Munyao Kayurira Advocates

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THE LEGAL PROCESS OF CHANGING YOUR NAME IN KENYA

Introduction

“No longer shall your name be called Abram, but your name shall be Abraham…” (NKJV Bible Genesis 17:5)

Unlike the biblical change of name from Abram to Abraham that was ordained by God, the process of changing one’s name in Kenya is governed by The Registration of Persons Act, The Births and Deaths Registration Act, and the Registration of Documents (Change of Name) Regulations.

To legally change one’s name, a deed poll needs to be registered. Upon registration, the Registrar will cause the Deed Poll to be advertised in the Kenya Gazette. The consequence of the change of name is that the applicant will need to apply for a fresh national ID Card to reflect the new name.

The Requirements for change of name

The requirements for change of name slightly differ from one set of persons to the other. For instance, for a married woman, she must provide her certificate of marriage or other evidence if the said marriage was not registered. This is to be accompanied with the written consent of her husband.

For a widow, she is required to furnish her certificate of marriage or other evidence of her marriage if it was not registered and a death certificate.

If a divorcee, she must provide her certificate of marriage, or other evidence of her marriage if it was not registered, together with the decree absolute proving the divorce.

Also, the requirements of change of name for a minor of less than 16 years will be different from that of a minor of more than 16 years of age. For a minor below 16 years, his/her parent or legal guardian shall sign the deed poll. If the minor is above 16 years old, the minor shall consent to the change of name.

Alternative Procedure for Married or Divorced Persons

There are some instances where change of name may be effected through an application to the Registrar of Persons. Rule 9 of the Registration of Persons Rules, 1998 provides that where a married woman wishes to acquire her husband’s name she shall make an application to the Registrar of Persons attaching the marriage certificate, an affidavit stating her wish to adopt her husband’s name and copies of her ID and his ID. Where a divorcee wishes to drop and/or add a name, she shall lodge an application to the Registrar of Persons attaching the decree absolute of the divorce. The person shall at the same time surrender her identity card, pay a fee of one thousand shillings, and permit her photograph to be taken for the purpose of enabling a new identity card to be issued to her.

Change of Name for a Minor below 2 Years

Article 53 (1) (a) of the Constitution of Kenya, provides that “every child has a right to a name…” However, that name can be changed. Where a child is less than two years old, Section 14 of the Births and Deaths Registration Act provides that its parents may make an application to the registrar of births and deaths to alter the name upon payment of the prescribed fees. The application is made through filling out a form at the Registrar of Births and Deaths. This change of name does not require a deed poll and it is not technical. However, every change of name application for persons above 2 years requires a deed poll.

The Procedure

As a matter of practice, you will be required to furnish the following:

  1. A letter from the local area chief.
  2. An identity report of the person (Finger Print Printout).
  3. A deed poll prescribed as form 1 of the Regulations to the Registration of Documents Act. (It must be commissioned by a commissioner of oaths).
  4. The birth certificate of the applicant to the deed poll.
  5. A statutory declaration as prescribed under the Act (Form 6). It is sworn by a person resident in Kenya and who personally knows the applicant by the name they want to change.

The Deed Poll is then registered with the Registrar of Documents.

Upon registration, the endorsed documents are to be lodged at the Government Printers’ offices for publishing in the Kenya Gazette. The name change is effected at this point. The Applicant is then advised to apply for a new ID

Instances Where a Change of Name may be rejected

The Registrar may decline to effect the change of name for the following reasons:

  1. If the chosen name(s) is vulgar, offensive;
  2. The name includes numbers, symbols or punctuation marks;
  3. The proposed name is difficult to pronounce;
  4. The name incites or promotes criminal activities, racial, religious hatred or use of controlled drugs;
  5. If the name ridicules people, groups, government departments, companies or organizations; and
  6. If the name creates an impression/belief that one has an inherited/conferred title, honour, rank or academic award, for example, a change of first name to Sir, Lord, Lady, Prince, Princess is not acceptable.

Further, where it is established by the Registrar that the objective of change of name is to perpetuate a fraud, the registrar may reject that application for change of name.

