A BRIEF GUIDE TO

DOING BUSINESS
IN KENYA, 2022

1
 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

Contents

05 INTRODUCTION

06 The Country at a Glance

06 General Considerations

08 ESTABLISHING A BUSINESS

09 Business Vehicles
13 Investment Incentives
13 Foreign Investment
14 Exchange Controls
14 Import/ Export Regulations

16 OPERATING A BUSINESS

17 Employment
21 Tax
29 Competition
32 Intellectual Property
33 Consumer Protection
36 Data Protection
37 Fintech
38 Environmental Considerations
44 Dispute Resolution
46 Anti-Corruption, Money Laundering and Bribery

56 DISSOLVING A BUSINESS

60 OUR FIRM

61 OUR PRESENCE IN AFRICA

62 KEY CONTACTS

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

Foreword INTRODUCTION

This guide provides answers to questions that are

frequently asked by Kenyan business people and
foreign investors with an interest in Kenya. It gives
a broad overview of the legislative regime applicable
to business in the country.

I t has been prepared by a team of our Kenyan lawyers who specialise in various relevant areas of
law. We hope you find it useful.

For further information or specific assistance, please do not hesitate to contact any one of our
lawyers in Kenya.

Paras Shah
Managing Partner, Kenya

The contents of this guide are for reference only and should not be considered as a substitute for detailed legal advice.
It is correct as at July 2022.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

INTRODUCTION GENERAL CONSIDERATIONS

The Country at a Glance 1. What is the legal system in Kenya? • The Data Protection Regulations

The Republic of Kenya is situated in East Africa. Kenya has been a Republic since its independence The Ministry of ICT, Innovation and Youth
from Great Britain (the United Kingdom of Great Affairs recently issued three sets of
It is known as the ‘cradle of mankind’. Kenya’s Britain and Northern Ireland, (UK)) in 1963. The regulations to guide implementation of the
people, united under the green, black, red and political system is a parliamentary constitutional Data Protection Act (No. 24 of 2019) (the
white of the national flag, comprise more than 40 democracy, which consists of a Head of State DPA). These are:
ethnic groups. Their warmth and hospitality are (President), Deputy President and a Cabinet of 21
best expressed in the national motto: ‘Harambee’, Cabinet Secretaries. The Government functions i. the Data Protection (General)
meaning ‘let’s all pull together’. through a large civil service implementing policy, Regulations, 2021 (the General
and a judiciary. Regulations);
Kenya’s capital city is Nairobi, meaning ‘the place ii. the Data Protection (Registration
of cool waters’. It is the highest city in East Africa The country has a well-established legislative base of Data Controllers and Data
at 1 700m above sea level. Modern and fast- with laws inherited from the UK, as well as many Processors) Regulations, 2021
growing, Nairobi is estimated to have over four modern statutes. English case law is of persuasive (the Registration Regulations);
million inhabitants. Other major cities and towns value in the Kenyan courts, and the formal and
include Eldoret, Kisumu, Machakos, Mombasa, business sector largely follows the European/ iii. the Data Protection (Compliance
Nakuru and Nyeri. American model of free market economics and Enforcement) Regulations,
and capitalism. 2021 (the Enforcement
English and Swahili are the official languages. Regulations) (together the
The legal system in Kenya is based on: Regulations).
Kenya is a regional hub for business and trade
throughout East and Central Africa. It is a member • Statutes, including statutes of general Data processors and controllers who meet the
of the East African Community (EAC), which is an application that were in force in England prescribed thresholds under the Registration
economic trading bloc currently comprising the on 12 August 1897; Regulations are required to register with the
economies of Kenya, Rwanda, Tanzania, Uganda • English common law and doctrines of equity; Office of the Data Protection Commissioner
and most recently Burundi and South Sudan. • African customary law – this only applies (ODPC) from 14 July 2022.
Kenya is also a member of the Common Market for in civil cases where one or more parties
Eastern and Southern Africa (COMESA), another are subject to it; In light of these developments, we anticipate
regional trading bloc, comprising 21 countries. • Kenyan case law; and that enforcement of the DPA and the
• English case law (where not inconsistent Regulations will be a key priority for the
with Kenyan law). ODPC. Compliance must therefore be an
immediate priority resident and non-resident
2. What are the key recent legal developments for controllers and processors.
affecting companies doing business in Kenya?

• The Partnerships Act of 2012

The Partnerships Act of 2012 came into effect

on 8 March 2021. As a result, the Partnership
Act, Cap 29 has been repealed, save for
transitional provisions.

Two acts now govern partnerships in Kenya

the Limited Liability Partnership Act, 2011 and
the LLP Act and the Partnerships Act.

It is worth noting that while the Partnership

Act 2012 is now in force it still requires
operational regulations to enable the
registration of limited partnerships.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

ESTABLISHING A ESTABLISHING A BUSINESS

BUSINESS Business Vehicles ii. The applicant will also be required to

provide the other details of the
3. What are the most common forms of shareholders, directors, registered office,
business vehicles used in Kenya? constitutive documents, company
secretary (where applicable), date
The most common form of business vehicle in of commencement of business etc. in the
Kenya is the private limited liability company. one step.
Private limited liability companies are favoured iii. Payment of the incorporation fee will be
because they are relatively easy to register done upfront (at the commencement of
and there are no minimum or maximum share the online registration).
capital requirements. iv. The total incorporation fee is
KES 10,750 comprising:
Private companies must have at least one • the fee for incorporation of
shareholder. Single-member companies are the company – KES 10,000;
permitted under the Companies Act, 2015. Private • name reservation referred to
companies must have at least one director who is in (i) above – KES 100;
a natural person. A public company must have at • results of a company search
least two directors. at the Companies Registry
confirming directorship and
There is no legal requirement for a company to shareholding – KES 600; and
have Kenyan shareholders or Kenyan directors. • a convenience fee of KES 50.
However, a company is not able to register for tax v. In case all the names that provided
with the Kenya Revenue Authority (KRA) in (i) above are not available for use,
without submitting the KRA Personal Identification then the application will be returned
Number (PIN) of at least one director of the for correction. There will be no
company. This creates a requirement that at least additional cost.
one of the directors needs to be registered with vi. The previous provision for name
the KRA. While there is no explicit law which extensions shall no longer apply as the
requires this, it is the practice. If a foreign non- name will be available until completion of
resident director registers with the KRA, they are the incorporation process.
then obligated to file annual tax returns (and nil vii. The one day one step registration
returns in case they do not earn any income process does not apply for companies
in Kenya). that are regulated and where approval
from the regulator is required. The
4. In relation to the most common form of timelines will be subject to receipt of the
corporate business vehicle used by foreign requisite approval.
companies in Kenya, what are the registration
and reporting requirements? Constitutive documents

Kenyan company The constitutive documents of the company

must be subscribed to by at least one subscriber.
The BRS has introduced a one day one step A company may adopt the model articles, as
registration process. The process of name prescribed by the Companies Act, which provide
reservation and application for registration of that the objects of the company are unlimited, or
businesses has now been merged into one step. In it may adopt its own set of articles and prescribe
practice however, the registration process takes specific objects within the articles if it so wishes.
an average of 5 business days.
While there is no legal requirement for a maximum
The process or minimum share capital, the Registrar of
i. The applicant will be required to provide Companies and the Collector of Stamp Duty
3 to 5 proposed names in order of recommend that a company be incorporated with
priority. a minimum share capital of KES 100,000. We have
however come across a few companies with a
share capital of less than KES 100,000.00.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

A Kenyan company must notify the Registrar of Kenyan companies are now required to keep a Partnerships An LLP is required to have at least two (2)
any changes in respect of its: register of beneficial owners disclosing, amongst partners. Section 27 (1) of the LLP Act requires
• articles of association; other things, the nature of control the beneficial There are three distinct types of partnerships in every LLP to have at least one manager who is
• registration details; owner has in the company. Kenya: general partnerships, limited partnerships a natural person who has attained the age of 18
• directors’ details; and limited liability partnerships regulated by years and who is resident in Kenya. An LLP is
• secretary’s details; It is worth noting that a publicly listed company the Partnerships Act, 2012 (Act No. 16 of 2012) required under section 27 (2) of the LLP Act to
• register of beneficial owners; is not required to maintain a register of (the Partnerships Act), and the Limited Liability lodge the details of the person who is designated
• share capital and allotment of shares; or beneficial owners. Partnerships Act, 2011 (Act No. 42 of 2011) (the as a manager of the partnership together with the
• company name. LLP Act) respectively. consent of that person to act as the manager with
Branch of a foreign company the Registrar of LLPs (the Registrar).
Any changes to these details must be notified to General Partnerships
the Registrar through prescribed forms within the A foreign company registered outside Kenya can Steps taken in registration of an LLP:
prescribed timelines, which are between 14 days register a branch office in Kenya as opposed to General partnerships are the traditional Applications for registration of LLPs are done
and 30 days. Failure to make such notification registering a local entity. With the exception of partnership models where each partner has online via the e-Citizen portal. The BRS has
may attract penalties. certain specific tax considerations, the effect unlimited liability and it is the partners who have introduced a one-day one-step registration
of establishing a local Kenyan company as the general responsibility for the business of the process. The process of name reservation and
• Company secretary: All public companies opposed to a branch of a foreign company does partnership. General partnerships have the power application for registration of businesses has now
in Kenya as well as private companies not considerably differ from a Kenyan legal to: (a) sue and be sued in its own name; (b) enter been merged into one step.
with a paid up share capital of at least perspective. into contracts and own or hold property for the
KES 5 million are required to appoint a purposes of the business of the partnership; and i. The applicant will be required to provide a
qualified company secretary who is a The Companies Act contains extensive disclosure (c) subject to the partnership agreement, provide minimum of 3 and a maximum of 5 proposed
registered member of the Kenya Institute and compliance requirements for companies continuity for the partnership business despite a names in order of priority.
of Certified Public Secretaries. that are incorporated outside Kenya that wish to change in the partners. ii. The applicant will also be required to provide
register a branch or representative office to do the details of the partners, the manager,
• Auditor: Every company is required to business in Kenya. Limited Partnerships the registered address, date of
appoint an auditor who is a member of the commencement of business etc. in the one-
Institute of Certified Public Accountants of A foreign company that establishes a branch For a limited partnership to exist there ought step process. The applicant will be required to
Kenya, unless the directors foresee that in Kenya must file certain documents and to be one or more general partners, each with provide details relating to the: (a) Kenya
audited financial statements are unlikely to information with the Registrar within 30 days of unlimited liability and one or more registered national identification card or passport number
be required by the company. its establishment of a place of business in Kenya. limited partners, each with limited liability. of the manager(s) and partner(s) and; (b) the
As a matter of practice, this should be undertaken PIN certificate number of the manager(s) and
• Annual return: Every company is required in advance as a first step since the issue of A general partner is liable for all debts and partner(s) issued by the Kenya Revenue
to file a return with the Registrar at least the Certificate of Compliance (issued upon obligations of the partnership. A limited Authority (not applicable to person who are
once a year. registration of the branch) is a pre-requisite for partner is liable for the debts or obligations of not Kenyan residents).
obtaining an entry permit and any other statutory the partnership to the extent of the amount iii. Payment of the incorporation fee will be
A private company can be converted into a registrations. contributed to the partnership at the time of done upfront (at the commencement the
public company at any time and vice versa. All joining the partnership. online registration).
companies are required to file audited accounts A branch of a foreign company is required to iv. The total incorporation fee is
at the Companies Registry unless it qualifies as a file its accounts alongside the parent company’s Limited Liability Partnerships KES 25, 700 comprising:
‘small company’. A company qualifies as a small accounts with the Registrar every year, unless it • name reservation and
company if it satisfies two or more of the following was incorporated in the Commonwealth in which The limited liability partnership (LLP) combines incorporation of the LLP
requirements: case it is exempted from having to file its balance some of the features of a traditional partnership – KES 25,150; and
sheet and profit and loss account. with the limited liability benefits more typically • results of a search on the LLP
• it has a turnover of not more than associated with a company. – KES 550.
KES 50 million; Any changes to the details of the branch of a v. In case all the names that provided in (i)
• the value of its net assets as shown in foreign company must be notified to the Registrar Section 6 (2) of the LLP Act provides that, on above are not available for use, then the
its balance sheet as at the end of the year within 60 days of such changes. These include being registered under the LLP Act, an LLP application will be returned for correction.
is not more than KES 20 million shillings; and changes to the: becomes a body corporate with perpetual There will be no additional cost.
• it does not have more than 25 employees. succession and with a legal personality separate vi. The previous provision for name extensions
• charter, statutes and memorandum from that of its partners. This means that a change shall no longer apply as the name will be
In an attempt to promote transparency in the and articles; in the partners of an LLP does not affect the available until completion of the
ownership of companies in Kenya, the Companies • directors or secretary of a foreign company existence, rights or obligations of the LLP. registration process.
Act introduced the requirement by Kenyan or their particulars;
companies to disclose beneficial ownership. • names or addresses of persons authorised
to accept service on behalf of a foreign
company; and
• address of the principal registered office
of a foreign company.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

• Partnership deed: This is the constitution Failure to comply with this requirement is an • Time scale and fees: there are no application
Investment Incentives
of the LLP, which governs relations among the offence punishable under the LLP Act by a fine fees for the investment certificate and the
partners. It provides for the powers of each not exceeding KES 100,000 to be paid by the LLP. procedure may take about a month (timelines
5. What grants or incentives are available to
of the partners, the signing mandate for bank provided by the Charter of KenInvest).
investors?
accounts and transactions and other such Failure to comply may also be deemed as a
matters. It is necessary to consider these and ground for declaring that the LLP is unable to pay KenInvest certification will only be issued upon the
Kenya welcomes foreign investment, but does not
other matters when drafting a partnership deed. its debts and the LLP may be wound up under foreign investor making a minimum investment of
have a wide-ranging suite of special incentives
a court process (paragraph 3(2) (d) of the fifth USD 100 000, or the equivalent in any currency.
for investors from abroad. The limited incentives
• Registration certificate: Registration of the schedule of the LLP Act).
that are available are through special export-led
LLP is complete when the Registrar issues a
schemes and by special arrangement with the
Foreign Investment
registration certificate, which must be iii. Requirement to have a registered office
National Treasury.
displayed at the registered office. This in Kenya 6. Are there any restrictions on foreign
process has been automated which speeds up investments (including authorisations
The Investment Promotion Act (No. 6 of 2004)
the registration process, as such it takes The LLP Act requires LLPs to establish and required by the central or local Government)?
established a statutory body known as the
between two and three weeks. maintain a registered office within Kenya to which
Kenya Investment Authority (KenInvest) whose
all communication and notices to the partnership Foreign investment is actively encouraged in
main objective is to promote investments in
• The operational requirements of an are to be addressed. all sectors of the economy. However, there are
Kenya. KenInvest is responsible for facilitating
LLP under Kenyan law certain ownership and control restrictions, and
the implementation of new investment projects,
An LLP may change the address of its registered authorisations that are applicable in specific
providing after-care services for new and existing
In addition to the operational requirements office by lodging with the Registrar a notice of sectors, including banking, insurance, mining
investments, as well as organising investment
applicable to businesses generally (e.g. business change in the manner determined by the Registrar and telecommunications. Restrictions are also
promotion activities both locally
permits, procuring KRA PIN certificates, filing and such a change takes effect when the notice applicable to companies holding (by lease or
and internationally.
tax returns, etc.), the following operational is lodged. purchase) agricultural land. These companies
requirements are specifically applicable to require approvals or exemptions from the Land
An investor may apply for an investment
LLPs in Kenya: iv. Specific requirements for documents Control Board under the Land Control Act
certificate from KenInvest. This certificate will
(Chapter 302, Laws of Kenya). More importantly,
entitle its holder to assistance from KenInvest in
i. Requirement to keep proper books of account An LLP is required to ensure that no invoice or a company that has a foreign shareholding may
the expedient processing of licences necessary
for at least seven years other document relating to the partnership not acquire agricultural land (unless a specific
for the business and to conduct its investment
business is issued unless it bears: (a) the name and presidential exemption is granted).
activities in Kenya. The Investment Promotion Act
Section 30 (1) and (2) of the LLP Act requires registration number of the partnership; and (b) a
indicates the following as some of the incentives
an LLP to keep proper and accurate accounting statement that it is registered with limited liability. In addition, it is necessary for entities operating
available for holders of an investment certificate.
records for a period of at least seven (7) years, in certain sectors to be licensed by the relevant
failing which each of the partners commits an v. Other notification requirements regulator, for example:
• Licences and permits: KenInvest will assist
offence and is liable on conviction: if the offender
investors in obtaining any other licence
is a natural person, to a fine not exceeding Whenever a change occurs in any of the details • banks require licences from the Central Bank
or permit necessary in order to do business
KES 100,000 or to imprisonment for a term registered in respect of an LLP, the partnership of Kenya;
including work permits, liaising with the
not exceeding two (2) years or to both; and if shall, within fourteen (14) days after the change, • insurance companies require licences from
relevant governmental authority to do so.
the offender is a body corporate, to a fine not lodge with the Registrar a statement specifying the Insurance Regulatory Authority;
exceeding KES 100,000. the nature and effective date of the change and • mining companies require licences from
• VAT and customs duty exemptions:
such other information (if any) as is prescribed by the Mineral Rights Board;
the foreign investor, on certification by
ii. Requirement to lodge annual declaration the regulations. • telecommunications companies require
KenInvest, is entitled to assistance in obtaining
of solvency or insolvency with Registrar licences from the Communications Authority
VAT and customs duty exemptions on the
of Kenya; and
importation of equipment and machinery.
Section 29 of the LLP Act requires an LLP to • market intermediaries such as brokers,
lodge with the Registrar a declaration by one of fund managers and investment banks require
• Tax holidays: as a rule, Kenya does not provide
its manager(s) that in the opinion of the manager, licences from the Capital Markets Authority.
tax incentives for foreign investment, although
the partnership either - appears, as at that date, to
there is a preferential regime for companies
be solvent; or does not appear, as at that date,
situated in and registered as Export
to be solvent.
Processing Zones or Special Economic Zones.

