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Changes effected to Trusts in Kenya by the Trustees (Perpetual Succession) (Amendment) Act, 2021

The Trustees (Perpetual Succession) (Amendment) Act, 2021 (hereinafter “the Amendment Act”) has introduced some key changes to the law of trusts in Kenya helping to clarify the landscape of trust formation and registration in Kenya.

Prior to this Amendment Act being passed, trusts were generally defined in the Trustee Act Chapter 167 of the Laws of Kenya as “implied and constructive trusts , cases where the trustee has a beneficial interest in the trust property, and to the duties incidental to the office of a personal representative”.

With respect to registration and incorporation of trusts, trusts created other than by operation of law were required to first be registered as simple trusts with the (or a) registrar of documents under the Registration of Documents Act, then thereafter, if the creator of the trust desired the trust to be a corporate body with perpetual succession, the creator then had to make a separate application to the Cabinet Secretary in charge of lands under the Trustees (Perpetual Succession) Act Chapter 164 of the Laws of Kenya, for incorporation of the trust.

The Act also did not set out timelines for registration of the trust deed or for incorporation of the trust and accordingly registration of a trust deed could take up to a month or more and incorporation of a trust could take up to 2 years or more.

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Looking to book tourists on Airbnb? Careful, the Tourism Regulatory Authority in Kenya is watching

Under the Kenyan Tourism Act No. 28 of 2011, no person is permitted to carry out tourism activities or services in the country without a licence. The applicable tourism activities and services are listed in the Ninth Schedule of the Act and are categorized into Classes “A” to “H” Enterprises.

The application for licensing is required to be made to the Tourism Regulatory Authority in Kenya using a prescribed form which can be downloaded from the Authority’s website. The licence granted is an annual licence which must be renewed every year. There is also supporting documentation that will need to be submitted together with the application depending on the person, entity or business seeking licensing.

Short term rentals and accommodation targeted at tourists fall under Class “A” Enterprises which includes hotels, motels, inns, hostels, serviced flats and apartments, beach and holiday cottages, villas, homestays, guest houses and time shares.

Continue reading “Looking to book tourists on Airbnb? Careful, the Tourism Regulatory Authority in Kenya is watching”
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Distinction between Employees and Independent Contractors

Contracts on service provision may take the form of a contract of service (employment contract) or a contract for services (independent contractor/consultant agreement). Independent contractor agreements involve entities or individuals who are genuinely self-employed, not the company’s employee. When issues arise, the Courts usually look into the substance rather than the form of such agreements to determine whether or not they are in fact employment contracts masked as independent contractor agreements to enable an employer avoid its obligations. Such an investigation into substance would include an examination of the contractual provisions in addition to whether or not the level of control amounts to employment. The following is a summary of the distinction between employees and independent contractors:

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How To Change Your Name Under Kenyan Law

Names are not cast in stone and it is possible to change them. You can change your name at any time (in your adult life) and for any reason provided that it is not to deceive or defraud or to avoid an obligation. The Registration of Documents Act (CAP 285) read together with the Registration of Documents (Change of Name) Regulations provide the legal basis for this process. Continue reading “How To Change Your Name Under Kenyan Law”

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Police Powers of Search and Seizure

INTRODUCTION

The basic principle under the Constitution of Kenya, Article 31, is that every person has a right to privacy and to not have their person, home or property searched, their possessions seized, information relating to their family or private affairs unnecessarily required or revealed or the privacy of their communications infringed.

However, there are certain lawful circumstances under which this right to privacy can be limited as reflected in Article 24 of the Constitution. The limitation can only be effected or permitted through the passage of law and it must be such as is reasonable and justifiable in an open and democratic society. It must also take into account certain relevant factors such as the need to ensure that the enjoyment of rights and fundamental freedoms by any individual do not prejudice the rights and fundamental freedoms of others and the importance of the purpose of the limitation as well as its nature and extent.

