Brief Opinion on Incorporation of a Non-deposit Taking Microfinance Limited Liability Private Company (“LLPC”) in the Republic of Kenya




Requirements and Procedure of Registration of an LLPC

1. Documents and Information Required

The documents and information required to enable the incorporation are as follows;

(i) The proposed name for the Company for purposes of reservation;

(ii) The names of shareholders and directors. Minimum of one (1) shareholder and one (1) director;

(iii) The respective directors and shareholders postal and residential addresses;

(iv) The physical location of the company, being the Land Reference number where the office shall be situate together with the postal address;

(v) The type (ordinary, preferential, e.t.c) and number of shares the company will have and how they shall be divided up, e.g share capital of KShs. 100,000/- divided into 1,000 ordinary shares of KShs. 100/- each;

(vi) The number of shares to be held by each shareholder;

(vii) Copies of Identity Cards/Passports and Pin Certificates for the directors;

(viii) Email addresses and telephone numbers for the respective shareholders and directors;

(ix) One recent and coloured (1) passport photograph for each of the directors and shareholders;

(x) At least one (1) director must be itax compliant;

(xi) An email address that has never been used in the itax portal (we can open one for this purposes and hand over the same upon completion of the registration process);

(xii) Whether the Non-deposit Taking Micro-finance LLPC shall be a subsidiary or is as a result of a merger and acquisition;

(xiii) Target business start date for the Non-deposit Taking Micro-finance LLPC;

(xiv) Target accounting period end for the Non-deposit Taking Micro-finance LLPC;

(xv) Number or employees at the business start date for the Non-deposit Taking Micro-finance LLPC;

(xvi) One (1) main object and one (1) secondary object for the Non-deposit Taking Micro-finance LLPC;

(xvii) A brief background on the shareholders’ business or economic activities;

(xviii) A declaration by the individual shareholders on the sources of funds duly certified by a Commissioner of Oaths;

(xix) Documentary evidence on the sources of funds (Bank Statements for the shareholders.);

(xx) An Affidavit confirming that the sources of funds to be deployed to the proposed company are not proceeds of crime duly certified by a Commissioner of Oaths; and

(xxi) Duly filled form CR1 and CR2 for the proposed company and duly witnessed by a Commissioner of Oaths.

2. Procedure and Timelines

Incorporation of a Non-deposit Taking Micro-finance LLPC in Kenya is in two phases namely the Central Bank of Kenya (“CBK”) stage which takes approximately two (2) weeks and the Companies Registry stage which takes about two (2) – three (3) weeks. Collectively, the entire process should take approximately a month from execution of the relevant forms. The process involves;

(i) obtaining all relevant information in 1. above;

(ii) procuring the reservation of name of the proposed company name;

(iii) filling in the relevant information in the forms;

(iv) procuring execution of the Forms;

(v) verification that all documents are in order;

(vi) applying for authorization of registration of the proposed company as a Non-Deposit Taking Micro-finance LLPC from;

(vii) issuance of letter of no objection to the registration of the proposed company to carry on business as a credit-only entity addressed to the Registrar of Companies and copied to ourselves;

(viii) assessment and payment of stamp duty;

(ix) stamping and registration of the Company and issuance of the Certificate of Incorporation;

Other requirements by the relevant departments are;

  1. Registration with the Kenya Revenue Authority Tax Department for a PIN
  2. Registration with the National Social Security Fund.
  3. Registration with the National Hospital Insurance Fund.

The Companies Registry then issues the Company registration certificate together with the PIN, NSSF and NHIF registration certificates.

We then proceed to make a company seal for the Non-deposit Taking Micro-finance LLPC.

TO NOTE

Kindly note that in line with Section 3 of the Microfinance Act, the Ministry of Finance is in the process of coming up with Regulations to govern the operations of credit-only facilities. Similarly, the role of the CBK is purely restricted to informing the Registrar of Companies that it has no objection towards registration of an entity as a Non-deposit Taking Micro-finance Institution. Accordingly, the CBK does not out rightly or otherwise consider itself with matters pertaining to licensing of credit-only facilities. As it stands, regulation of credit-only facilities is a free field subject to certain legal limitations as shall be set out in the CBK Letter. This therefore means that the Company can proceed to commence its business after we effect its registration pending publication and subsequent commencement of the said Regulations to enable it apply for licensing.

3. Fees and Attendant Costs

We stand guided by the provisions of the Advocates Remuneration Order (Legal Notice Number 35 of 2014) in charging legal fees.

Brief Opinion Prepared by Kabau & Associates Advocates, www.kabauadvocates.com

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