The Amendment of the Companies Act No. 15 of 2017, through Legal Notice No. 12 in 2019, has made it mandatory for companies incorporated in Kenya to keep a register of Beneficial Owners in addition to the pre-existing register of members. Companies will now be required to keep a register of their beneficial owners.
31st January 2021 is the deadline for the mandatory compliance period for companies to update their beneficial ownership information register.
This is a new aspect of compliance requiring more transparency from companies means that Kenya gains a competitive edge in our financial sector. Hopefully, this will improve our position under the Financial Action Task Force.
Failure to comply on beneficial ownership information is an offence under the Companies Act and attracts a penalty of up to Kshs. 500,000 (approx. USD 5,000) on each officer who is liable … Notwithstanding other daily fines of Kshs. 50,000.00 (approx. USD 500) per day for each day of non-compliance.
The threshold for disclosure is for all direct and indirect shareholders who hold at least 10% of the issued shares or voting rights of a company, or individuals who hold a right to appoint or remove a director, or actually exercise “significant influence or control” over a company.
For non-resident beneficial owners, there are implications in the form of transfer pricing rules and deemed interest among others. This is because previously it was not obvious that a company is foreign-controlled but the threshold and the need for a register of beneficial ownership means that foreign ownership will form part of public information. These tax implications will need to be examined in detail depending on the individual companies.
Failure to comply is an offence under the Companies Act which attracts a penalty of up to Kshs. 500,000 (approx. USD 5,000) on each officer who is liable and further penalties for each subsequent offence. Notwithstanding other daily fines of Kshs. 50,000.00 (approx. USD 500) per day for each day of non-compliance.