The signing of the Anti-Money Laundering and Combating of Terrorism Financing Bill into law has instituted widespread changes in the Limited Liability Partnerships Act of 2011 (LLP Act). The amendments introduced are aimed at combating terrorism financing and ensuring transparency in financial transactions in Kenya. They are a major step in enforcing Kenya’s obligations under various international agreements and treaties pertaining to money laundering.
Some of the beneficial ownership pertinent amendments made to the LLP Act include:
• All LLPs are now required to file an annual return with the Registrar within 30 days of the anniversary of their registration. If an LLP fails to file its annual returns for a period of five years or more or fails to comply with the requirements to lodge a copy of the register of beneficial ownership, the Registrar is authorised to have the LLP struck off the Register of LLPs,
• New LLPs will be required to keep a register of their beneficial owners and existing LLPs will be required to comply with the same within 60 days of coming into force of the amendment to the Law. In case of any changes in the beneficial ownership of an LLP, the LLP will further be required to update the register of beneficial owners within 14 days of the change taking place,
• Where an LLP has nominee partners, (individual or legal person instructed by the partner(s) to act on their behalf), the said LLP is required to maintain a register containing names and addresses for both the partner and the nominee, the date on which the person became a nominee partner and lodge a copy of the same with the Registrar within 60 days of coming into effect of this amendment. Similar to the beneficial ownership information, the LLP is required to update any changes in the register of nominee partners within 14 days of the change happening,
• The Registrar may strike off an LLP from the Register of LLP if it fails to file its register of beneficial owners and nominee partners despite the Registrar’s directive to do so,
• Every LLP is now required to appoint an authorised person to fulfil the continuing Registrar compliance obligations. However, the Act does not define the qualifications and liabilities of an Authorised Person, and
• The records relating to the beneficial owner’s information must be maintained for a period of at least 10 years from the date, which a person ceases to be a beneficial owner.
The penalties relating to the failure or delay in complying with the new requirements range from KES 2,000 to KES 500,000.
We further take note of the following amendments to the LLP Act:
1. The amendments to the Act have now established Foreign Limited Liability Partnerships as a new category of LLPs. The Act now requires that an LLP registered outside Kenya shall not carry on business Kenya unless it is registered under the Act.
2. LLPs are now required to maintain certain registers and documents at their registered office for a minimum period of 7 years. These documents include the registration certificate; registers, declarations of solvency; any filings made at the Registry; Partnership Agreements and any other documents that the Registrar may require.
3. Foreign LLPs (although undefined by the Act) are required to appoint at least one local representative for purposes of operating in Kenya.
4. An LLP may be wound up through a voluntary application made to the Registrar requesting the LLP to be struck off. The application may be made by its manager or a majority of the partners to be struck off.
This alert serves as general guidance and is not intended to constitute specific legal advice.
For legal advice with respect to this alert, please contact our Partners, Nishit.Maru@CMS-DI.com or Alex.Muchira@CMS-DI.com.
Contributors*
Laura Lwigado – Company Secretary
Lukman Malik – Trainee Lawyer
