Policy changes that will likely affect your business
By Frankline Sunday | January 20th 2021
In exactly two weeks, all directors of registered companies in Kenya are expected to have provided the government with full details of their contact details, passport photo, where they live and how much of the company they own. This comes as the grace period for companies to comply with the Companies (Beneficial Ownership Information Regulations, 2020) lapses and the government begins to set up a digital register of all company directors. The regulations that came in force last year with a three-month grace period introduce new compliance requirements for owners of companies as the state seeks to crack down on shell companies and tax dodgers.
Here is what you need to know:
A beneficial owner is defined as one who exercises significant influence or control directly or indirectly over the company. This includes someone who holds at least 10 per cent of issued shares in the company, exercises at least 10 per cent of the voting rights or holds a right to appoint or remove a company director. Kenneth Gathuma, Director General of the Business Registration Services, BRS says the regulations are part of an ongoing effort to establish a digital database of registered companies. At the same time, Gathuma says this will provide the majority fun-registered SMEs opportunity to gain access to formal credit markets, a need that has become more pressing in the wake of the pandemic.
“During the months of the pandemic we saw businesses registered at a significantly higher rate compared to previous years,” explained Gathuma in an interview with KTN News last week.
“July was the peak where we had more than 10,000 companies per month getting registered and while this has petered down, we expect the higher numbers to prevail through 2021,” he said.
At the same time, the registration process has been made easier. Business owners are now spared the manual Huduma process and can do everything digitally on the e-citizen platform. “With the pandemic and the commercial activities subdued we have seen people seeking to get credit using movable assets for example and registering your business makes it easier to gain access to formal credit markets as well as get additional support such as technology and skills transfer,” explained Gathuma. To do this, business owners create an account on e-citizen if they don’t have one. One needs a National ID Number (an alien card certificate number in case of foreigners), valid email address and telephone number to create an account.
If one already has an account, they simply log in and add the additional information either as an update or an amendment of the business owners register for existing companies.
The BRS has broken down the process with clear tabs and prompts that indicate the information required at each stage of the process.
It is advisable to have all details required in a separate document before one starts filling in the online form.
New instructions for companies
Business owners are expected to indicate a percentage each shareholder owns in the company directly and indirectly. In companies where the shareholder is a corporate body, all shares are held indirectly and the user will be required to provide the beneficial owners’ details of the corporate entity.
Beneficial owners will also be required to provide:
· Their phone number
· Email address
· Postal address
· Residential address
· Attach a coloured passport photo.
Business owners are also supposed to indicate the type of control or influence and type of right to appoint/remove a director each beneficial owner has in the company as well as voting rights if applicable.
Once all the information has been filled, the system generates a form that each beneficial owner will be required to download, sign and scan to upload back into the system.
The business owners can then upload and review the form before submitting for review and approval by the registrar of companies. Companies are also supposed to file a notice to the Registrar in case a person ceases to become a beneficial owner. To promote compliance, the Act gives company officials the authority to give notice to beneficial owners to provide their details, failure to which the company can restrict the relevant interest of the person. This means the company can restrict the directors from accessing their dividends or shares for example until they provide the required information. The BRS has said beneficial information will not be disclosed to the public and leaking the data to unintended parties attracts a fine of up to Sh20,000 or six-months imprisonment or both. However, the information can be made available to a “competent authority” upon request to the Registrar.
Kenneth Gathuma further says the BRS will further link the business registration data to other data sets to further assist business owners. “In the coming year we anticipate that integration with other systems will assist business owners to improve the way they do things and get better opportunities that will arise from the effects of the pandemic,” he said.
Digital lenders cut credit to Kenyans after CBK directive
- Demand for electricity hits record high
- Why you should register your small business with government
- Fuel prices may rise as oil import bill doubles in nine months
- President Uhuru Kenyatta: How I plan to reduce fuel prices
SHIPPING & LOGISTICS
- CBK will not cap interest rates charged by digital lenders