The declaration is required to be lodged not later

than fifteen (15) months after the registration of
the LLP and subsequently once in every calendar
year at intervals of not more than fifteen (15)
months.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

Exchange Controls

7. Are there any exchange controls or

currency regulations?

There are currently no foreign exchange

controls in Kenya and the Kenyan currency
is freely tradable with all major world currencies.
Banking transactions are required to be
conducted through authorised and licensed banks.
Most banks allow customers to operate foreign
currency accounts although they are required to
report all transactions in excess of USD 10,000.

Import/ Export Regulations

8. Are there any import/ export regulations?

Import and export is primarily regulated by the

East African Community Customs Management
Act, 2004. This is a regional statute enacted
by the East African Legislative Assembly and
regulates the levying of import taxes on goods
imported into the EAC member states.

In addition, Kenya has enacted the Miscellaneous

Fees and Levies Act, 2016 and the Excise Duty
Act, 2015 which impose certain levies and provide
regulations regarding imports and exports into
and out of Kenya.

The Value Added Tax Act also provides for the

levying of VAT on imports of goods and services
into Kenya.

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OPERATING A OPERATING A BUSINESS 11. Is a written contract of employment required?

If so, what terms must be included in it? Do any
implied terms and/ or collective agreements

BUSINESS Employment

9. What are the main laws regulating

apply to the employment relationship?

Yes. The Employment Act provides that a contract

employment relations?
of service for a period or a number of working
days which amount in the aggregate to the
Labour matters in Kenya are governed by various
equivalent of three months or more must be in
pieces of legislation namely the:
writing. The written contract of service must state
particulars of employment, which may be given to
• Employment Act, 2007 (Employment Act);
the employee in instalments but not later than two
• Labour Relations Act, 2007;
months after the beginning of the employment.
• Labour Institutions Act, 2007;
• Regulation of Wages (General) Order,
Below are some of the requirements
which is subsidiary legislation under the
to be included in employment contracts:
Labour Institutions Act, 2007;
• Employment and Labour Relations
• name, age, permanent address and gender of
Court Act, 2011;
the employee;
• Work Injury Benefits Act, 2007; and
• name of employer;
• Occupational Safety and Health Act, 2007.
• job description;
• date of commencement of employment;
Terms and conditions of employment are
• form and duration of the contract;
regulated under the Employment Act and
• place of work;
the Regulation of Wages (General Order). The
• hours of work;
Employment Act provides for the minimum terms
• remuneration, scale or rate of remuneration;
and conditions of employment.
• details of other benefits;
• the intervals at which remuneration is paid;
However, an employer and employee are free
• the date on which the employee’s period of
to enter into contractual arrangements
continuous employment began, taking into
providing for terms more favourable than
account any employment with a previous
the prescribed minimum.
employer which counts towards that period;
• entitlement to annual leave, including public
The Employment Act does not apply to
holidays and holiday pay in sufficient detail to
independent contractors; their terms of services,
enable accrued holiday pay on termination of
rights and obligations are regulated by contract.
employment to be precisely calculated;
• sick leave entitlement;
10. What are the main laws relating to the
• pension and pension schemes;
recruitment of employees?
• grievance procedures;
• length of notice for termination of contract;
Generally, an employer shall not discriminate
and
or harass, directly or indirectly, against an
• where employment is not for an indefinite
employee or a prospective employee, in respect of
period, the period for which it is expected to
recruitment or other matters arising out
continue or, if it is for a fixed term, the date
of employment.
when it is to end.

Employers are restrained from requiring

With the exception of sick leave, pension and
prospective employees to provide any clearance
pension schemes, which may be set out in another
certificates, which require payment to be made
document that is reasonably accessible to the
before issuance, unless the employer issues the
employee, all the above matters are required to be
employee with an offer of employment. However,
in a single document.
once the employer issues the employee with
an offer of employment, they may require the
Certain human resource policies are required
employee to avail various clearance certificates
by law. An employer who employs more than
and once provided, the employer may withdraw
50 employees must have a disciplinary policy.
the offer of employment, if the employee does
Further, an employer who has more than 20
not satisfy the requirements of employment.
employees is required to have a policy on sexual
harassment.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

An employer must also have a safety and • Class F permit - issued to persons who intend The Employment and Labour Relations Court • f ailing to obey a directive from the employer
healthy policy pursuant to the provisions of the to engage, whether alone or in partnership, have held that during the consultation period an that is within the scope of duties; and
Occupational and Health Safety Act. as a specific manufacturer in Kenya and have employer must explain to the employees: • being arrested for an offence punishable by
obtained or are assured of obtaining any licence, the reasons for the redundancy and the likely imprisonment and not being released within
Orders issued pursuant to the Labour Institutions registration or other authority or permission as extent of the redundancies, the criteria to be used 14 days of the arrest.
Act, and relevant to specific classes of employees may be necessary and have sufficient capital in selecting the employees who will be declared
(such as security guards, agricultural workers and resources for the said purpose. redundant, any alternative action that could If an employer wishes to terminate an employee
or pump attendants), set out the minimum be taken instead of the redundancies, and the for gross misconduct or fundamental breach, it
entitlements and conditions of employment that • Class G permit - issued to investors in specific package to be paid to the employees who will be must follow due process. This entails:
must be adhered to when engaging employees trade, business or consultancy. declared redundant.
within such specific classes of employment. •  xplaining to the employee in a language
e
• Class I permit - issued to persons who The employees should also be allowed an he or she understands, the reasons for the
12. Do foreign employees require work permits are members of societies approved by the opportunity to make representations (although termination;
and/ or residency permits? they are not explicitly entitled to management • allowing the employee to have a
Government and engage in religious and
charitable activities. representations). Further it is recommended that representative of his or her choice present
Yes. Foreign employees must obtain work permits
employers consider any other roles that may be during the explanation; and
before starting work in Kenya. Immigrations laws
• Class K permit - issued to persons who are available to individual employees. • hearing and considering any representations
in Kenya make it obligatory for an employer to
not less than 35 years old; have an assured that the employee and the representative,
obtain the appropriate work permit (or special
annual income that is derived from a source In cases where an employer has entered into if any, may make regarding the
pass) on behalf of each foreign national intending
other than employment, occupation, trade, a collective bargaining agreement (CBA) with employee’s termination.
to work in the country.
business or profession and being an income a trade union which recognises that the staff
that is derived outside of Kenya but remitted members of that employer have the right to After following due process, an employer who
Under the Immigration Act, 2011, any person who
in Kenya; derived from a property, pension unionise, any entitlement that a unionised finds an employee guilty of gross misconduct
employs a foreign national in a capacity in which
or annuity payable from sources in Kenya; employee would have either to management may summarily dismiss the employee.
the foreign national is not authorised to be
or derived from sufficient investment capital representation or consultations in the event of a Summary dismissal means terminating the
employed commits an offence which, upon
conviction, attracts a fine of KES 500 000 or to to produce such assured income that will redundancy (or other termination of employment) employment without notice or with less notice
imprisonment for a term not exceeding three be brought into and invested in Kenya; and would be governed by the terms of the CBA that than the employee is statutorily or contractually
years or to both. undertakes not to accept paid employment was negotiated. entitled to.
of any kind.
There are nine categories of work permits 14. How is the termination of individual Poor performance
including: • Class M permit - issued to persons granted employment contracts regulated?
refugee status or any spouse of such refugee For an employment to be terminated on account
• Class A permit - issued to persons who intend who intends to take up employment or engage An employment contract may be terminated for of poor performance, the following actions must
to engage, whether alone or in partnership, in an occupation, trade, business or profession. the following reasons: precede the termination:
prospecting for minerals or mining in Kenya
and who have obtained or are assured of The main consideration in issuing work permits is Gross misconduct or fundamental breach • t he employer must demonstrate that there
obtaining any prospecting or mining right whether or not the presence of the foreigner will has been an appraisal of the employee’s
licence and have sufficient capital or resources be of benefit to Kenya. In 2019, the Department An employer may terminate an employee’s performance over a period with the
for the purpose. of Immigration introduced a Kenyanisation policy employment contract for gross misconduct or participation of the employee, and there has
which seeks to reserve Kenyan jobs for Kenyan fundamental breach of the employment contracts. been no improvement;
• Class B permit - issued to those who intend nationals. As such, there has been a notable • a performance improvement plan should
to engage in the business of agriculture and increase in the rejection rate for Class D The Employment Act considers the following acts be agreed, containing specified targets and
animal husbandry in Kenya and who have (Employment) Work Permits. as constituting gross misconduct: timelines and allowing for a reasonable period
acquired permission to hold an interest in of time (a minimum of two months) for the
land in Kenya and have sufficient capital and 13. Are employees entitled to management •  eing absent from work without leave or
b employee to improve his or her performance;
resources for the said purpose. representation and/ or to be consulted in lawful cause; and
relation to corporate transactions (such as • being intoxicated at the workplace; • assessment of the employee’s performance
• Class C permit - issued to members of redundancies and disposals)? • wilfully neglecting to perform duties under the over the specified period of time should
a prescribed profession who intend to employment contract; clearly demonstrate that the employee has
practise that profession, whether alone or in Whilst the Employment and Labour Relations • using abusive language or behaving in an failed to achieve the targets set out in the
partnership, in Kenya and who possess the Court has acknowledged that there is no insulting manner to the employer or other performance improvement plan.
prescribed qualifications and have sufficient express provision under the Employment Act to person of authority;
capital or resources for the purpose. • committing, or on reasonable and sufficient
consult, it has held that the requirement to have
consultations is implied by the provisions of law grounds is suspected of having committed, a
• Class D permit - issued to persons offered
relating to redundancy and it is necessary for criminal offence against or to the substantial
specific employment by a specific employer,
an employer to consult with its employees in detriment of the employer or its property;
and who are qualified to undertake that
order to prove justifiability of its intention to
employment
declare redundancies.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

Before terminating the contract of employment Redundancy After following the above process, the employer 15. Are redundancies and mass layoffs regulated?
for poor performance, an employer must: may terminate the contract of employment by
An employer may implement redundancies for giving notice or paying wages in lieu of notice. Yes, the requirements have been set out above.
• explain to the employee in a language he various reasons, including the following: In addition to the foregoing, an employee whose
or she understands, the reasons for the services have been terminated on account of
Tax
termination; • when there is an economic downturn caused redundancy is also entitled to severance pay
• allow the employee to have a representative by factors beyond the control of an employer (which is calculated at the rate of at least 15 days
16. When is a business vehicle subject to tax in
of his or her choice present during the that lead the employer to contemplate for every completed year of service) and payment
Kenya and what are the main taxes that apply to
explanation; and reducing staff numbers; of all leave accrued but not taken.
a business?
• hear and consider any representations that • where based on commercial judgment an
the employee and the representative, if employer considers that there are too many Expiration of contract
The following laws regulate tax in Kenya:
any, may make regarding the employee’s employees employed in a particular area or
termination. overall and there is need to reduce numbers; A fixed term contract of employment terminates
Income Tax Act
• where there is mechanization of the modes automatically when the end date thereof reaches.
After following due process, the employer may of production that reduces the need for staff
The Income Tax Act, Chapter 470 of the Laws
terminate the employee’s employment by giving number; Remedies for unfair dismissal
of Kenya is the law providing for the levying of
notice or paying wages in lieu of notice. • where there is mechanization of the modes
income tax for businesses and individuals as
of production that reduces the need for staff Whether or not an employer conducts the
well as other taxes such as capital gains
Physical incapacity number; or termination in a fair manner, an employee is
tax (CGT), employment taxes etc.
• where there is reorganization of the business entitled to dispute the lawfulness or fairness of his
An employer may terminate the services of an or a new business strategy or model is or her termination.
Tax Procedures Act
employee on the ground of physical incapacity adopted in order to run the business more
due to illness or physical disability. Before doing efficiently and/or profitably and this involves The general rule set is that an employee’s
The Tax Procedures Act, 2015 is the substantive
this, an employer must provide evidence to reduction of staff number. employment must be procedurally and
law for tax administration in Kenya.
demonstrate that the employee is incapable substantively fair. Even where termination is
of carrying out his work and that there are no There are mandatory procedural requirements allowed pursuant to an employment contract and
It provides, among others, for the appointment
suitable or alternative opportunities available to that an employer must comply with before by giving due notice, the employee still has the
of tax representatives who are the appointed
the employee. terminating an employee’s employment on ability to make a claim for unfair termination.
representatives of a resident or non-resident
account of redundancy:
person who accrues or is likely to accrue a tax
Before terminating the contract of employment If the Employment and Labour Relations Court
liability in Kenya, with the duty to ensure that the
on the grounds of physical incapacity, an • The employer must notify the labour officer in finds that the termination was not justified or was
person complies with the tax laws.
employer must: charge of the areas where the employee, the unfair, it may order the employer to:
affected employee and/or the relevant labour
The Tax Procedures Act also provides for the
• explain to the employee in a language he union (if the affected employee is a member • reinstate or re-engage the employee in a
licensing of tax agents who are duly authorised
or she understands, the reasons for the of a union) of the reasons for and extent of position comparable to that in which the
to prepare tax returns, notices of objection,
termination; the intended redundancy; employee was employed prior to his or her
or otherwise transact business with the
• allow the employee to have a representative • The notices of intended redundancy must be termination;
Commissioner under a tax law on behalf of
of his or her choice present during the issued at least one month before the intended • pay the employee wages or salary in lieu of
a taxpayer.
explanation; and date of termination on account of redundancy; notice that should have been given;
• hear and consider any representations that • The employer must have consultations with • pay the employee the equivalent of up to 12
In addition to the Tax Procedures Act, dispute
the employee and the representative, if the employees; months gross monthly wages or salary as
resolution rules and procedures with respect to
any, may make regarding the employee’s • Where some of the employees of a particular compensation for unlawful termination; or
tax disputes are provided for in the Tax Appeals
termination. class will be declared redundant, the employer • make an order for damages payable to the
Tribunal Act.
must, in the selection the employees to be employee in instances where the employer's
After following due process, the employer may declared redundant, have due regard to actions were particularly egregious to the
terminate the employee’s employment by giving seniority, skill, ability and reliability of employee (for example discrimination).
notice or paying wages in lieu of notice. the employees.

