Subject to section 1022 of the Companies Act 2015, the Attorney General published the Companies (Beneficial Ownership Information) Regulations, 2020 through Legal Notice No 12 dated 18^th February 2020.  These regulations require all companies to maintain a register of beneficial owners, which discloses the particulars of natural persons who own or control the company.

The regulations provide the implementation of the beneficial ownership disclosure through section 93A of the Kenyan Companies Act. Section 93A requires all companies to disclose the beneficial owners of their shares.

The Regulations set out the information to be provided to the Registrar of Companies and statutory forms to be completed for filing as highlighted hereunder;

Definition of a Beneficial Owner

A “beneficial owner,” in the Companies Act is defined as “the natural person who ultimately owns or controls a legal person or arrangement 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”

A person is deemed to exercise significant influence or control over a company if he or she participates in the finances and financial policies of a company without necessarily having full control over them.

The register of beneficial owners should disclose the identification and contact information of the beneficial owners as well as the nature of their ownership or control. It should also specify the date that the beneficial ownership commenced and when it ceased.

Information Required

Board Composition- The size of the board, diverse mix of skills and expertise critical for effective oversight on the management of the company

The Regulations require a company to issue a notice to any person who they reasonably believe to be a beneficial owner in the company, requiring them to provide their details for the purpose of updating the register.  The person to whom a notice has been issued shall be required to comply within twenty-one days of the notice failing which the Company shall issue a warning notice to that person.

Where the person does not respond within 21 days, the company is to issue a warning notice to such person. Finally, where the person does not respond to the warning notice, within 14 days, then the company can restrict the relevant shares, voting rights, or right to appoint or remove a board member of such person.

The disclosure requirements under the Regulations are as follows:

1. The holding directly or indirectly of at least 10 per cent of the issued shares.
2. The holding directly or indirectly of at least 10 per cent of the voting rights.
3. The right to appoint or remove a director.
4. The exercise of “significant influence or control” over a company.

Updating the Beneficial Ownership

The beneficial owners’ register should be lodged with the Registrar of Companies in the prescribed form (Form BOF1).  Any changes in the beneficial owners’ particulars should be notified to the Registrar by lodging Form BOF2, while a cessation of beneficial ownership shall be notified in Form BOF3.

The Implications

The Companies Registry commenced the implementation of the Regulations on 13^th October 2020. As of the date hereof, a company cannot deal, maintain and or make any application whatsoever in respect of a company on the e-Citizen platform without first submitting the beneficial ownership register by filing the Form BOF1.

Form BOF1 should be supported by evidence of the steps taken to acquire the particulars of the beneficial owner as well as whether the information obtained was: –

• provided by the beneficial owner or their authorized representative;
• taken from an official register; or
• Provided by a third party not directly related to the beneficial owner.

All registered companies are required to update their beneficial ownership by 31^st January 2021. Failure to update the beneficial ownership register will leave all responsible directors, shareholders or officers are liable to a maximum fine of Kshs 500,000/-

Deadline Extensions

By a notice dated 27^th January 2021, the Registrar of Companies issued a final grace period of up to 31^st July 2021 after having consulted several stakeholders.

How We Can Help

As Imperial Registrars, we assist our client companies to comply with the Companies (Beneficial Ownership Information) Regulations, 2020 by preparing and maintaining the Beneficial Owners Register as well as identifying and giving notice to the beneficial owners to provide the details required by the Regulations. Get in touch for any inquiry or professional help. (Info@imperialregistrars.co.ke)