INCORPORATION OF REAL ESTATE COMPANIES IN KENYA (2024)

INTRODUCTION

We shall discuss the law pertaining to incorporation of private companies, limited by shares under the Companies Act2015, which is the appropriate type of company for real estate activities and operations.

APPLICABLE LEGAL PROVISIONS

The process of incorporating a private company limited by shares is well outlined in sections 13, 14 and 16 of the Companies Act, No. 17 of 2015. These sections outline the documents required as well as the information to be provided by directors and shareholders of the proposed Company.

In respect of the post-registration requirements, they are discussed in the following statutes:

1. The Tax Procedures Act
2. The Social Health Insurance Fund Act
3. The National Social Security Fund Act

The sector specific requirements with regards to the real estate companies’ operations are provided in the Estate Agents Act.

REGISTRATION PROCESS

The process of Company incorporation entails sending the following information to the Companies registry in the forms prescribed by the Companies Act. The necessary information includes:

1. A minimum of three and a maximum of five proposed company names that are not offensive, abusive, identical to an already reserved name/registered company or likely to draw the impression that the company enjoys state patronage.
2. Proposed physical and postal address of the Company.
3. Proposed company’s email address and telephone number.
4. Physical and postal addresses of the directors and shareholders.
5. Email addresses of the company directors and shareholders.
6. Telephone numbers of the directors and shareholders.
7. The number of shares available for distribution and the value of each share.
8. The number of shares to be allocated to individual shareholders.
9. Whether directors have direct or indirect control over the company operations.
10. The identification numbers of the directors and shareholders.
11. Where a shareholder is an unnatural person (company), the Company’s registration number is required.
12. Identification details, telephone numbers and email addresses, physical and postal address of any beneficial owner of the company.
13. The nature of business to be undertaken by the company.

In addition to the above information, the following documents are required in conducting the process:

1. Passport size photos of the directors and shareholders.
2. Where a shareholder is an unnatural person (Company), the company certificate of registration.
3. Company articles of association, where the shareholders opt not to adopt the model articles of association provided by the companies’ registry.

STATUTORY FEES

A mandatory fee of 10,750/= Kenya Shillings is paid to the Companies registry to complete the incorporation process.

TIMELINES

Registration of the company takes 5 days to be registered. A certificate of incorporation is issued by the Companies registry to signify registration of the Company.

POST-REGISTRATION SUBSIDIARY REQUIREMENTS

Social Health Insurance Fund

Every employer who, under a contract of service, has employed one employee or more must register with the Fund as a contributing employer. Failure to do so bars the employer from accessing public services. To enable registration with the Social Health Insurance Act,2023 an employer is required to provide the following documents:

1. The Company certificate of compliance.
2. The Company Kenya Revenue Authority Pin certificate.

National Social Security Fund

Every employer who, under a contract of service, has employed one employee or more must register with the Fund as a contributing employer. Failure to do so bars the employer from accessing public services. To enable registration with the National Social Security Fund Act, an employer is required to provide the following documents:

1. The Company certificate of incorporation.
2. The Company Kenya Revenue Authority Pin certificate.

Tax Requirements

Resident companies are taxable in Kenya on income accrued or derived from Kenya. Resident companies with business activities outside Kenya are also taxed on income derived from business activities outside of Kenya. The rate of corporate income tax for resident companies is 30%.

Any person who is liable for taxation under the Income Tax Act or the Value Added Tax Act is required to register with the Kenya Revenue Authority. The same position applies to persons who expect to manufacture, import or supply excisable goods.

Upon such registration, the Kenya Revenue Authority, the company is issued with a pin certificate. The company is required to provide the following documents:

1. Copy of Certificate of Incorporation.
2. Copy of CR12-Certificate of official search.
3. Copy of Memorandum and Articles of Association.
4. Copy of PIN Certificate for one of the company’s directors.
5. Copy of Tax Compliance certificate of one of the company’s directors.
6. Copy of the Acknowledgement receipt.

REQUIREMENTS UNDER THE ESTATE AGENTS ACT

For the company to operate and undertake activities in real estate, it must be in the control of a qualified real estate agent.

Qualifications

With regards to qualifications, a person is only allowed to practice as a real estate agent if he is a full member of the Institution of Surveyors of Kenya in the chapters of Valuation and Estate Management Surveyors, Building Surveyors and Land Management Surveyors; or is a corporate member of the Royal Institution of Chartered Surveyors but qualified to be a full member of the Institution of Surveyors of Kenya in the chapters of Valuation and Estate Management Surveyors, Building Surveyors and Land Management Surveyors.

For persons who are neither of the above, they must demonstrate that they are of good character and must satisfy the Estate Agents Registration Board that they have not been convicted (whether in Kenya or elsewhere) of an offence involving fraud or dishonesty.

Application

To run a real estate company, a person must be registered as an estate agent. The application is made to the Estate Agents Registration Board in the prescribed form. However, the intended estate agents must provide the following information:

1. Name of the applicant. This is the estate agent who wishes to practice in the name of the incorporated company.
2. Applicant’s date of birth of the applicant.
3. Applicant’s postal and residential address.
4. Applicant’s nationality and citizenship.
5. Applicant’s details on the secondary school, college and/or universities attended.
6. List of professional institutions where the applicant is a member.
7. Applicant’s professional experience details:-Name of employerAddressPeriod of employment
8. Name and address of the applicant’s company.
9. Name and address of the company’s directors.
10. A confirmation of whether the company directors have/have never been convicted for bankruptcy.
11. Name and address of an official referee who knows your background history well, e.g. a magistrate, chief or assistant chief of the applicant’s area.

Cost of the application

The application must be accompanied by a mandatory fee of Kshs. 3,300/=.

CONCLUSION

The above process requires strict compliance. Failure to comply with the requirements on name reservation as well as failure to submit any of the above information or document as elaborately explained above shall hinder registration of the company. It is therefore essential that the intended directors and shareholders observe thorough diligence in the submission of the required information.

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