Trading as a contractor under the new Act

By Mumbi Mionki

The National Construction Authority Act (No. 41 of 2011) (the Act), which came into effect on June 8, was enacted to provide for the establishment, powers and functions of the National Construction Authority whose mandate in streamlining and regulating the construction sector in Kenya is broad.

A.Under the Act, a person is deemed to be a contractor if, for valuable consideration, he undertakes for any other person, the construction, installation, erection, alteration or any other work connected therewith beneath or above the ground and is authorised to supply or control the type, quality or use of materials and the labour for such works.

Provided that a person shall not be deemed to be a contractor where the cost of the works does not exceed such sums as the Board may from time to time determine or where works are for a residential house for private use, not requiring a structural design.

B. The Third Schedule to the Act provides a list of classes of contracted works for which the Board shall register eligible contractors to undertake.

C. A person or firm may apply to the Board for registration as a contractor in the prescribed form and on payment of the prescribed fee and shall be required to demonstrate to the Board’s satisfaction that he or at least one director or partner (in the case of a firm):

a) Holds the minimum technical qualifications and skills prescribed by the Board for the class of contract works sought to be registered under;

b) Has the necessary experience prescribed by the Board;

c) Has the necessary plant and equipment necessary for the category for which registration is sought.

Upon registration, the person shall be issued with a Certificate of Registration indicating the registration number, class of works for which registered, date of registration and duration of registration.

All certificates of registration shall remain the property of the Authority and may be withdrawn and returned to the Authority upon suspension or cancellation of the registration of a contractor.

D. The Board may refuse to register a person as a contractor if in its opinion the person:

a) Does not meet the conditions stated above;

b) Is a member of a consulting firm providing architectural, quantity surveying or engineering services, unless this is disclosed during the application for registration and the person does not provide both consultancy and construction services in the same project (except where expressly specified that this shall be the case).

c) Is a person whose registration as a contractor would result in conflict of interest with his employer.

Where the Board refuses to register a person as a contractor, it shall communicate its decision to the person in writing within fourteen days of its decision and shall state its reasons for such refusal.

E. The Board may accredit a firm incorporated outside Kenya to carry out construction works within the country where the firm meets the conditions prescribed by the Board and satisfies the Board that it:

a) Intends to be present in Kenya only to carry out the specific works for which it has been contracted and will not undercut the fee prescribed by the Board for the particular class of works for which accreditation is sought;

b) Has a compliance certificate from the Registrar of Companies showing that it is trading as a contractor in a capacity that satisfied the Board; and

c) Has lodged an affidavit with the Board stating that once the contracted works are complete and the defects liability period has lapsed, it shall wind up business and shall not engage itself in further construction business in Kenya.

The Board may require an applicant under this section to appear before it and produce documentary evidence of its competence immediately prior to its entry in Kenya.

A foreign firm so registered shall only be entitled to undertake work only for the length of time prescribed by the Board and shall return the Certificate of Registration to the Board upon the expiry of that period.

The Minister, in consultation with the Board, shall stipulate ownership structures of foreign firms.

F. Any person who carries on the business of a contractor without first being registered as such by the Board commits an offence and shall be liable on conviction, to a fine not exceeding Kenya Shillings One Million (Sh1,000,000) or to imprisonment for a term not exceeding three years or to both. In the case of a continuing offence, such person shall be liable to a further fine not exceeding Kenya Shillings One Hundred Thousand (Sh100,000 for every day or part thereof that the offence continues.

G. The Registrar (Executive Director of the Authority) shall keep and maintain registers in which the name, particulars, class of works, tools plants and equipment and duration of registration among others of every registered contractor shall be entered upon approval by the Board.

H. The Board may institute an inquiry into the conduct of a contractor on its own motion or upon receipt of a complaint addressed to the Board alleging professional misconduct by a registered contractor addressed to the Board in writing.

The Board may require the contractor whose conduct is subject of such complaint or investigation to file an explanation verified by affidavit.

Further, the Board may summon such contractor before it or before a subcommittee established for the purpose and may hear evidence or inspect documents adduced in the matter.

If any contractor so summoned fails to answer fully and satisfactorily all questions put to him by the Board or to produce documents in his possession specified in the order, he commits an offence and is liable upon conviction to a fine not exceeding Kenya Shillings One Million (Sh1,000,000) or to imprisonment for a term not exceeding three years or to both.

Upon the Board’s inquiry into the alleged misconduct of a contractor, it may:

a) Caution the contractor;

b) Direct the contractor to take such action as it may deem appropriate in the circumstances;

c) Direct that the registration of a contractor be suspended for such period as it may specify; or

d) Direct that the name of the contractor be removed from the register.

The Act is in many ways a huge plus for the local construction sector especially if the Authority implements its mandate boldly and without fear or favour.

The writer is a conveyance lawyer practising in Nairobi.