The Companies (Beneficial Ownership Information) Regulations

Legal Notice 12 of 2020

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The Companies (Beneficial Ownership Information) Regulations
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LAWS OF KENYA

COMPANIES ACT

THE COMPANIES (BENEFICIAL OWNERSHIP INFORMATION) REGULATIONS

LEGAL NOTICE 12 OF 2020

  • Published in Kenya Gazette Vol. CXXII—No. 40 on 28 February 2020
  • Commenced on 28 February 2020
  1. [Amended by Companies (Beneficial ownership Information) (Amendment) Regulations, 2022 (Legal Notice 32 of 2022) on 24 February 2022]
  2. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]
  3. [Amended by The Companies (Beneficial Ownership Information) (Amendment) Regulations, 2023 (Legal Notice 162 of 2023) on 19 October 2023]

1. Citation

These Regulations may be cited as the Companies (Beneficial Ownership Information) Regulations.

2. Interpretation

In these Regulations, unless the context otherwise requires—"Act" means the Companies Act (Cap. 486);"arrangement" refers to an artificial entity, without legal personality, associating one or more natural or legal persons together in an ownership or control relationship, but without implying that the parties to this arrangement have any other form of collective legal identity;"beneficial owner" means the 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;"competent authority" means the Attorney-General, any criminal investigation agency established by law, law enforcement agencies, authorities that supervise and monitor the financial sector, including the Financial Reporting Centre and the Kenya Revenue Authority;"contracting authority" has the meaning assigned to it under the Public Private Partnership Act (Cap. 430).“designated non-financial businesses or professions” has the meaning assigned to it under section 2 of the Proceeds of Crime and Anti-Money Laundering Act (Cap. 59A);“family” means—
(a)the beneficial owner’s spouse;
(b)a child or step-child of the beneficial owner;
(c)a child or step-child of the beneficial owner’s spouse who lives with the beneficial owner and has not reached eighteen years of age;
(d)a parent of the benef icial owner;
(e)a brother or sister to the beneficial owner;
(f)a brother or sister of the spouse of the beneficial owner;
(g)a grandchild of the beneficial owner; or
(h)a spouse of any of the persons specified in paragraphs (b), (e), (f) and (g).
"financial institutions” has the meaning assigned to it under section 2 of the Proceeds of Crime and Anti-Money Laundering Act (Cap. 59A);"joint arrangement" means an arrangement between the holders of shares or rights in a company that they exercise all or substantially all the rights conferred by their respective shares or rights jointly, in a manner pre-determined by the arrangement;"material discrepancy" means factual errors that could significantly alter the status or identity of a beneficial owner but does not include typing mistakes or spelling errors;“member” has the meaning assigned under section 3 of the Act;"personal identification number" means the personal identification number issued under section 12 of the Tax Procedures Act (Cap. 469B)."procuring entity" has the meaning assigned to it under the Public Procurement and Asset Disposal Act (Cap. 412C);“protected personal identifiable information” includes—
(a)birth certificate number, national identity card number passport number;
(b)personal identification number;
(c)date of birth;
(d)residential address;
(e)telephone number; or
(f)email address;
"public private partnership" has the meaning assigned to it under the Public Private Partnership Act (Cap. 430);“Public Private Partnership Committee” has the meaning assigned to it under the Public Private Partnership Act (Cap. 430);“Public Procurement Regulatory Authority” has the meaning assigned to it under the Public Procurement and Asset Disposal Act (Cap. 412C);"public procurement" has the meaning assigned to it under the Public Procurement and Asset Disposal Act (Cap. 412C);"Registrar" means the Registrar of Companies appointed under setion 831 of the Act;"relevant interest" means—
(a)shares held by a person in a company;
(b)voting rights exercised by a person in the company; or
(c)the right to appoint or remove any member of the board of directors of the company;
"significant control” includes control that can be exercised through—
(a)debt instruments or other financial arrangements such as where a lender or creditor controls a legal person via the provisions of the lending agreement which provides that debt is convertible into voting equity, or where a third party influences a shareholder by means of a financial or other relationship but does not include instances where a bank provides financing to a legal person;
(b)positions held within a legal person such as being responsible for the strategic decisions that affect business practices or general direction of the legal person including senior managing officials;
(c)informal means such as through close personal connections to family or associates including informal nominee arrangements or when an individual is using, enjoying or benefiting from the assets owned by the legal person, or
(d)differential voting rights that give certain shareholders more control than others in this case, even a shareholding that falls well below a specified threshold may in fact give a minority shareholder control over the company; and
“significant influence” means the power to participate in the operating and financial policies of a company without necessarily having full control over them;"significant influence or control" means participation in the finances and financial policies of a company without necessarily having full control over them; and"ultimately owns or controls" means a situation which ownership is exercised through a chain of ownership or by means of control other than direct control.[L.N. 32 of 2022, r. 2, L.N. 162 of 2023, r. 2.]

