Registration as a Company Limited by Guarantee

A proposed charitable organization can also be registered as a company limited by guarantee. Registration of Companies in Kenya is regulated under the Companies Act 2015 (the “Act”).

A company limited by guarantee means that the liability of the company's members is limited to the amount the members guarantee or undertake to contribute towards meeting the obligations of the company in the event of its winding up or liquidation.

Procedure of Incorporation

(a) Name Search and Reservation

The first step is to make an application to the Registrar of Companies to reserve the proposed name. The Registrar may reject any names if deemed undesirable or is there are confusingly similar to those of already existing companies.

Pursuant to Section 55 of the Act, the applicant is required to apply to the Registrar of Companies when undertaking the registration formalities for a licence permitting the company being a foundation to dispense with the use of the word “Limited”.

(b) Preparation of the Articles of Association.

Upon reservation of the name, the applicant is required to prepare the constitutive document of Foundation i.e Articles of Association. The Articles of Association provides for the rules and regulations of the Foundation’s internal affairs.

Thereafter, you shall be required to prepare various statutory forms which will be presented for registration together with the Articles of Association. These are: -

(i) Application to Register a Company (CR1);

(ii) Memorandum of a company limited by guarantee(CR3);

(iii) Notice of Appointment of Directors(CR6);

(iv) Notice of Residential Address of Directors(CR8); and

(v) Application to dispense with the word “Limited”.

The main objectives of the foundation will be set out in the application form (CR1) while the memorandum of association (CR3) will set out the minimum amount which a member guarantees to contribute to the assets of the company in the event of its winding up. The amount which the members undertake to contribute in the event the company is wound up is left at the discretion of the members.

Kindly also note that the proposed Directors are required to furnish the following documents:

(a) a copy of his/ her national identity card or passport;

(b) copy of KRA PIN certificate;

(d) Residential address including name of apartment/building, road and LR Number or Plot Number and postal address.

Once all the documents have been executed and the registration fees paid, the application is presented for registration.

Investigation by the National Intelligence Service

After the documents are submitted for registration and the applicable registration fees paid, the documents are forwarded to the Director of the National Intelligence Service for vetting of the directors, and sometimes the directors of the proposed company may be invited for an interview to shed more light of the proposed activities of the entity.

Upon approval by the National Intelligence Service, the documents are sent back to the Registrar of Companies for registration of the foundation or incorporation. Incorporation is complete when the Registrar issues a Certificate of Incorporation. This makes the foundation a body corporate with perpetual succession and with capacity to sue and be sued and own property in its own name.

After registration, the applicant may apply to the Attorney General through the Registrar to exempt the foundation from using the word “Limited” as part of its name.

Post-incorporation formalities

(a) PIN Certificate, Tax Compliance Certificate & Tax Exemptions

After registration of the foundation, we shall apply for Personal Identification Number (PIN) Certificate and Tax Compliance Certificate from the Kenya Revenue Authority (KRA). This is done online, and is necessary for purposes of opening a bank account and other transactions with government including filing of tax returns in Kenya.

Once the Foundation commences business, the applicant may apply for income tax exemptions allowed to charitable organizations under paragraph 10 of the First schedule of the Income Tax Act. This will culminate in the issuance of a Tax Exemption Certificate by the KRA. This is issued for a renewable term of five (5) years.

(b) Common Seal & Opening of Bank Account

The Foundation will require a common seal for executing its official documents. As your-go-to Advocates, we shall assist in procuring the same on your behalf upon incorporation of the Foundation.

Further, the Foundation will in the course of business need to operate a bank account in its name. We are familiar with the documents requested by the various local banks and shall prepare the first board minutes and resolutions of the Foundation authorizing the opening of the Bank Accounts.

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