DECLARATION OF BENEFICIAL OWNERSHIP UNDER  THE COMPANIES (BENEFICIAL OWNERSHIP INFORMATION) REGULATIONS, 2020

Overview

The Companies (Beneficial Ownership Information) Regulations, 2020

  • Came into force on 18th February 2020 and was operationalised on 13th October 2020 requires every company incorporated in Kenya to keep and lodge a register of its beneficial owners with the Registrar of Companies within thirty (30) days of its preparation.
  • Beneficial owner is defined to be “a natural person who ultimately owns or controls a legal person or arrangements or the natural person on whose behalf a transaction is conducted and includes those persons who exercise ultimate effective control over a legal person or arrangement.”
  • Under Regulation 3 of the said Regulations, a company is required to take reasonable steps to identify its beneficial owners and to enter their information in its register of beneficial owners. The required information includes the following details:
    • full name (of the beneficial owner)
    • birth certificate number, national identity card number or passport number;
    • personal identification number (PIN);
    • nationality;
    • date of birth
    • postal and business address;
    • residential address, telephone number and email address
    • occupation or profession;
    • nature of ownership or control
    • the date on which any person became a beneficial owner of the company;
    • the date on which any person ceased to be a beneficial owner; and
    • any other relevant detail the Registrar may from time to time require
  • Regulation 3(2) provides that a beneficial owner of a company shall be a natural person who meets any of the following conditions:-
    • Holds at least 10% of the issued shares in the company either directly or indirectly;
    • Exercises at least 10% of the voting rights in the company either directly or indirectly;
    • Holds a right, directly or indirectly, to appoint or remove a director of the company; or
    • Exercises significant influence or control, directly or indirectly, over the company. Significant influence or control is defined under the Regulations to mean: “participation in the finances and financial policies of a company without necessarily having full control over them”.

Implication:

  • The implications of the Regulations is that  a company incorporated in Kenya is obligated to disclose its beneficial owners
  •  Failure to provide a register of beneficial owners curtails the enjoyment of any rights or interest granted to that beneficial owner. Further, Failure to comply with these requirements is deemed an offense and the company and every officer who is in default will each be liable on conviction to a fine of up to KES500,000.
  • The Registrar of Companies has granted a grace period to companies for preparation of Beneficial Ownership register up to 31st January, 2021, before enforcement for non-compliance.

Mitigation:

The Companies should ensure that the register is prepared and filed on or before 31st January, 2021.

Please get in touch with us on info@kipkenda.co.ke or caroline.rotich@kipkenda.co.ke  for further information.

BP2O3190
CAROLINE JEROBON ROTICH
Associate, Advocate of the High Court of Kenya
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