Accordingly, for the police to violate a person’s privacy, they must act pursuant to an existing and valid law, they must prove that these special circumstances exist and they must strictly follow the procedures prescribed under those laws for their acts or actions to be upheld or protected. Continue reading “Police Powers of Search and Seizure”

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The Business Prenup – The Importance of a Shareholders Agreement

Introduction

No one goes into a marriage already expecting the worst, but even the most seemingly stable couples can hit bumps in the road that tear them apart. Prenuptial agreements have the power to protect both parties when entering a marriage. The whole idea being to minimize the uncertainties of the law and litigation, if something does happen and the marriage ends in divorce or death.

Similarly, a shareholders’ agreement (business prenup) would be extremely handy in the event of a dispute or a breakdown in trust between the shareholders of a company i.e. disagreement on the business of a company, or the methods of carrying out the same, or their decision making powers etc. A lack of certainty created by not having a shareholders’ agreement in place can often lead to disputes amongst the shareholders which can be costly to deal with. Continue reading “The Business Prenup – The Importance of a Shareholders Agreement”

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Overview of the Movable Property Security Rights Act, 2017

Introduction

This Act repealed, among others, the Chattels Transfer Act (Chapter 28 of the Laws of Kenya) which was the Act used to create chattels mortgages in Kenya i.e. securities for lending using movable property as collateral. It applies to security rights created in movable assets, through a variety of transactions, including a chattel mortgage, credit purchase transaction, credit sale agreement, floating and fixed charge, pledge, trust indenture, trust receipt, financial lease and any other transaction that secures payment or performance of an obligation as well as the outright transfer of a receivable. However, liens and charges created under other laws are expressly excluded. Continue reading “Overview of the Movable Property Security Rights Act, 2017”

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Breach of Contract by the Government: Available Measures in Law for Businesses

Introduction

Tender season! It comes around every year and every time it does, our local newspapers and websites are awash with tender invitations placed by various government ministries or agencies across the country for the supply of goods and services or for the conduct of building and civil works. Numerous Kenyan businesses, from various industries, scan the dailies and reload website pages almost religiously with a view to tracking such advertisements. The businesses identify the invitations to tender falling within their field of expertise and submit their bids. Putting those bids together is often time consuming and cost intensive especially for large construction projects where the business entity is required to offer tender security, guarantees, informed technical proposals and detailed financial proposals.

The excitement is almost palpable when the relevant government ministry or agency evaluates the submitted bids and awards the tender to the successful business entity. The letter of award is quickly accepted by the successful tenderer, and the parties then prepare and sign the necessary contract documents spelling out, among other terms, the obligations of the parties. Some of these obligations are usually standard. One of these would be that the successful tenderer is expected to supply the goods and services or conduct the building and civil works in a satisfactory manner. On the other hand, the government ministry or agency commits to settle payments in a timely fashion.

For the successful business entity, the tender might often be its guaranteed source of income, its super profit machine or its business deal of the decade in light of the perceived financial stability of government ministries or agencies.

That is, until the government ministry or agency in question defaults in making scheduled payments despite the satisfactory performance of the business entity’s obligations, the ministry’s or agency’s officials remain non-responsive to the business entity’s constant emails, letters and telephone calls. It then becomes necessary to evaluate the available options for recovery or recourse.

What are the legal remedies available to the business entity for breach of contract by a government ministry or agency? What is the manner in which these remedies would be enforced? Continue reading “Breach of Contract by the Government: Available Measures in Law for Businesses”

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Foreigners’ Ownership of Real Estate in Kenya

Introduction

Many foreigners have been duped that they cannot own land in their name in Kenya. This notion is untrue since foreigners are permitted to own land within the Republic of Kenya. However, this ownership is subject to certain pre-qualifications and conditions.

In Hanny Hartmann v. Edward Mganga Mbogo (Civil Case 222 of 2007), Marga Grounstra v. Baya Abraham Wanje (Civil Case No. 284 of 2007) and many other similar cases, more so in relation to coastal properties, foreigners enter into all manner of agreements and arrangements with locals with a view of the locals purchasing properties on their behalf. This is usually based on the alleged representation that a foreigner cannot own land in their name. Such partnerships between locals and foreigners usually turn sour and should be approached with caution.

Accordingly, before a foreigner purchases land or a house in Kenya, proper research should be done through the help of a qualified legal professional to advice and structure a legally sound transaction. Continue reading “Foreigners’ Ownership of Real Estate in Kenya”