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Value Added Tax Act products and input for the construction of houses The definition of permanent establishment under storage, or display of goods or merchandise
under an affordable housing scheme approved by the Income Tax Act is: belonging to the enterprise; (b) the
The Value Added Tax Act, 2013 (VAT Act) the Cabinet Secretary on the recommendation of maintenance of a stock of goods or merchandise
imposes VAT on various supplies of goods and the Cabinet Secretary responsible for housing. i. a fixed place of business through belonging to the enterprise solely for the purpose
services in Kenya including business carried which business is wholly or partly of storage, or display; (c) the maintenance of a
out over the internet or an electronic network East African Community Customs carried on and includes a place of stock of goods or merchandise belonging to the
including through a digital marketplace. Management Act management, a branch, an office, enterprise solely for the purpose of processing
a factory, a workshop, a mine, an by another enterprise; (d) the maintenance of a
The VAT Act came into force in September 2013 Customs matters and the imposition of import oil or gas well, a quarry or any fixed place of business solely for the purpose of
and has been amended since then by various duty on imports into East Africa are uniformly other place of extraction or purchasing goods or merchandise, or of collecting
statutes in order to achieve one of the intentions governed by the East African Community Customs exploitation of natural resources, information, for the enterprise; (e) and the
of the VAT Act which was to reduce the number Management Act, 2004. a warehouse in relation to a maintenance of a fixed place of business solely for
of exempt and zero rated items as these were person whose business is providing the purpose of carrying on, for the enterprise, any
eroding the tax base for VAT. However, since its Generally, import duty on finished goods is storage facilities to others, a farm, other activity.
enactment, the list of exempt items has increased levied at 25%on finished products and at 10% plantation or related activities are
by two thirds. for intermediate goods other than raw materials. carried on and a sales outlet; Double taxation treaties
The East Africa Community has introduced a
The Excise Duty Act maximum rate of 35% for Band 4 category of ii. a building site, construction, Kenya currently does not have a wide double
products including dairy and meat products, assembly or installation project any taxation treaty network. Double taxation
The Excise Duty Act, 2015 (Excise Duty Act) cotton and textiles, iron, steel, edible oils, supervisory activity connected to agreements (DTAs) are in force with Canada,
imposes excise duty on certain goods and services beverages and spirits, furniture, leather products, the site or project, but only if it Denmark, France, Germany, India, Iran, Korea,
such as money transfer services, mobile cellular fresh-cut flowers, fruits and nuts, sugar and continues for a period of more Norway, Qatar, South Africa, Sweden, the United
phone services, internet data services, fees, confectionery among others. than 183 days; Arab Emirates, the UK, Zambia and Seychelles.
charges and commissions charged by financial A number of other treaties, including for East
institutions relating to their licensed activities, The following are the main taxes that apply to iii. the provision of services, including African Community member states, have been
betting, gaming, prize competitions, alcoholic businesses in Kenya: consultancy services, by a person signed but are yet to be ratified.
products, tobacco products, certain imported through employees or other
foods and confectionary, imported furniture, Income (or corporation) tax personnel engaged for that Withholding tax on the payment of dividends
imported jewellery and fuels among others. purpose, but only where the and interest
Under the ITA, Chapter 470 Laws of Kenya, services or connected business
This Act came into force in December 2015 and income is taxed in Kenya provided that it accrues in Kenya, continue for a period of, Withholding tax (WHT) is applied to a wide
repealed the Customs and Excise Duty Act, in or is derived from Kenya, irrespective of the or periods exceeding in the range of payments made to both residents and
which had been in force since 1978. The various tax-residence of the business vehicle. The taxation aggregate, 91 days in any 12 month non-residents such as management, technical or
provisions of the repealed Act are now contained regime can therefore be said to be source-based. period commencing or ending in professional fees; royalties; consultancy and
in various statutes including the Excise Duty Act, the year of income concerned; agency fees; and insurance and reinsurance
the Miscellaneous Fees and Levies Act and Business profits for a company are taxed at premiums paid to non-resident (excluding
the East African Community Customs different rates depending on whether the iv. an installation or structure used in premiums with respect to aviation insurance).
Management Act. company is tax resident in Kenya or not. Tax the exploration for natural resources;
residence for a company means that: Provided that the exploration The WHT rate on payment of dividends to non-
The Miscellaneous Fees and Levies Act continues for a period of not less residents is 15% (and 5% for Kenya residents) and
• the body is a company incorporated under than 91 days; and on payment of qualifying interest is 15%.
The enactment of the Miscellaneous Fees and Kenyan laws; or Other withholding taxes apply on management
Levies Act, 2016 reintroduced certain levies that • the management and control of the affairs v. a dependent agent of a person who fees, royalties and other service payments to non-
were previously provided for in the repealed of the body was exercised in Kenya in the acts on their behalf in respect of residents. These rates may be lower where
Customs and Excise Duty Act. particular year of income under consideration; any activities which that person there is a DTA between Kenya and the country of
or undertakes in Kenya including residence of the trading partner.
The Act imposes an ad valorem Railway • the body has been declared by the Cabinet habitually concluding contracts, or
Development Levy (RDL) at (2%) and an ad Secretary for the National Treasury by notice playing the principal role leading Distribution tax
valorem Import Declaration Fee (IDF) at (3.5%) in the Gazette to be resident in Kenya for any to the conclusion of contracts that
on all goods imported into Kenya (although year of income. are routinely concluded without With effect from 1 January 2019, companies that
certain exemptions are available) as well as an material modification by the person. pay dividends out of untaxed profits and gains
export levy on the export of specified products, A company that is tax-resident in Kenya is taxed will be subject to a distribution tax equivalent to
such as animal hides and skins, and waste and on its business profits at 30%, while a company The definition of PE excludes activities that are of the resident corporate tax rate of 30%. The new
scrap metal. A reduced rate of RDL and IDF at which is not tax-resident in Kenya but has a a preparatory or auxiliary character such as regime replaces the previous compensating tax
1.5% is available for approved manufacturers permanent establishment (PE) in Kenya is taxed (a) the use of facilities solely for the purpose of regime. Payments of dividends out of income that
importing raw materials and intermediate on its profits at the rate of 37.5%. is exempt under the ITA are not subject to this tax.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

Repatriation of profits out of Kenya children of the parties) provided this is done Digital service tax 18. Are there any thin capitalisation rules
within two years of death or, if subject to a (restrictions on loans from foreign affiliates)?
Given the absence of foreign exchange controls in court case, two years from determination of Effective 1 January 2021, a new Digital Services
Kenya, repatriation of any profits and dividend is the case; Tax (DST) was introduced and is payable by a The Income Tax Act was amended by the Finance
possible subject to the payment of relevant • the transfer of property between spouses; non-resident person whose income arises from Act, 2021 which replaced the thin capitalization
taxes payable. • the transfer of property to immediate family; the provision of services derived from or accruing regime with an interest restriction regime. Under
• the transfer of property where spouses or a from a business carried out over the internet or the interest restriction regime, gross interest paid
Capital gains tax spouse and immediate family own 100%; and an electronic network including through a digital or payable to a lender which exceeds thirty per
• gains realised on the sale or transfer of listed marketplace at the rate of 1.5% of the gross cent (30%) of the earnings (excluding exempt
Capital gains tax (CGT) was re-introduced with securities with effect from January 2016. transaction value. income) before interest, tax, depreciation, and
effect from 1 January 2015. A capital gain is the Listed securities refer to securities that are amortization (EBITDA) is not an allowable
net gain from the disposal of capital assets. It is listed and traded on any securities exchange DST is a final tax for non-residents without a deduction for corporation tax purposes.
chargeable on the whole of a gain that accrues to approved under the Capital Markets Authority permanent establishment in Kenya. DST is “Interest” for the purposes of this limitation
a company or an individual on or after 1 January (Cap 485A of the Laws of Kenya) and any payable to the KRA on or before the 20th day includes payments that are economically
2015 on the transfer of property situated in Kenya, licenced securities exchange (i.e. the Nairobi of the month following which the digital service equivalent or similar to interest and expenses
whether or not the property was acquired before 1 Securities Exchange). was offered incurred in raising finance.
January 2015. The rate of tax is 5% of the net gain
and is a final tax that cannot be offset against other Where a transfer of property is necessitated 17. How are the following taxed: The interest restriction regime does not apply to:
income taxes. Pursuant to the Finance Act 2022, by a transaction involving the incorporation,
the rate of tax for capital gains will be 15% effective recapitalisation, acquisition, amalgamation, • Dividends paid to foreign corporate (a) Bank or financial institutions licenced
1 January 2023. separation, dissolution or similar restructuring shareholders? Dividends paid to foreign under the banking act (including
where the transfer is: shareholders are subject to withholding tax Microfinance institutions licenced and
For a company, the ‘property’ whose transfer is at the non-resident rate of 15% (lower if non-deposit taking microfinance business
subject to CGT covers all property and includes • a legal or regulatory requirement; provided for in a double tax treaty or to under the Mircrofinance Act 2006;
immovable and movable property, as well as • as result of a directive or compulsory a member state of the East African
interests arising out of such property (such as acquisition by Government; Community), which is a final tax. (b) Entities under the Hire Purchase Act;
leases, intellectual property (IP) and goodwill), • an internal restructuring within a group which
as well as stocks and bonds. For an individual, does not involve transfer of property to a • Dividends received from foreign companies? (c) Non-deposit taking institutions involved
‘property’ means land in Kenya as well as third party; or Foreign dividends received by a Kenyan tax in the lending and leasing business;
marketable securities in Kenya. • in the public interest and approved by the resident are not taxable in Kenya.
Cabinet Secretary. (d) Companies involved in the
The reintroduced CGT regime has had several • Interest paid to foreign corporate manufacture of human vaccines;
teething problems owing largely to the fact that the transaction will be exempt from CGT. shareholders? Interest payments to foreign
the 1985 CGT framework was reintroduced with shareholders whether or not they have a (e) companies engaged in manufacturing
mostly cosmetic changes. For example, it Minimum tax permanent establishment in Kenya are subject whose cumulative investment in the
currently fails to factor in inflation and provides no to withholding tax at the rate of 15% (lower if preceding five years from the
indexation relief, although this is to some extent The Finance Act, 2020 introduced a minimum tax provided for in a double tax treaty). commencement of this provision
compensated for with the low rate of the tax. payable at the rate of 1% of the gross revenues of is at least five billion shillings;
companies subject to corporation tax, effective 1 • IP royalties paid to foreign corporate
Certain transactions involving property dealings January 2021. shareholders? IP royalties paid to foreign (f) companies engaged in manufacturing
do not constitute a transfer for capital gains shareholders with a permanent establishment whose cumulative investment is at least
purposes. These include: The minimum tax will be payable where the in Kenya are subject to a withholding tax at five billon shillings, provided that the
instalment tax that would have ordinarily been the rate of 5% of the gross amount payable. investment shall have been made outside
• the transfer of property for the sole purpose payable by the entity is lower than the minimum IP royalties paid to foreign shareholders Nairobi City County and Mombasa County;
of securing a debt or a loan; tax whilst instalment tax will be payable if it is without a permanent establishment in Kenya
• the issuance by a company of its own shares higher than the minimum tax. The minimum tax is are subject to a withholding tax at the rate (g) holding companies that are regulated
or debentures; a final tax which cannot be carried forward and of 20% of the gross amount payable (lower if under the Capital Markets Act.
• the vesting of property in a personal offset against future taxes, unlike instalment taxes. provided for in a double tax treaty).
representative of a deceased person by However, in a ruling delivered by the High Court Debt includes all debt, including local debt such as
operation of law; on 19 April 2021 in Constitutional Petition No. bank overdrafts. It is not limited to loans granted
• the transfer of property by an individual to a E005 of 2021, the High Court in Machakos granted by affiliated companies.
spouse or former spouse as part of a divorce conservatory orders restraining the Kenya
settlement or bona fide separation agreement, Revenue Authority (the KRA) from enforcement
including a transfer to ‘immediate family’ (i.e. of minimum tax pending the hearing and
determination of a petition challenging minimum
tax filed at the High Court (the Petition). The case
is still pending determination.

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In addition to interest restriction rules, Kenyan (a) a non-resident person located in a preferential 21. How are imports and exports taxed? Import declaration fee
incorporated companies that are controlled by a tax regime;
non-resident person alone or together with four or (b) an associated enterprise of a non-resident Customs duty An import declaration fee (IDF) is payable at the
fewer other persons, are subject to a ‘deemed person located in a preferential tax regime; rate of 3.5% of the customs value of all goods
interest’ on loans that are provided interest- (c) a permanent establishment of a non-resident The duty is charged on goods imported into imported into Kenya for home use (use in Kenya).
free by the non-resident person controlling the person operating in Kenya where the Kenya depending on their assessed customs In this respect every importer of goods is required
company or a non-resident associate of the non- nonresident person is located in a preferential value. The East African Community Customs to complete an import declaration form. A lower
resident person controlling the company. KRA tax regime. Management Act provides for several methods of rate of 1.5% is available on the importation of raw
prescribes the rate of deemed interest from time ascertaining the customs value of goods imported materials and intermediary goods by approved
to time. A preferential tax regime is defined as: into the EAC for purposes of levying customs duty manufacturers and input for the construction
and the transaction value method is the primary of houses under an affordable housing scheme
KRA would thus deem interest on any such (a) any Kenyan legislation, regulation method for ascertaining the customs value. The approved by the Cabinet Secretary on the
interest free loans and a withholding tax at the (b) or administrative practice which transaction value method generally relies on the recommendation of the Cabinet Secretary
rate of 15% would be payable. The implication is (c) provides a preferential rate of tax to declared cost, insurance and freight (CIF) value of responsible for housing.
that withholding tax is payable to the KRA on the (d) such income or profit, including the goods imported. The applicable customs duty
deemed interest, although the deemed interest (e) reductions in the tax rate or the tax base; or rate is prescribed in the EAC Custom External Additionally, an exemption is available on the
does not actually have to be paid by the company (f) a foreign jurisdiction which: Tariff, 2017, commonly referred to as the CET importation of any other goods provided for in
to the lender. (g) does not tax income; Code. the Act.
(h) taxes income at a rate that is less than
19. Must the profits of a foreign subsidiary be twenty per cent; Value added tax Railway development levy
imputed to a parent company that is tax resident (i) does not have a framework for the
Kenya (controlled foreign company rules?) exchange of information; Value added tax (VAT) is chargeable on goods A railway development levy is payable at the rate
(j) does not allow access to banking information; and services imported into Kenya unless the of 2% of the customs value of goods imported into
Yes, where an ultimate parent entity of a (k) lacks transparency on corporate structure, goods or services are exempted from VAT. The Kenya for home use (use in Kenya). Exemption
multinational enterprise group is tax resident in ownership of legal entities located therein, applicable rate could be the standard rate of 16% from this fee is only available to very few specific
Kenya, the entity will be required to submit to beneficial owners of income or capital financial or the zero rate. Zero rating and exemption from goods prescribed in the Miscellaneous Fees and
the Commissioner a return describing the group’s disclosure or regulatory supervision VAT is granted sparingly to essential goods and Levies Act. A lower rate of 1.5% is available on the
financial activities in Kenya, where its gross services. The taxable value of imported goods for importation of raw materials and intermediary
turnover exceeds the prescribed threshold, and Under the Transfer Pricing Rules, any person to purposes of VAT is the sum of: goods by approved manufacturers and input for
in all other jurisdictions where the group has a whom the rules apply is required to develop a the construction of houses under an affordable
taxable presence, not later than twelve months Transfer Pricing Policy to determine the arm’s • the value of the goods ascertained for the housing scheme approved by the Cabinet
after the last day of the reporting financial year of length price in accordance with the guidelines purpose of customs duty, in accordance Secretary on the recommendation of the Cabinet
the group. The information to be included in the and make his or her analysis available upon with the East African Community Customs Secretary responsible for housing.
Return includes information on revenue, profit or request by the Commissioner of Domestic Taxes. Management Act, whether or not any customs
loss before income tax paid, income tax accrued, Transfer pricing policies should be updated on duty is payable on the goods; Additionally, an exemption is available on the
stated capital, accumulated earnings, number of an annual basis. • to the extent not included above, (a) the cost importation of any other goods as provided for in
employees and tangible assets other than cash or of insurance and freight incurred in bringing the in the Miscellaneous Fees and Levies Act.
cash equivalents with regard to each jurisdiction in There are no specific transfer pricing penalties. the goods to Kenya; and (b) the cost of
which the group operates. However, the Commissioner of Domestic Taxes services treated as part of the imported Excise duty
can conduct an audit, make adjustments to the goods; and
20. Are there any transfer pricing rules? taxable profit, and demand tax where applicable. • the amount of customs duty, if any, paid on Excise duty is chargeable on the manufacture and
the goods. importation of goods which are classified as
Transfer pricing in Kenya is regulated by the The Tax Procedures Act provides that the failure excisable goods pursuant to the Excise Duty Act,
ITA Chapter 470, Laws of Kenya, the Income to keep, maintain or retain a document required The Finance Act 2022 has amended the VAT Act 2015, at the rates prescribed in the Excise Duty
Tax (Transfer Pricing) Rules, 2006 and the by a tax law without reasonable cause shall be to provide for standard rating of services exported Act.
Organisation for Economic Cooperation and liable to a penalty equal to the higher of: out of Kenya save for services provided with respect
Development Guidelines (OECD Guidelines). The to business process outsourcing which have been Export levy
OECD Guidelines are applicable in the absence of • 10% of the tax payable by the person under zero rated for VAT purposes. For services to be
detailed local guidelines. the tax law to which the document relates deemed to have been exported out of Kenya, An export levy is payable on certain goods
and to the reporting period to which the the direct beneficiary of the services must be a exported out of Kenya as specified in the Excise
The transfer pricing rules and regulations are failure relates; or foreign person and the services must be used Duty Act. Such goods include hides, skins and
applicable where a resident person carries on • where no tax is payable in the reporting or consumed outside Kenya. other animal products used in the production of
business with: period, the penalty shall be KES 100 000. leather and fur clothing, and scrap metal.

The applicable rate of the export levy is an ad

valorem rate based on the custom value of the
goods. The export levy does not apply to goods
exported to the EAC partner states.

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Anti–adulteration Levy The Finance Act 2022 has introduced a definition Pay as you earn and personal income tax returns Accordingly, some employers are voluntarily
of “permanent home” under section 2 of the ITA deducting and remitting contributions at the
The Act also provides for an anti–adulteration levy to include a place where an individual resides or Pay as you earn (PAYE) is the method of above rates while others are deducting and
imposed on the customs value for Kerosene which is available to that individual for residential deducting income tax from salaries and wages. remitting contributions at the old rates (i.e. KES
imported into Kenya’s customs territory. The levy purposes in Kenya, or where in the opinion of It applies to all income and benefits from any 400/= of which KES 200/= is deducted from the
is Kenya Shillings eighteen (KES 18) imposed on the the Commissioner the individual’s personal or employment (namely wages, salaries, bonuses, employee’s salary and KES 200/= is contributed
customs value of kerosene.The levy is refundable economic interests are closest. commissions, directors’ fees and taxable benefits). by the employer).
where the kerosene is used by a licensed or
registered manufacturer of paint, resin or shoe A resident individual is liable to tax on his or National Social Security Fund National Hospital Insurance Fund
polish. her world-wide income arising from his or her
employment, regardless of where it is paid or Social security contributions are made to Each employee contributes a sum, depending on
Motor vehicle processing fee where the services were rendered. A non-resident the National Social Security Fund (NSSF). his or her salary, that must be deducted by the
is only liable to tax for the income derived Participation in this fund is mandatory and is employer from his or her salary and submitted
The Act imposes a processing fee of Kenya from Kenya. intended to provide a state retirement benefit to the National Hospital Insurance Fund. The
Shillings ten thousand (KES 10,000) on all motor for salaried workers. Contribution is made by both contributions are used to offset the costs of
vehicles excluding motor cycles imported or 24. What income tax and social security the employer and the employee. The employee’s medical treatment, but they only cover a fraction
purchased duty free to be levied before clearance contributions must be paid by the employee and portion is deducted from his or her salary and of actual costs.
as provided in the East African Community the employer during the employment relationship? the total amount is paid by the employer to NSSF.
Customs Management Act, 2004
Competition
A key requirement in the remittance of taxes and Under the current NSSF regime, 12% of an
22. Is there a wide network of double tax treaties? other mandatory deductions is the registration employee’s monthly earnings (with 6% deducted
25. Are restrictive agreements and practices
and obtaining of a Personal Identification Number from the employee’s earnings and 6% drawn from
regulated by competition law? Is unilateral (or
Kenya currently does not have a wide double (PIN) from the Kenya Revenue Authority. The PIN the employer) should be contributed into the
single firm) conduct regulated by competition law?
taxation treaty network. Double taxation is required for the following transactions: pension fund established by the Act. This is subject
agreements (DTAs) are in force with Canada, to a maximum of KES 2 160 for employees earning
The Competition Authority
Denmark, France, Germany, India, Iran, Korea, • incorporation of companies; above KES 18 000.
Norway, Qatar, South Africa, Sweden, the United • registration of property titles and
Competition law in Kenya is regulated by the
Arab Emirates, the UK, Zambia, and Seychelles. A stamping of instruments; Currently, the upper earning limit (UEL) is
Competition Act, No. 12 of 2010 (the Competition
number of other treaties, including for East African • approval of plans and payments to the KES 18 000 while the lower earnings limit (LEL)
Act). The Competition Act is enforced by the
Community member states, have been signed but county authorities; is KES 6 000. The contributions relating to the
Competition Authority of Kenya (the Competition
are yet to be ratified. • registration with the National Social Security earnings below the LEL (a maximum of KES 720)
Authority) and the Competition Tribunal, which
Service and National Hospital Insurance Fund; are credited to what is known as a Tier I account
hears appeals against decisions made by the
23. In what circumstances are employees taxed • registration of motor vehicles, transfer of while the balance of the contribution for earnings
Competition Authority.
in Kenya and what criteria are used? motor vehicles, and licensing of motor v between the LEL and the UEL (up to a maximum
vehicles; of KES 1 440) is credited to what is known as a
Restrictive agreements and practices
Income tax is charged for each year of income • registration of business names; Tier II account.
on all the income of a person, whether resident • underwriting of insurance policies;
The Competition Act applies to all economic
or non-resident, which accrued in or was derived • trade licensing; The NSSF regime also provides a full opt-out
activity within or having an effect in Kenya. Part
from Kenya. • importation of goods and customs clearing option for employers to pay contributions in
3 of the Competition Act regulates restrictive
and forwarding; respect of Tier II contributions into a contracted-
trade practices and prohibits agreements
An individual is resident for tax purposes if: • payment of deposits for power connections; out scheme that it participates in or has
between undertakings, decisions by associations
• all contracts for the supply of goods and established. Such a scheme must have been
of undertakings, decisions by undertakings or
• he or she has a permanent home in Kenya and services to government ministries and approved under a Reference Scheme Test set out
concerted practices by undertakings which
was present in Kenya for any period in a public bodies; by the Retirement Benefits Authority. In this case,
have as their object or effect the prevention,
particular • opening accounts with financial institutions pensionable earnings that are below the statutory
distortion or lessening of competition in trade in
year of income under consideration; or and investment bank; wage are subject to contributions to the NSSF and
any goods or services in Kenya, or a part of Kenya
he or she has no permanent home in • registration and renewal of membership those that are above the statutory wage become
unless they are exempt in accordance with the
Kenya but: by professional bodies and other subject to contributions to the voluntary scheme.
Competition Act.
• was present in Kenya for a period or licensing agencies;
periods • registration of mobile cellular pay bill and (Due to an existing court case in which the
Agreements, decisions and concerted practices
amounting in the aggregate to 183 days or till numbers by telecommunication operators. lawfulness of the above NSSF rates has been
contemplated include agreements concluded
more in that year of income; or was present challenged, the NSSF has not demanded
between parties in a horizontal relationship or
in Kenya in that year of income and in each compliance with the above rates of contribution.
parties in a vertical relationship or both.
of the two preceding years of income for
periods averaging more than 122 days in
each year of income.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

Unilateral conduct The Competition Rules consider that, among The merger thresholds prescribed by the Competition Rules are outlined in the table below:
others, the following categories of transactions do
Unilateral conduct, such as abuse of dominance not qualify as mergers:
and abuse of buyer power, is prohibited by the MERGERS NOT REQUIRING
Competition Act. i. joint ventures that are not MERGERS SUBJECT TO AN
APPROVAL OF THE COMPETITION MERGERS REQUIRING APPROVAL
full function; EXCLUSION APPLICATION
AUTHORITY
Exemptions ii. the appointment of a receiver
• Mergers where the combined • Mergers where the combined • Mergers where the minimum
or administrator or entry into an
turnover or assets of the merging turnover or asset value of the combined turnover or asset value
The Competition Act allows undertakings to apply arrangement with creditors that does not
parties (whichever is higher) does merging parties (whichever is of the merging parties (whichever
for an exemption from the Competition Authority result in a change
not exceed KES 500 million. higher) is between KES 500 is higher) is KES one billion
in respect of any category of agreement, decision of control;
• Mergers which meet the COMESA million and KES one billion. shillings and the turnover or asset
or practice that is considered to be a restrictive iii. the acquisition of an additional interest
Competition Commission Merger • Transactions where the combined value of the Target (whichever is
trade practice under the Competition Act. in an undertaking by an acquiring
Notification threshold and at least turnover or asset value of the higher) exceeds KES 500 million.
The Competition Authority may grant an undertaking that already controls the
two-thirds of the turnover or merging parties (whichever is • Where the turnover or assets
exemption if it is satisfied that there are undertaking in question (in a manner
assets (whichever is higher) is not the higher) is above KES one (whichever is the higher) of the
exceptional and compelling reasons of public contemplated under the Competition
generated or located in Kenya. billion but the turnover or asset acquiring undertaking is above
policy as to why the agreement, decision or Act) unless the transaction results in the
value (whichever is the higher) of KES 10 billion and the merging
concerted practice should be exempted. However transfer from joint control to sole control;
the target is less than KES 500 parties are in the same market
conduct which amounts to an abuse of dominance iv. the purchase of current assets in the
million. or can be vertically integrated
or abuse of buyer power cannot benefit from the ordinary course of business; and
• Transactions involving firms unless the transaction is
exemption process. v. internal restructurings between a
engaged in prospecting in the notifiable to the COMESA
holding company and its wholly owned
carbon based mineral sector Competition Commission.
In addition, the Competition (General) Rules, 2019 subsidiaries or between subsidiaries
irrespective of asset value. • In the carbon based mineral
(the Competition Rules) contains block exemption which are wholly owned by undertakings
sector, if the value of the reserves,
guidelines (the Block Exemption Guidelines) in belonging to the same group.
the rights and associated assets
respect of franchise agreements, stadia and sport
to be held as a result of the
branding rights agreements, content development On 1 June 2021, the Joint Venture Guidelines
merger exceeds KES 10 billion.
and broadcasting agreements and one-off (the JV Guidelines) came into effect. The JV
• Where the undertakings operate
sporting and promotional events. The Block Guidelines expound on joint ventures, providing
in COMESA, meet the COMESA
Exemption Guidelines exempt the category of guidance as to the types of joint ventures that
Merger Notification thresholds
agreements listed above from the prohibition on require notification, the filing parties in a joint
but 2/3rds or more of their
restrictive trade practices in the Competition Act venture transaction, the basis for determining
turnover or assets (whichever is
provided that they meet the criteria prescribed in the assets and turnovers in joint ventures and the
higher) is generated or located
the Block Exemption Guidelines. Parties who have Authority’s approach to reviewing and analyzing
in Kenya.
conducted a self-assessment and fall within the joint venture transactions. Pursuant to the JV
provisions of the Block Exemption Guidelines are Guidelines, joint ventures that fall outside the
required to notify the Competition Authority that scope of the merger regime are subject to
their agreement meets the Block Exemption scrutiny under the provisions of the Competition
Guidelines prior to execution of the agreement. Act and the Competition Rules regulating
restrictive trade practices. It is important to note that where transactions are notifiable to the COMESA Competition Commission (the
26. Are mergers and acquisitions subject CCC) and as such do not require approval from the CAK, the merging parties are required to inform the CAK
to merger control? in writing that the transaction has been notified to the CCC within 14 days of filing the notification to the CCC.
There is no prescribed format for this notification.
The Competition Act deems a merger to have
occurred when one or more undertakings, directly
or indirectly, acquire or establish, direct or indirect
control over the whole or part of the business of
another undertaking The Competition Rules clarify
that a merger shall not be subject to notification
if it is taking place wholly or entirely outside of
Kenya and has no local connection.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

Merger Filing Fees The Industrial Property Act, Trade Marks Act and The ACA has commenced the intellectual property
Copyright Act have largely been drafted in line rights (IPR) recordation process. To enable
The Competition Authority imposes merger filing fees based on the combined turnover with international best practice as contained in the effective compliance by IPR holders, the authority
or assets of the merging parties (whichever is higher). various international treaties governing IP rights has extended the deadline for recordation of trade
that Kenya is a party to, most notably the marks to 1 January 2023. The significance of this
Agreement on Trade-Related Intellectual Property is that from 2 January 2023, it shall be illegal to
Act (TRIPS). The Anti-Counterfeit Act borrows import into Kenya goods bearing a registered
heavily from the South African Anti-Counterfeit Act. trade mark, trade name or copyright, for
COMBINED TURNOVER/ASSETS OF THE MERGING PARTIES FILING FEE PAYABLE
commercial purposes unless the IPR is recorded.
The Anti-Counterfeit Act, provides a means of Further, not only are registered IPR owners
No filing fee payable enforcement of IP rights relating to trade marks required to record their registered IPRs, importers
KES Five Hundred thousand and one (500,001)
(exclusion application is still and copyright, where these rights are infringed are also tasked with the responsibility of ensuring
– KES One billion (1,000,000,000)
required) through counterfeiting activities. It provides for that IPRs relating to the goods imported are
seizure and destruction of counterfeit goods by declared. Failure by importers to adhere to this
KES One billion and one (1,000,000,001) its inspectors and criminal sanctions and penalties requirement will result in non-compliant importers
KES One million (1,000,000)
– KES Ten billion (10,000,000,000) against offenders. being prosecuted and penalized.

KES Ten billion and one (10,000,000,001) Key government agencies involved in the Consumer Protection
KES Two million (2,000,000)
– KES Fifty billion (50,000,000,000) IP rights landscape in Kenya are: the Kenya
Industrial Property Institute (KIPI), the Copyright 28. Are marketing agreements regulated?
Board of Kenya (KECOBO), the Judiciary and the
Above KES Fifty billion (>50,000,000,000) KES Four million (4,000,000)
Anti-Counterfeit Agency (ACA). Marketing agreements made between parties are
usually made with the intention of dictating the
To a large extent, the KIPI and KECOBO regulate quality of products to be maintained in the market;
A merger, which meets the merger notification IP rights in accordance with their respective ascertaining the standardisation of packages
threshold under the Competition Rules, must
Intellectual Property mandates. KIPI is responsible for the granting of and containers used; and regulating the flow of
be approved by the Competition Authority trade marks, certification marks, patents, industrial products to the market. These agreements are not
27. Is IP protected in Kenya? designs and utility models certificates.
prior to its implementation. In the absence regulated by any governmental authority and are
of an authorising order by the Competition The Industrial Property Tribunal under the commercially based.
IP laws in Kenya are essentially contained in the Industrial Property Act hears and determines
Authority, the merger will be deemed to have
following Acts and rules or regulations under patent, utility model and design infringement
no legal effect and any obligations imposed by 29. Are there consumer protection laws
these Acts where applicable: cases. Trade mark infringement disputes are
the merger agreement will not be enforceable in and if so, what are they?
legal proceedings. In addition, a person who fails however heard, in the first instance, by the High
• Constitution of Kenya, 2010 (Constitution); Court.
to notify a merger to the Competition Authority The Consumer Protection Act 46 of 2012
• Industrial Property Act, 2001;
commits an offence and is liable on conviction to (the Consumer Protection Act) which came
• Trade Marks Act, 2001; In 2020, KECOBO launched the National Rights
imprisonment for a term not exceeding five years into force on 14 March 2013, governs consumer
• Copyright Act, 2001; and Registry (NRR) to facilitate the online registration
or to a fine not exceeding KES 10 million or both. protection in Kenya. Prior to its enactment,
• Anti-Counterfeit Act, 2008. of copyright. The NRR platform allows a rights
The Competition Authority may impose a financial Kenya did not have a specific law governing
penalty of an amount not exceeding 10% of the holder to access their work and generate a consumer protection.
Plant variety protection in Kenya is regulated certificate at any time. Copyright registration is
preceding year’s gross annual turnover in Kenya
under the Seeds and Plant Varieties Act (Chapter not mandatory in Kenya, but is highly advisable
of the undertaking or undertakings in question, for The main objective of the Consumer Protection
326 of the Laws of Kenya) and Regulations under as the certificate can serve as formal proof of
implementing a merger without approval. Act is to provide for the protection of consumers
this Act. ownership of copyright works. and prevent unfair trade practices in consumer
The Competition Authority is further empowered transactions. It generally applies to transactions
Unregistered IP rights, such as trade secrets, are In 2021, KECOBO introduced a waiver of copyright
to step in and propose structural and behavioural involving the supply of goods and services, and
also protected under English Common law, which registration fees on the National Rights Registry
remedies where a merger raises competition has specific provisions on certain items such
is applicable in Kenya by virtue of the Judicature (NRR) to incentivize right owners to register their
or public interest concerns. In addition, the as credit agreements, leases, repairs to motor
Act, Cap 8. works. The waiver subsequently expired on 30
Competition Authority may require parties to vehicles and internet agreements.
mergers that fall below the exclusion thresholds June 2022 and the prescribed fees set out in the
to seek its approval where it is likely that the Second Schedule of the Copyright Regulations, Notably, there are provisions relating to consumer
merger will substantially prevent or lessen 2004 are applicable. protection in the Competition Act, which grants
competition, restrict trade or raise public interest the Competition Authority a mandate to carry
concerns. out inquiries, studies and research into matters
relating to competition and to protect the
interests and welfare of consumers.

