CM SME Club

Registration And Compliance Issues Surrounding Public Benefit Organizations (PBOs)

In 2013, the Public Benefits Organization Act, 2013 (the PBO Act) was passed by Parliament and was gazetted to commence operations on 16th September 2016. However, despite the commencement being gazetted, the provisions of the Act are yet to be operationalized. Consequently, such organizations continue to be registered as Non-Governmental Organizations (NGOs) under the NGO Co-ordination Act 1990 (NGO Act), the Non-Governmental Organisation Regulations, and the Non- Governmental Organisation Co-ordination Amendment Regulations of 2010. It is also worth noting that one of the provisions of the PBO Act was to repeal the NGO Act.

Admittedly, this position has occasioned some level of uncertainty causing persons who would want to register non-governmental organizations or public benefit organizations to steer clear and prefer other forms of registration including trusts and foundations. It is however important to note that in spite of this lack of clarity, registration is still on-going under the NGO Act although stakeholders speculate that the PBO Act may be operationalized at any time and thus it is important to touch on these 2 regimes when discussing PBOs and NGOs.

A. Registration of a PBO

A public benefit organization is defined in section 2 of the PBO Act to mean ‘a voluntary membership or non-membership grouping of individuals or organizations, which is autonomous, non-partisan, non-profit making and which is:

(a) organized and operated locally, nationally or internationally;

(b) engages in public benefit activities; and

A “public benefit activity” is defined in section 2 of the PBO Act to mean:

“an activity that supports or promotes public benefit by enhancing or promoting the legitimate economic, environmental, social or cultural development or protecting the environment or lobbying or advocating on issues of general public interest or the interest or well-being of the general public or a group of individuals or organizations.”

The goal of the PBO Act is to provide a new legal, regulatory and institutional framework for public benefits organizations (PBOs) in Kenya and create a framework for their co-operation and partnership with the Government.

The regulatory and registration body under the PBO Act is the Public Benefit Organizations Registration Commission (the “Commission). This will take over the roles of the NGO Board established under the NGO Act once it is repealed. A Tribunal, called the Public Benefit Organizations Dispute Tribunal, has also been established under section 43 of the PBO Act and if implemented will handle all disputes relating to the community benefit organizations.

The PBO Act provides that “civil societies” which are defined to include trusts and foundations can register under the Act ensuring that all these bodies come under one legislation.

B. Requirements for registration of a PBO in Kenya

An application for registration is made to the Authority and accompanied by the following documents: -

(a) A copy of the Constitution or other constitutive document of the public benefit organization;

(b) Names and addresses of the founders of the PBO;

(c) The public benefit purposes for which the PBO is organized and operated and all of the principal activities that the PBO shall engage in;

(d) The postal and physical address of the principal place of doing business of the PBO;

(e) The prescribed fee; and

(f) Such other particulars of information as may be required by the Authority in order to assist the Authority to determine whether or not he Organization meets the requirements for registration under the Act.

An international non-governmental organization may register as a PBO by filing the following documentation: -

(a) An application form;

(b) Proof that it is a legal entity in another country;

(d) A written statement from a representative of the organization’s headquarters with authority to provide such statement stating –

(i) The purpose of the international non-governmental organization;

(ii) A general description of the activities that he international non-governmental organization is planning to carry out in Kenya; and

(iii) The name, address and other contact information of the authorised agent.

C. Compliance Requirements of PBOs under the PBO Act

Section 31 of the PBO Act provides that every public benefit organization registered under the Act shall keep proper books of accounts and other records in relation to its operations and activities and shall prepare annually a statement of accounts in a form which conforms to the standards of the generally accepted accounting practice applicable to non-profit organizations.

Further, the financial statements prepared and submitted by a public benefit organization, shall include an opinion signed by an independent auditor as to whether the financial statements present fairly, in all material respects, the organization's financial position for the reporting period.

Also, within six months after the end of each financial year, every public benefit organization is to submit to the Authority a statement of its accounts audited in accordance to the opinion signed by the independent auditor and a report dealing generally with the programme of activities of the public benefit organization.

A public benefit organization may not engage in fundraising or campaigning to support or oppose any political party or candidate for appointive or elective public office, nor may it propose or register candidates for elective public office.

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