Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Kenya. It examines the procedures, time and cost involved in launching a commercial or industrial firm with between 10 and 50 employees and start-up capital of 10 times the economy's per-capita gross national income.The most recent round of data collection was completed in January 2016.
1 . Reserve
a unique company name at the Huduma Center or the Companies Registry
Agency: Huduma Center
The procedure begins by
reservation of the company name pursuant to companies provision which is a
counter service provided by both companies registry and Huduma Centres. The
name is reserved for 30 days but can be extended for a similar period upon
application. Once the name is reserved, one is required to present the
memorandum and articles of association and the statement of nominal capital for
stamping. 1 day on average Ksh 100 per name reservation
2 . Receive
stamp duty assessment on the memorandum and articles of association and the
statement of the nominal capital
Agency: Huduma Center
As of January 2005, the Kenya
Revenue Authority (KRA) took over the stamp duty collection from the Ministry
of Lands and Housing. As an administrative requirement, the KRA now requires
the personal identification numbers (PINs) of all parties on whose behalf
duty-stamped documents are submitted. Documents are first assessed by the Stamp
Duty Office before payment can be made at the KRA-designated banks. The process
has initially lengthened to about 2 weeks because the Stamp Duty Office waited
to receive confirmation of bank payment after clearance of funds. However, the
time was reduced to 5-10 days in 2008 as a result of better communication
between the Ministry of Lands and Housing and the Kenya Revenue Authority (KRA).
A fee of KES 100 is payable as Bank handling charges.Under the Stamp Duty Act (Cap.
480), the stamp duty on the nominal capital of the company is KES 20 for every
KES 2,000 or part thereof. The stamp duty on the memorandum and articles of
association is KES 2,000.Stamp duty can now be assessed at
Huduma Centers. Huduma centers are Government service centers located in major
towns in Kenya. These service centers were first launched in November 2013. 1 day1% of nominal capital (KES 20 for every
KES 2,000 or part thereof of capital) + KES 2,000 for stamp duty on Memorandum
and Articles of Association
3 . Pay
stamp duty at the Huduma Center
Agency: Huduma Center
The entrepreneurs pay the stamp
duty at the Huduma Centers, if it does not exceed KES 80,000. Alternatively, it
can be paid at the National Bank of Kenya or the Kenya Commercial Bank which
are the designated Banks for the collection of stamp duty revenue on behalf of
Kenya Revenue Authority. 1 day KES 110
4 .Stamp
the memorandum and articles of association, and a statement of the nominal
capital
Agency: Huduma Center
After the stamp duty assessment
and payment are completed, the company founders return to get the memorandum
and articles of association stamped. 1 day no charge
5 . Sign
the Declaration of Compliance before a commissioner of oaths or a notary public
Agency: Commissioner of Oaths /notary public
According to the Companies Act
(Cap. 486), an advocate engaged in the formation of the company or a director
or company secretary named in the articles of association must sign the
declaration of compliance (Form 208). This form is submitted to the Registrar
of Companies along with the registration documents. 1 day KES 200
6 . Register
with the Registrar of Companies at the Attorney General Chambers in Nairobi
Agency: Registrar of Companies at the Attorney
General's Chambers
The entrepreneur must submit the
incorporation deed and the following to the Registrar of Companies:
• Stamped memorandum and articles
of association
• Statement of capital
• Notice of Situation of
Registered Office (Form 201)
• Particulars of Directors and
Secretary (Form 203)
• Declaration of compliance with
the Companies Act (Form 208)
• Copy of the company name
approval
Fee schedule for registration
under the Companies Act (Cap. 486):
• For the first KES 100,000: KES
2,200
• For every KES 20,000 after the
first KES 100,000 or part thereof: KES 120, subject to a maximum of KES 60,000
• Filing fee for three forms: KES
600 (KES 200 each) 12 days on
average KES 9,280
7 . Register
for taxes at the Kenya Revenue Authority
Agency: Tax Department
The personal tax identification
number (PIN) and the company tax identification number are required to register
for VAT, local service tax, and the Pay-As-You-Earn (PAYE) tax.
The PIN certificates of at least
two signatories (2 directors or 2 shareholders or a director and the secretary)
of the company are required. To register for taxes, the entrepreneur must also
file the certificate of incorporation and a copy of the memorandum and articles
of association.
Due to new online reforms, the
application for a PIN number and the registration for VAT registration can now
be done online. Unless the KRA has already received confirmation of the company
incorporation from the Companies Registry, the entrepreneur must submit the
certificate of incorporation and receive log-in details to proceed with online
tax registration. 1 day no charge
8 . Apply for a business permit
Agency: County Government
Applicable permit fees fall
within the following scales:
- Large trader, shop, or retail
service with 21-50 employees and premises of 300-3,000 square meters (or at a
prime location): KES 30,000
- Medium trader, shop, or retail
service with 5-20 employees and premises of 50-3,000 square meters (fair
location): KES 15,000 5 days KES 15,000
9 . Register
with the National Social Security Fund (NSSF)
Agency: National Social Security Fund
The National Social Security Fund
provides the employee with a lump-sum retirement benefit. Historically, the
rate of return paid by the state is considerably less than that achieved by
private schemes, but participation is mandatory. The employer pays a standard
contribution of about 1% of salary, subject to a maximum of KES 400 per month.
Half the contribution is deductible from the employee’s salary. The precise amount
of the contribution (less than the maximum) is determined by reference to
salary bands. As of June 2014, following the enactment of the new National
Social Security Fund Act (2013), the pension contribution is 12% of the
pensionable wages made up of two equal portions of 6% from the employee and 6%
from the employer subject to an upper limit of KES 2,160. 1 day no
charge
10 . Register
with the National Hospital Insurance Fund (NHIF)
Agency: National Hospital Insurance Fund
The employee contributes a fixed
sum to the National Hospital Insurance Fund (NHIF), which must be deducted by
the employer from the employees’ salary. The maximum contribution is KES 320
per month. The contributions are used to offset the costs of medical treatment,
but they only cover a fraction of actual costs. Hence, most companies provide
employees with medical insurance. 1 day no charge
11 . Make
a company seal
Agency: Seal maker
Seal makers request a copy of the
certificate of incorporation in order to make a company seal..2 days, simultaneous with
previous procedure between KES 2,500 and
KES 3,500
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