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Beneficial Ownership Information Regulations, 2020

19 October 2020

The recently introduced Section 93A of the Companies Act requires each company to have and maintain a register of its “beneficial owner(s)”. The Government has now published Regulations which address implementation of the beneficial ownership information requirement.

Definition of Beneficial Owner

Under the Regulations a beneficial owner is a natural person who ultimately owns or controls a legal person or arrangements or the natural person on whose behalf a transaction is conducted, and includes those persons who exercise ultimate effective control over a legal person or arrangement.
 
The beneficial owner shall be a natural person who meets any of the following expansive conditions in relation to the company:

  1. holds at least ten percent of the issued shares in the company either directly or indirectly;
  2. exercises at least ten percent of the voting rights in the company either directly or indirectly;
  3. holds a right, directly or indirectly, to appoint or remove a director of the company: or
  4. exercises significant influence or control, directly or indirectly, over the company.

Compliance

Under the Regulation a company is required:

  1. Take reasonable steps to identify its beneficial owners and enter in its register of members their details;
  2. Lodge with the Registrar of Companies a copy of its register of beneficial owners and any changes to the beneficial owners and/ or their particulars;
  3. Give to notice to persons it knows or has reasonable cause to believe is the beneficial owner of a company to provide details of their particulars as set out in the Regulations within twenty-one (21) days from the date of the notice;
  4. Issue a warning notice to a person who fails to comply with notice requiring that provide their particulars;
  5. Restrict the relevant interest of a person who fails to comply with the warning notice within fourteen days, notify the person affected by the warning notice and file the warning with the Registrar of Companies; and
  6. Withdraw the restriction placed on the relevant interest of the beneficial owner within fourteen days upon their complying with the warning notice and file the withdrawal with the Registrar of Companies.

Data Protection

The Regulations prohibit companies from disclosing the details of a beneficial owner without the written consent of the beneficial owner, save for where disclosure is made pursuant to a court order.

The Registrar of Companies may only disclose the information relating to a beneficial owner to a competent authority upon a written request by the competent authority.

A competent authority is defined to mean the Attorney General, criminal investigation and law enforcement agencies, and authorities that supervises and monitor the financial sector, including Financial reporting Centre and the Kenya revenue Authority.

Offence and Penalties

It is an offence to disclose the beneficial ownership information without the written consent of the beneficial owner or in any manner other than prescribed by the Regulations.

A person who discloses beneficial ownership information in the manner other than for the purpose for which such information is obtained commits an offence and is liable upon conviction to a fine not exceeding twenty thousand shillings or to imprisonment for a period not exceeding six months, or to both.

Disclaimer

This alert is for information purposes only and does not constitute legal advice. The alert does not address or opine on the obligations of public listed companies or foreign companies registered in Kenya.

For legal advice with respect to this alert, please contact our Partner, Hamish Keith (Corporate / Commercial) at [email protected] or Associate, Alex Muchira at [email protected] 

Related people

Hamish Keith
Hamish W. Keith
The Senior Partner
Nairobi
Alex Muchira
Alex Muchira
Associate
Nairobi