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The Consumer Protection Act gives a consumer • making an unconscionable representation. • it is an offence for a person to supply goods The Competition Act envisages collaboration
the right to commence legal action on behalf of a In determining whether a representation is that are unsafe, banned or which do not between the Competition Authority and other
class of people in relation to any contract for the unconscionable some of the matters that will comply with a prescribed consumer product agencies. The Competition Authority is required to
supply of goods or services to the consumer. This be taken into account include whether the safety standard, to a consumer; consult with the Kenya Bureau of Standards in all
right cannot be ousted by any agreement between person making the representation • it is an offence for a person to supply goods matters involving the definition and specification
the parties. The consumer rights include: knows inter alia: that do not comply with a prescribed product of goods and the grading of goods by quality;
information standard, to a consumer; and the receipt of notifications from recognised
• Implied warranties: A supplier of goods and • that the consumer is not reasonably able to • the Competition Authority will require a consumer bodies of alleged infringement of the
services is deemed to warrant that the goods protect his or her interests due to supplier to act where it appears to the Authority consumer welfare and product liability provisions
and services are of a reasonably merchantable disability, ignorance, illiteracy, or inability that the goods may cause injury to any person; for the purpose of initiating investigations.
quality. There are additional implied to understand language; the supplier has not taken satisfactory action
warranties • the price grossly exceeds the price at which to prevent the goods causing injury; or the The Pharmacy and Poisons Board (the PPB) has
that are deemed to apply notwithstanding any similar goods or services are readily goods supplied to the consumer do not enacted the Pharmacy and Poisons (Registration
provisions to the contrary in the agreement. available to like consumers; comply with a prescribed consumer product of Health Products and Technologies) Rules,
• Ambiguities to be interpreted in favour of • there is no reasonable probability of safety standard. 2022 (the PPB Rules). Under the PPB Rules, a
the consumer: Any ambiguities in a consumer the consumer making payment in full; • The actions required to be taken by the supplier person who intends to import, manufacture or
agreement shall be interpreted in favour of • the consumer transaction is excessively are to: sell a health product or technology is required to
the consumer. one-sided in favour of someone other • recall the goods; submit an application for registration of the health
• Estimates: If a supplier of goods or services than the consumer; • disclose to the public (or a class of product or health technology to the PPB.
provides an estimate, the supplier cannot • that a statement of opinion is misleading persons)
charge the consumer an amount that exceeds and the consumer is likely to rely on it to the nature of the defect in the goods, 31. Are there any laws around content regulation
the estimate by more than 10%, unless his or her detriment; or circumstances in which their use is dangerous for instance regulating broadcasting and
additional or different goods or services • the consumer is being subjected to undue and the procedures for disposing of the exhibition of films?
are provided. pressure to enter into the transaction. goods; and
• Unsolicited goods or services: Except as • inform the public (or a class of persons) The Film and Stage Plays Act (Chapter 222 of
provided under the Consumer Protection Act, The Consumer Protection Act also provides that the manner and period within which the Laws of Kenya) (the Film and Stage Plays
a recipient of unsolicited goods or services has operators and/or suppliers should not the supplier undertakes to repair the Act) provides a statutory basis for the making
no legal obligation in respect of their use communicate or cause to be communicated any goods, replace the goods, or refund and exhibition of cinematograph films and the
of disposal. representation that is prescribed as a prohibited the consumer the price of the goods; licensing of stage plays, theatres and cinemas.
representation. Prohibited representations would
• Advertising on internet gaming sites: be prescribed by the relevant authority and likely • where a manufacturer supplies goods The Film and Stage Plays Act establishes the
Advertisements (including sponsorship cover instances such as where a supplier seeks to and such goods are found to have a defect as Kenya Film Classification Board (KFCB) to
relationships) on internet gaming sites sell an illegal product. a result of which an individual suffers loss regulate the creation, broadcasting, possession,
that are operated contrary to the law or injury, such manufacturer is liable to distribution and exhibition of film content.
are prohibited. Similarly, the Competition Act prohibits compensate the individual for the loss or
unconscionable conduct and making false or injury suffered. KFCB is also mandated under the Kenya
The Consumer Protection Act prohibits ‘unfair misleading representations in the course of Information and Communications Act (Chapter
practices’ and provides for radical sanctions supplying goods or services. The Competition An individual who suffers loss or damage as a result 411A of the Laws of Kenya) (KICA) to impose
against a supplier who engages in unfair practices. Authority may initiate investigations into a of defective products may recover compensation age-related restrictions on content. This ensures
The following, among others, are deemed to consumer complaint either on its own initiative through court action. In such an action, the that any content depicting or containing scenes
be unfair practices under the Consumer or upon receipt of information or a complaint supplier may defend him or herself on the following that are over 18 appropriate only or is delivered in
Protection Act: from any person, government agency, Ministry, or grounds: a language intended for an adult audience, is not
consumer body. aired during the watershed period (5.00 am to
• making false, misleading or deceptive • the defect in the products did not exist at the 10.00 pm).
representations, including representing that 30. How are product liability and product time of the supply of the goods;
goods or services have sponsorship, approval, safety regulated? • the defect existed only because there was KICA also mandates KFCB to enforce the
performance or characteristics that they do compliance with a mandatory standard for them; Programming Code for Broadcasting Services
not have, and representing that goods or The Competition Act sets out the rights of • the state of scientific or technical knowledge (the Programming Code). The Programming
services are of a particular standard, quality, consumers with respect to product liability, at the time when the supplier was supplied by Code stipulates that all programme and non-
grade, style or model, if they are not; providing for the required standards; liability in the actual manufacturer was not such as to programme matter – commercials, infomercials,
respect of unsuitable or defective products; and enable the defect to be discovered; or documentaries, programme promotions,
• a representation that the goods have been a mechanism for redressing infringement. Some of • if the defects were comprised in other finished programme listings, community service
used to an extent that is materially different the key provisions include that: goods, the specific defects are only announcements and station identifications – are
from the fact; attributable to the design of the finished verified and classified before they air.
goods, the markings on or accompanying the
• a representation that a specific price finished goods, or the instructions or warnings
advantage exists, if it does not; and given by the manufacturer of the finished goods.

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The KFCB recently issued the Proposed Co- The DPA establishes the ODPC to oversee The Access to Information Act requires an entity Central Bank as empowered under the National
Regulation Framework for Broadcast, Video implementation and enforcement of the DPA. to correct, update or annotate information held Payment System Act and the Central Bank of
on Demand and Over the Top Content,2022 in Amongst other duties, the Data Commissioner is on a data subject at his or her request. Kenya Act.
Kenya. The framework, which underwent public tasked with publishing guidance on how certain
participation in May 2022, proposes a three-tier parts of the DPA are to be interpreted and affected. Sector laws (such as those governing health, • Alternative lending practices are growing
approach to regulation, that is self-regulation, co- The Data Commissioner was appointed on 16 financial transactions and telecommunications) rapidly in Kenya. Fintech enterprises are
regulation and regulation by KFCB. November 2020 and has developed some data contain provisions requiring service providers to targeting micro-enterprises (small businesses)
protection guidelines to facilitate the effective maintain customer data in a secure manner and that cannot access formal credit facilities
32. Are there any restrictions/prohibitions on the implementation of the Data Protection Act. limits the use and transfer of such data. through banks. The uptake of mobile money
establishment of certain types of businesses? in Kenya has enabled alternative lenders to
Additionally, the Ministry of ICT, Innovation and Under the DPA, a person is not permitted to use use this convergence of technology to reach
Nairobi City County has introduced a Betting, Youth Affairs issued three sets of regulations to personal data for commercial purposes unless more customers and lower the cost of
Lotteries and Gaming (Amendment) Bill (the guide implementation of DPA. These are: express consent has been given by the data obtaining credit. In the process, they have
Gambling Bill) that seeks to only permit operation subject. Further, the collection, use and purpose developed new ways of extending credit to
of betting, lotteries and gaming premises in i. the Data Protection (General) Regulations, for collection of personal information must be the small and micro-business segments
establishments within a five (5) star rated hotel as 2021 (the General Regulations); lawful, disclosed and limited; and collection that they serve. The formal lending industry 
designated by the Tourism Regulatory Authority. of personal data must be by lawful means in is regulated by the Central Bank, but there
ii. the Data Protection (Registration of Data accordance with the provisions prescribed under is no legislative framework governing
The Gambling Bill proposes to prohibit the Controllers and Data Processors) Regulations, the DPA. alternative lending platforms.
broadcasting of video or audio programming 2021 (the Registration Regulations); and
that promotes betting and gaming during the Further, as per the General Regulations, a person • The Central Bank of Kenya (Amendment)
watershed period (5.00 am to 10.00 pm); and to iii. the Data Protection (Compliance and is only permitted to use personal data for direct Act, 2020 (CBK Amendment Act) provides
introduce only cashless modes of payment for Enforcement) Regulations, 2021 (the marketing if: (i) the data is collected directly from the Central Bank of Kenya (CBK) with the
betting within gambling establishments. Enforcement Regulations) (together a data subject and the data subject is notified powers to license and exercise oversight over
the Regulations). of and consents to the intended use of the digital credit providers. The CBK Amendment
personal data for purposes of direct marketing Act requires digital money lenders to obtain
Data Protection
Data processors and controllers who meet (ii) where the person provides the data subject annual licences from the CBK, and to disclose
the prescribed thresholds in the Registration with a simplified opt out mechanism for the data any positive or negative information of its
33. Are there specific statutory data protection
Regulations will be required to register with the subject to request not to receive direct marketing customers to licensed credit reference bureaus,
laws? If not, are there laws providing equivalent
ODPC from 14 July 2022. communications; and (iii) where the data subject where such information is deemed to be
protection?
has not made an opt out request. required for the discharge of the functions of
Given these developments, , we anticipate that the digital lenders and the licensed credit
The Data Protection Act, 2019 (the DPA) was
enforcement of the DPA and the Regulations will reference bureaus.
assented to in November 2019 and is now the Fintech
be a key priority for the ODPC. Compliance must
overarching legislation regulating the handling of
therefore be an immediate priority for controllers • Further, the Central Bank of Kenya
personal data in Kenya. However, the Constitution, 35. Is fintech regulated? If so, how?
and processors. (Digital Credit Providers) Regulations, 2022
the Access to Information Act and case law by the
(DCP Regulations), were gazetted on
courts constitute additional sources of law on There are no sector-specific regulations
The Children Act, 2021 (the Children Act), 18 March 2022. Digital credit providers (DCPs)
data protection. governing fintech in Kenya. Fintech businesses
enacted on 7 July 2022, expands the scope are required to obtain a license from the
have to identify and comply with the regulations
of the right to privacy under Article 33 of the CBK, with existing DCPs having a six (6)
The DPA applies to the processing of personal controlling the specific area of business that they
Constitution of Kenya 2010 by protecting the month grace period to apply for the licence, i.e.
data by resident and non-resident data controllers operate in and acquire the approvals required,
privacy of a child, their family, their private affairs by 18 September 2022. DCPs may only engage
and data processors where the data subjects if any.
and correspondence from unlawful interference. in business activities permitted by the CBK and
are located in Kenya. It enshrines the obligations
Parents and guardians have the right to exercise may not undertake deposit taking business or
of data controllers and data processors in The Kenyan fintech sector remains one of
reasonable supervision over the conduct of take cash collateral for loans.
their handling of personal data and provides the fastest growing in Africa, with technology
their children.
for a registration regime for data controllers increasingly defining the day-to-day running
• The Computer Misuse and Cybercrimes Act
and processors with the Office of the Data of businesses in the country. Notable activities
34. Are there laws protecting personal No. 5 of 2018 (the Computer Misuse Act)
Commissioner (ODPC). The DPA outlines the in the fintech space include:
information? aims to protect the confidentiality, integrity
rights of data subjects including the requirement
and availability of computer systems, programs
to obtain the consent of the data subjects in • Digital payments and remittances
The Constitution provides, in Article 31, that and data as well as facilitate the prevention,
certain circumstances, and mandates adherence are no longer the preserve of licensed banks.
every person has the right to privacy which detection, investigation, prosecution and
to data protection principles by data controllers While today these services are still offered
inter alia includes the right to not have information punishment of cybercrimes. It establishes
and data processors. It further includes provisions by banks, other nonbank entities are offering
relating to his or her family or private affairs the National Computer and Cybercrimes
on cross- border transfer of data that must be similar services under the regulation of the
unnecessarily required or revealed. It also includes Co-ordination Committee (the Committee)
complied with by both data controllers and
the right to not have the privacy of an individual’s and vests the Committee with a wide ambit of
data processors.
communications infringed.

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analyzing and responding to cyber threats management and governance in Kenya include: Regulations)) serve as the main framework for appeals against decisions made by NEMA
and cyber incidents that threaten Kenyan environmental law in Kenya. The EMCA mirrors the with respect to issues such as environmental
cyberspace. This is significant given the The Constitution environmental rights and duties provided for under licensing.
increasing interest in distributed ledger the Constitution.
technology among innovators in Kenya. The promulgation of the Constitution effectively iv. County Environment Committees: These
elevated environmental rights and environmental The institutional framework under this Act include: committees are responsible for the proper
• The CBK also published a Discussion Paper on issues generally to constitutional status under the management of the environment within
Central Bank Digital Currency on 10 February Bill of Rights. i. National Environmental Management Authority the county and the development of county
2022 for stakeholder comments on the (NEMA): This is the national regulatory agency strategic environmental action plans.
opportunities and risk of using a Central Bank Article 42 of the Constitution states that: ‘Every charged with enforcing the Act’s provisions.
Digital Currency (CBDC) as legal tender person has the right to a clean and healthy It exercises general supervisions and co- The Environmental and Land court which is
in Kenya. The Discussion Paper outlined the environment, which includes the right: to have the ordination overall matters relating to the established pursuant to Article 162 of the
evolution of payments globally and in Kenya environment protected for the benefit of present environment and is the principal instrument of Constitution with the same status as the High Court
and discussed recent digital payment and future generations through legislative and government in the implementation of all policies of Kenya also plays a pivotal role in the enforcement
methods including electronic money, CBDC, other measures, particularly those contemplated in relating to the environment. NEMA reviews of environmental laws in Kenya. It has both original
stable coins and other cryptocurrencies. Article 69; and to have obligations relating to the and grants licences to proponents that plan to and appellate jurisdiction to hear and determine
Whilst the submission date for stakeholder environment fulfilled under Article 70’. develop projects in Kenya. Pursuant to the environmental law matters. Appeals from
comments and representations has passed (20 authority granted to it under the Act, NEMA decisions of the National Environmental Tribunal
May 2022), theo utcome of this exercise Furthermore, Article 70(1) of the Constitution may compel any authority or ministry to are referred to this court for determination.
is likely to play a key role in CBK’s efforts at guarantees a clean environment as a claimable comply with existing environmental laws
addressing the financial needs of an right by any member who feels that his or her including the EMCA and the Regulations 37. Are there any environmental permits and
increasingly digital economy. rights to a clean environment have been infringed. and may enforce such legislation by issuing licences required?
administrative sanctions and/or instituting
Environmental Considerations This Article provides that, ‘if a person alleges criminal proceedings against persons or Any prospective investor setting up a business in
that a right to a clean and healthy environment institutions which contravene environmental Kenya needs to consider whether the business as
36. Are there laws protecting the environment? If recognised and protected under Article 42 has laws in Kenya. NEMA co-ordinates the proposed would affect the environment, and
so, what are they? been, is being or is likely to be, denied, violated, activities of other agencies charged with whether there are any sector-specific
infringed or threatened, the person may apply to a environmental management in Kenya and requirements for registration by NEMA.
Environmental law in Kenya generally comprises court for redress in addition to any other legal liaises with such agencies and the county
the rules and doctrines arising from common remedies that are available in respect to the same government in its enforcement actions.
law, provisions of constitutions, statutes, general matter’.
principles and treaties that deal with protection, The Act also established various committees
management and use of natural resources and the Paragraph 3 of Part 2 of the Fourth Schedule on standards enforcement and action plans
environment. The aims of environmental law are: to the Constitution provides that control of to support NEMA’s performance in matters of
air pollution, noise pollution, other public environmental quality standards and planning.
• to facilitate environmental management nuisances and outdoor advertisement is a county
by providing rules and regulations for government function. This means that licenses ii. National Environmental Complaints Committee:
environmental conservation and preservation; relating to projects that impact the environment This committee is charged with investigating
through air pollution, noise pollution, and other any allegations or complaints against any
• to protect indigenous knowledge and generic public nuisances such as fireworks, demolitions person or against NEMA in relation to the
resources; and and firings require county government approval. condition of the environment in Kenya and
The county government to issue the approval any suspected case of environmental
• to facilitate sustainable development. is the relevant county government where the degradation. It also undertakes
business activity is to take place. public interest litigation on behalf of the
The sources of environmental law in Kenya include citizens in environmental matters.
the Constitution, framework law, sectoral statutes, The Environmental Management and
regulations, judicial decisions, customary law, Coordination Act (Cap 387, Laws of Kenya) iii. National Environmental Tribunal: The mandate
treaties, general opinions of international law and of this tribunal is to decide on grievances and
qualified writings among other sources. Such The Environmental Management and Coordination
laws have increasingly been guided by principles Act (EMCA or the Act) and regulations thereunder
which promote international cooperation in (including the water quality regulations, the
management of shared environmental resources, waste management regulations, the controlled
intergenerational and intra-generational equity, substances regulations, the air quality regulations,
sustainable use of resources and the precautionary the noise and excessive vibration pollution
approach to environmental conservation. control regulations, the wetland, river and
The main written laws applicable to environmental seashore regulations, and the environmental
impact assessment (EIA) regulations (the

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Information on environmental permits and licences is provided in the following table.