Consequences of Changing your Name

Upon the change of name, there will be discrepancies in your educational and professional certificates and your Title Deeds. In the case of professional and educational certificates, an Affidavit confirming the said change of name will suffice. As for Land instruments such as Title Deeds, one needs to lodge an Application for Rectification of the Register with the respective Land Registrar for purposes of correcting the name.

At Munyao-Kayugira & Company Advocates, we have the expertise to undertake this process on your behalf. For any inquiries or support you may need, you can reach us through our email info@smkadvocates.com .

DISCLAIMER: THIS ARTICLE DOES NOT CONSTITUTE LEGAL ADVICE.

Incorporation of Business Entities by Foreign Companies in Kenya

CAN FOREIGN COMPANIES ESTABLISH BUSINESS ENTITIES IN KENYA?

Introduction

Yes, foreign companies can incorporate/register a business entity. The incorporation/registration of a foreign entity in Kenya is governed by the Companies Act, 2015 as well as sector specific laws. Sector specific laws are laws governing the industry/ market where the foreign entity wishes to operate in. For instance, anyone wishing to operate a banking business must, before registration/incorporation seek a license from the Central Bank, the industry’s regulator.

A foreign entity duly registered in another country can register and operate the following business models in Kenya:

  • A subsidiary of the foreign entity;
  • A branch office of the foreign entity

Incorporation of a Subsidiary

A subsidiary is like a local incorporated company with the only difference being that it is wholly or largely owned by another incorporated entity. This can be incorporated either as a private limited liability company or a public limited liability company depending on the number of members.

The number of members for a private limited liability company can range from one (1) member up-to fifty (50) members excluding employees. This means that the subsidiary can be wholly owned by the parent company. On the other hand, there is a requirement that it must have at least one director who is a natural person.

Incorporation Process

The incorporation process of companies is currently undertaken on the e-citizen online platform that sought to eliminate the physical human interface though the process still relies on officials on the back end who review and approve applications. The process is currently a one-stop process where you apply for reservation of name as you make the full application for incorporation.

One is at liberty to adopt the model articles of association or customize the same to suit their requirements, particularly where one wishes to align the articles with those of a parent company.

Advantages of incorporating a subsidiary

  • The subsidiary may or may not carry out the same business as its parent company;
  • It has a separate legal personality from the parent company. This means that the liabilities of the subsidiary do not accrue to the parent company;
  • Tax benefits. A subsidiary is taxed at the rate of 30% of the income generated in Kenya which is the same as a local company. This is cheaper compared to the corporate income tax rate of a branch which is at 37.5%. The tax is only chargeable on the income accrued and derived in Kenya.
  •  The subsidiary can choose to retain the name of the parent company or get another one altogether.

Disadvantages of incorporating a subsidiary

  • Should you not have Kenyan shareholders and/or directors then you will be required to take out an investor permit to be able to get tax registration, open bank accounts and generally run your business in Kenya;
  • The winding up process of a subsidiary is complex as it is treated as a company incorporated in Kenya and hence has to follow the procedure in accordance with the Insolvency Act 2015.

Timelines

The process currently takes anywhere between 3-7 working days if there are no sector specific approvals required once we are provided with all requirements. A request to amend, provide alternative names etc. may delay the process.

A branch of a Foreign Company

A branch is essentially a company organized to conduct business on behalf of a parent company in another jurisdiction. The branch office is like a new placement, department or division that is set up under the parent company’s name and forms part of that legal entity.

Registration Process

The registration process of a foreign company is provided for under Part 37 of the companies Act, 2015. Section 974 of the Companies Act, provides that a foreign company shall not carry on business in Kenya unless it is registered or has applied to be registered and the application has not been dealt with within the prescribed period.

Thus the first step is to apply to for registration of foreign company to the Registrar of Companies through the e-citizen portal. The application is usual done under Form FC1.

Branches must have a local representative resident in Kenya, who may be a citizen or a non-citizen. This is also the person responsible for the company’s compliances in Kenya. We offer local representative services at an annual fee.

Advantages of setting up a branch of a Foreign Company

  • The registration system for branches is simple and thus foreign companies seeking to set up a place of business in Kenya do not face complex procedures of registration;
  • There is more control by the parent company since the activities of the branch are fully managed by the parent company especially decision making;
  • Opening a branch allows the parent company access to a new market and target new consumers of their goods and service without the need for creation of a new entity.

