Beneficial Ownership Requirements in Kenya

Introduction:
The Companies Act of 2015 underwent a significant amendment in 2019, resulting in the inclusion of Section 93A, mandating all companies in Kenya to uphold a register of ‘Beneficial Owners’ while notifying the Registrar of Companies. The subsequent enactment of The Companies (Beneficial Ownership Information) Regulations in 2020 solidified these requirements, which took effect on February 18, 2020.

Who Qualifies as a Beneficial Owner? The Companies Act defines a beneficial owner as “the natural person who ultimately owns or controls a legal entity or arrangements, or the individual on whose behalf a transaction is conducted.” This definition encompasses individuals exercising ultimate effective control over a legal entity or arrangement.

Company Obligations and Criteria for Beneficial Ownership:
Every company is obliged to undertake reasonable measures to identify their beneficial owners and maintain a comprehensive register containing specific particulars. According to the Regulations, a Beneficial Owner (BO) qualifies if they:

• Hold at least ten percent of the company’s issued shares, either directly or indirectly.
• Possess the right, directly or indirectly, to appoint or remove a company director.
• Exercise significant influence or control, directly or indirectly, over the company’s financial policies without absolute control.
• Hold at least ten percent of the voting rights, either directly or indirectly.

Information Required for Beneficial Ownership:
Companies must gather and record detailed information about their beneficial owners, including:

• Full name
• National identity card number/passport number
• Personal identification number
• Nationality
• Date of birth
• Postal, business, and residential addresses
• Telephone number
• Email address
• Occupation or profession
• Nature of ownership or control
• Dates of becoming or ceasing to be a beneficial owner
• Any additional information required by the Registrar

Penalties for Non-Compliance: Failure to adhere to Section 93A’s obligations incurs penalties up to Kshs. 500,000 for the company and implicated officers. Subsequent non-compliance post-conviction leads to additional penalties of up to Kshs. 50,000 per day.

Data Protection Measures: The Regulations strictly forbid public disclosure of Beneficial Ownership (BO) information. Exceptions are granted to requests made by criminal investigation and law enforcement agencies, as well as financial sector regulators. Disclosure violations result in fines up to KES. 20,000 or imprisonment for up to six months, or both.

In summary, the Companies Act’s amendments and subsequent Regulations in Kenya emphasize the criticality of maintaining a register of Beneficial Owners, imposing strict compliance measures and penalties for non-adherence. Understanding and fulfilling these obligations are pivotal for companies operating within the Kenyan jurisdiction.