3. Beneficial owner particulars

(1)In accordance with section 93A of the Act, every company shall have a beneficial owner.
(2)For the purpose of these Regulations, a beneficial owner of a company shall be a natural person who meets any of the following conditions whether individually or jointly in relation to the company—
(a)holds at least ten percent of the issued shares in the company either directly or indirectly;
(b)exercises at least ten percent of the voting rights in the company either directly or indirectly;
(c)holds a right to, directly or indirectly, appoint or remove a majority of the members of the board of directors;
(d)exercises significant influence or significant control, directly or indirectly, over the company.
(2A)For purposes of a company limited by guarantee, a beneficial owner of a company shall be a natural person who meets any of the following criteria—
(a)whether individually or jointly, exercises at least ten percent of the voting rights directly or indirectly;
(b)whether individually or jointly, has a right to exercise or actually exercises significant influence directly or indirectly over the running of the activities of the company limited by guarantee;
(c)whether individually or jointly, has the right to, directly or indirectly, appoint or remove any of the board of directors;
(d)whether individually or jointly, has the right to, directly or indirectly, direct or veto the distribution of funds, assets, or investment decisions of the company limited by guarantee; or
(e)whether individually or jointly, has the right to, directly or indirectly, liquidate the company limited by guarantee.
[L.N. 162 of 2023, s. 3.]
(2B)Where two or more natural persons—
(a)hold a share or right jointly; or
(b)have a joint arrangement relating to shares or rights held,each of such persons shall, for the purposes of subregulation (2) be treated as a beneficial owner.
[L.N. 162 of 2023, s. 3.]
(3)A company shall take reasonable steps to identify and verify the particulars of its beneficial owners and shall enter in its register of members following particulars in respect of its beneficial owner
(a)full name;
(b)birth certificate number, national identity card number or passport number;
(c)personal identification number;
(d)nationality;
(e)date of birth;
(f)postal address;
(g)business address;
(h)residential address;
(i)telephone number;
(j)email address;
(k)occupation or profession;
(l)nature of ownership or control;
(m)the date on which any person became a beneficial owner of the company;
(n)the date on which any person ceased to be a beneficial owner; and
(o)any other relevant detail the Registrar may from time to time require.
(4)The information on the nature of ownership or control referred to in subregulation (3)(1) is as specified in regulation 3(2) and 3(2A).
(4A)A company shall validate and verify the particulars referred to in subregulation (3) before submitting a copy of the particulars to the Registrar,
(5)A company shall lodge with the Registrar a copy of its register of beneficial owners in Form BOF1 set out in the First Schedule in accordance with section 93A(3) of the Act.
(5A)A company shall , from time to time, validate, review, verify and update information of its beneficial owners in its register of beneficial owners.
(5B)A company may request its beneficial owner to review, validate and verify any of the beneficial owner’s particulars referred to in subregulation (3).
(5C)When there are any changes in the particulars of a beneficial owner, the director, member or beneficial owner of the company shall notify the company within fourteen days of such change.
(5D)A person who fails to provide the information referred to sub regulation (5C) to the company, the provisions of these Regulations relating to the restriction of relevant interest shall apply.
(6)A company shall lodge with the Registrar the particulars of change of its beneficial owners in Form BOF2 set out in the First Schedule and shall pay the fees set out in the Second Schedule.
(7)Where a company has a new beneficial owner, the company shall update its register beneficial owners and file a notice of any new benef icial owner with the Registrar in Form BOF4 set out in the First Schedule.
(8)A company shall file a notice of a person ceasing to be a beneficial owner to the Registrar in Form BOF5 set out in the First Schedule in accordance with section 93A (5) and (6) of the Act and pay the fees set out in the Second Schedule.[L.N. 32 of 2022 r. 3, L.N. 162 of 2023, r. 3.]

4. Company's duty to investigate and obtain beneficial owner particulars

(1)A company shall give notice to a person it knows or has reasonable cause to believe that the person is a beneficial owner of company, requiring the person to provide the particulars set out in Regulation 3(3).
(2)A person who receives a notice under this regulation shall comply with the requirements of the notice not later than twenty one days from the date of the notice.
(3)A person who receives a notice under subregulation (1) is not required to disclose any information in respect of which the Court has directed not to be disclosed.

