Changes in Policy that will likely Impact your Business.

Managers of registered companies in Kenya are expected to have provided the government with their contact details in two weeks. These details include a passport photo, where they live, and how much of the business they own.

This comes as the grace period for firms to comply with the Companies (Beneficial Ownership Information Regulations, 2020) lapses. With the lapse, all company directors begin to create a digital registry for the government. This is to help the state continue to crack down on shell companies and tax dodgers. The regulations that came into effect last year with a three-month grace period introduce new enforcement standards for business owners.

What to Know:

A beneficial owner directly or indirectly exercises significant influence or control over the business. This involves someone who owns at least 10% of the company’s issued stock. Or has at least 10% of the voting rights, or the power to appoint/remove a director of the company.

Director-General, Business Registration Services Kenneth Gathuma, says this is part of an initiative to create a digital registered company database. Gathuma says this will allow the majority of fun-registered SMEs the opportunity to gain access to the formal credit market. This is a need that has become more urgent in the aftermath of the pandemic.

“We saw companies registering at a substantially higher pace than in previous years during the months of the pandemic.”

“July was the peak and we registered more than 10,000 businesses. And while this has petered down, we expect the higher numbers to prevail by 2021,” he said.

Registration online

The government has made the registration process simpler at the same time. Business owners are now spared the manual process of Huduma centers and can do everything on the e-citizen platform digitally.

Gathuma stated that people have been seeking credit using movable assets. And, for instance, with the pandemic, registering your business makes it easier to gain access to formal credit markets. Gathuma added that this comes with additional support such as the transfer of technology and skills.

” To do this, if they don’t have one, business owners build an account on e-citizen. A National ID Number is required (an alien card certificate number for foreigners), valid email address, and telephone number.”

They simply log in and add the additional details if one already has an account. This is either an upgrade or a modification to the registry of company owners for existing businesses.

With simple tabs and prompts that show the details needed at each stage, the BRS has broken down the process. Before one starts filling in the online form, it’s advisable to have all the information needed in a separate document.

New guidelines for businesses

Business owners are expected to disclose a percentage that is directly and indirectly held by each shareholder in the company. All shares are owned indirectly in companies where the shareholder is a corporate body. The user needs to supply the corporate entity with the beneficial owners’ data.

It will also enable beneficial owners to provide:

• Their phone number
• The Email Address
• Home Address
• Profession ·
• Add a photo with a colored passport.

Additional requirements

Business owners need to demonstrate the type of authority and type of right to appoint/remove a director. This is if the company has beneficial owners and, if necessary, voting rights.

Beneficial owners download a document generated by the system. They then sign, scan and submit the document back into the system until all the information has been filled in.

Business owners can then upload and review the form before sending it to the company registrar for review and approval. Business owners should file a report to the Registrar if a person ceases to become a beneficial owner.

The Act gives company officials the power to give notice to beneficial owners to provide their information to facilitate enforcement. Failure to this, the company may limit the person’s relevant interest. For example, the company may prevent directors from accessing their dividends or shares until they provide the information needed.

The BRS has said that the public would not disclose any useful information. Exposing the data to unintended parties attracts a fine of up to Sh20,000 or six-month imprisonment or both. However, business owners can provide details to a ‘competent authority’ at the request of the Registrar.

Gathuma says that in order to further assist business owners, BRS will connect business registration data to other data sets.

He said that alignment with other programs will help businesses change the way they do things this year. Additionally, they will get better prospects arising from the impact of the pandemic.

Courtesy of KTN News, The Standard.