Disadvantages of setting up a branch of a Foreign Company

  • The parent company is liable for the actions /liabilities of the branch office;
  • Losses incurred by the branch office are included in the parent company’s income statement;
  • All actions by the branch office need ratification by the board of directors of the parent company which in turn may limit the performance of the branch office;
  • A branch has limited business scope as it must be within the scope of that of the parent company. It cannot go beyond the scope provided for by the parent company’s incorporation and constituting instruments.
  • The current rate of corporate income tax for a branch is 37.5%.

Registration will take approximately 3-7 working days.

Sector Specific Regulations

Different sectors are regulated by different statutes and bodies. These regulations may place a cap on the shareholding of such businesses. For example, telco companies are required to have at least 30% shareholding to be Kenyan either at the inception or within three years after being licensed. These sector specific regulations are important when it comes to issuance of licenses and future compliances.

DISCRIMINATION AT THE WORK PLACE

DISCRIMINATION AT THE WORK PLACE

  1. Definition
    a. Discrimination at the work place may be defined as the exclusion of and differential treatment accorded to a particular group of persons based on a range of social categories such as sex, religion, disability, opinion or race.
    b. Prejudicial treatment has the effect of denying particular classes of people access to equal opportunity or their right to fair treatment and labor practices despite the fact that they may be skilled and proficient in the work that they are involved in.
    c. Most people are of the notion that discrimination only occurs during the subsistence of one’s employment, however, this could not be further from the truth. Discrimination may occur at the recruitment process, during one’s employment or during the termination of their engagement.
    In this article, we will be looking at discrimination at the work place and what to do as an employer or employee dealing with such a situation.
  2. The Law Surrounding Discrimination At The Workplace
    a. Article 27 of the Constitution of Kenya (2010) provides for equality and the freedom from discrimination. As far as discrimination at the workplace is concerned, the following provisions apply:
    i. Article 27 (3): Women and men have the right to equal treatment, including the right to equal opportunities in political, economic, cultural and social spheres;
    ii. Article 27 (4): The State shall not discriminate directly or indirectly against any person on any ground, including race, sex, pregnancy, marital status, health status, ethnic or social origin, colour, age, disability, religion, conscience, belief, culture, dress, language or birth;
    iii. Article 27 (5): A person shall not discriminate directly or indirectly against another person on any of the grounds specified or contemplated.
    b. Section 5 of the Employment Act also echoes the sentiments of the Constitution of Kenya (2010). Specifically, section 5(2) of the Employment Act mandates employers to promote equal opportunity and eliminate discrimination as part of their practice during the course of their business.
    c. Section 5(5) of the same directs employers to compensate their employees equally for value of equal work performed.
    d. Section 5 of the Labour Relations Act and section 12 & 15 of the Persons with Disabilities Act 2003 reiterate the positions taken by the aforementioned provisions.
    e. Nonetheless, there are exceptions to the above-mentioned provisions. Section 5(4) of the Employment Act provides instances where an employer’s actions will not be regarded as discrimination. These are:
    i. When affirmative action measures consistent with the promotion of equality are undertaken;
    ii. When employers engage in exclusion based on an employee’s job competencies;
    iii. When employers engage citizens in accordance with National employment policy;
    iv. When employers restrict access to limited categories of employment in the interest of state security.
    f. As a final note, the provisions of Article 27 of the Constitution of Kenya (2010) as well as those of Section 5 of the Employment Act are not exhaustive enough to cover all the grounds upon which discrimination may occur. This is so as discrimination is broad ranged and has the ability to shift overtime. Therefore, it is important to all that courts develop jurisprudence that interprets the application of the above-mentioned provisions.
  3. Analysis Of The Law Surrounding Discrimination At The Workplace
    a. The courts have a wide range of jurisprudence that seeks to interpret the law surrounding discrimination at the workplace. Notably, the case of V.M.K v Catholic University of Eastern Africa (C.U.E.A) [2013] eKLR is a landmark case detailing how the courts handled allegations of discrimination on the basis of sex, HIV status and pregnancy.
    b. The facts of the case were that the claimant had been employed by the respondent on a casual basis. At the time she was earning Seven Thousand Kenya Shillings with no provision of benefits. Her colleagues were two male employees engaged in the same capacity as the claimant, however, the terms of their contract were permanent and pensionable. In the year 2003, the claimant was shortlisted, interviewed and recommended for an internal job placement.
    c. As part of the requirements for the job placement, a medical test had to be conducted on the applicants. However, there was no mention that the same would include a HIV test. When the results of the same were out, the claimant was informed that she was HIV positive. This information was shared amongst her colleagues in the workplace despite the fact that she had not consented to the same. It was on this basis that the claimant was denied the earlier stated job placement and was, forthwith, employed vide contracts with shorter terms. She was also denied paid maternity leave and her employment was subsequently terminated once she resumed work after her leave.
    d. In the courts determination, it was held that the respondents had not submitted compelling advice to prove that their actions were justified and non-discriminatory. If anything, their lack of proper documentation and rationale behind the compensation structures applied to the complainant proved that the respondents were engaging in direct discrimination.
    e. Similarly, in the case of Gichuru v Package Insurance Brokers Ltd (Petition 36 of 2019) [2021] KESC 12 (KLR) the respondents failed to establish that the termination of the appellant’s engagement was due to the fact that he could no longer physically move around albeit his ability to perform his job. The courts held that section 15 of the Persons with Disabilities Act mandated them to provide special facilities in order to accommodate persons with disabilities; a provision they had not complied with.