4A. Nominee shareholder and nominee director

(1)A person, whether formally or informally, acting as a nominee shareholder or a nominee director shall disclose to the company their status as a nominee and provide the particulars of the nominator within the prescribed timelines under the Act.
(2)The company shall upon validating, reviewing and verifying the nominee status, note the nominees in its register of nominees.
(3)The company shall submit a copy of its register of members or register of directors with the Registrar as provided for under the Act.
(4)The Registrar shall put an asterisk to the names of directors or shareholders who are directors or shareholders, appearing in the register of members or register of directors.
(5)The company shall—
(a)where a nominator is a natural person, enter the particulars of the nominator in the register of beneficial owners; or
(b)where a nominator is a legal person, enter the particulars of the beneficial owners of the legal person in the register of the beneficial owners,and submit a copy of the register of beneficial owners and any change to it, in accordance with the provisions of the Act and these Regulations.
(6)A nominee who falsely declares or fails to disclose the nominator commits an offence and shall be liable, on conviction, to the penalty provided under section 872 of the Act.
(7)For purposes of this regulation “informally” means, without any form of written legal contract such as based on loose forms of control where a family member, friend, employee or associate stands in for the nominator, who can be the beneficial owner.[L.N. 162 of 2023, r. 4.]

5. Warning notice

A company shall issue a warning notice to a person who fails to comply with the provisions of regulation 4 and keep a copy of the warning notice in its register of beneficial owners.

6. Content of a warning notice

A warning notice issued under regulation 5 shall—
(a)specify the date on which the warning notice is issued and the date of compliance;
(b)be accompanied by a copy of the notice issued under regulation 4;
(c)require the person to comply with the notice issued under regulation 4;
(d)state that it is proposing to restrict the relevant interest the person holds in the company; and
(e)explain the effect of the restriction.

7. Restriction

(1)A company shall restrict the relevant interest of a person if the person has not complied with the warning notice within fourteen days from the date of the warning notice.
(2)A company shall make a note in the company's register to indicate the restriction issued under subregulation (1).
(3)A company shall file a copy of the restriction issued under this regulation with the Registrar within fourteen days from the date of the issuance of the restriction.

8. Content of a restriction

Where a company restricts the relevant interest of a person it shall notify the person affected by the restriction, in writing of the—
(a)date the warning notice under regulation 5 was issued;
(b)date on which the restriction was issued; and
(c)effect of the restriction.

9. Effect of restriction

The effect of a restriction issued under regulation 7 respect to a relevant interest is as follows—
(a)any transfer of the interest is void;
(b)no rights are exercisable in respect of the interest;
(c)no shares may be issued in right of the interest or in pursuance of an offer made to the interest-holder;
(d)no payment may be made of sums due from the company in respect of the interest.

10. Withdrawal of the restriction

(1)Where a notice issued under regulation 5 is complied with after the time specified in the notice, the company shall, within fourteen days of compliance of the notice, withdraw the restriction placed on the relevant interest of the beneficial owner.
(2)A company shall note in its register of beneficial owners—
(a)the date on which the withdrawal was issued;
(b)the date on which the company became required to withdraw the restriction; and
(c)the person's relevant interest in the company.
(3)The company shall file a copy of the withdrawal issued under this regulation with the Registrar within fourteen days from the date the withdrawal was issued.

11. Identification

(1)The company shall note in its register of beneficial owners that it knows or has reasonable cause to believe that there is a beneficial owner in relation to the company but—
(a)has not identified the beneficial owner;
(b)has not been able to obtain the beneficial owner particulars;
(c)has issued a warning notice which has not been complied with;
(d)has issued a restriction notice; or
(e)there is a matter pending before court in relation to beneficial ownership.
(2)The company shall lodge with the Registrar in Form BOF3 as set out in the First Schedule details setting out the steps undertaken to identify the beneficial owner or any other relevant information related to subregulation (1) above.[L.N. 162 of 2023, r. 5.]

12. Offence

A person who discloses beneficial ownership information in any manner other than for the purpose for which such information is obtained commits an offence and shall be liable upon conviction to a fine not exceeding twenty thousand shillings or to imprisonment for a period not exceeding six months, or to both.[L.N. 162 of 2023, r. 6.]

