Information on how foreigners in Kenya can start and run businesses is often sparse and ambiguous. Most articles addressing business setup in Kenya are targeted at Kenyan citizens. But what about foreigners residing in Kenya or elsewhere? What do they need to get started? Do they require a Kenyan Business Permit or an alien ID? This guide aims to provide clear answers on how to start a business in Kenya as a foreigner.
You begin by considering the entity that suits your type of business. Would you like a private limited company, a public limited company, a sole proprietorship business or a limited liability partnership? To understand what these entities are and the entity that best suits your desires, kindly check out our previous article, ‘Starting a Business in Kenya’. When you want to start a business in Kenya as a foreigner, it is important to note that you may be required to obtain a work permit, especially if you will be resident in Kenya. With the work permit comes the Alien identity card and tax registration.
Registration of a sole proprietorship Company for foreigners
Registration of a sole proprietorship or as a business name is the simplest of all the available entities. In summary, a business name just shows who owns a business, the address and date of registration. The first step in registering it is to do a name search. This is done on the eCitizen portal and enables one to reserve the name that they intend to use for the business. After the reservation is done, the registration can take place. This type of entity can be wholly owned by a foreigner. The form to be filled is called a BN2 form, which lists out the details of the business owners. One requires a copy of their Passport or alien ID, a coloured passport size photo. This whole process is done online, on the eCitizen portal. The registration is normally completed within 7 days.
Incorporation of limited liability partnership for foreigners
The second entity to starting a business in Kenya as a foreigner is a limited liability partnership (LLP). This is a type of entity that, in essence, allows the partners to separate their personal liability from the liability of the partnership. It has the protection of a limited company, with the flexibility of a partnership. The minimum number of partners for this entity is two while the maximum is twenty. The partners can either be natural persons or corporate bodies. A manager who is resident in Kenya must be appointed at the point of registration.
How to register a limited liability partnership business in Kenya as a foreigner
If you want to register an LLP, you should first begin with a name search, which is done online on the eCitizen portal. Afterwards, you are required to fill out an LLP1 form. An agreement between the partners called a limited liability partnership agreement should also be drafted and signed by all the partners. However, although it is a requirement, it is not submitted during registration. The letter of consent of the manager to act as manager of that partnership is also required and submitted. The names, addresses, passport photos, KRA PIN certificates, and copies of the IDs, both local and alien, of the partners and manager are required. This registration is done manually, at the Registrar of Companies, currently located at Sheria House.
A private limited company, also called a limited liability company, is a business entity that allows members and directors to separate their assets from the entity’s assets. This kind of entity is among the best for a person who wants to start a business in Kenya as a foreigner. It can be wholly owned by a foreigner and some argue that a work permit may not be required in its formation. There is no requirement for a resident director or a company secretary.
Requirements for A Foreigner to open a company in Kenya
Requirements for starting a business in Kenya for foreigners in Kenya to open a private company firstly, the name search and reservation, as with all other entities listed above. After this is done, the CR1, CR2, CR8 and Statement of Nominal Capital forms are required to be filled.
Starting a business in the form of a public company, as a foreigner in Kenya, may be a bit more complicated than the other types of entities. A public limited company is a company that is mainly intended for business and public investment. If you, as a foreigner are just looking for an entity in which to invest your money, you can subscribe for shares in a public company, and become its member. If, however, you are seeking to start this type of business in Kenya as a foreigner, keep in mind that a resident Kenyan representative is required. Also, 30% of the shares must be held by Kenyans. A minimum of three directors, and a minimum of seven shareholders are required for this type of entity. A Kenyan resident company secretary is also required. Shareholders and directors can be corporate bodies, but at least one of each must be natural persons.
To register it, the CR1, CR8 and Statement of Capital forms need to be filled, and a memorandum of the company and its articles of association should be drafted. The names, addresses, passport photos, KRA PIN certificates and a copy of their IDs, local or alien, of the directors and shareholders, are also required. The documents are uploaded and the forms filled out online, on the eCitizen portal.
Once you have the certificate of registration, you are now ready to pursue other permits and regulatory approvals, if required. Look out for our article on the permits and approvals ordinarily required. Is it easy to start a business in Kenya as a foreigner? Yes. If starting a business in Kenya proves difficult, feel free to contact us through mmsadvocates.co.ke and we will be glad to help.
By: Victory Wanjohi
www.mmsadvocates.co.ke
Hi
Does a foreigner who owns a business in Kenya but does not reside in Kenya need a business permit to be a signatory for transactions of the business’ bank account?