Invest in Kenya

Paul Maina By Paul Maina, 31st Jan 2014 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Business>Starting A Business

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Detailed summary of how to start a business in kenya

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Kenya. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 189 economies. The most recent round of data collection was completed in June 2013.

Compare Kenya to 188 other economies.

Standardized Company
Legal Form: Private Corporation
Paid in Minimum Capital Requirement: None
City: Nairobi

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No. Procedure Time to Complete Associated Costs
1 Reserve a unique company name at the Companies Registry

The company name reservation lasts 30 days but can be renewed for a similar period.
3 days KES 100 per name reservation
2 Stamp the memorandum and articles of association, and a statement of the nominal capital

As of January 2005, the Kenya Revenue Authority (KRA) took over the 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 are first assessed by the Stamp Duty Office before payment can be made at the KRA-designated banks. The process has initially lengthened to about 2 weeks because the Stamp Duty Office waited to receive confirmation of bank payment after clearance of funds. However, the time was reduced to 5-10 days in 2008 as a result of better communication between the Ministry of Lands and Housing and the Kenya Revenue Authority (KRA). A fee of KES 100 is payable as Bank handling charges.
5 days 1% of nominal capital + KES 2,020 for stamp duty on Memorandum and Articles of Association
3 Pay stamp duty at a designated bank

The entrepreneur pays the stamp duty at the National Bank of Kenya which is the designated Bank for the collection of stamp duty revenue on behalf of Kenya Revenue Authority.
1 day KES 100 for bank commission
4 Sign the Declaration of Compliance before a commissioner of oaths or a notary public

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 of association must sign the declaration of compliance (Form 208). This form is submitted to the Registrar of Companies along with the registration documents. (Simultaneous with procedure 2)
1 day KES 200
5 Register with the Registrar of Companies at the Attorney General Chambers in Nairobi

The entrepreneur must submit the incorporation deed and the following to the Registrar of Companies:
• Stamped memorandum and articles of association
• Statement of capital
• Notice of Situation of Registered Office (Form 201)
• Particulars of Directors and Secretary (Form 203)
• Declaration of compliance with the Companies Act (Form 208)
• 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

7- 14 days KES 7,000
6 Register for taxes at the Kenya Revenue Authority

The personal tax identification number (PIN) and the company tax identification number are required to register for VAT, local service tax, and the Pay-As-You-Earn (PAYE) tax.
The PIN certificates of at least two signatories (2 directors or 2 shareholders or a director and the secretary) of the company are required. To register for taxes, the entrepreneur must also file the certificate of incorporation and a copy of the memorandum and articles of association.

Due to new online reforms, the application for a PIN number and the registration for VAT registration can now be done online. Unless the KRA has already received confirmation of the company incorporation from the Companies Registry, the entrepreneur must submit the certificate of incorporation and receive log-in details to proceed with online tax registration.
1 day no charge
7 Apply for a business permit

Applicable permit fees fall within the following scales:
- Large trader, shop, or retail service with 21-50 employees and premises of 300-3,000 square meters (or at a prime location): KES 20,000
- Medium trader, shop, or retail service with 5-20 employees and premises of 50-3,000 square meters (fair location): KES 10,000
5 days KES 10,000
8 Register with the National Social Security Fund (NSSF)

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 (less than the maximum) is determined by reference to salary bands.
1 day no charge
9 Register with the National Hospital Insurance Fund (NHIF)

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.
1 day no charge
10 Make a company seal

Seal makers request a copy of the certificate of incorporation in order to make a company seal.
2 days between KES 2,500 and KES 3,500


Invest In Kenya, Kenya Atheltics, Kenyan Footballer

Meet the author

author avatar Paul Maina
I have just finished Bachelor of Arts degree in Economics and sociology from Nairobi University. I will be writing on sports and money making tips

Follow me on twitter @itsgitau

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