13. Disclosure by the company

(1)A company shall not use or disclose any information about its beneficial owner except—
(a)for communicating with the beneficial owner concerned;
(b)in order to comply with any requirement of these Regulations;
(c)in order to comply with the Proceeds of Crime and Anti-Money Laundering Act (Cap. 59A) and its Regulations;
(d)in order to comply with the Prevention of Terrorism Act (Cap. 59B) and its Regulations; or
(e)in order to comply with a court order.
(2)Notwithstanding subregulation (1), information relating to a beneficial owner may be disclosed by a company —
(a)with written consent of the beneficial owner;
(b)to the procuring entity, where the company participates in public procurement and assets disposal under the Public Procurement and Asset Disposal Act (Cap. 412C);
(c)to the contracting authority, where the company participates in a public private partnership arrangement under the Public Private Partnership Act (Cap. 430);
(d)to financial institutions for the purposes of entering into a relationship with the institution.
[L.N. 32/2022, r. 4, L.N. 162/2023, r. 7.]

14. Disclosure by the Registrar

(1)The Registrar may—
(a)use information relating to a beneficial owner for the purpose of communicating with the beneficial owner;
(b)upon a written request or any other means the registrar may specify, make available the beneficial ownership information of a company, to—
(i)a competent authority;
(ii)the Public Procurement Regulatory Authority;
(iii)the Public Private Partnerships Committee;
(iv)supervisors or regulators of financial institutions and designated non financial businesses and professionals; or
(v)any government agency in charge of implementing anti money laundering and countering financing of terrorism measures;
(c)upon receipt of Form BOF6 or as the Registrar may specify and on payment of the fee stipulated in the Second Schedule, disclose beneficial ownership information of a company, in Form BOF7 set out in the Second Schedule, other than protected personal identifiable information, to—
(i)financial institutions;
(ii)designated non-financial businesses or professionals; or
(d)disclose beneficial ownership information of a company pursuant to a court order.[L.N. 162/2023, r. 8.]

15. Publishing beneficial ownership information

Beneficial ownership information shall not be made available to the public or be published, except—
(a)by the Public Procurement Regulatory Authority in the government portal in relation to entities that have been awarded a tender by the procuring entity as part of a contract award; or
(b)by a government, where the matter is of public interest.[L.N. 162/2023, r. 8.]

16. Data protection

The publication or disclosure of the beneficial ownership information under these Regulations shall not include protected personal identifiable information, except where such disclosure is made to a competent authority or pursuant to a court order.[L.N. 162/2023, r. 8.]

17. Material Discrepancy Reporting

(1)A company or a beneficial owner of a company shall report to the Registrar, material discrepancy identified by them in relation to beneficial ownership information filed by the company, in form BOF8 set out in the First Schedule.
(2)The Registrar may, upon receipt of the report under subregulation (1), issue a direction to the company directing the company to address the discrepancy by filing an updated copy of its register of beneficial owners pursuant to section 93A of the Act.
(3)Failure to comply with the Registrar’s directive under subregulation (2) shall have the same effect as a failure to comply with the directive issued under section 93A (12) of the Act.[L.N. 162/2023, r. 8.]

FIRST SCHEDULE [r. 3(3)]

FORM BOF1

[L.N. 32 of 2022,r. 5, L.N. 162/2023, r. 9.]

REGISTER OF BENEFICIAL OWNERS**

[Section 93A of the Companies Act (Cap. 486)]Name of company: .......................................................Number of company :......................................................To the Registrar of Companies:The above company hereby lodges the register of beneficial owners in accordance with section 93A of the Companies Act (Cap. 486) that the following person is a beneficial owner of the companyDate that the person became a beneficial owner: ___/_/_______[dd/mm/yyyy]

BENEFICIAL OWNER

NATURE OF OWNERSHIP OR CONTROL FOR A COMPANY LIMITED BY SHARES

NATURE OF OWNERSHIP OR CONTROL FOR A COMPANY LIMITED BY GUARANTEE

SHAREHOLDERS WHOSE BENEFICIAL INTEREST HAS NOT BEEN DISCLOSED:

