The Companies (Beneficial Ownership Information) Regulations 2020

The Companies (Beneficial Ownership Information) Regulations 2020 were created under Legal Notice No. 12. These regulations were created with an endeavor to promote transparency in the ownership of Kenyan companies and in compliance with the international standards on transparency, which includes the disclosure of information of the beneficial owner.

A beneficial owner has been defined under the regulations as, “the natural person who ultimately owns or controls a legal person or the arrangements of the legal person; or the natural person on whose behalf a transaction is conducted, and includes those persons who exercise ultimate effective control over a legal person or arrangement.”

1. Every company shall keep a register of its members which shall include information relating to beneficial owners of the company, if any;
2. The register of members should contain the following information:
   • The names and addresses of the members (which have been made to include: the full name, National ID Card Number or Passport Number, KRA PIN, Nationality, Date of Birth, Postal Address, Residential Address, Current Phone Number, Current Email Address, Occupation, Nature of Ownership or Control, and any other information the Registrar may require from time to time);
   • The date on which each person was registered as a member and any beneficial ownership, if any; and
   • The date on which any person ceased to be a member.
3. A company shall lodge with the Registrar, a copy of its register of members including information relating to beneficial owners, if any, within thirty days after completing its preparation; and
4. A company other than a public liability company shall lodge with the Registrar a copy of any amendment to its register of members within fourteen days after making the amendment.

Of note is that section 94 of the Companies Act, No. 17 of 2015 provides that, a company shall ensure that its register of members is kept at its registered office and lodged with the Registrar. Please note that if the register is prepared at another office of the company other than the registered office, a copy of the register may be kept at that other office. Additionally, if the register is prepared by another person on behalf of the company, a copy of the register may be kept at the office of that other person.

However, if a company fails to comply with the aforesaid, then each officer of the company who is in default, will be considered to have committed an offense and on conviction each liable to a fine not exceeding KES. 500,000/= only. If, after a company or any of its officers is convicted of an offense under subsection (10), the company continues to fail to comply with the relevant requirement, the company, and each officer of the company who is in default, commit a further offense on each day on which the failure continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such offense.

A company is also expected to investigate and obtain beneficial ownership particulars where it has reasonable cause to believe that a legal person is a beneficial owner by issuing the suspected legal person, a notice to provide these particulars. Once the notice is served, the legal person is required to respond within 21 days. If the legal person fails to respond to the notice upon the lapse of the 21 days, the company will then send a warning notice that shall lapse for fourteen (14) days. If the legal person fails to adhere to the warning notice, the company is expected to keep a copy of the warning notice in its register of beneficial owners, note the restriction in the register in the register and file the restriction with the Registrar of Companies.

The effect of a restriction means that:

1. Any transfer of the interest is void;
2. No rights are exercisable in the interest;
3. No shares may be issued in right of the interest; and
4. No payment may be made of sums due from the company concerning the interest.

Of importance is that a company is prohibited from disclosing protected beneficial ownership information except:

1. In communicating with the beneficial owner concerned;
2. In compliance with the Regulations, court order; and/or
3. If there is written consent from the beneficial owner.

The Registrar of Companies may also use the information to communicate with the beneficial owner.

Furthermore, such protected beneficial information is prohibited from being made available to the public and as such, such information shall be omitted from the material on the register.

In conclusion, all companies with nominee shareholding will now be required to disclose details of all the shareholders and investigate these nominee shareholders to provide their particulars for the register.