Under section 93A of the Companies Act No. 17 of 2015, companies are now required to keep a register of the beneficial owners of the company and to provide a copy of this register to the Companies registry, within thirty (30) days of its preparation.
Under the Companies (Beneficial Ownership Information) Regulations, 2020, a beneficial owner is defined as a natural person who ultimately owns or controls a company or arrangements within the company OR on whose behalf a transaction is conducted, and includes those persons who exercise ultimate effective control over a company or arrangements within the company.
“Ultimately owns or controls” is defined as a situation where ownership is exercised through a chain of ownership or by means of control other than direct control.
Every company is required to have a beneficial owner. Every person in the company who meets the following requirements, qualifies as a beneficial owner and is required to be noted in the beneficial owners’ register:
- holds at least ten percent (10%) of the issued shares in the company either directly or indirectly;
- exercises at least ten percent (10%) of the voting rights in the company either directly or indirectly;
- holds a right, directly or indirectly, to appoint or remove a director of the company; or
- exercises significant influence or control, directly or indirectly, over the company.
Significant influence or control is defined as participation in the finances and financial policies of a company without necessarily having full control over them. A company is required to take reasonable steps to identify its beneficial owners and upon doing so, the following information concerning them is to be noted in the beneficial owners’ register and they are then to sign against the information:
|National Identity Card Number/Passport Number|
|Current Email Address|
|Current Telephone Number|
|Link of beneficial owner with the company||The percentage of shares a person holds in the company|
The percentage of voting rights a person holds in the company
A person holds a right to appoint or remove a majority of the board of directors of the company; and/or
Whether a person exercises significant influence or control over the company
|Beneficial Owner||Name _______________________________|
A company, through its directors, is required to give notice to a person it knows or has reasonable cause to believe, is a beneficial owner of the company, requiring the person to provide the particulars set out here above. The persons receiving this notice have twenty-one (21) days to comply with it.
If the person fails to comply with the notice, the company is required to issue them with a warning notice, a record of which should be kept in the register. And if the person still fails to comply with the warning notice within fourteen (14) days, then the company is required to restrict the relevant interest the person holds in the company. What this means is that any transfer of the interest by the person shall be void, no rights will be exercisable in respect of the interest, no shares may be issued in right of the interest and/or no payment may be made of sums due from the company in respect of the interest.
If the company suspects there is a beneficial owner with respect to the company but is unable, after reasonable efforts, to identify such a person, it is required to note in its register of beneficial owners that it has not been able to identify the said beneficial owner or to obtain his/her particulars, that it has issued a warning notice which has not been complied with (copy of the warning notice provided), that it has issued a restriction notice or that the matter is pending before a court, if that be the case.
Once the register is prepared, the company is required to keep the said information concerning the beneficial owners confidential. It is not to disclose this information except for purposes of communicating with the beneficial owner, or in compliance with the Beneficial Ownership Information regulations or in pursuance of a court order or unless the beneficial owner consents to such disclosure. Similarly, the Companies’ registry, once the register has been submitted to them, is not to make such information available to the public.
Any changes to the beneficial owners of a company are similarly required to be notified to the Companies’ registrar within fourteen (14) days of any such changes.
If a company fails to comply with the requirement to prepare and submit its beneficial owners’ register, the company, and each officer of the company who is in default, commits an offence and on conviction are each liable to a fine not exceeding five hundred thousand shillings (KES. 500,000).
Companies have until the 31st of July 2021 to comply with these requirements. The preparation and submission of this register is to be done online through the E-citizen portal under the service tab titled Business Registration Service.
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