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County Regulations

Local Authority Regulations:

  • Kenya has 47 Counties.
  • The County structure and decentralized governance is relatively new.
  • Counties were formed in 2013.
  • Each County has specific laws & rules and the Company Registration Process & Business Permit & License requirements may differ from county to county.
  • Initial company registration usually takes place at the Central Registry, at the Attorney General’s Office at Sheria House, Nairobi (Central Business District).

For more Information on the County of Nairobi laws & regulations please click this link: http://www.nairobi.go.ke/home/common-city-laws-and-regulations/

Business License Requirements:

For more information on specific requirements for business licenses and tariffs in each individual County please click the link below:

http://www.businesslicense.or.ke/

  • Select the County required i.e. where the business is/will be located.
  • Select the type of business or industry that best describes your business operation
  • If you cannot find the correct enterprise, operation or industry description there is an online enquiry form for submission to the County Administration; alternatively, you can inquire for respective business license requirements with any local Huduma Centre: http://www.hudumakenya.go.ke/centres.html
  • In general, business licenses must be renewed annually.

Bank Accounts

How to Open a Bank Account in Kenya

Kenya has an established and varied banking industry.  You may open account with any of the various banks.  The process and requirements differ slightly from bank to bank and initial research is advised covering the following issues:

  • What is the Bank’s specialty?
    • That is to say, some banks have greater experience with Small and Medium Businesses rather than large Corporates.
    • This will be evident when you examine the range of products they offer
  • What additional products/services does the Bank offer for businesses?
    • Credit & Business Loans?
    • Payroll Services? or
    • Is the Bank authorized to accept & process Tax, VAT & other Statutory Payments?
  • Does the Bank offer internet banking and/or mobile banking?
  • How long will it take the Bank to process your application and issue a Company chequebook and/or Debit / Credit Card?
  • What is the fixed transaction turnaround time?
    • Inter-bank as well as within the bank’s own branch network?
  • Is there a personal contact person at the Bank allocated to a business account?
    • Or will you be expected to use the general customer service desk operation?
  • Does the Bank offer branchless banking?
    • How extensive is the branch network?
    • Is it represented countrywide and in all Counties?
    • Does the Bank have authorized banking agents in areas where no Branch exists?
    • Does it have an ATM (Automated Teller Machine) network?
  • What are the costs associated with your account?
    • Overdraft facilities & other costs.

The following documents are required in order to Open a Bank Account in Kenya:

FOR AN UNLIMITED COMPANY FOR A LIMITED COMPANY
Business Name Certificate or Deed of Partnership Certificate of Registration
Certified Copy of the ID document for each Signatory to the Account Original or Certified Copy of the ID document for each Signatory to the Account
A Mandate to open the Account Documentation showing authority to open the Account
An original Utility Bill (electricity or water) Original or Certified Copy of a Utility Bill (electricity or water)
Personal Identification Number (PIN) Personal Identification Number (PIN)
Photos of the Signatory (passport, colour x 4) Photos of the Signatory (passport, colour x 4)
Cash Payment for Opening Balance
• Minimum Kshs 10,000/=
• This varies from bank to bank
Cash Payment for Opening Balance
• Minimum Kshs 10,000/=
• This varies from bank to bank
Certificate of Incorporation
Possibly required:
Memorandum & Articles of Association
OR
Registration Business Statement
(if you do not have a Memorandum of Association)
Original or Certified copy of the Board Resolution to open a Bank Account
Original or Certified Copy of the Seconded Minutes of the Board Meeting

Accounting & Financial Reporting

Information on Accounting Procedures & Financial Reporting

  • Every company must file an annual financial statement and report each year.
  • The requirements vary according to your company status with more details required for a Public Company listed on the Nairobi Stock Exchange (NSE)
UNLISTED COMPANY LISTED COMPANY
Required Filing:
• The company’s annual financial statement
• A Directors’ report
Required Filing:
• The company’s annual financial statement
• A report on the Directors’ remuneration
• The Directors’ report
• The Auditor’s report on the financial statement and directors’ report
Auditor’s Report
• The Auditor’s report on the financial statement and directors’ report
NB: Not required if: The company is classified as a ‘Small Company’ and therefore exempt from audit SEE NOTE (1)
Auditor’s Report on:
• The company’s financial statement
• The audited part of the Directors’ remuneration report
• The Directors’ report.
• Reference SEE NOTE (2)
• Balance sheet
or
• Profit & Loss Accounts Report
• Reference
• Balance sheet
or
• Profit & Loss Accounts Report

