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