PERMIT/ ENABLING BUSINESSES PROCESSING HOW OFTEN BOTTLE- FEES PERMIT/ ENABLING BUSINESSES PROCESSING HOW OFTEN BOTTLE- FEES
LICENCE FRAMEWORK APPLICABLE/ TIME (FREQUENCY) NECK/ LICENCE FRAMEWORK APPLICABLE/ TIME (FREQUENCY) NECK/
WHERE CHALLENGES WHERE CHALLENGES
REQUIRED REQUIRED

Environmental Section 58 of the Any project that Under the Issued once, at If the issues With effect
Impact Environmental may impact Regulations, the start of the raised by the from 1 June Air Pollution The All the facilities as Within 45 - Generally every No specific Application
Assessment Management and the enironment the authority is project. NEMA reviewers 2022 the EIA Emissions Environmental well as equipment 90 days of year, however issues, subject fee: KES
(EIA) Licence Coordination (construction, required to If the project are not properly processing and Licence Management and listed under the application. subject to to administrative 5 000.
Act; Regulations manufacturing communicate the does not start addressed, the monitoring Coordination (Air Third Schedule of conditions of the efficiencies of
18-24 of the and processing decision upon within two years, process may take fees were Quality) the regulations. licence. government Variation or
Environmental industries). review of an EIA validity can be longer. reinstated at Regulations 2014. offices such as Transfer Fee:
(Impact A project, report within three extended for a 0.1% of the NEMA. KES 3 000 or
Assessment programme, months maximum of four total cost of 10% of annual
and Audit) development or of receiving years at a fee of the fee.
Regulations; The policy that leads the licence KES 5 000. project to a
Environmental to projects that application. minimum of Emission into
Management and may have an Any variation KES 10 000 atmosphere
Coordination Act impact on the According to from the initial with no upper fee: KES
(Conservation environment. NEMA, the project report capping. The 20 000 – KES
of Biological timeline for and license processing and 50 000.
Diversity issuance of conditions monitoring
Resources, a license is requires of Strategic Noise and The Any person with Varies depending Depending on No specific According
Access to dependent on the submitting a Environmental Vibrations Environmental intention to make on the county the activity issues, subject to the Act, it
Genetic type of report request to NEMA Assessment Licence Management and or cause to be government validity can range to administrative should range
Resources and submitted. For for approval of (SEA) reports Coordination made any loud, issuing the license. from a period efficiencies from KES 2
Benefit Sharing) Summary Project the variation. cost of KES (Noise and unreasonable, not more than 7 of the county 000 to
Regulations, Reports, a license 1,000,000. Excessive unnecessary or days or period government KES 5 000.
2006. may be issued Vibration unusual noise which not more than issuing the However,
within 5 days. For This does not Pollution Control) annoys, disturbs, three months. license. since the
Comprehensive include the Regulations, injures or endangers However, the regulations
Project Reports, fees charged 2009. the comfort, repose, regulations were were enacted
a license may by or to EIA health or safety issued before the before
be issued within experts. of others and the 2010 Constitution the 2010
21 -30 days. For environment. which has Constitution,
Integrated Study assigned the the specific
Reports, a license Control of air function of county
may be issued pollution, noise noise pollution government
within 60-90 days. pollution and other control to county where the
public nuisances. governments. business is
Effluent Section 74 Any trade Approximately Every year. No specific Sewerage to operate
Discharge and 75 of the or industrial 30-60 working issues, subject service is to set the
Licence (EDL) Environmental undertaking days. to administrative providers: KES required fee.
Management and that discharges efficiencies of 500 000.
Coordination any effluents or government Discharging Licence to The Any business that Within 45 days of Every year. No specific Ranging from
Act; The other pollutants offices such as facilities listed produce, Environmental deals with ozone application. issues, subject KES 1 500 to
Environmental resulting from the NEMA. under Fourth import, Management and depleting gases to administrative KES 15 000.
Management and trade or industrial Schedule: KES transport Coordination that are listed in the efficiencies of
Coordination undertaking only 100 000. or export (Controlled first schedule of the government
(Water Quality) into an existing Institutions: controlled Substances) regulations. offices such as
Regulations, sewerage system. KES 20 000. substances Regulations, NEMA.
2006. Other: 2007.
KES 10 000.
Access permit The Any person who Approximately 60 When required No specific Individual
NEMA Waste The Any person who is Approximately Every year. If the issues Varies Environmental wants to access working days. and each issued issues, subject applications:
Disposal Environmental in the business of 14-21 working raised by NEMA between KES 3 Management and genetic resources in access permit is to administrative KES 20 000.
Licence Management and handling (including days. are not properly 000 and Co-ordination Kenya. valid for one year efficiencies of
Coordination transportation), addressed, the KES 75 000. (Conservation from the date of government Corporate
(Controlled packaging, process may take of Biological issue and may offices such as applicants
Substances) treatment, longer. Diversity and be renewed for a NEMA. KES 50 000.
Regulations, conditioning, Resources, further one year.
2006. reducing, recycling, Access to Renewal
reusing, storage Genetic individual
and disposal of Resources and applicants:
waste. Generally Benefit Sharing) KES 10 000.
for persons Regulations,
involved in waste 2006. Corporate
disposal. applicants:
KES 25 000.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

PERMIT/ ENABLING BUSINESSES PROCESSING HOW OFTEN BOTTLE- FEES

LICENCE FRAMEWORK APPLICABLE/ TIME (FREQUENCY) NECK/
WHERE CHALLENGES
REQUIRED

Waste permit Environmental Any business that Within sixty When required. No specific Application
Management and transports (60) days for issues, subject fee:
Co-ordination waste. applications and to administrative KES 3 000.
(Waste within 14 days for efficiencies of
Management) renewals. government Licence fee:
Regulations, offices such as KES 30 000.
2006. NEMA.

Transit permit Environmental Any business that Within sixty When required. No specific Application
Management and transports toxic or (60) days for issues, subject fee:
Co-ordination hazardous applications and to administrative KES 3 000.
(Waste waste destined for within 14 days for efficiencies of
Management) another country renewals. government Licence fee:
Regulations, through the offices such KES 30 000.
2006. territory of Kenya. as NEMA.

Export permit Environmental Any business that Within sixty When required. No specific Application
Management and exports hazardous (60) days for issues, subject fee:
Co-ordination substances. applications and to administrative KES 3 000.
(Waste within 14 days for efficiencies of
Management) renewals. government Licence fee:
Regulations, offices such KES 30 000.
2006. as NEMA and
requirement to
have a valid prior
informed consent
document issued
by the designated
national authority
of the receiving
country.

Permits for Environmental Any business/ Approximately five Valid for a No specific Application
fireworks, Management and activity relating working days. maximum of issues, subject fee: KES 500.
demolition, Co-ordination to fireworks, three months. to administrative
firing ranges (Noise and demolitions, firing Varies depending efficiencies Permit fee:
and specific Excessive ranges or specific on the county However, the of county KES 5 000.
heavy duty Vibration heavy industry. government regulations were government
industry Pollution) issuing the license. issued before the offices and the However,
(Control) Control of air 2010 Constitution National Police since the
Regulations, pollution, noise Approval from the which has Service. regulations
2009. pollution and other National Police assigned the were enacted
Fourth public nuisances. Service is required function of before
Schedule of the for fireworks and noise pollution the 2010
Constitution of firing ranges. control to county Constitution,
Kenya, 2010 governments. the specific
county
government
where the
business is
to operate
is to set the
required fee.

Further, the
approval from
the National
Police Service
is subject to
a fee.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

38. Are there environmental reporting in the form of fines and/or imprisonment of the The Court of Appeal has jurisdiction to hear compared to the 2012 Arbitration Rules which
obligations? offender (or directors if the offender is a corporate appeals from the High Court, the ELC and the it repeals. The changes introduced in the Rules
entity) and will vary depending on the breach. ELRC. The Supreme Court’s jurisdiction relates to focus on increasing the efficiency and flexibility
Proponents of projects in Kenya are required Civil sanctions may include orders for hearing and determining appeals from the Court of arbitrations administered by CIArb.
to conduct assessments and prepare project compensation of affected parties or orders of Appeal where such disputes are certified as
reports for projects likely to have an impact on the requiring restoration of the area which is the matters of general public importance as well as Kenya is a signatory to other international
environment (listed in Schedule 2 of the EMCA) subject matter of the environmental breach. any case involving the interpretation or application arbitration-affiliated treaties such as the
before being issued with an EIA licence. of the Constitution. International Center for Settlement of Investment
Disputes (ICSID) Convention and the New York
Dispute Resolution
Once a project has been EIA approved, the entities Due to the global pandemic caused by the Convention on the Recognition and Enforcement
are then required to submit annual environmental spread of COVID-19, the Hon Chief Justice of Foreign Arbitral Awards of 1958 (New York
40. How are disputes resolved in Kenya?
audits. Regulation 34 of the Environmental announced a scale down of court activities to Convention). Both conventions form part of
(Impact Assessment and Audit) Regulations, allow for appropriate measures to be put in place Kenyan law by virtue of the application of Article
Inevitably, occasional disputes arise in the course
2003 provides that in executing a project, after to prevent the spread of the COVID-19 virus 2(6) of the Constitution.
of doing business. In Kenya, the most common
the environmental impact assessment study in our courts. Many courts have since created
form for dispute resolution is litigation through the
report has been approved by NEMA, or after the forums through which parties may file pleadings Arbitration is generally appreciated as a faster
judicial system.
initial audit of an ongoing project, the proponent electronically. and more efficient method of dispute resolution
shall take all practical measures to ensure the than litigation. It is becoming increasingly popular
The Judiciary consists of superior courts made
implementation of the environmental management The COVID-19 crisis has seen the judiciary as a method of dispute resolution in Kenya-law
up of the Supreme Court, Court of Appeal, High
plan by: integrate technology in judicial proceedings by governed contracts.
Court, Employment and Labour Relations Court
introducing electronic filing, electronic delivery of
(ELRC) and Environment and Land Court (ELC).
• carrying out a self-auditing study on a judgments and hearings via video conference. Whereas parties are free to choose their preferred
The subordinate courts consist of the Magistrate
regular basis; forum for arbitration, the Nairobi Centre for
Court, Courts Martial, Kadhi Court, Small Claims
• preparing an environmental audit report Our courts have progressively phased out International Arbitration (NCIA) is a dispute
Court, and Tribunals as established by various
after each audit and submitting the report to physical court appearances and moved all court resolution service provider established by statute
statutes.
the authority annually or as may be prescribed proceedings to virtual platforms including MS suited for domestic and international arbitration.
by the authority; and Teams, GoToMeeting Web Conferencing and The primary mandate of the NCIA is to administer
The Magistrate Court has the jurisdiction to hear
• ensuring that the criteria used for the audit Webex meetings. Only very few cases such as international commercial arbitration and other
and determine civil disputes where the value
are based on the environmental management criminal cases require physical attendance in forms of dispute resolution processes including
of the subject matter does not exceed KES 20
plan developed during the environmental court. mediation. The NCIA has published the NCIA
million. Whilst the Small Claims Court has the
impact assessment process or after the initial Arbitration and Mediation Rules, which facilitate
jurisdiction to hear and determine disputes where
audit. 41. Are there any alternatives to litigation? institute-administered arbitration and mediation
the value of the subject matter does not exceed
under its auspices.
KES One (1) million. The establishment of the Small
Once NEMA receives the audit report, it is The Constitution encourages the promotion of
Claims Court is part of an initiative to enhance the
required to acknowledge receipt and review it alternative forms of dispute resolution. Alternative Mediation is progressively gaining ground as a one
ease of doing business in Kenya.
within seven days. There are no costs associated forms of dispute resolution include arbitration, of the most successful ways of resolving disputes
with the filing and submission of the audit reports mediation and reconciliation. Additionally, the in Kenya. The traction of mediation is attributed
The High Court has jurisdiction to determine
to NEMA. Civil Procedure Act (Chapter 21) requires courts to to the court-annexed mediation programme
appeals from the Magistrates Court and other
promote alternative methods of dispute resolution. established by the Judiciary. The programme,
local tribunals and quasi-judicial bodies. It also
NEMA may also carry out its own audits on which has been rolled out across several divisions
has unlimited original jurisdiction to hear and
licensed projects whenever it deems necessary in Arbitration in Kenya is governed by the Arbitration of the High Court, allows the Court to screen cases
determine all civil matters including all commercial
order to ascertain proponents’ compliance with Act, 1995. The Arbitration Act is modelled on the to establish whether they qualify for mediation. If
disputes, IP matters, bankruptcy and insolvency
conditions of approval of such projects. provisions of the United Nations Commission so, the qualifying case is referred for resolution by
matters and matters relating to arbitration. Its
on Trade Law (UNCITRAL)Arbitration Rules, which a mediator appointed by the Court. The mediator
jurisdiction extends to the power to interpret the
Project planners are also required to register their have been adopted by many countries in the is required to guide the parties to settlement
Constitution and make determinations on the
proposed projects with the National Construction world as the law to govern international as well as within a capped 60-day prescribed period. The
denial, infringement or violation of constitutional
Authority within the prescribed timelines. domestic arbitration. period may be extended by the Court for a further
rights.
ten (10) days.
39. What liabilities may arise for breach of Kenyan branch of the Chartered Institute of
The ELRC and ELC are two courts established
environmental laws? Arbitrators (CIArb) unveiled its revised Arbitration
by the Constitution with status equal to the High
Rules, 2020 (the Rules). The Rules came into
Court. These courts have the authority to hear and
Persons found in breach of environmental laws force on 1 October 2020 and will apply to all cases
determine disputes relating to employment and
or the conditions specified under environmental registered after this date. The Rules provide a
labour relations and the environment and the use
permits may be liable to both criminal and civil more comprehensive set of procedural rules as
and title to land, respectively.
sanctions. Criminal sanctions are usually issued

