A detailed step by step guide

The company registration process used to be long and convoluted. However, the introduction of the Online Business Registration Service simplified the process. Through this, any person can apply for and register a company online. This article will look at the detailed process for company registration (Private Limited Liability Company) in Kenya and other approvals the company needs to obtain during formation and registration.

However, it important to highlight the following basics:

1. One person can form a company in Kenya:
2. There are different types of companies. However, this article will explain the process for the formation of a Private Limited Liability company.
3. A private company limits the rights of members to transfer shares in its constitution, the articles limit the number of members to fifty, the articles prohibit the invitation of members of the public to subscribe to its shares and its certificate of incorporation states that the company is private.
4. A company has a corporate personality. It means that a company is a legal person that is capable of suing, owning property, and entering into contracts.

With the above in mind, let us delve into the formation and registration process of a company.

1.Create an e-citizen account

You must have an e-citizen account to access government services. To create an e-citizen account, you require your national id, email address, passport photo, and your phone number. You can make your application here.

2. Reserve a unique company name using e-citizen

The Companies Act, part V, makes provision for company names. Ideally, Applicants can search and reserve company names online on e-citizen.

Upon applying, one makes payment via mobile money and receives a confirmation of the name reservation within the same day.

The name is reserved for 30 days and can be extended to a maximum period of 60 days from the time of reservation. It is important to note that the application for reservation of a name can be rejected if it is similar to an existing name, is offensive or fails the desirability tests

Important: Always make sure you also conduct a trademark search to ensure that your name does not infringe on an existing trademark.

3. Apply and pay for the registration of the company

In this case, the Applicant should fill in the details in the fields on e-citizen. The application can be made here. One is required to supply the following information:

1. Articles of association
2. Registered office address
3. Share information
4. Ownership information

The Applicant can either adopt the model articles of association provided under the Companies Act or modify the articles as he deems fit.

Next, the Applicant pays the prescribed fee (usually a KES 10,000 (registration fee) + KES 600 (CR2 or company search fee) + KES 50 (convenience fee). This can be done through mobile money, credit card, or any other stipulated method.

Upon payment, the platform generates the following forms:

1. Details of the first directors, Secretary and Authorised Signatory of the Company: This form needs to be signed by all the first directors, secretary and authorized signatory of the company
2. Form CR 2 (Memorandum for a company with a share capital): This form is to be signed by all the subscribers to the shares of the company
3. Form CR 8 (Notice of Residential Address/Change of Address of Director of a Company)-This form is to be signed by the applicant.
4. Statement of Nominal Capital: this is to be signed by any of the first directors of the company

One is required to download the forms, sign them, and re-scan them back to the system. The Registrars at the Company registry will consider your application and if successful, one is issued with a certificate of incorporation.

4. Tax Requirements

Company Pin

Income from businesses is taxable under the Income Tax Act. Similarly, the Tax Procedures Act requires companies to register for a company pin. Remember, a pin is required for the filing of returns.

To apply for a pin, a company must have the following documents:

1. Copy of Certificate of Incorporation.
2. Copy of CR12.
3. Copy of Memorandum and Article of Association (optional).
4. Copy of PIN Certificate for one of the company’s directors.
5. Copy of Tax Compliance certificate of one of the company’s directors.
6. Copy of the Acknowledgement receipt.

Pin registration is done online via iTax. The procedure is as follows: Visit iTax; Select “New PIN Registration”; Fill the online form appropriately; Submit an online application.

NOTE: Upon completion, you will receive an acknowledgement receipt

A follow-up email will be sent to you with either further instructions on where to present the required documentation for verification or a PIN certificate.

VAT Registration

Under the Value Added Tax Act, any person whose business is expected to/makes taxable supplies worth KES 5,000,000 for any period up to twelve months to apply for a VAT.

You can apply for VAT here

Register for PAYE

Under the Income Tax Act Cap 470, an employer is required to deduct Pay As You Earn (PAYE) from an employee’s remuneration.

As such, all employers are thus required to register for PAYE once they have employees. You can apply for PAYE here

Note: One can complete the applications for VAT, PAYE and corporate tax at the same time.

5. Obtain a unified business permit.

This is a mandatory license issued to traders in Nairobi and has to be renewed before the 31st of March every year. It covers all other licenses required and one does not have to obtain many permits.

To get this permit, one has to first create an account on the Nairobi city county website and obtain the permit.

6. National Hospital Insurance Fund

Under section 16 of the NHIF Act, an employer has the obligation to make statutory deductions from the employee’s salaries and remit them to the board. However, for this to happen, one must apply for NHIF employer registration.

The employer is required to submit the following documents online:

1. The employer’s registration form; (this document is easily accessible from the NHIF’s website.)
2. Certificate of registration;
3. Pin certificate.

Upon successful registration, one is issued with an employer’s code.

7. Social security registration

Under section 19 of the NSSF Act, every employer, who under a contract of service, employs one employee or more shall register with the Fund as a contributing employer and shall, register his employees as members of the Fund.

To register a company under NSSF, one is required to complete the NSSF employer’s registration form and attach a certificate of incorporation, registration of the business name, and a trading license. After successful registration, one is issued with an NSSF certificate of registration. See the important information here.

The procedure of setting up a company in Kenya is lengthy. Nonetheless, it has been simplified as most procedures are done online. Moreover, incorporation has several advantages.

8. Register with the National Industrial Training Authority (NITA)

By virtue of Legal Notice No. 113 of 2007, employers are required to register and contribute to the industrial training levy. (It is charged at KES 50 per employee per month).

To do so, one must complete an application form and attach:

1. the employer’s KRA PIN Certificate
2. the employer’s Certificate of Incorporation.

One completes the process by forwarding the application and supporting documents to the National Industrial Training Authority (NITA). (No application fee is charged here)

9. Register the workplace with the Directorate of Occupational Safety and Health Services

Under the Occupational Safety and Health Act, all Occupiers (employers) are required to register their workplace with the Director of Occupational Safety and Health Services. As such, a company must obtain a Certificate of Registration of a Workplace from the Directorate in respect of each of the premises as a workplace by the company.

It is noteworthy that employers with less than 100 employees are no longer required to register and obtain a certificate of registration from the National Council for Occupational Safety and Health for the first twelve months from the date of registration of the business. The Business Laws (Amendment) Act, 2020 introduced this change.

Advantages of incorporation

Separate legal liability: Members cannot be liable for the company’s debt as it is a separate legal entity.

Perpetual succession. The death of a company official does not affect the company. Thus, a company can only be terminated by the operation of the law.

Disadvantages of incorporation

Lengthy incorporation and registration procedure: The process of forming a company is lengthy and there are too many formalities when it comes to the formation and registration of a company.