    f. Nonetheless, as was earlier stated, employers are allowed to distinguish among employees on various positive fronts requiring them to do so. In the case of I.P.O.A v National Police Service Commission and 660 others [2014] eKLR ,it was held that pregnant women could not participate in police recruitment processes because the activities involved were rigorous and would cause harm to the unborn child. This form of discrimination was held to be positive as it was based on the claimant’s ability to perform the job.
  4. Various Forms Of Discrimination That Can Occur In The Workplace
    a. Pursuant to the provisions of Article 27(4) of the Constitution of Kenya 2010 and Section 5 (3) of the Employment Act, discrimination may occur on the grounds of race, sex, color, ethnicity, pregnancy, disability, HIV status, mental status, opinion, nationality, social origin, religion, marital status, age, culture, dress and gender. However, this list is not conclusive.
    b. In an attempt to capture the various forms of discrimination that may occur in the work place, there are three main categories under which allegations of discrimination may be grouped:
    i. Direct Discrimination: this refers to out rightly comparable instances which clearly show that the treatment being afforded to one employee is different to the treatment being afforded to another despite the likeness and similarity in the job positions occupied;
    ii. Indirect Discrimination: this form of discrimination occurs when protected classes of people are affected by the application of policies or practices in the work place that limit their freedom to engage as they would or; excludes them from accessing certain opportunities. For example, a job advertisement stating as a requirement that applicants are not allowed to wear headscarves is a form of indirect discrimination as Muslim women would be affected;
    iii. Positive discrimination: this form of discrimination is applied in order to positively benefit groups that have been affected by discriminatory practices in the work place. An example of the same would include affirmative action requiring male members of an organisation to be composed of only two-thirds of the populace.
  5. The Burden Of Proof In Proving Discrimination Claims
    a. In the case of Gladys Mutanu Vundi v Bank of Africa Limited, ELRC Cause No. 1277 of 2011 the courts held that in order to prove an instance amounting to discrimination, a claimant had to set up a clear cut case by:
    i. Establishing membership in a protected class of persons who may be discriminated upon on the basis of their membership to the same.
    ii. Establishing that they met the qualifications and the requirements of the job that was lost.
    iii. Proving that the adverse treatment received and/ or subsequent decision made was as a result of the employee being a member of the protected class.
    b. By establishing a prima facie case based on these precincts, section 5(7) of the Employment Act directs that the employer will be responsible for discharging the burden of proof by proving that his or her actions amounted to positive discrimination.
  6. Remedies Available To The Discriminated Employee
    a. Upon the successful institution of a case, the victim of discrimination may be awarded quantum damages, taking into account the nature of discrimination, with the intention of repositioning the victim as though the discrimination never occurred. This however should not be taken to mean that the victim will be reinstated as an employee, though the same is possible as a remedy through a court order.
    b. Other reliefs available to a claimant in such an instance include:
    i. A declaration of rights;
    ii. Issuance of conservatory orders;
    iii. Issuance of an injunction;
    iv. Issuance of prohibitory orders putting a stop to the employer’s actions.
  7. Preventative Measures That Employers Can Apply
    a. It goes without saying that it is crucial to the performance of a business that its brand and reputation are held to the highest possible standard. Significant losses may accrue if and when discriminatory law suits are publicly filed against organisations. To counter the same, it is important that employers create and maintain a work culture that encourages diversity. The same can be achieved through the following actions:
    i. Through the help of their advocates, employers may draft comprehensive employee handbooks that capture strict policies and internal process mechanisms that may be sought when reporting claims of discrimination. These policies should also effectively cover grounds of discrimination prohibited within the workplace and the consequences of engaging in the same once disciplinary processes have been initiated.
    ii. Employers may need to undertake regular training of their staff on what constitutes discrimination, how it not only goes against the law, but the company’s policies as well.
    iii. Organisations may endeavor to conduct regular audits on how benefits within the company are distributed so as to gauge whether the company grants these benefits out of merit or if there are discriminatory factors that come into play that may be improved on.
    iv. Business organisations may also endeavor to improve working conditions that mainly affect marginalized groups within the office. Rather than excluding specific groups from participating in certain job types the employer should seek to improve conditions that may adversely affect marginalized groups in order to increase equitable access to valuable opportunities.
    v. Having scheduled performance reviews whenever an employer has any concerns with an employee may also insulate the employer from discriminatory claims. It is possible for employees to sue for discrimination at the face of termination that was fairly accorded. Therefore, it is imperative that employers keep track of their concerns once they arise as proper and honest record keeping may in turn prove that any action taken against an employee was fairly accorded.
    vi. Organisations must ensure that they have anti-retaliation policies in place in order to prevent any instances where an employee may make an allegation for discrimination and a member of the organisation acts against the claimant in retaliation to the claim raised.
    vii. Lastly, it is imperative that employers take discrimination claims seriously by thoroughly investigating any claim before discounting the same. An employee handbook setting out internal processes that may be triggered after a complaint has been raised may be helpful and wise to follow in this instance.
    Employment related matters are part of a wide berth of services Munyao-Kayugira & Co., offers to its clients. For any inquiries or support you may need, you can reach us through our email info@smkadvocates.com