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

42. Are foreign judgments and international The Constitution Anti-Corruption and Economic Crimes Act, 2003 an additional mandatory fine which is determined
arbitration awards enforceable in Kenya? as follows:
Principles that should govern the exercise The Anti-Corruption and Economic Crimes Act, i. the mandatory fine shall be equal to two
Foreign judgments are enforceable in Kenya under of authority by the State and its officials are 2003 defines corruption to include: times the amount of the benefit or loss; and
the Foreign Judgments (Reciprocal Enforcement) entrenched in Chapter 6 of the Constitution. • Bid rigging - where a person receives, solicits ii. if the conduct that constituted the offence
Act (Chapter 43). Foreign judgments are This chapter defines the authority given to a or agrees to receive as well as where a person resulted in both a benefit and loss, the
enforceable under the principle of reciprocity. State officer as a public trustee. The authority gives, offers or agrees to give or offer a mandatory fine shall be equal to two times
To be enforceable, the foreign judgment must should be exercised in a manner that, among benefit as an inducement or reward for: the sum of the amount of the benefit and
originate from a country with which Kenya has a other things, promotes public confidence in • refraining from submitting a tender, the amount of the loss.
reciprocal recognition agreement. Presently the integrity of the office and should be used proposal, quotation or bid;
these countries are Australia, England and Wales, to serve the people rather than ruling them. • withdrawing or changing a tender, The Anti-Corruption and Economic Crimes Act is
Malawi, Rwanda, Seychelles, Tanzania, Uganda and proposal, quotation or bid; or administered by the Ethics and Anti-Corruption
Zambia. State officers are called on to behave in a manner • submitting a tender, proposal, quotation Commission.
that avoids compromising public interest in or bid with a specified price or with any
The recognition of foreign judgments is not favour of personal interest. Where they fail to do specified inclusions or exclusions. Anti-Corruption and Economic Crimes Court
automatic and is only accepted on a case-by-case so, disciplinary action will be taken against them • Dealing with suspect property - where a
basis upon consideration by the High Court. including dismissal from office and the resulting person deals with property that he believes On 8 December 2015, the Chief Justice of Kenya
inability to apply for another State officer position. or has reason to believe was acquired in the issued a gazette notice for the Anti-Corruption
The Arbitration Act makes the New York course of or as a result of corrupt conduct; and Economic Crimes Division of the High Court
Convention applicable to the recognition of State officers are: • bribery; of Kenya to facilitate effective case management
international arbitration awards, including grounds • fraud; and the expeditious disposal of cases; and to
for the refusal to recognise and enforce such • required to hand over all gifts and donations • embezzlement or misappropriation ensure that similar disputes are effectively
awards. International arbitral awards may be they receive on a public or official occasion of public funds; and efficiently adjudicated.
denied recognition in Kenya for several reasons, to the State unless exempt under an Act • Abuse of office - where a person who uses
such as public policy or where the subject matter of Parliament; his office to improperly confer a benefit on The new court was established on 15 January 2016
of the international arbitration award is not • not allowed to keep bank accounts outside himself or anyone else in Nairobi with its own registry and a total of
capable of settlement through arbitration. Kenya except when allowed to do so by an • breach of trust; or 13 sitting judicial officers. The judicial officers are
Act of Parliament; and • dishonesty: bound by the provisions of the Anti-Corruption
• not allowed to receive benefits or personal • in connection with any tax, rate or impost and Economic Crimes Act that provide for
Anti-Corruption, Money Laundering
loans in circumstances that will threaten levied under any Act; or continuous hearing of cases on a day-to-day
And Bribery basis until determination. All corruption-related
their integrity. • under any written law relating to the
elections of persons to public office. offences under the Act are now to be determined
43. Are there laws against money laundering and
A full-time State officer is prohibited from by the Anti-Corruption Court. The Court also has
corruption? If so, what are they?
participating in any other gainful employment. A person who conspires with another to commit power to determine all criminal offences allied or
A State officer is prohibited from holding office an offence of corruption or economic crimes is connected to corruption.
The Constitution lays the foundation for anti-
in a political party. guilty of an offence.
corruption laws in Kenya. The following statutes
The Ethics and Anti-Corruption
expound on its provisions:
A retired State officer who is receiving a pension A person who incites another to do any act or Commission Act, 2011
from public funds is restricted from holding more make any omission of such a nature that, if that
• the Anti-Corruption and Economic Crimes
than two concurrent remunerative positions as act were done or the omission were made, an Pursuant to Article 79 of the Constitution, the
Act, 2003;
chairperson, director or employee of a company offence of corruption or an economic crime would Ethics and Anti-Corruption Commission Act was
• the Companies Act, 2015;
owned or controlled by the State or a State organ. thereby be committed, is guilty of an offence assented into law on 27 August 2011 and came
• the Leadership and Integrity Act, 2012;
under the Anti-Corruption and Economic Crimes into effect on 5 September 2011. Article 79 directs
• the Public Officers Ethics Act;
A retired State officer shall not receive Act, 2003. Parliament to enact legislation to facilitate the
• the Proceeds of Crime and Anti-Money
remuneration from public funds except where they establishment of an independent Ethics and
Laundering Act, 2009;
ae holding a remunerative position as chairperson, The definition of corruption is very wide and Anti-Corruption Commission (the EACC).
• Prevention of Terrorism Act, 2012;
director or employee of a company owned or covers acts by both principals and agents.
• the Ethics and Anti-Corruption Commission
controlled by the State or a State organ. Offences under the Act carry a fine of KES 1
Act, 2011; and
million and/ or imprisonment for a period of up to
• the Bribery Act, 2016.
For the avoidance of doubt, the Constitution of 10 years.
Kenya defines the term Public officer to mean:
i. any State officer; or Where a person received a quantifiable benefit
ii. any person, other than a State officer, who or any other person suffered a quantifiable loss, a
holds a public office; person found guilty under the Act shall be liable to

Constitution of Kenya defines the term State

officer as a person holding a State office.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

The EACC is established as an independent 10. institute and conduct proceedings in court for leadership and integrity. The EACC is The Act requires State or public officers to declare
commission with a corporate nature. The for purposes of the recovery or protection responsible for overseeing and enforcing the any interest that may arise regarding a certain
Commission consists of a chairperson and four of public property, or for the freeze or implementation of this Act. issue at the beginning of the meeting during which
other members appointed in accordance with the confiscation of proceeds of corruption the issue is deliberated upon. Public entities are
provisions of the Constitution and the Ethics and or related to corruption, or the payment The Act provides that a State officer shall not required to keep a register of conflicts of interest
Anti-Corruption Commission Act. It replaced and of compensation, or other punitive and accept or solicit gifts, hospitality or other benefits for five years. Similarly, members of Parliament
took up the functions and powers of the defunct disciplinary measures including proceedings from a person who has a contractual or legal and members of county assemblies are required to
Kenya Anti-Corruption Commission established for the recovery of property or proceeds of relationship with the State officer’s organisation. declare any direct pecuniary interest or benefit of
under the Anti-Corruption and Economic Crimes corruption located outside Kenya. The Act does, however, prescribe circumstances whatever nature in any—
Act. The functions of the EACC include: in which a State officer may accept a gift in his
The Companies Act or her official capacity and states that such a gift (a) debate or proceeding of the body
1. in relation to State officers: shall be treated as a gift or donation to the State. of which he or she is a member;
(i) develop and promote standards and The Companies Act provides for the The Act provides that a State officer may receive (b) debate or proceeding in any committee
best practices in integrity and anti- disqualification of directors, administrators or a gift in an official capacity provided that: of that body; and transaction or
corruption; liquidators for fraud or a breach of duty A. the gift is within the ordinary bounds of communication which the State officer
(ii) develop a code of ethics; committed while a company was under liquidation propriety, a usual expression of courtesy may have with other members of the
or administration. Any person who holds or or protocol and within the ordinary body, State officers, public officers or
2.  ork with other State and public offices in the
w formerly held office in such circumstances and standards of hospitality; government officers.
development and promotion of standards and is found guilty of fraud or breach of duty can be B. the gift is not monetary; and
best practices in integrity and anti-corruption; disqualified for a period of 15 years. C. the gift does not exceed such value as Clerk of the Senate, the National Assembly or
may be prescribed by the Commission in a county assembly shall maintain a register of
3. r eceive complaints on the breach of the code The Companies Act also criminalises the the regulations. conflicts of interest, which shall be open to the
of ethics by public officers; fraudulent falsification, mutilation and destruction public for inspection.
of company records. It is an offence that attracts Public entities must keep and maintain registers of
4. investigate and recommend to the Director a fine not exceeding KES 1 million or imprisonment gifts received by State officers or public officers; State or public officers should not participate in
of Public Prosecutions the prosecution of for a term not exceeding seven years, or both. and gifts given by the public entity to State tenders for the supply of goods or services to
any acts of corruption, bribery or economic officers or public officers. a public entity in which they are serving or are
crimes or violation of codes of ethics or The Companies Act prohibits directors from otherwise similarly associated with. However, the
other matter prescribed under the Ethics and receiving benefits from third parties where State officers are also prohibited from using holding of shares by a State officer or a public
Anti-Corruption Commission Act, the Anti- such benefits are attributable to the person’s their office to wrongfully or unlawfully influence officer in a company is not construed as
Corruption and Economic Crimes Act or any directorship or to any act or omission by the the acquisition of property. If this occurs and is participating in the tender of a public entity unless
other law enacted pursuant to Chapter Six of director and will create a conflict of interest. Any proven, the State officer will, subject to any appeal the State officer or public officer has a controlling
the Constitution; director found guilty of this is liable to a fine of which the officer may make, forfeit the property shareholding in the company.
KES 1 million and he or she must return the benefit and the property will be held by the EACC or by
5. r ecommend appropriate action to be taken that he or she received to the company. an agent appointed by the EACC in trust for the Bank accounts outside Kenya
against State officers or public officers alleged Republic, until it is lawfully disposed of.
to have engaged in unethical conduct; The Companies Act only criminalises the receiving State officers and Public officers are not allowed
of the benefit not the giving of the benefit. As It is important that a person who is charged with to open or continue to operate bank accounts
6.  versee the enforcement of codes of ethics
o such, the person who gave the benefit would be the responsibility of managing an organisation, outside Kenya without the approval of the EACC.
prescribed for public officers; prosecuted under the Ethics and Anti-Corruption whether private or governmental, avoids a Where a State officer or Public officer operates
Commission Act. situation where personal interests conflict, or a bank account outside Kenya, he or she must
7.  dvise, on its own initiative, any person on any
a appear to conflict, with his or her official duties. submit annual statements of the account to the
matter within its functions; The Companies Act is aligned with the EACC. The officer must authorise the EACC to
Constitution in that it only recognises lobbying in Therefore, a public officer is prohibited from verify the statements, and any other relevant
8. r aise public awareness on ethical issues the form of advocacy and does not allow for any awarding or influencing the award of a contract to: information, from the foreign financial institution in
and educate the public on the dangers lobbying that includes giving benefits to directors. which the account is held.
of corruption and enlist and foster public • himself or herself;
support in combating corruption but with The Leadership and Integrity Act, 2012 • the State officer’s or public officer’s A State officer or Public officer who fails to
due regard to the requirements of the spouse or child; declare the operation or control of a bank account
Anti-Corruption and Economic Crimes Act, The primary purpose of the Leadership and • a business associate or agent; or outside Kenya commits an offence and shall, upon
2003 (No. 3 of 2003), as to confidentiality; Integrity Act, 2012 is to ensure that State officers • a corporation, private company, partnership conviction, be liable to imprisonment for a term
respect the values, principles and requirements of or other body in which the officer has a not exceeding five years, or a fine not exceeding
9.  onitor the practices and procedures of
m the Constitution and to establish procedures substantial or controlling interest. KES 5 million.
public bodies to detect corrupt practices and and mechanisms for the effective administration
to secure the revision of methods of work or of Chapter 6 of the Constitution which provides
procedures that may be conducive to corrupt
practices; and

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

Care of property Each relevant commission must establish a • performs any other act in connection with iv. dealing in precious stones;
specific Code of Conduct and Ethics for the public such property, whether it is performed v. accountants, who are sole practitioners
State officers are required to: officers for which it is the responsible commission. independently or with any other person, or are partners in their professional firms;
i. take all reasonable steps to ensure that The commission responsible for a public officer whose effect is to: vi. non-governmental organisations;
public property in the officer’s custody, may, on its own initiative or pursuant to a vii. advocates, notaries and other independent
possession or control is taken care of complaint by any person, investigate to determine • conceal or disguise the nature, source, legal professionals who are sole
and is in good repair and condition; whether the public officer has contravened the location, disposition or movement of the said practitioners, partners or employees within
ii. refrain from using public property, funds Code of Conduct and Ethics. property, or the ownership thereof, or any professional firms; and
or services that are acquired in the course interest which anyone may have in respect viii. such other business or profession in which
of or as a result of the official duties, for According to the Act, a public officer may thereof; or the risk of money laundering exists as the
activities that are not related to the accept a gift given to him or her in his or her Minister may, on the advice of the FRC,
official work of the State officer; and official capacity. However, unless the gift is a • enable or assist any person who has declare.
iii. return to the issuing authority all the non-monetary gift that does not exceed the committed or commits an offence, whether in
public property in their custody, value prescribed by regulation, such a gift shall Kenya or elsewhere, to avoid prosecution; or All reporting institutions are required to register
possession or control at the end of be deemed to be a gift to the public officer’s with the FRC. Any reporting institution that
the appointment, or election term. organisation. Public officers are allowed to receive • remove or diminish any property acquired fails to register with the FRC as required by the
gifts from friends or relatives where such gifts are directly or indirectly as a result of the Proceeds of Crime and Anti-Money Laundering
Failure to adhere to the above requirements given on a special occasion recognised by custom. commission of an offence. Act and the Regulations commits an offence.
relating to care of property shall render the State
officer personally liable for any loss or damage to A public officer may not be an agent for, or The Act provides for the limitation of the person’s Although the Proceeds of Crime and Anti-Money
the public property. further the interests of, a foreign government, privacy if the person is suspected or accused Laundering Act does not prescribe a penalty for
organisation or individual in cases where such of committing an offence. This may include the offence of failing to register with the FRC,
Misuse of official information agency is detrimental to the interests of Kenya. searching and seizing of a person’s property and Regulation 42 of the Regulations provides that any
investigation of the persons private information person, reporting institution or supervisory body
A State officer is prohibited from directly or The Public Officers Ethics Act requires each and communication. who contravenes the provisions of the Regulations
indirectly using or allowing any person under the public officer, once every two years, to submit to commits an offence and shall, on conviction, be
officer’s authority to use any information obtained his or her responsible commission a declaration The Act establishes the following bodies: liable to a fine not exceeding Kenya Shillings five
through or in connection with the office, which of the income, assets and liabilities of himself or a) the Financial Reporting Center (the FRC) million (KES 5,000,000.00) or to imprisonment
is not available in the public domain, for the herself, his or her spouse or spouses and his or her which administers the Act and regulates for a term not exceeding three (3) years or both
furthering of any private interest, whether dependent children under the age of 18 years. reporting institutions; fine and imprisonment.
financial or otherwise. b) an Anti-Money Laundering Advisory
Proceeds of Crime and Anti-Money Laundering Board which advises the FRC in the Reporting institutions are required to monitor
Establishment of specific codes Act (Cap 59B) exercise of its powers; and and report to the FRC any suspicious activities
c) the Assets Recovery Agency whose main or transactions immediately and, in any event,
Public entities are required to prescribe a The Proceeds of Crime and Anti-Money function is to confiscate proceeds of crime. within seven days of the date of the transaction
specific Leadership and Integrity Code for the Laundering Act provides for the offence of or occurrence of the activity that is considered
State officers in that public entity. The specific money laundering and introduces measures Section 2 of the Act defines the term “reporting suspicious. Failure to report suspicious activities
Leadership and Integrity Code prescribed by a for combating the offence. It also provides for institution” to mean a financial institution and to the FRC is an offence under the Act. The FRC
public entity shall include all the requirements in the identification, tracing, freezing, seizure and designated non-financial business and profession. has the powers to intervene in the execution
the general Leadership and Integrity Code under confiscation of the proceeds of crime, and for of a suspicious transaction to facilitate inquiries
the Leadership and Integrity Act, 2012 and may connected purposes. The Proceeds of Crime and Anti-Money and investigation.
provide for the manner in which any requirements Laundering Act defines a “financial institution”
of the specific or general Code may be satisfied. The Act defines money laundering as a situation to include any person or entity that conducts Section 44 (3) of the Proceeds of Crime and
where a person who knows, or who ought the business of lending including consumer Anti-Money Laundering Act requires reporting
Public Officers Ethics Act (Cap 183) reasonably to have known, that property is, or credit, mortgage credit, factoring, with or institutions to file reports all cash transactions
forms part of, the proceeds of crime and: without recourse, and financing of commercial exceeding USD 10,000 or its equivalent in any
The Public Officers Ethics Act was enacted to transactions; financial leasing or financial other currency carried out by it.
advance the ethics of public officers by providing • enters into any agreement or engages in any guarantees.
for a Code of Conduct and Ethics for public arrangement or transaction with anyone in A reporting institution which obtains information
officers and requiring financial declarations from connection with that property, whether that The Act defines “designated non-financial which is suspicious or indicates possible money
certain public officers. agreement, arrangement or transaction is businesses or professions” to include: laundering activity shall not disclose such
legally enforceable or not; or i. casinos (including internet casinos); information to an unauthorised person but
ii. real estate agencies; shall report it to the Centre as required by
iii. dealing in precious metals; these Regulations.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

