Starting a business in Kenya: your entrance to East Africa

A private limited company is a popular entity for a wide range of foreign businesses in Kenya. It is a separate legal entity from its parent, providing shareholders with limited liability and protecting their personal assets. The number of shareholders is capped at 50. A private limited company allows full foreign ownership, offers local credibility and makes it simple to open a bank account. Profits are subject to a resident corporate income tax rate of 30%.

A public limited company is typically chosen by larger enterprises intending to raise capital by offering shares. It has no upper limit on membership, but it faces more stringent regulatory oversight and must appoint at least two directors and a qualified company secretary. Public companies are subject to the same 30% corporate tax rate as private companies but are more scalable, making them suitable for major infrastructure or multinational projects.

The Kenyan LLP combines the tax flexibility of a partnership with the limited liability of a company. An LLP is generally not subject to corporate income tax at the entity level. Instead, profits and losses pass through to the partners, who are taxed individually, preventing the double taxation of corporate profits and dividends. Partners are protected from personal liability for the firm's debts. It is more flexible than a limited company in that it doesn't require a formal board of directors or a company secretary, but it must appoint at least one manager, who must be a natural person.

A branch office is an extension of a foreign parent company, authorised to carry out revenue-generating activities in Kenya without incorporating a local subsidiary. It is not a separate legal entity, meaning the parent company remains fully liable for all obligations and debts incurred by the branch. Setting up a branch can be faster, but it is subject to the higher non-resident corporate tax rate, at 37.5%. Foreign companies must also appoint at least one Kenya resident as a local representative.

A liaison office enables a foreign company to establish a non-commercial presence in Kenya. Activities are limited to non-revenue-generating tasks, such as market research, promotional activities and acting as a point of contact for the parent company. This model is suitable for firms exploring the East African market before committing to a full launch. As they do not earn income, liaison offices are generally not subject to corporate tax, though they must still register with the tax authorities for payroll purposes.

Setting up a company in Kenya involves a range of costs, which can vary depending on your chosen entity, specific business activity and the location you want to establish a presence in, among other key factors.

After reviewing your plans, we can walk you through the expected costs and set them out clearly, so you know what to budget for at each stage.

• Registration fees: Costs associated with Kenya company registration, including the Business Registration Service (BRS) on the eCitizen portal.
• Licensing fees: Includes fees for the mandatory Single Business Permit, a consolidated licence issued by county governments. The cost is determined by your location and business size.
• Visa costs: Expenses for securing work permits, such as a Class G (investor) or Class D (employment) permit, plus the Foreign Nationals Certificate (Alien Card).
• Office space rental: Costs for leasing commercial premises.
• Government fees: Company formation in Kenya can come with various administrative charges for statutory filings and stamp duty on share capital.
• Professional fees: Costs for hiring local experts, including advocates for legal setup, company secretaries for compliance and tax consultants.
• Other potential costs: These may include the notarisation of foreign documents and initial bank account opening balances.

At Hawksford, we take a structured approach to your company formation. Our experts can lead you through every stage of the process, reducing bottlenecks and making sure your entity is set up properly.

We start with a detailed assessment to fully understand your commercial targets, functional needs and future vision. We can then offer bespoke guidance on the suitable entity structure for your company setup in Kenya.

After this discussion, we can prepare a dedicated roadmap setting out a practical route to Kenyan market entry. Our experts can provide guidance on incorporation, shareholder configurations and any industry-specific regulatory requirements.

Our team can support you through the drafting and filing of the necessary paperwork, helping to verify that every detail meets the standards involved for company incorporation in Kenya. We handle the preparation of legal documents, application submissions and permit approvals from the relevant authorities.

We can help you reserve your company name and apply for the trade licences needed for your business. Our team can communicate with the local authorities on your behalf to handle the required formalities. This can help ensure the necessary approvals and documents are in place before you commence operations.

We can also manage the processing of investor and staff visas, coordinating the necessary paperwork and liaising with immigration departments.

We can streamline the opening of your local business accounts by providing guidance on KYC requirements and connecting you with trusted financial institutions. Our professional network in Kenya includes relationships with established banks.

Beyond the initial Kenya company registration, our team can continue to support your business as it establishes local operations. We can also assist you with ongoing accounting and tax compliance, including corporate tax, value added tax (VAT) registration and filing, financial statement preparation and bookkeeping.

The overall timeline for setting up a company in Kenya can vary depending on a range of factors that influence the setup process. These factors include the legal structure you choose, the complexity of your intended business activity and the licensing requirements associated with it. The timeline may also be affected by the requirements of the relevant authorities and the efficiency of document processing.

Our team can support you through the setup process with clear and realistic timelines at each stage. This can help you plan effectively and prepare to commence operations once the necessary approvals are in place.

• Chosen legal structure: The choice of jurisdiction and legal structure can influence the timeline.
• Complexity of business activity: Business activities that require special approvals from specific government entities may take longer to process.
• Efficiency of document processing: The efficiency with which documents are submitted and processed by the relevant authorities can also play a role.

Working with a partner with global expertise can significantly help ease the burden. Communication is kept consistent throughout the incorporation process, so you can have better visibility over the progress of your entity formation. This may make the process of establishing your business in Kenya easier to manage.

• Initial planning and document preparation: Typically 1 to 2 weeks
• Company registration and licensing: 3 to 5 business days is the target according to the Business Registration Service
• Visa processing: 1 to 3 months if all paperwork is complete and accurate
• Bank account opening: 3 to 6 weeks

At each stage, we can provide clear guidance on the requirements involved and flag potential issues before they become obstacles. By ensuring that filings are accurate and complete, our team can also help reduce the risk of delay caused by missing information or administrative error.