Types of Companies in Kenya

The following are the types of companies in Kenya: –

Companies limited by shares

This is a type of company that has a share capital and the liability of each member is limited to the amount, if any, unpaid on their shares.

Companies limited by guarantee

This is a type of company that does not have a share capital and the liability of each member is limited to the amount that the members undertake to contribute to the assets of the company in the event of its liquidation. Furthermore, its certificate of incorporation states that it is a company limited by guarantee.

Unlimited companies

This is a type of company that has no limit on the liability of its members and its certificate of incorporation states that the liability of its members is unlimited.

Private companies

This is a type of company that the Articles of Association: –

1. restrict a member’s right to transfer shares;
2. limit the number of members to fifty;
3. prohibit invitations to the public to subscribe for shares or debentures of the company;
4. it is not a company limited by guarantee; and
5. its certificate of incorporation states that it is a private company.

Public companies

This is a type of company that the Articles of Association: –

1. allow its members the right to transfer their shares in the company;
2. do not prohibit invitations to the public to subscribe for shares or debentures of the company; and
3. its certificate of incorporation states that it is a public company.

Foreign Companies

This is a type of company that is a branch of a company registered outside of Kenya but has established a place of business in Kenya.

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Memorandum of Association (MOA)

This is a legal document prepared by individuals who wish to form a company. The memorandum of association defines the company’s relationship with its shareholders and describes the company’s objectives. The MOA contains among other things, the nature of the business, share capital, and share allocation to the director(s) or shareholders or members. A valid MOA must provide that the first shareholders of the company, normally referred to as subscribers, agree to become members of the company and, in the case of a company that is to have a share capital, to take at least one share each.

Restriction of the Company’s Objects

Previously, companies were required to supply the Registrar with an MOA which specifies the objectives for which the company is formed. This would in effect, restrict the activities of the company to what is provided for in the MOA. It is therefore in contravention of the law (otherwise known as ultra vires) for a company to undertake activities that are not specifically provided by the MOA.

However, the new Companies Act 2015 removes any restriction on the company’s objects. A company can therefore undertake any activity upon registration. A company may nonetheless limit its objects by specifically providing it in the Articles of Association.

Registration of Companies in Kenya

The Companies Registration Office under Business Registration Service (BRS) is in charge of company registration in Kenya. Previously, company registration in Kenya was a complex and lengthy process. However, the enactment of the Companies Act, 2015, and the Business Registration Service Act 2015 streamlined the registration process.  

Method of Forming a Company

One or more persons may form a company by subscribing their names to a memorandum of association of the proposed company. The person contemplated here includes individuals, companies, government-owned entities, non-profit organizations, and other legal persons excluding an unincorporated Trust. In light of the foregoing, it is possible for an individual to form a company contrary to the previous position where the law required two or more persons

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Company Registration Requirements

To register a company, the following details should be lodged at the Companies Registry: –

1. Proposed names of the company (at least three)
2. Name and details of proposed directors and shareholders which include; Identity or Passport Number, date of birth, phone number, email address, postal address and postal code, occupation, place of residence, County, District, and locality
3. Nominal capital
4. Proposed office address
5. Whether the company is to be a private or a public company
6. Nature of business
7. Sector e.g. manufacturing
8. Business start date
9. Accounting period end month
10. Number of employees
11. Estimated annual turnover
12. A statement of capital and initial shareholding
13. Ownership information

Company Registration Certificate

Upon the registration of a company, the Registrar issues the company with a certificate of incorporation. The certificate is conclusive evidence that the requirements relating to the registration of a company have been complied with and that the company is duly registered under the Companies Act 2015. The Registrar must sign the certificate of incorporation and authenticate it with the Registrar’s official seal.

For professional assistance with company registration, please feel free to reach out to us via the following email addresses: info@dmklaws.co.ke and dmklaws@gmail.com.