Starting a Business in Kenya, Step-By-Step in Company registration

Assumptions:

Legal Form: Private Corporation
City: Nairobi
Procedure 1. Obtain approval for the company name from the Registrar of Companies
Time to complete: 3 days
Cost to complete: KES 100 per name reservation
Name of Agency:
Comment:
The company name reservation lasts 30 days but can be renewed for a similar period.
Procedure 2. Stamp the memorandum and articles and a statement of the nominal capital
Time to complete: 8 days
Cost to complete: 1% of nominal capital + KES 2,005, stamp duty on Memorandum and Articles of Association
Name of Agency:
Comment:
Effective January 1, 2005, the Kenya Revenue Authority (KRA) took over stamp duty collection from the Ministry of Lands and Housing. As an administrative requirement, the KRA now requires the personal identification numbers (PINs) of all parties on whose behalf duty-stamped documents are submitted. Documents must be first assessed by the Stamp Duty Office before payment can be processed by the KRA-designated banks. The process has lengthened initially to about 2 weeks because the Stamp Duty Office waited to receive confirmation of bank payment after clearance of funds. However, the time has reduced in 2008 as a result of better communication between the Ministry of Lands and housing and Kenya Revenue Authority (KRA) to 5-10 days. Bank handling charges of KES 100 for each transaction are also due.
Procedure 3. Pay stamp duty at bank
Time to complete: 1 day (included in the previous procedure)
Cost to complete: KES 100 bank commission
Name of Agency:
Comment:
Procedure 4. Declaration of compliance (Form 208) is signed before a Commissioner of Oaths /notary public
Time to complete: 1 day
Cost to complete: KES 200
Name of Agency:
Comment:
According to the Companies Act (Cap. 486), An advocate engaged in the formation of the company or a director or company secretary named in the Articles must sign Form 208, the declaration of compliance, which accompanies the registration documents to be submitted to the Registrar of Companies. (Simuletanous with procedure 2)
Procedure 5. File deed and details with the Registrar of Companies at the Attorney General’s Chambers in Nairobi
Time to complete: 7- 14 days
Cost to complete: KES 5,893
Name of Agency:
Comment:
The founder must file the incorporation deed and the required documents and forms (listed below) with the Registrar of Companies, which includes:
- Stamped memorandum and articles of association.
- Statement of capital.
- Form 201, Notice of Situation of Registered Office.
- Form 203, Particulars of Directors and Secretary.
- Form 208, Declaration of compliance with the Companies Act.
- Copy of the company name approval
Fee schedule for registration:
- For the first KES 100,000: KES 2,200.
- For every KES 20,000 after the first KES 100,000: KES 120, subject to a maximum of KES 60,000.
- Filing fee for three forms: KES 600.
Procedure 6. Register with the Tax Department for a PIN
Time to complete: 1 day
Cost to complete: no charge
Name of Agency:
Comment:
Registration for a personal and a company identification number (PIN) is required to register for the VAT (PIN certificates of at least two directors or 2 shareholders or a director and the secretary are required), the local service tax, and the pay-as-you-earn (PAYE) tax. The founder must file the certificate of registration and a copy of the memorandum and articles of association.
Procedure 7. Register with the VAT office
Time to complete: 1-2 days
Cost to complete: no charge
Name of Agency:
Comment:
The application for a VAT Certificate must be supported with application form, copies of the Certificate of Incorporation, the PIN Certificate for the company and 2 of its directorsand Memorandum and Articles of Association.
Procedure 8. Apply for a business permit
Time to complete: 5 days
Cost to complete: KES 5,000
Name of Agency:
Comment:
The fee to apply for a business permit varies by type of business, number of employees, and size of the company’s premises. The fee is payable to the Nairobi City Council, Licensing Department. The City Council will issue a business permit.

Fee schedule for business permit:
- Medium trader, shop, or retail service from 5 to 20 employees and/or premises 50–300 sq. m. (fair location): KES 5,000.
-Mid-size business of 50 employees and premises 300 sq. m.: about KES 20,000 to KES 50,000, depending on the nature of the business.

The Licensing Laws (Repeals and Amendments) Act , 2006 (enacted in December of 2006 and came into effect on May, first, 2007), amends the Local Government Act (Cap. 265) by reducing the number of business permits required for a distributor of goods or provider of services to carry on its business activities. Applicants having obtained a business permit to operate from one local authority will not be required to obtain another business permit in another local authority. In addition, business permit applicants will have an opportunity to elect whether to apply for a 1- or 2-year permit. The 2006 law also eliminated the requirement to obtain a trading license in addition to the permit.

Procedure 9. Register with the National Social Security Fund (NSSF)
Time to complete: 1 day
Cost to complete: no charge
Name of Agency:
Comment:
The National Social Security Fund provides the employee with a lump-sum retirement benefit. Historically, the rate of return paid by the state is considerably less than that achieved by private schemes, but participation is mandatory. The employer pays a standard contribution of about 1% of salary, subject to a maximum of KES 400 per month. Half the contribution is deductible from the employee’s salary. The precise amount of the contribution (where less than the maximum) is determined by reference to salary bands.
Procedure 10. Register with the National Hospital Insurance Fund (NHIF)
Time to complete: 1 day
Cost to complete: no charge
Name of Agency:
Comment:
The employee contributes a fixed sum to the National Hospital Insurance Fund (NHIF), which must be deducted by the employer from the employees’ salary. The maximum contribution is KES 320 per month. The contributions are used to offset the costs of medical treatment, but they only cover a fraction of actual costs. Hence, most companies provide employees with medical insurance.
Procedure 11. Register for PAYE
Time to complete: 1 day
Cost to complete: no charge
Name of Agency:
Comment:
Procedure 12. Make a company seal after a certificate of incorporation has been issued
Time to complete: 2 days
Cost to complete: between KES 2,500 and KES 3,500
Name of Agency:
Comment:
seals are made by private entities who require sight of a copy of the certificate of incorporation

Source: Doing business project

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