NOTES:

(1) Definition of a Small Company or Small Group:

  • A company or group with Annual Turnover of less than 50 million;
  • A company or group with Net Assets (as per the balance sheet date) of less than 20 million;
  • Number of employees in the company or Group: less than 50 persons;
  • Registered as a Private Company; and
  • It is not an Insurance or Banking Entity or another ineligible group
    • e. not trading on security exchange or other regulated market in Kenya

(2) A Reference must include notes on each or any of the following filed documents:

  • Annual financial statement;
  • Balance sheet; and
  • Profit and loss account, includes notes to the statement, or balance sheet or profit and loss account.

These Reference notes should:

  • Give information required by a provision of the Companies Act 2015 or give information conforming to the prescribed financial accounting standards;
  • Be given, as required or permitted, in a note on the Company’s Financial Statements; and
  • Include any disclosures as required by the International Financial Reporting Standards (IFRS) and the International Auditing Standards.

Financial Requirements & Information:

Average Accounting Costs:

  • Mandatory annual audit, by external auditors
    • Costs depend on the size of business, turnover and the number of transactions per month
    • For Small Companies: at least Kshs. 30,000/= per annum
  • Monthly accounting costs also depend on size of business and number of transactions per month
    • For Small Companies: at least Kshs. 5,000/= per month

Retention of Accounting Records:

  • Accounting records must be kept at the company’s registered office.
  • The Accounts records must be open at all times to inspection by the officers of the company.
  • The records must be retained for at least 7 years from, and including, the date on which they were created.

Setting and Changing Accounting Reference Periods:

  • Accounting reference period should be set at the anniversary of the company’s incorporation;
    • Provided that the first reference period is at least 6 months and not more than 18 months.
  • A company may change its current, or preceding, accounting reference period through a notice to the Registrar.
  • NB: Such notice is not effective if given less than 5 years after the end of an earlier extension to an accounting reference period.
    • e. A company can only extend its accounting period once in a 5 year period unless waived by the Company Secretary.
    • Reference periods cannot be extended by more than 8 months.

Further Requirements:

  • Companies are, in some cases, required to distribute summary financial statements to those entitled to receive copies.
  • A quoted company must publish its annual reports and audited financial statements including its preliminary results on its website.
  • All published financial statements must remain available on the website for at least one year.
  • Offences and fines relating to Financial Reporting range Kshs. 500,000/= to KES 2 million: Companies Act 2015 – Presentation 3.

Taxation Requirements:

  • Value Added Tax (VAT)
    • VAT must be paid Monthly
    • VAT is mandatory if the business earns an annual income above Kshs. 5 million
    • VAT is levied on consumption of taxable goods & services
    • Currently and in general the VAT rate is 16%
      • NB VAT is 14% on restaurant and hotel services
    • Turnover Tax
      • Turnover Tax must be submitted Quarterly
      • Turnover Tax is mandatory if the business earns an annual income between
        500,000/= & Kshs. 5 million
      • Turnover Tax is an Indirect tax, chargeable at 3% of total sales
    • Corporation Tax
      • Corporation Tax is liable on the Company’s worldwide trading profits
      • The rate of Corporation Tax is currently 32.5%
      • It is advisable to seek the services of a taxation advice consultant to ensure compliance
  • Statutory Monthly Payments:
  • PAYE To be paid by the 9th of each month
  • NHIF To be paid by the 15th of each month
  • NSSF To be paid by 15th of each month
  • VAT To be paid by 20th of each month

NB: If the payment date falls on a weekend, payment needs to be made on or before the last working day before that date

To find more Information about where to pay please use this link: http://www.kra.go.ke/index.php/kra-portal

Note: All regulatory information on Company Accounting Records as well as Financial Statements can be viewed under the new Companies Act, 2015 – Part 25 (Pages 620 – 704).

More information can also be accessed via the following file: Documents on new Companies Act, 2015

KENYA BUSINESS GUIDE

The Kenya Business Guide (KBG) is a think-tank that seeks to support the improvement and strengthening of the business environment in Kenya by providing access to information on key features of both the private and public sector prerequisites in the effective functioning of business. The KBG works in the intersection of the private and public sectors developing curated and value-added information to assist leaders in making more effective decisions.

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