Pursuant to Section 93A of the Companies Act,2015 as amended by the Statute Law (Miscellaneous Amendment) Act 2019, read together with the Companies (Beneficial Ownership Information) Regulations 2020 (the “Regulations’), every Company is required to keep a register of its beneficial owners and maintain a copy with the Registrar of Companies.
On 16th October 2020, the Registrar of Companies operationalized the Beneficial Ownership (“BO”) E-Register with effect from 13th October 2020. To enable Companies comply, the Registrar granted a grace period of preparation of BO register up to 31st January, 2021, before enforcement for non-compliance.
Definition of a Beneficial Owner
A beneficial owner, under the Regulations is defined as 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 of a company shall be any natural person who meets the following conditions:
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.
Particulars of the Company for inclusion under the BO E-Register
The Regulations entail that companies take reasonable steps to identify its beneficial owners and enter their details in its register of members. The particulars of its beneficial owners to be included in the register include:
§ Full name(s)
§ Birth certificate number, national identity card number or passport number;
§ Personal identification number;
§ Date of birth;
§ Postal address;
§ Business address;
§ Residential address;
§ Telephone number;
§ Email address;
§ Occupation or profession
§ Nature of ownership or control;
§ Date on which any person became a beneficial owner of the company;
§ Date on which any person ceased to be a beneficial owner; and
§ Any other relevant detail the Registrar may from time to time require.
Under the Regulations the company is required to:
1. 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;
2. Give notice to persons it knows or has reasonable cause to believe is the beneficial owner of the company to provide details of their particulars as set out in the Regulations within twenty-one (21) days from the date of the notice;
3. Issue a warning notice to a person who fails to comply with notice requiring that they provide their particulars;
4. Restrict the relevant interest of a person who fails to comply with the warning notice within fourteen (14) days, notify the person affected by the warning notice and file the warning with the Registrar of Companies; and
5. Withdraw the restriction placed on the relevant interest of the beneficial owner within fourteen (14) days upon their complying with the waning notice and file the withdrawal with the Registrar of Companies.
The Regulations prohibit companies from disclosing the particulars of a beneficial owner without the written consent of the beneficial owner, unless disclosure is made pursuant to a court order.
Offences and Penalties in regard to Beneficial Ownership
According to the regulations, 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 information in such a manner commits an offence and attracts a fine not exceeding Kenya Shillings Twenty Thousand (Kshs 20,000) or imprisonment for a period not exceeding six (6) months, or to both.
A Kenyan company has the responsibility to investigate and obtain its beneficial owners particulars. However, the act does not expressly stipulate whose responsibility it is to investigate and obtain the information. The Companies Act provides that in the event of non-compliance, the company, and each officer of the company who is in default commits an offence and on conviction, each is liable to a fine not exceeding KES 500,000 and if the offence subsists after conviction, the company and each officer are liable to a fine not exceeding KES 50,000 for each day.
All Officers of Companies and authorized persons are required to comply and submit a copy of the Beneficial Ownership Register within 30 days of its preparation and to notify the Registrar within 14 days of any change in Beneficial Ownership information. Failure to comply with this requirement makes it an offence to the Company and every officer of the Company who is in default.
Remember that the looming deadline for compliance is 31st January 2021. Thereafter, these penalties shall come into effect!