Business entities in Kenya in 2021
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. The Kenyan authorities 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
- 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;
- A Kenya LLC requires a minimum of 1 director and 1 shareholder of any nationality and who can be living outside of Kenya;
- In accordance with the Kenya Companies Act, there is no minimum share capital requirement when setting up 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 like those of a private limited company, except that the company will also have to file its (audited) financial statements with the Kenya Companies Registry;
- A Kenya public company is mostly preferred by entrepreneurs or investors looking to list their company on the Nairobi Stock Exchange.
The Kenya Branch office
- 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 be required to appoint one resident representative in Kenya.
The Kenya EPZ company
- Local and foreign business looking to establish a manufacturing company or an agriculture oriented business in Kenya for export purposes can choose to set up a limited liability company in an Export Processing Zone (EPZ);
- All limited liability companies that wish to secure EPZ status must register and get approval with the Export Processing Zone Authority.
Table comparing different entities in Kenya
LLC PLC Branch Limited liability Partnership Also known as: Pte. Ltd. PLC Branch LLP How long to set the company up? 4 weeks 4 weeks 6 weeks 4 weeks How long to open company bank account? 4 weeks 4 weeks 4 weeks 4 weeks Legal liability? Limited Limited Unlimited Limited Wholly foreign owned? Yes Yes Yes Yes Minimum share capital? US$2 US$7 N/A US$2 File annual tax return? Yes Yes Yes Yes Corporate bank account? ABC Bank EcoBank Citibank EcoBank Does our Client need to travel? No No No No Resident director required? No No No No Resident representative/manager required? No No Yes Yes Kenya shareholder/partner required? No Yes No No Minimum directors/partners allowed? 1 2 1 2 Minimum shareholders/partners? 1 7 1 2 Kenya resident company secretary required? No No No No Corporate shareholders allowed? Yes Yes Yes Yes Corporate director(s) allowed? Yes Yes Yes Yes Kenya corporate tax rate? 30% 30% 37.5% 0% Annual financial statements required? Yes Yes Yes Yes Statutory audit required? Yes Yes Yes Yes Allowed to issue sales invoices in Kenya? Yes Yes Yes Yes Allowed to sign contracts with local entities? Yes Yes Yes Yes Allowed to import and export goods? Yes Yes Yes Yes Can rent an office in Kenya? Yes Yes Yes Yes Can buy Kenya property? Yes Yes Yes Yes Can own equity in other local companies? Yes Yes Yes Yes Total Kenya business setup costs in Yr. 1 US$17,350 US$18,950 US$16,250 US$15,850 Subsequent annual costs (excl. accounting and tax fee) US$1,200 US$1,200 US$1,200 US$1,200 Sample engagement fee invoice View invoice PDF View invoice PDF View invoice PDF View invoice PDF