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On 17 October 2024, the Registrar of Companies issued a public notice mandating that all companies and Limited Liability Partnerships (LLPs) comply with the beneficial ownership disclosure requirements under the Companies Act (Cap. 486) and the Limited Liability Partnership Act (Cap. 30). Non-compliance will result in removal from the Register of Companies. Private limited companies must meet the requirements by 30 November 2024. As of October 2024, 399,595 of Kenya’s 794,741 registered companies (representing 50.28%) have not disclosed their beneficial ownership information as required by law, thus risking delisting.

Beneficial Owners and Beneficial Ownership Information

A beneficial owner is a natural person who, either individually or jointly, directly or indirectly, holds at least 10% of a company’s shares, exercises 10% or more of its voting rights, can appoint or remove a majority of its board of directors, or has significant influence or control over the company (usually financial).

The legal framework for beneficial ownership information disclosure in Kenya includes the Companies Act, the Companies (Beneficial Ownership Information) Regulations, 2020, the Limited the Liability Partnerships Act, and the Business Registration Service Guide on Disclosure of Beneficial Ownership Information. These regulations are part of Kenya’s response to the Financial Action Task Force’s (FATF) recommendations to combat money laundering, terrorism, corruption, and organized crimes.

Companies are required to identify and verify their beneficial owners and record specific information about them including their full name, national identity card or passport number, KRA PIN, nationality, addresses, occupation, nature of ownership or control, and the date on which any person became a beneficial owner of the company. Companies must maintain this information in a register and submit a copy to the Registrar.

Companies must also document if they are aware of a beneficial owner whose details are incomplete, if a warning was issued and ignored, if a restriction notice was given, or if there are ongoing court proceedings concerning beneficial ownership.

Penalties for non-compliance

Failure to keep and file a register of beneficial ownership information with the Registrar of Companies is an offence punishable by a KES. 500,000. Continuing non-compliance incurs a further fine of up to KES. 50,000. Additionally, failure to file amendments to the beneficial ownership register within 14 days of a change attracts an administrative fine of KES. 2,000 for the company and each defaulting officer, with an additional penalty of Ksh. 100 for each day the default continues.

Companies have recourse under the regulations to issue warning notices and restrictions to beneficial owners who fail to provide the required information.

Conclusion

With the compliance deadline fast approaching, companies must act to comply with the disclosure requirements or risk removal from the register. This enforcement underscores Kenya’s commitments to global standards to combat money laundering, terrorism, corruption, and organised crime.

Should you require assistance to comply with the Registrar’s directive, please get in touch with Benson Ngugi, Kabu Karanja, or Jessica Obimbo.