Article By Lawyer Ms. Ashlyne Alwanga Kioge

Waiver of Court Filing Fees

During Jamhuri Day Celebrations last year (12th December 2019) the President of Kenya, Uhuru Muigai Kenyatta, directed the National Treasury, the Attorney General, and the Judiciary to work together to develop a legal regime for waiver of fees for commercial disputes below KES 1 Million. This was one of the measures aimed at reduction or the elimination of fees levied by government agencies in order to enhance the simplification of processes in trade, access to credit, and consumer protection.

This directive gained the force of law in Legal Notice no. 59 published on 20th April 2020 under the Public Finance Management Act (No. 18 of 2012). Through this notice, the Cabinet Secretary for the National Treasury and Planning exercised his powers under Section 77 of the Act to waive court filing fees in respect of commercial disputes where the value of the suit does not exceed one million (1,000,000) shillings for a period of two (2) years.

Before this waiver, a dispute whose value was one million (1,000,000) shillings would attract a filing fee of about seventy thousand (70,000) shillings.

This waiver takes effect on 20th April 2020 and applies to commercial cases filed after this date and will go a long way in easing the overall costs that go into the institution of cases/claims.

If you have any question regarding this alert, please do not hesitate to contact Scola Kayugira on E-mail: scola@smkadvocates.com, Tel:+254 723 495 054, Skype: Scola Munyao-Kayugira.

This alert is meant for general information only and should not be relied upon without seeking specific legal advice.

Amendment to Business Laws to Facilitate the Ease of Doing Business in Kenya

Key Amendments to Business Laws in Kenya

The Business Laws (Amendment) Act, 2020 (the Act) was became law on 18th March, 2020.
The purpose of the Act is indicated as making amendments to various business laws to facilitate the ease of doing business in Kenya and for connected purposes.

