By Sheila Munyi
The Companies (Beneficial Ownership Information) Regulations, 2020 have come into force. It requires all companies with nominee shareholding to disclose details of all the shareholders for the register held at the Companies Registry.
Here is a piece that was done by Sheila Munyi, Managing Partner at Ma Law Africa on what you will be required to do by the Public Notice issued by the Companies Registry.
The Companies (Beneficial Ownership Information) Regulations,2020were created under Legal Notice No. 12.
These regulations were created with an endeavour to promote transparency in the ownership of Kenyan companies and in compliance with the international standards on transparency, which includes the disclosure of information of the beneficial owner.
A beneficial owner has been defined under the regulations as, “the natural person who ultimately owns or controls a legal person or the arrangements of the legal person; or the natural person on whose behalf a transaction is conducted, and includes those persons who exercise ultimate effective control over a legal person or arrangement.”
The Regulations apply to a beneficial owner who, whether directly or indirectly:
These Regulations amended section 93 of the Companies Act, 2015 which now reads that:
Of note is that section 94 of the Companies Act, No. 17 of 2015 provides that, a company shall ensure that its register of members is kept at its registered office and lodged with the Registrar. Please note that if the register is prepared at another office of the company other than the registered office, a copy of the register may be kept at that other office. Additionally, if the register is prepared by another person on behalf of the company, a copy of the register may be kept at the office of that other person.
However, if a company fails to comply with the aforesaid, then each officer of the company who is in default, will be considered to have committed an offence and on conviction are each liable to a fine not exceeding KES. 500,000/= only. If, after a company or any of its officers is convicted of an offence under subsection (10), the company continues to fail to comply with the relevant requirement, the company, and each officer of the company who is in default, commit a further offence on each day on which the failure continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such offence.
A company is also expected to investigate and obtain beneficial owner particulars where it has reasonable cause to believe that a legal person is a beneficial owner by issuing the suspected legal person, a notice to provide these particulars. Once the notice is served, the legal person is required to respond within 21 days. In the event that the legal person fails to respond to the notice upon lapse of the 21 days, the company will then send a warning notice that shall lapse for a period of fourteen (14) days. If the legal person fails to adhere to the warning notice, the company is expected to keep a copy of the warning notice in its register of beneficial owners, note the restriction in the register in the register and file the restriction with the Registrar of Companies.
The effect of a restriction means that:
Of importance is that a company is prohibited from disclosing protected beneficial ownership information except:
The Registrar of Companies may also use the information to communicate with the beneficial owner.
Furthermore, such protected beneficial information is prohibited from being made available to the public and as such, such information shall be omitted from the material on the register.
In conclusion, all companies with nominee shareholding will now be required to disclose details of all the shareholders and investigate these nominee shareholders to provide their particulars for the register.
The Author is an advocate of the Kenya High Court. Please note that this legal article is for information purposes only and should not be relied upon without legal consultation. Should you have any questions, please feel free to reach us vide email at: firstname.lastname@example.org or phone number: +254 703124871