SHAREHOLDER

NOTES*To be published in the Government portal in accordance with regulation 13(5)**This form is used to notify the Registry of the particulars of company beneficial*** Please indicate whether director, certified secretary or advocate of the company**** Please indicate whether the information obtained was (a) provided by the beneficial owner or their authorised representative; (b) taken from an official register; or (c) provided by a third party not directly related to the beneficial owner.Please enter particulars of every beneficial owner in a separate form[Notes: (a) Please enter particulars of every beneficial owner in a separate formFORM BOF2 [r. 3(4)]CHANGE OF BENEFICIAL OWNERS' PARTICULARS*[Section 93A of the Companies Act, 2015]To the Registrar of Companies:The above company hereby gives notice in accordance w ith section = 93A of the Companies Act, 2015, that the registered particulars** of the beneficial owners of the company, as specified in column 1 of the table below, have changed in column 2 of that table.Lodged on behalf of the company by:NOTES*This form is used to notify the Registry of changes in the particulars of company beneficial owners.** The particulars to be notified are of changes occurring in the company ’s register of beneficial owners.***Please indicate whether director, certified secretary or advocate of the company.****Please indicate whether the information obtained was (a) provided by the beneficial owner or their authorised representative; (b) taken from an official register; or (c) provided by a third party not directly related to the beneficial owner.

FORM BOF3 [r. 11]

UNSPECIFIED OR UNKNOWN BENEFICIAL OWNER

FORM BOF 4 [r. 3(7)]

NOTICE OF A NEW BENEFICIAL OWNER**

[Section 93A of the Companies Act, 2015]

Name of company: ..................................................Number of company:..................................................To the Registrar of Companies:The above company hereby gives notice in with section 93A of the Companies Act, 2015 that the following person is a new beneficial owner of the companyDate that the person became a beneficial owner: _____//__________- [dd/mm/yyyy]

BENEFICIAL OWNER

NATURE OF OWNERSHIP OR CONTROL FOR A COMPANY LIMITED BY SHARES

NATURE OF OWNERSHIP OR CONTROL FOR A COMPANY LIMITED BY GUARANTEE

SHAREHOLDERS WHOSE BENEFICIAL INTEREST HAS NOT BEEN DISCLOSED: SHAREHOLDER

NOTES*To be published in the Government portal in accordance with regulation 13(5)* * This form is used to notify the Registry of the particulars of company beneficial owners* * * Please indicate whether director , certified secretary or advocate of the company* * * * Please indicate whether the in formation obtained was (a) provided by the beneficial owner or theirauthorised representative; (b) taken from an official register; or (c) provided by a third party not directly related to the beneficial owner.Please enter particulars of every beneficial owner in a separate form[Notes: (a) Please enter particulars of every beneficial owner in a separate form

FORM BOF5 [r.3(8)]

NOTICE OF CEASING TO BE A BENEFICIAL OWNER*

[Section 93A of the Companies Act, 2015]

To the Registrar of Companies:The above company hereby gives notice in accordance with section 93A of the Companies Act, 2015 that the beneficial owners of the company, as specified in column 1 of the table below, ceased to be beneficial ow ners of the company on the date(s) specified opposite that/those name(s) in column 2 of that table.NOTES*This form is used to notify the Registry when a person ceases to be a beneficial owner.**Please indicate whether director, certified secretary or advocate of the company.***Please indicate whether the information obtained was (a) provided by the beneficial owner or their authorised representative; (b) taken from an official register; or (c) provided by a third party not directly related to the beneficial owner.

FORM BOF6 [r. 14]

BENEFICIAL OWNERSHIP SEARCH REQUEST

[Section 93A of the Companies Act, 2015]Name of company: ......................................................................Number of company:.....................................................................Reason(s) for conducting a search ......................................................

FORM BOF7 [r. 14.]

BENEFICIAL OWNERSHIP OFFICIAL SEARCH REPORT

[Section 93 of the Companies Act, 2015]To;Records relating to the below company held by the Registrar as at .....................................Names of the beneficial owners*Note:*Information contained herein shall only be used for the purposes of customer due diligence and shall not be published disclosed to third parties unless permitted by law.

FORM BOF8 [r .17]

DISCREPANCY REPORTING

[Section 93 of the Companies Act, 2015]Name of company: ...................................................................Number of company: .................................................................Nature of Discrepancy ..............................................................

SECOND SCHEDULE [r. 4]

FEES

[L.N. 162/2023, r. 10.]
ItemFee
Notice of ceasing to be a beneficial owner500
Beneficial Ownership Search Request600
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Cited documents 6

Act 6
1. Companies Act 1559 citations
2. Tax Procedures Act 1286 citations
3. Public Procurement and Asset Disposal Act 352 citations
4. Proceeds of Crime and Anti-Money Laundering Act 317 citations
5. Prevention of Terrorism Act 110 citations
6. Public Private Partnerships Act 10 citations

Documents citing this one 0