Understanding the Registrar of Companies' Beneficial Ownership Directive in Kenya
In a move to enhance transparency and combat financial crimes such as money laundering and terrorism financing, the Registrar of Companies in Kenya has issued a directive under the Companies Act (Cap. 486) and the Limited Liability Partnership Act (Cap. 30). This directive requires private companies and LLPs to file and maintain up-to-date Beneficial Ownership (BO) information.
In October 2024, the Registrar of Companies in Kenya issued a pivotal directive under Section 93A of the Companies Act (Cap. 486) and Section 31B of the Limited Liability Partnership Act (Cap. 30). This directive aims to align Kenya's corporate landscape with global standards for combating money laundering, terrorism financing, and other illicit financial activities. Below is a breakdown of what the notice means, its implications, and what Kenyan companies and partnerships must do to comply.
What Is Beneficial Ownership and Why Is It Important?
Beneficial ownership refers to the individuals who ultimately own or control a company, even if the ownership is indirect. By maintaining up-to-date records of beneficial owners, the government strengthens its ability to track financial activities and curb illegal activities like tax evasion, corruption, and terrorism financing.
Who Must Comply?
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Private Limited Companies
- Deadline: 30th November 2024
- Required to prepare, maintain, and file a register of their beneficial owners.
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Limited Liability Partnerships (LLPs)
- Deadline: To Be Announced (TBA)
Both entity types must adhere to the compliance requirements of the Companies Act and Limited Liability Partnership Act, including filing annual returns every year.
What Are the Penalties for Non-Compliance?
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Failure to File for Five Years:
Companies and LLPs will be deemed inactive and risk being struck off the business register. -
Administrative Fines:
- A penalty of Ksh. 500,000 for failing to maintain the Beneficial Ownership Register.
- An additional fine of Ksh. 50,000 for every month of continued default.
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Failure to Update Changes in Ownership:
- Companies must file amendments within 14 days.
- A penalty of Ksh. 2,000 for each officer in default and Ksh. 100 per day for continued non-compliance.
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Striking Off:
Non-compliant entities will be struck off the register as per Section 894 of the Companies Act and Section 33A of the Limited Liability Partnership Act.
How to File Your Beneficial Ownership Information
To comply with the directive:
- Download the official Beneficial Ownership Information Guide from the Business Registration Service (BRS) website.
- Prepare and maintain the beneficial ownership register at your company or LLP's registered address.
- Submit the required details through the BRS portal before the specified deadline.
Why This Matters for Kenyan Businesses
This directive reinforces Kenya's commitment to global financial compliance standards, making the country an attractive destination for foreign investment. Compliance is not just a legal obligation for businesses; it safeguards their reputation and ensures they remain operational.
Key Takeaways
- Act Early: Avoid the last-minute rush and potential penalties by filing your details before the deadline.
- Stay Updated: LLPs should await further communication from the Registrar regarding their compliance timeline.
- Educate Your Team: Ensure all officers and stakeholders understand the importance of adhering to the directive.
Conclusion
The Registrar of Companies' directive is a game-changer for transparency and accountability in Kenya's business environment. At aKtive Citizen, we encourage all companies and LLPs to take immediate action to comply with these requirements, ensuring a brighter and more transparent future for Kenyan businesses.
Stay informed, stay compliant, and remain aKtive!
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