Information, Books And Records That A Company Should Keep

A key guide to ensuring business compliance is keeping the right documentation. It is imperative to have and maintain a consistent and organized repository of documents that can be retrieved from time to time. There are many reasons why doing so can benefit your company, including

i. Documentation helps in the effective process of functioning and recording data.

ii. It demonstrates professionalism.

iii. It facilitates performance management.

iv. It guides businesses in enforcing policies.

v. It ensures statutory compliance.

vi. Proper documentation also helps a company defend itself when legal issues arise.

vii. It evidences to employees, customers and potential investors that the company is serious about safeguarding critical information and providing interested parties with detailed records of workplace happenings.

Ideally, every company should be having a list of documents that are mandatory for its operations. In this article we will look at some of the important information, books and records that a company must keep.

1. REGISTRATION DOCUMENTS

a. Certificate of Incorporation

A Certificate of incorporation is issued by the Registrar of companies and evidences that a company is duly recognized and registered under the Companies Act, 2015 to conduct business.

b. Company by-laws

A company's constitution and bylaws are documented sets of internal rules and regulations that govern operations in the company. They also define the rights and privileges of members and shareholders of the company and sets out the acceptable conduct, standards and practices. In addition, they outline the company's managerial structure and governance issues.

In Kenya, these are usually captured in the Memorandum of Association and Articles of Association.

c. Corporate Governance & Management

Some of the common records that a company must have and keep in relation to corporate governance include;

Board Charter: This is a policy document that clearly defines the respective roles, responsibilities and authorities of the board of directors (both individually and collectively) and management in setting the direction, the management and the control of the organization.

Board resolutions: The decisions that a company's board takes during its meetings are recorded as board resolutions and must be well kept for future reference.

2. BUSINESS DOCUMENTS

These are documents that record various details regarding the company’s internal and external dealings. They include:

Business license - depending on a company's areas of activity or geographical location, it may be required to obtain one or more permits issued by government agencies in order to function. It is thus important to have these licenses of operation obtained, renewed and well kept.

Business plan – most often, this is the first document created by the business owner. It outlines what the company aims to achieve, the timelines for its objectives and how to achieve them.

Transactional documents - these include all documents executed and issued as a result of a transactions, such as executed agreements, invoices, receipts and payment orders.

3. CAPITAL RAISING AND FINANCING DOCUMENTS

Financial Accounting documents

Managing the budget is often a major part of ensuring an organization's long-term success. Financial records such as balance sheets, income statements, bank statements, receipt records and payroll reports help the organization's management keep track of all income and expenditures, ensuring the company's financial health.

Capital Raising Documents

Everyone starts a new business venture with high hopes that it will succeed. In order to do so, deliberations may be made over sustainable financing options. It is thus crucial to keep this information for record purposes and some of the documents that the company must keep include:

a. Duly executed Loan Agreements.

b. Term sheets; these are documents that contain the key commercial terms of investment deals such as investment amounts, control, accruing rights. It ensures that both parties are aware of what has been agreed.

c. Share subscription agreement; prescribes the issue of shares on pre-agreed conditions.

d. Shareholders agreement; clearly set out the rights, obligations and powers of the shareholders.

4. DATA PROTECTION RECORDS

Data Protection is the means by which the privacy rights of individuals are safeguarded in relation to the collecting and processing of their personal data. Companies interact with data from their employees, clients and consumers on daily operations and it is imperative to ensure that such data is processed properly and safeguarded. Proper handling of personal data and sensitive data requires that consent is prior obtained and that the company sets up a data protection policy to ensure that data is upheld with confidentiality and not disclosed to unauthorized persons. The policy must also state how data is recorded, maintained and deleted.

5. INTELLECTUAL PROPERTY RECORDS

In the course of business, the company may develop inventions, literary and artistic works, designs, symbols, names and images. There are various ways to protect these Intellectual properties such as via patent, copyright, industrial designs and trademarks.

The company must have proper records of all its registered IP rights and licenses obtained to use IP rights of others. This will enable it monitor use by the public and prevent infringement. Proper records will also inform the company of the status of compliance for example compliance with the requirement to renew such rights or license to use.

6. EMPLOYMENT AND HR DOCUMENTS

Employment agreements and related agreements – these documents are signed each time a company hires a new employee or decides to incorporate certain terms in the course of employment. They cover the employee's duties and role within the company as well as the company's obligations toward the employee. The company must also have and keep records of executed employment agreements and other agreements such as Confidentiality and non-disclosure agreements and HR manual.

Contractor agreements - These agreements are usually drafted in contracts for service whereby the two parties need to clearly outline in detail the terms of their engagement for example; who owns the completed work, the timelines for completion and the agreed consideration. It may also contain details regarding quality standards.

HR Documentation - It's vital for human resources (HR) professionals to maintain organized, accurate and consistent documentation of workplace events. These documentations include:

a. Onboarding paperwork

b. Performance evaluation documents

c. Medical information

d. Termination records

Company policy - A company policy document outlines all its policies regarding various subjects, such as health and safety, the conduct of its employees, the salary for each role, behavioral guidelines, disciplinary measures and any other rule or regulation internally set by the organization. Its main role is to act as a point of reference when employees require guidance on how to handle certain situations.

7. TAX RELATED DOCUMENTS

Some of the documents that a company keeps to show tax compliance include;

a. KRA Pin certificate

b. Tax Compliance Certificate

c. Records of filing annual returns

d. Records of VAT assessments, notices, objections etc.

8. INSURANCE

Business insurance enables companies to protect themselves against various risks such as major business losses, natural disasters, catastrophes, accidents and theft. A company should keep a business insurance document or file where information on different insurance policies that cover risks is stored.

How can we assist

We at CM SME Club work to make building your company easier. This is why we provide you with access to the largest collection of business documents and agreements at affordable costs. We also specialize in auditing your company documents and will advise you on documents that your business must obtain and keep to ensure that you are in full compliance with the Law. Explore our subscription plans and become a member today.

Published on Aug. 22, 2024, 1:10 p.m.