More than half of companies registered in Kenya risk being delisted for failing to disclose the identities of their secret shareholders who control more than 10 percent stakes in the firms following a notice by the Business Registration Service.
The Business Registration Service (BRS) in a notice has directed all companies and Limited Liability Partnerships (LLPs) to submit a register of beneficial owners to the Registrar of Companies.
According to BRS, 50.28 percent of the 794,741 registered companies in Kenya, which translates to a total of 399,595 companies, had not revealed the details.
Companies are to submit the register by November 30, 2024, while LLPs will receive submission deadlines later.
“All companies and LLPs must adhere to the compliance requirements of the Companies Act and Limited Liability Partnership Act. Effectively, all companies and LLPs are required to prepare and maintain a register of beneficial owners,” the notice reads.
Non-compliance, according to the notice, will see the entities face penalties, including a Ksh500,000 fine, and an additional Ksh50,000 fine for each day the failure continues.
Non-compliant entities may also be struck off the register under Section 894 of the Companies Act and 33A of the Limited Liability Partnerships Act.
Business Registration Service notice
The BRS further warned that failure to file amendments to the beneficial ownership register within 14 days of any changes will attract a fine of Ksh2,000 for the company and each officer in default, with an additional penalty of Ksh100 for every day the default persists.
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According to the registrar, the directive is in line with Anti-Money Laundering, Combating Terrorism Financing, and Combating Proliferation Financing.
“In line with Anti-Money Laundering, Combating Terrorism Financing, and Combating Proliferation Financing, the Service is mandated to collect and maintain accurate, adequate, and up-to-date basic and beneficial ownership information of Companies and Limited Liability Partnerships,” the notice adds.
The notice comes after BRS revealed that the rise of private company registrations in 2023 saw the number of new business entities on record grow by 2.9 percent to 141,194.
According to data from BRS covering the 2023 calendar year, the number of entities registered increased by 4,006 from 137,188 last year.
New private company registrations marked the largest increase of 8.7 percent as the new registrations hit 56,376 compared to 51,842 in 2022.
Registration of companies in 2023
On the other hand, the number of newly registered business names was down by 680 to 83,458 in 2023 while the number of registered foreign companies dropped by three to 181.
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BRS also highlighted that the number of newly registered public companies increased by one while companies limited by guarantee and limited liability companies were up by 29 and 124 to reach 506 and 582 respectively.
The BRS describes private companies as entities whose members’ liability is limited by shares.
“A company is limited by shares if the liability of its members is by the memorandum to the amount if any, unpaid on the shares respectively held by them. A private company is also a company that is restricted from inviting the public to subscribe to its shares,” the BRS states.
BRS is a state corporation established under the Business Registration Service Act, 2015 with a mandate to administer the Companies Act (CA), Cap 486, and the Limited Liability Partnerships Act, Cap 30 among other Laws.
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