Business entities in Kenya

Business entities in Kenya

Healy Consultants will be pleased to assist our Clients with Kenya company setup. There are several ways of doing business in Kenya, the most common being the setting up of a Kenyan limited liability company, locally known as a private limited company. However, the Kenyan authorities have also introduced in 2012 the limited liability partnership, which is quickly becoming a popular alternative to the formation of a limited liability company in Kenya. Foreign companies can also register a branch in Kenya. However, local regulations do not provide for the registration of a representative office.

The Kenya private limited company

    Kenya business setup guides for foreigners
  • The Kenya private limited company (also known as a limited liability company) is the type of business entity most commonly used for Kenya business setup by both local and foreign entrepreneurs. Such company is a separate legal entity from its owners who, as a result, enjoy limited liability;
  • Entrepreneurs can wholly own a Kenya LLC with a minimum of 2 shareholders and two directors of any nationality and who can be living outside of Kenya. In accordance with the Kenya Companies Act, there is no minimum amount of capital to setup a company in Kenya. However, foreigners wishing to relocate to Kenya by obtaining an entrepreneur visa are required to show that they have (or will) invest at least US$100,000 in the company;
  • After business setup in Kenya, all companies are required to i) register for tax with the Kenya Revenue Authority and ii) prepare financial statements, which must always be audited.

The Kenya Limited liability partnership

  • Since 2012, it is also possible to register a limited liability partnership (LLP) in Kenya with only i) two corporate or individual partners ii) US$2 as the minimum capital contribution and iii) a manager, who must be an individual allowed to work in Kenya (Kenya citizen or foreigner with a work permit). Unlike many other countries, all partners of a Kenya LLP can be limited partners, enjoying limited liability against the partnership’s losses;
  • The main advantage of the limited liability partnership is that it is a tax transparent entity, not subject to corporate income tax: all the income channeled through the partnership is directly taxed at the partners’ level, and must be included in their personal/corporate income tax filings;
  • It is also easy to convert an existing Kenya company into a limited partnership, by submitting an application to the Kenyan Companies Registrar along with the certificate of incorporation of the company, an up to date list of its shareholders and their ID documents. The conversion is then usually approved within two weeks.

The Kenya public limited company

Setting up a Kenya public limited company requires a minimum of seven shareholders and two directors. Other requirements are similar to those of a private limited company, except that the company will also have to file its (audited) financial statements with the Kenya Companies Registry. Such type of business entity is allowed to list on the Nairobi Stock Exchange.

The Kenya Branch office

Kenya laws stipulate that branch offices can be 100% foreign owned. The branch office is allowed to invoice local customers, sign local sales contracts and receive income from customers. However, the branch office will be required to obtain the necessary licensing for its industry of business. The foreign company will also have to appoint one resident representative in Kenya.

Table comparing different entities in Kenya

 LLCPLCBranchLimited liability Partnership
Also known as:Pte. Ltd.PLCBranchLLP
How long to set the company up?4 weeks4 weeks6 weeks4 weeks
How long to open company bank account?4 weeks4 weeks4 weeks4 weeks
Legal liability?LimitedLimitedUnlimitedLimited
Wholly foreign owned?YesYesYesYes
Minimum share capital?US$2US$7N/AUS$2
File annual tax return?YesYesYesYes
Corporate bank account?ABC BankEcoBankCitibankEcoBank
Does our Client need to travel?NoNoNoNo
Resident director required?NoNoNoNo
Resident representative/manager required?NoNoYesYes
Kenya shareholder/partner required?NoYesNoNo
Minimum directors/partners allowed?1312
Minimum shareholders/partners?3312
Kenya resident company secretary required?NoNoNoNo
Corporate shareholders allowed?YesYesYesYes
Corporate director(s) allowed?YesYesYesYes
Kenya corporate tax rate?30%30%37.5%0%
Annual financial statements required?YesYesYesYes
Statutory audit required?YesYesYesYes
Allowed to issue sales invoices in Kenya?YesYesYesYes
Allowed to sign contracts with local entities?YesYesYesYes
Allowed to import and export goods?YesYesYesYes
Can rent an office in Kenya?YesYesYesYes
Can buy Kenya property?YesYesYesYes
Can own equity in other local companies?YesYesYesYes
Total Kenya business setup costs in Yr. 1US$13,750US$16,850US$14,150US$13,750
Subsequent annual costs (excl. accounting and tax fee)US$1,100US$1,100US$1,100US$1,100
Sample engagement fee invoiceKenya LLC draft invoiceKenya PLC draft invoiceKenya branch office draft invoiceKenya LLP draft invoice

Contact us

For additional information on our business setup services in Kenya, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Kunal Fabiani, directly:
client relationship officer - Kunal