from at least 2 p.m. to 4 p.m. and that a local representative of the company is present at all times when the office is open. The company shall lodge with the Registrar for registration a notice of the hours between 9 a.m. and 5 p.m. on each business day during which the body’s registered office in Kenya is kept open. The company shall, within 7 days after making a change in the location of its registered office in Kenya, lodge with the Registrar for registration a notice of the change and of the new address of that office. The company shall, within 7 days after making a change to the hours during which its registered office in Kenya is kept open, lodge with the Registrar for registration a notice of the change. | The company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding Ksh. 200,000.00. |
| Section 984 | FOREIGN COMPANY TO DISPLAY ITS NAME AT OFFICE AND PLACES OF BUSINESS A registered Foreign Company shall paint or affix and keep painted or affixed, in a conspicuous position and in letters easily legible, on the outside of every office and place (including its registered office) that is in Kenya, at which its business is carried on and that is open and accessible to the public its name and the name of its place of origin. | The company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding Ksh. 100,000.00. |
| Section 985 | FOREIGN COMPANY TO STATE ITS NAME AND OTHER INFORMATION IN DOCUMENTS AND COMMUNICATIONS A registered foreign company shall state its name and other specified information in prescribed classes of documents and communications relating to its business in Kenya. | The company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding Ksh. 500,000.00. |
| Section 986 | FOREIGN COMPANY TO GIVE NOTICE OF CHANGES RELATING TO ITS CONSTITUTION, DIRECTORS AND BUSINESS IN KENYA A registered foreign company shall, within one (1) month after a change occurs in its constitution or any other document lodged in relation to the company, its directors, the powers of any directors who reside in Kenya and members of a Kenyan board of directors of the company, a local representative (s), the name or address of a local representative, or the location of its place of origin or place of business in Kenya; lodge with the Registrar for registration a notice of particulars of the change. | The company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding Ksh. 200,000.00. |
| Section 987 | FOREIGN COMPANY’S FINANCIAL STATEMENTS AND RETURNS A registered foreign company shall, at least once in every calendar year and at intervals of not more than 15 months, lodge a copy of its audited financial statement made up to the end of its last financial year, in such form and containing such particulars, and including copies of such documents, as the company is required to prepare by the law for the time being applicable to that company in its place of origin, together with a statement in writing, supported by a statutory declaration, verifying that the copies are true copies of the documents so required. A registered foreign company shall, as and when required to do so by the Registrar, provide the Registrar with such returns, containing such information, relating to the company as the Registrar may reasonably require. | The company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding Ksh. 1,000,000.00 or Ksh. 200,000.00 in case of returns. |
| Section 988 | REGISTRATION OF CHARGES OVER KENYAN PROPERTY OF FOREIGN COMPANY The foreign companies’ regulations provide for the registration of specified charges over property in Kenya of a registered foreign company. | |
| Section 991 | LOCAL REPRESENTATIVE OF FOREIGN COMPANY TO NOTIFY REGISTRAR OF CERTAIN EVENTS AFFECTING THE COMPANY Within 1 month after a registered foreign company has ceased to carry on business in Kenya, the local representative of the company in Kenya shall lodge with the Registrar for registration a notice of that fact. Within 1 month after a registered foreign company has been dissolved or deregistered in its place of origin, the local representative of the company in Kenya shall lodge with the Registrar for registration a notice of that fact. AND As soon as practicable after receiving either of the above notices, the Registrar shall strike the foreign company’s name off the Foreign Companies Register. | If a foreign company’s name is struck off the register, the company ceases to be registered in Kenya. |
| Section 991 | LIQUIDATION OF A FOREIGN COMPA NY If a registered foreign company is placed in liquidation in its place of origin the local representative of the company in Kenya shall, within one month after that day (or within that period as extended by the Registrar in special circumstances), lodge with the Registrar for registration notice of that fact and when a liquidator is appointed, notice of the appointment of a liquidator. And the Court shall, on application by the person who is the liquidator for the company in its place of origin, or by the Registrar, appoint a liquidator of the company in respect of its property in Kenya. | |
| Section 992 | POWER TO SRIKE OFF THE REGISTER On forming a reasonable belief that a registered foreign company is not carrying on business in Kenya or is carrying on such a business without having a local representative, the Registrar may send to the company a letter to that effect and stating that, if no answer showing cause to the contrary is received within six weeks from the date of the letter, a notice will be published in the Gazette with a view to striking the foreign company’s name off the Foreign Companies Register. |
At A.O. WANGA ADVOCATES we are happy to assist you with all your Subsidiary/Foreign Company registration needs including provision of virtual office space, local representative services, processing work permits for foreign expatriate, filing of changes and financial statements etc.
For more info contact us on info@aowangaadvocates.com or +254794600191
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