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Introduction

Who is a beneficial owner?

The Act defines a beneficial owner as “a natural person who ultimately owns or controls a legal person or arrangements or a natural person on whose behalf transactions are conducted, and include persons who exercise ultimate effective control over a legal person or arrangement.”

Under the Regulations, a beneficial owner is identified to be a natural person who directly or indirectly-owns at least ten percent (10%) of the issued shares of the company, exercises at least ten percent (10%) of the voting rights in the company, holds the right to appoint or remove a director of a company and/or exercises significant influence or control over a company. Significant influence or control means the participation by a natural person in the finances or financial policies of the company.

Why is this development?

The change has come by as a result of the recommendations of an Action Task Force on International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation. Through the recommendation of the Task Force, company owners are urged to maintain adequate and timely information on the beneficial ownership and control of legal persons. Consequently, there has been an introduction of section 93A of the Companies Act of 2015. This section was introduced in July 2019 through the Statute Law (Miscellaneous Amendments) Act. As a result, companies incorporated in Kenya are required to keep a register of beneficial owners disclosing the beneficial owners. A Legal Notice dated 18th February 2020 was issued to that effect. The office of the Attorney-General published the Companies (Beneficial Ownership Information) Regulations, 2020 (the Regulations) to give effect to section 93A of the Companies Act.

Beginning from  13th October 2020, the registrar of companies operationalized an e-register through which companies are required to supply details of beneficial owners.The register can be accessed through Director’s e-citizen accounts. Company owners should update the register by 30^th January, 2021

Which information regarding a beneficial owner should be supplied to the registrar of companies?  

full names of the beneficial owners, birth certificate number, national identity number, passport number, nationality, date of birth, postal address, business address, residential address, telephone number, email address, occupation or profession, nature of ownership or control, the date the person became the beneficial owner, date the person ceases to be a beneficial owner and any other information that may be required by the registrar from time to time.

Penalty for non-compliance?

The penalty for non-compliance with this requirement is a fine not exceeding Kenya Shillings Five Hundred Thousand (KES 500,000) to be levied against the company and against each of its directors in default. Additionally, continued non-compliance shall attract an additional fine not exceeding Kenya Shillings Fifty Thousand (KES 50,000) per day. This fine is prescribed under section 93A of the Companies Act.

Authored by: Mugo Kamau