Some of the changes brought in by the amendments to the law and their anticipated impact are as follows:

  1. The Law of Contract Act (Cap 23)

Section 2 of the Act amends the Law of Contract Act to provide for use of electronic and advanced electronic signatures as an alternative to physical signatures. The Act adopts the definition provided for under the Kenya Information and Communications Act (No. 2 of 1998) which is as follows:

‘an advanced electronic signature’ is one that meets the following requirements:

  • Is uniquely linked to the signatory;
  • Is capable of identifying the signatory;
  • Is created using means that the signatory can maintain under his sole control; and
  • Is linked to data to which it relates in such a manner that any subsequent change to the date is detectable.

With this amendment, contracts will now be deemed valid if signed by way of an electronic/advanced electronic signature.

The effect of this amendment is that parties will save on time and other resources required to attend offices/meetings to sign documents.

  1. The Registration of Documents Act (Cap 285)

Sections 4, 5 and 6 amend Sections 2, 3 and 4 the Registration of Documents Act to create an electronic register of documents and the electronic signing and filing of documents required to be filed under the Act.

  1. The Survey Act (Cap 299)

Sections 7,8 9 & 10 of the Act amend sections 2, 5, 30 &32 of the Survey Act to permit:

  • the use of electronic signatures and advanced electronic signatures;
  • electronic processing of documents or plans and the electronic imprinting of the seal of Survey of Kenya;
  • electronic submission of documents by surveyors to the Director of Surveys; and
  • electronic authentication of documents by the Director of Survey.

Following these amendments, it is expected that the time taken to process survey plans/deed plans and related records will improve and hopefully translate to reduction of survey costs. The introduction of security features will enhance confidence in the process.

  1. The Income Tax Act (Cap 470)

Section 11 of the Act amends Part V of the Second Schedule of the Income Tax Act to provide a tax incentive for investors spending over five billion in construction of bulk storage and handling facilities to support the standard gauge railway. The amount so spent shall be permitted as an investment deduction in the calculation of income tax.

  1. The Stamp Duty Act (Cap 480)

Sections 12 and 13 of the Act amend sections 2 and 19 of the Stamp Duty Act to provide for the stamping of documents by marks embossed or impressed by electronic means. This is intended to support the digitization of land registration transactions that have in the past been partly electronic, partly manual.

  1. Occupational Safety and Healthy Act (OSHA) (no.15 of 2007)

Section 15 of the Act amends section 44 of the OSHA to exempt business premises from the requirement for registration of work places for the first twelve months after incorporation where one has less than one hundred employees. This, therefore, means that no fee for such registration will be payable.

The amendment is aimed at easing the cost of doing business for startups.

  1. National Construction Authority Act (the NCAA) (Act No. 41 of 2011)

Sections 16—20 of the Act amend sections 2, 5, 23 and 42 of the NCAA to the following effect:

  • Enforcement of prescribed Building Codes;
  • Mandatory inspections to be undertaken by the National Construction Authority (NCA);
  • Additional powers to the board of the NCA to appoint investigation officers to conduct investigations; and
  • Create an offence for failure to comply with an order given by an investigating officer which is punishable by a fine of KES 1 million or an imprisonment term of 3 years or both.

These amendments seek to bring about accountability in the construction industry. The construction industry in Kenya has, for a long time, been plagued with issues around poor workmanship, negligence, recklessness and blatant disregard for the law (such as the Building Codes). The mandatory inspections and the appointment of investigating officers will assist in ensuring that these issues are dealt with.

  1. The Land Registration Act (the LRA) (No. 3 of 2012)

Sections 21-26 of the Act amend section 2, 44, 45 and 83 as well as repeal (deletion) of sections 38 and 39 of the LRA. The effect of these amendments is to provide for use of electronic signatures and advanced electronic signatures as well as permit electronic processing of instruments relating to land.

The implication, therefore, is that documents used to confer interests in land may be signed, lodged and processed electronically. This will, however, only be possible once all registries become fully digitized.

The repeal of sections 38 and 39 was intended to do away with the need to obtain land rent and land rates clearance certificates as mandatory documents in a transaction for transfer of land. The certificates were a barrier to expeditious conclusion of land transactions and also an added expenditure. A rates clearance certificate from Nairobi county would, for instance, cost ten thousand (Kes 10,000) shillings.

