Setting up a Foreign Company in Kenya: Branch vs. Subsidiary

By CMSME Club Team

Updated on March 27, 2025, 1:26 p.m.

Reading time: 5 minutes

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Kenya offers vast opportunities for businesses looking to expand into the region due to the vibrant consumer market and growing infrastructure, making it an attractive destination for foreign investment.

If you are looking to expand your business into Kenya, understanding the right structure for expansion is crucial. Foreign companies can enter the Kenyan market by either registering a branch office or incorporating a subsidiary. Each entity has distinct advantages and legal considerations.

This article breaks down the key difference and registration procedures.

Key Differences Between a Branch and a Subsidiary

Feature	Branch Office	Subsidiary Company
Legal Status	An extension of the foreign company with no separate legal identity.	A separate legal entity distinct from the parent company.
Liability	The foreign company is directly liable for the branch's actions.	Liability is limited to the subsidiary itself.
Governance	Governed by the foreign company's policies and constitutive documents.	Governed by its own Memorandum and Articles of Association.
Taxation	Taxed at 30% of income generated in Kenya.	Taxed at 30% like local Kenyan companies.
Control	Controlled by the foreign company.	Operates independently but may follow the parent company’s strategy.
Flexibility	Limited flexibility; all decisions may require foreign office approval.	Greater flexibility in local decision-making.
Incorporation Document	Certificate of Compliance	Certificate of Incorporation

Registration Process for a Branch Office

Name Search and Reservation

Conduct a name search through the business registration portal to confirm if your name is available. Pursuant to Section 977 of the Companies Act, a branch can also register under an alternative name.

Submit Incorporation Documents

The foreign company will need to provide the following documents which must be notarized and translated into English if originally in a foreign language:

Certificate of Incorporation

Company Constitution

List of directors and shareholders with personal details

Appoint a Local Representative

Pursuant to Section 979 of the Companies Act, a Branch must appoint a Kenyan resident as a local representative to act on behalf of the Branch in matters compliance.

Establish a Registered Office

The branch must have a physical address in Kenya for service of notices.

Tax Registration

Upon obtaining a Certificate of Compliance, register the branch with the Kenya Revenue Authority (KRA) for a PIN to facilitate tax compliance.

Registration Process for a Subsidiary

Name Search and Reservation

Conduct a name search through the business registration portal to confirm name availability.

Prepare Incorporation Documents

Submit the following documents to the Registrar of Businesses:

Memorandum and Articles of Association

Particulars of Directors and Shareholders

Notice of Residential Address for Directors

Statement of Nominal Capital

Upon confirmation of compliance the company will receive a Certificate of Incorporation.

Tax Registration

Obtain a KRA PIN for tax purposes. Each director must also have their personal PIN.

Compliance with Local Laws

Obtain the necessary business permits and licenses relevant to the intended business sector.

5. Conclusion

Choosing between a Branch and a Subsidiary largely depends on your business goals and operational preferences. If you wish to maintain full control under the parent company's structure, a branch may be the ideal choice.

Navigating these options can be complex, but CM SME Club is here to help. From guiding you through the registration process, document preparation, taxation advice, immigration permits for foreign staff, to ensuring your business remains compliant with Kenyan regulations, our team offers comprehensive support for your expansion into Kenya.

How CM SME Club can help

At CM SME Club, we provide comprehensive services to support your expansion into Kenya, including: