The Business Laws (Amendment) Act No.1 of 2020 was assented to by the President on 18th March 2020 and came into force upon assent. With it came amendments to a number of legislations, as discussed below:
SALIENT CHANGES
*Advanced electronic signature or an electronic signature have both been defined to mean electronic data used to uniquely identify the signatory and in the signatory’s sole control to the extent that any alteration to the electronic signature made after signing is detectable.
No.
Previous Practice
Who is Involved?
1
The Law of Contract Act, Chapter 23 Laws of Kenya
Section 3(6) of the Contract Act defines signing as “the making of one’s mark or writing one’s name or initial”.
Note that for a contract to be deemed valid under the act, it must be in writing and signed.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
This Act has now introduced electronic and advanced electronic signatures as recognized means of executing documents in Kenya.
Now, an electronic signature is valid and enforceable on a contract.
2
Industrial Training Act, Chapter 237 Laws of Kenya
This Act regulates the training of individuals in the industrial sector.
It allows the Cabinet Secretary to impose training levies payable by these individuals in the industrial sector at the rate of a 5% penalty for any amount due for each month and part of the month due.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
Currently, about a company incorporated following the enactment of this Act, the new company will have no obligation to pay the training levy for a period of up to one year after commencing operations.
3
Registration of Documents Act, Chapter 285 Laws of Kenya
This Act provides for the registration of documents regarding title or interest over immovable Property.
Signature under the Act was defined as, including and applying the fixing of a mark.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
With this enactment, signatures now include advanced electronic signatures and electronic signatures.
The Registrar of Documents is required to establish and maintain the registry of documents in electronic form.
Additionally, registration of documents by filing the documents in either physical or electronic form is now allowed.
4
Survey Act, Chapter 299 Laws of Kenya
This Act established the Survey of Kenya and makes provisions in relation to surveys and geographical names and licensing of the land surveyors, for connected purposes.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
The Act has included the definition of electronic signatures. It has also provided for the sealing and security features of electronic documents processed under the Act.
The Director of Survey’s seal (mark that confirms the authenticity of survey documents) can now be made electronically provided that the document is processed electronically and bears a security feature.
5
Income Tax Act, Chapter 470 Laws of Kenya
This Act provides for the charge, assessment, and collection of income tax.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
The Act provides for the investment deductions that are made on capital expenditures to be made on items especially building and machinery used for prescribed purposes such as Economic Processing Zones and Special Economic Zones.
6
Stamp Duty Act, chapter 480 Laws of Kenya
This Act provides for the levying and management of stamp duties.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
It amends the Stamp Duty Act by allowing for the electronic stamping of documents.
7
Kenya Information and Communications Act, No. 2 of 1998 (KICA)
This Act establishes the Communications Authority to facilitate the development of the information and communications sector.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
The effect of the amendment is that subject to meeting other requirements of KICA, the use of advanced electronic signatures in executing title documents, is now permitted by law.
8
Occupational Safety and Health Act, No. 15 of 2007
This Act provides for the safety, health and welfare of workers in the workplace.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
The amendment provides that companies and organizations of less than 100 employees do not require to register for their first year of operations since the date of incorporation of the company.
9
The Land Registration Act, No. 3 of 2012
This Act provides for the registration of titles to land.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
The amendment has included the definition of various forms of electronic signatures the advanced electronic signature and the electronic signature.
The definition of a seal has also been included to mean an electronic seal.
The amendment moves to remove the requirement for land rates and land rent clearances as a pre-requisite to the registration of Transfers and Charge over Property.
Regarding indemnities needed to effect changes in the register, the procedure has now been amended. Such that, any person claiming indemnity would be required to make an application for Investigation and consideration to the Chief Land Registrar. However, the decision of the Chief Land Registrar may be appealed in the Environment and Land Court.
10
National Construction Authority Act, No.41 of 2011
This Act establishes the National Construction Authority (NCA) and provides for its powers and functions.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
This Act now empowers the NCA to enforce the prescribed Building Code in the construction industry.
Also introduced is the power of the NCA to appoint investigation officers to carry out investigations concerning the compliance with NCA’s orders.
Failure to comply with the NCA orders as above will lead to the offense of willful disobedience to the lawful order of the investigating officer punishable by an imprisonment term of 3 years and/or a fine of KShs. 1,000,000/= only.
The NCA has also been given the power to undertake mandatory inspections of the sites of construction at any given time in line with the regulations issued by the Cabinet Secretary.
11
Public Finance Management Act, No.18 of 2012
This Act provides for the effective management of public finances by the national and county governments and the responsibilities of government entities.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
The amendment now states that the recommendations made by the National Assembly, do not need to ensure the total amount of revenue raised is consistent with the approved fiscal framework.
12
Value Added Tax Act, No. 25 of 2013
This Act imposes VAT on goods imported into Kenya and on certain services supplied in Kenya.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
The amendment to this Act exempts from VAT such goods, services, and supplies procured locally or imported for the construction of bulk storage or handling activities related to the Standard Gauge Railways, as approved by the Cabinet Secretary of Transport.
13
Business Registration Service Act, No. 15 of 2015
This Act establishes the Business Registration Service managing documents at the Companies Registry.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
The Act has done away with Share Warrants.
Share Warrants are documents issued by a Company, stating that its bearer is entitled to the shares specified in the Share Warrant. These Share Warrants are negotiable instruments, as such, they can be transferred from one legal person to the next by mere delivery (no requirement to transfer).
The company is now required to convert its issued bearer shares into registered shares in an effort to increase transparency into a company’s actual ownership.
14
Companies Act, No. 17 of 2015.
This Act provides for the law relating to companies in Kenya.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
The Act has provided that it is now no longer mandatory to have contracts made by the companies sealed with the company seals. The removal of the requirement of a company seal further applies to the sealing of share certificates.
15
Insolvency Act, No. 18 of 2015
This Act consolidates the law relating to the insolvency of companies and the bankruptcy of individuals.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
To increase the protection to creditors in the event of bankruptcy/insolvency, the Act has provided:
– That when a company is under administration, a moratorium takes effect. The court may lift this moratorium to consider the perishability of the movable property; and
– The creditors are also entitled to information from the insolvency practitioner, which should be granted within 5 business days unless extended for good cause.
16
Excise Duty Act, No. 23 of 2015
This Act provides for the charge, assessment, and collection of excise duty.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
To encourage the local manufacture of glass bottles, the Act has introduced an excise duty tax on imported glass at 25%.
17
Miscellaneous Fees and Levies Act, No. 29 of 2016
This Act provides for the imposition of duties, fees, and levies on imported and exported goods.
Business Laws (Amendment) Act, No. 1 of 2020, Laws of Kenya
Provides for the exemption of goods imported or purchased for the construction or bulk storage or handling activities related to the Standard Gauge railways as approved by the Cabinet Secretary of Transport.
Please note that this legal article is for information purposes only and should not be relied upon without legal consultation. Should you have any questions, please feel free to contact us.