Reporting institutions must ensure that they Regulation 34 of the Regulations provides that 44. Are there laws against bribery? • where the action of receiving a bribe where,
maintain and keep records of all transactions for a at the end of each calendar year, each reporting If so, what are they? as a consequence of receiving a bribe or
minimum period of seven years from the date the institution shall submit to the FRC by the 31st of agreeing to receive a bribe, a function
relevant business or transaction was completed January of the following calendar year or as may The Bribery Act, 2016 came into force on 13 • or activity is performed improperly by that
or following the termination of an account or be required by the Centre, from time to time, January 2017 with the object of providing a person, or by another, or agreeing to receive
business relationship. a compliance report detailing the institution’s framework for the prevention, investigation and it, is deemed to constitute an agreement
compliance with the AML Act, the Regulations punishment of bribery and related offences in for the improper performance of an activity
Reporting institutions must ensure that: and the institution’s internal anti-money Kenya. Recently the Attorney General published or function; or person, at the recipient’s
laundering rules. Guidelines to Assist Public and Private Entities in request.
i. they do not to tip off persons involved in the Preparation of Procedures for the Prevention
a suspicious activity; The Prevention of Terrorism Act, 2012 of Bribery and Corruption which are intended to Extra-territorial application
ii. they comply with instructions, directions, assist private entities in establishing procedures
or rules issued by the FRC; This Act provides for measures for the detection for the prevention of bribery and corruption. The Act has extra-territorial application in relation
iii. they avail information during inspection and prevention of terrorist activities. These to bribery-related offences carried out outside
and respond to inspection reports include restrictions against terrorist financing and The Act came in the wake of changes and new Kenya to include Kenyan citizens, public or
within the prescribed time; dealing with property for, or that is controlled appointments to the EACC in a bid to battle private entities, as well as persons associated with
iv. take measures to prevent use of new by, a terrorist group. Dealing means receiving, corruption in all sectors of the country’s economy. these entities whether as employees, agents or
technologies for money laundering purposes; acquiring, transacting, representing, concealing, The Bribery Act applies to all individuals and otherwise. Accordingly, all acts of bribery
v. undertake a Money Laundering risk disposing, converting, transferring or moving, entities in the private and public sectors. committed by a Kenyan citizen, a public or private
assessment to enable it identify, assess, using as security or providing financial services. entity or a person associated with such a private
monitor, manage and mitigate the risks Previously, the law did not impose significant entity outside Kenya are treated as if the acts of
associated with money laundering and The Act requires any person including financial responsibilities on the private sector in the fight bribery took place in Kenya.
update the risk assessment policies at institutions to report to the FRC any information against corruption. Importantly, the Act now
least every two years; they may have with respect to such property imposes express duties on private entities and Any bribery of a foreign public official in order
vi. appoint a money laundering officer who including terrorist financing transactions. The Act individuals, for example, the duty to prevent and to influence his or her capacity is also an offence
shall be of management level and shall also requires financial institutions to freeze any report incidents of bribery, as well as the under the Act.
have relevant and necessary competence, assets that are associated with a terrorist group or requirement to have procedures for the
authority and independence; and any person who is listed in sanctions lists including prevention of bribery in place. It prescribes Duty to report bribery
vii. adopt an independent audit function to UN sanctions lists. penalties for private entities and individuals who
check compliance by the institution with fail to adhere to its provisions. All persons holding a position of authority in
the AML Act and the Regulations. Other laws a public or private entity must report to the
The Bribery Act generally has implications to both EACC any knowledge or suspicion of instances
Each reporting institution must undertake Kenya is also party to four International individuals and entities in the private and public of bribery. Failure to report the bribery within a
customer due diligence which entails: Conventions aimed at combating corruption and sector. As a “Sister Act” to the Anti-Corruption period of 24 hours constitutes an offence.
corruption-related offences including: and Economic Crimes Act 2003, it seeks to
i. taking reasonable measures to satisfy itself comprehensively expound the offence while Prevention of bribery:
as to the true identity of any person who • United Nations Convention against Corruption providing a contextual application of the Act.
seeks to enter into a business relationship (ratified 9 December 2003); • Procedures: Public and private entities
with the financial institution. • United Nations Convention against The Act does not give an express definition of the are required to put in place procedures for
ii. undertaking due diligence on Transnational Organised Crime term ‘bribery’. It however clarifies the meaning of the prevention of bribery and corruption
existing customers; (acceded 16 June 2004); ‘giving and receiving a bribe’ as follows: appropriate to their size and scale and the
iii. refusing to open or maintain an anonymous • United Nations Convention against Illicit nature of their operations. Failure of private
or fictitious account; and Traffic in Narcotic Drugs and Psychotropic Giving a bribe entities to put in place such procedures is an
iv. identifying and verifying the natural Substances (acceded 19 October 1992); and offence on the part of the director or
persons behind a legal person • African Union Convention on Preventing A person gives a bribe if he or she ‘offers, senior officer.
and arrangement. and Combating Corruption promises or gives a financial or other advantage
(ratified 3 February 2007). to another person, who knows or believes the • The EACC has published the Guidelines to
Reporting institutions must maintain internal acceptance of the financial or other advantage Assist Public and Private Entities in the
controls and internal reporting procedures with would itself constitute the improper performance Preparation of Procedures for the
the aim of identifying persons (within the of relevant function or activity’. Prevention of Bribery and Corruption
institution) to whom reports should be made, the (the Bribery Guidelines). The Bribery
procedures for making the report and the course Receiving a bribe Guidelines provide for items that need
of action to be taken. to be included in these procedures
A person receives a bribe if: including internal reporting procedures
• he or she receives or agrees to receive a bribe and protection of whistle blowers.
with the intention to improperly perform an
activity or function;

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

• Protection of whistleblowers and witnesses:

Under the Act, it is an offence to harass,
intimidate or disclose any information
regarding informants, whistleblowers or
witnesses. The Act mandates law enforcement
agencies to establish mechanisms to protect
the identity of informants and witnesses.
Additionally, the EACC is charged with the
responsibility of assisting any entities and
interested persons to develop and put in place
procedures to protect whistleblowers.
This is in addition to the protection under
the Witness Protection Act.

• Penalties: The Act imposes heavy penalties

for bribery-related offences including:

• imprisonment for up to 10 years;

• a fine not exceeding KES 5 million;
• requirements to pay the benefit to
the Government;
• confiscation of property;
• disqualification from being an
elective person;
• disqualification from serving as a
director or partner in Kenya; and
• being barred from holding public office.

Assisting/Aiding/Enabling Bribery

Any person who knowingly assists a person or a private

entity to give or receive a bribe by–

i. obtaining property intended for

use in bribery;
ii. using, having possession of or transferring
property which was obtained as a result
of or in connection with bribery; or
iii. recording property which was obtained
as result of or in connection with bribery in
the accounting records of any private entity,
commits an offence.

Where the offence is committed by a director or senior

officer of a private entity such private entity is deemed
to have committed the offence.

Outlook

The Act has far-reaching implications for those doing

business in Kenya or with Kenyan entities, alongside
other extra-territorial statues on bribery such as the US
Foreign Corrupt Practices Act and the UK Bribery Act.

Its effectiveness is yet to be tested, but businesses

need to make sure their compliance programmes are
appropriate.

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2022

DISSOLVING DISSOLVING A BUSINESS

A BUSINESS
45. Are there any considerations in terminating Options for insolvent companies
a business?
Liquidation by an application to the court by any
Introduction relevant stakeholders of the business. Alternatively
by way of a creditor’s voluntary liquidation where
There are two main laws that govern the creditors of the business are tasked with appointing
dissolution or winding up of a business; the a liquidator after the passing of a resolution of
Companies Act and the Insolvency Act, 2015 its members
(Insolvency Act).
Business rescue
Solvent vs. Insolvent dissolution
The Insolvency Act has introduced a number
It is imperative to consider the status of the of business rescue concepts including:
company/branch in question from as perspective • Pre-Insolvency Moratorium
of solvency when talking about dissolving • Administration; and
a business. • Company voluntary arrangements.

The dissolution of a business may be carried Pre-Insolvency Moratorium

out either voluntarily or, where the company
is deemed unable to pay its debts (as defined The Business Laws (Amendment) (No. 2) Act
in the Insolvency Act), involuntarily by either amended the Insolvency Act, 2015 to introduce
the members of the business itself or other a new pre-insolvency moratorium as a standalone
stakeholders such as creditors or the Registrar. procedure that can be used by the directors of
eligible companies to obtain temporary protection
Options for solvent companies from creditors, while a company considers a
business rescue plan. The pre-insolvency
The Companies Act sets out the process for moratorium is for a period of thirty (30) days
the dissolution of non-trading companies striking but a Court has the discretion to extend the
off the Register of Companies. The process is moratorium for a period of at least thirty (30)
initiated by an application by the shareholders days if it believes that the extension is desirable in
and the directors of the company. The Registrar order to achieve the aims of the initial moratorium.
can undertake the task of striking a company off While a pre-insolvency moratorium is in place, a
the Registrar if he or she has ascertained that “monitor” is responsible for the supervision of the
the company is neither trading nor active. company.

A branch of a foreign company may be Administration

deregistered either by a representative of
the branch itself making an application to the Administration has the primary objective of
Registrar to do so at least one month after the rescuing a company in financial difficulties and
branch ceases to operate, or, it may be struck allowing it to continue as a going concern. It
off the register by the Registrar, in cases such as is intended to enable an eligible company to
where the branch is not carrying on business in undergo reorganisation or to realise its assets
Kenya or is carrying on business in Kenya without under the protection of a statutory moratorium.
a local representative. The moratorium prevents winding-up petitions
from being made or resolutions from being
The Insolvency Act has set out two processes for passed. Security over the company’s assets may
the winding up of a company. It can be undertaken not be enforced without the court’s permission.
by the members themselves (members’ voluntary
liquidation) where the company is solvent.

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 BOWMANS A
A Brief
Brief Guide
Guide to
to Doing
Doing Business
Business in
in Kenya,
Kenya, 2022
2021

Company voluntary arrangement (CVA) in person or by proxy at the meeting convened

for the purpose. As it is always necessary to take
This is a procedure that allows a company: account not only of the number of creditors who
• To settle debts by paying only a proportion approve the scheme but also the value of their
of the amount that it owes to creditors; holdings, the resolution to approve the scheme
and/or must be by way of a poll; and (b) sanctioned by
• To come to some other arrangement with its the court.
creditors over the payment of its debts.
There is nothing in the legislation that prescribes
A CVA is proposed by the directors of an insolvent the subject matter of a scheme. In theory, a
company. It is however implemented by an scheme could be a compromise or arrangement
insolvency practitioner. A CVA comes into force at about anything that the company and its creditors
the time when a majority (in number and value) may properly agree on among themselves.
of its creditors approve a CVA proposal made in
respect of the said company. Director’s duties

Once approved, the CVA binds all the unsecured For directors of a company, steps prior to going
creditors of a company who were entitled to vote into administration or any insolvency regime
on the CVA proposal. Once bound by a CVA, a are critical. The duties owed by a director to a
creditor is prevented from taking steps against the company are altered where that company is in or
company that the terms of the CVA prohibit. is facing the threat of insolvency, so as to require
Typically these terms will be drafted to prevent directors to have proper regard for the interests
the creditor from recovering any debt that falls of creditors. It is therefore imperative that the
within the scope of the CVA, other than through directors of a company facing financial difficulty
an agreed mechanism set out in the CVA. A CVA understand and keep in mind their fiduciary
does not give rise to an automatic moratorium and statutory duties. Failure to do may result in
and only binds preferential/secured creditors to directors being personally liable for carrying out
the extent they agree to be bound by the terms of activities such as fraudulent trading or wrongful
the CVA. trading.

A scheme under the Companies Act

A scheme of arrangement allows for a company

to make a compromise or arrangement with its
creditors (or any class of them). It is binding on all
creditors provided that, pursuant to section 926
of the Companies Act, it is both: (a) approved by
a majority in number representing three-quarters
in value of the creditors present and voting either

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 BOWMANS A Brief Guide to Doing Business in Kenya, 2021

Our Firm Our Presence

in Africa
We help our clients manage legal complexity and unlock
opportunity in Africa.

W R
e have an enviable track record of Our expertise is frequently recognised by ecognising the size and enormous On the global front, Bowmans has long-standing
providing legal services to the highest independent research organisations. Most diversity of Africa, our approach to and excellent relationships with a range of
professional standards in Africa. recently, our Kenyan practice won the 2022 providing legal services across the international law firms with whom we often work
We work for clients across numerous African Chambers Africa Award for Law Firm of the Year continent is intended to offer on-the-ground on Africa-focused client mandates. We are also
jurisdictions on corporate, finance, competition, in Kenya. In 2022, Bowmans won six IFLR Africa advice in the countries that matter for our clients. a member firm of Lex Mundi, a global association
taxation, employment, technology and dispute Awards including overall M&A Team of The Year; Our presence in Africa is always evolving to meet of more than 160 independent law firms in all the
resolution matters. Jurisdictional Firm of the Year: South Africa; the changes that are shaping the future of this major centres across the globe. Lex Mundi gives
Loans Firm of the Year: South Africa; M&A Firm vast continent. us the ability to connect our clients with the best
With eight offices in six African countries and of the Year: South Africa; and Project Finance law firms in each of the countries represented.
over 400 specialist lawyers, we draw on our Firm of the Year: South Africa. We also advised Currently, we have our own offices in six
unique knowledge of the business and socio- on the deal named M&A Deal of the Year. At the African countries: Kenya (Nairobi), Mauritius
political environment to advise clients on a wide 2022 Africa Legal Awards, we won four practice (Moka), South Africa (Cape Town, Durban,
range of legal issues. awards including Banking and Finance Team Johannesburg), Tanzania (Dar es Salaam),
of the Year; Capital Markets Team of the Year; Uganda (Kampala) and Zambia (Lusaka).
Everywhere we work, we offer clients a Tax Team of the Year and Transportation and
service that uniquely blends expertise in the Infrastructure Team of the Year. We work closely with our Bowmans Alliance
Ethiopia
law, knowledge of the local market, and an firms in Ethiopia (Aman & Partners LLP) and
understanding of their businesses. Our aim In the 2021 DealMakers Africa Awards we ranked Nigeria (Udo Udoma & Belo-Osagie). These are
is to assist clients to achieve their objectives first in East Africa for both deal value and deal two of the leading corporate and commercial law
Kenya
as smoothly and efficiently as possible while flow and also advised on the deals named East firms in their jurisdictions.
Nigeria Uganda
minimising the legal and regulatory risks. Africa Deal of the Year and East Africa Private
Tanzania
Equity Deal of the Year. In the 2021 DealMakers We have a special relationship with a competent
Our clients include domestic and foreign Awards we placed first by deal flow and second practitioner in Mozambique. We also have a non- Zambia

corporates, multinationals, funds and financial by deal value in the Unlisted M&A Transactions exclusive co-operation agreement with French
institutions, across almost all sectors of the category; first by deal flow and third by deal international law firm Gide Loyrette Nouel
economy, as well as state-owned enterprises and value in the BEE Deals category; third and fourth that provides our clients access to assistance South Africa Mozambique Mauritius
governments. by value and flow respectively, in the Listed in francophone west and north Africa. The
Company M&A Transactions category; and arrangement provides complementary access for
fourth by deal value and deal flow in the General Gide’s clients and lawyers to markets in central,
Corporate Finance category. southern and eastern Africa.
Bowmans offices

We ensure that, whenever our clients need

legal advice in other parts of Africa, we can Alliance firms

assist them by tapping into our comprehensive

database of contacts of the best firms and Special relationship
practitioners across the continent.
Significant transaction or advisory experience

CONTENTS PAGE 60 CONTENTS PAGE 61

 BOWMANS

Key Contacts Cape Town, South Africa

T: +27 21 480 7800
E: [email protected]

Dar es Salaam, Tanzania

T: +255 76 898 8640
E: [email protected]
PARAS SHAH TERRY MWANGO
Managing Partner, Kenya Head of Litigation and Disputes Durban, South Africa
Nairobi, Kenya Nairobi, Kenya T: +27 31 109 1150
E: [email protected]
T: +254 20 289 9000 T: +254 20 289 9000
E: [email protected] E: [email protected] Johannesburg, South Africa
T: +27 11 669 9000
E: [email protected]

Kampala, Uganda
ALEEM THARANI CORNELIUS KIGERA T: +256 41 425 4540
Head of Projects, Energy and Infrastructure Head of B & F and Real Estate E: [email protected]
Nairobi, Kenya Nairobi, Kenya
Lusaka, Zambia
T: +260 21 135 6638
T: +254 20 289 9000 T: +254 20 289 9000
E: [email protected]
E: [email protected] E: [email protected]
Moka, Mauritius
T: +230 460 5959
E: [email protected]
JOHN SYEKEI JOYCE KARANJA
Head of IP and Technology Head of Competition Nairobi, Kenya
T: +254 20 289 9000
Nairobi, Kenya Nairobi, Kenya
E: [email protected]

T: +254 20 289 9000 T: +254 20 289 9000

E: [email protected] E: [email protected]

Follow us on Twitter:
@Bowmans_Law
RAINBOW FIELD
Director www.bowmanslaw.com
Nairobi, Kenya

T: +254 20 289 9000 Alliance Firms:

E: [email protected]
Aman & Partners LLP, Addis Ababa, Ethiopia
T: +251 11 470 2868
E: [email protected]

Udo Udoma & Belo-Osagie, Lagos, Nigeria

T: +234 1 2774920-2, +234 1 2719811-3
E: [email protected]

CONTENTS PAGE 62 CONTENTS PAGE 63