The amendment, however, left sections 55 (b) and 56 (4) of the LRA intact and as such, land rent clearance certificates are required for registration of leases and charges.

Please note, however, that land rent and land rates are still payable under law. The amendment only does away with the need to obtain clearance certificates when effecting a transfer of land transaction.

  1. The Kenya Information and Communication Act (KICA) (No. 2 of 1998)

Section 14 of the Act amends the KICA to permit the use of electronic signatures.
Pursuant to the terms of the KICA, the Communication Authority of Kenya will license electronic certification service providers whose role will be to generally support electronic signatures and to adhere to procedures that ensure that the secrecy and privacy of the electronic signatures.

  1. The Companies Act ( No. 17 2015)

Sections 29-38 of the Act amend sections 35, 37, 289, 495, 504, 611 and Paragraph 21 of the Sixth Schedule besides repealing (annulling) sections 38, 42, and 43 in their entirety. The amendments have the following effect:

  1. Companies are no longer require a seal for purposes of execution of contracts, sealing of share certificates etc. Contracts entered into by companies may be executed by persons acting under the company’s authority- express or implied. These may be the directors, the company secretary or a person holding a power of attorney.
  2. Bearer shares had been phased out by the Act in 2015. However, through the amendment timelines for phasing them out through conversion have been issued. Companies are now required to convert all bearer shares to registered shares within 9 months of enactment of the Act and to notify the Registrar of such conversion within 30 days. Failure to do so is an offence and the company and any officers are liable, upon conviction to a fine not exceeding five hundred thousand shillings.
  3. Thresholds required for “squeezing-in” and “selling-out” have been amended. The threshold for “squeeze-ins” and “sell-outs” has now been reinstated at 90%. In 2019, the Companies Act had been amended to reduce the threshold from 90% to 50%.

“Squeeze-in rights” permit an investor, to acquire minority shareholdings on a compulsory basis if it has acquired or unconditionally contracted to acquire not less than 90% in value of the shares to which the takeover offer relates and not less than 90% of the voting rights carried by the shares to which the offer relates.

“selling-out rights” permit a minority shareholder to be bought out by the bidder if the bidder has acquired or unconditionally contracted to acquire 90% in value of the target company’s shares and 90% of the voting rights carried by the shares (whether by virtue of acceptances of the offer or by other acquisitions of the shares).

The reversion to 90% is in line with global best practice.

  1. Insolvency Act (No. 18 of 2015)

Section 39 of the Act deletes section 560A and substitutes it with a new section all together on considerations to take into account on applications for approval to lift a moratorium.
A moratoria refers to a period of time during which transactions or legal processes (in respect of companies under administration) are restricted from proceeding without the approval of the administrator or a court.

The conditions to be taken into account include: a consideration of the purpose of administration, the impact of the approval on the applicant and particularly whether they will suffer loss, the legitimate interests of the applicant, value of creditor’s claim, whether provision of protection may be feasible or overly burdensome, whether the asset is necessary to keep the debtor’s business as a going concern, relief required to preserve the value of assets such as perishable goods etc. Such an approval, if granted, is for a period of no more than twenty-eight days.

  1. Excise Duty Act (No. 23 of 2015)

Section 41 of the Act amends Paragraph 1 of the First Schedule to the Excise Duty Act, 2015 to include imported glass bottles (excluding bottles for packaging of pharmaceutical products) amongst excisable goods. The said bottles attract excise duty at the rate of 25%.

In 2019, the World Bank’s Ease of Doing Business (EODB) Index ranked Kenya at position 56 globally up from position 80 the previous year. Some of the issues noted in the 2019 report that were a hurdle to the ease of doing business included land registration processes which were found to be difficult, cumbersome and costly. The measures taken through the amendments highlighted above are intended to further ease the cost of doing business in Kenya. More, in terms of training, capacity building etc, however, needs to be done for the intended benefits to be realized.

If you have any questions regarding this write-up, please do not hesitate to contact Scola Kayugira on E-mail: scola@smkadvocates.com, Tel:+254 723 495 054, Skype: Scola Munyao-Kayugira.

This write up is meant for general information only and should not be relied upon without seeking specific legal advice.