COMPANY BENEFICIAL OWNERSHIP DISCLOSURE IN KENYA.
A beneficial owner has been referred to be the ultimate owner or controller of a
legal person, either their ownership interests or positions held within the
legal entity some of such persons include; natural persons who control the
entity through ownership interests, also known as (threshold approach), shareholders who exercise control alone or
together with other shareholders including through any contract or
relationship, also known as( majority approach), natural persons who control
the entity through other means for instance personal connections, natural
person who exerts control without ownership but participates in its financing
and natural persons who control the entity through strategic decisions which fundamentally
affect its business
In 2013, FAFT (Financial Action
Task Force) revised its Recommendation 24, so as to include measures for
obtaining detailed customer identification and verification as well as to
distinguish between high risk and low risk countries.
The objective of the FAFT
recommendation on beneficial ownership disclosure is to prevent the misuse of
legal entities for money laundering or terrorist financing, but the same can be
useful standard to detect other related
offences such as corruption and tax evasion.
Pursuant
the FAFT Recommendations, the Kenyan Law under Section 93 of the Companies Act,
2015 stipulates that a company shall make a disclosure of the beneficial owners
of its shares and prepare a register of the same.
This provision therefore incorporates the OECD (Organisation for
Economic Co-Operation and Development) principles on beneficial
ownership as recommended by Financial
Action Task Force (FAFT), it is opined that even though
the beneficial ownership principle has been argued as ineffective tool for reason
it has a wide threshold of 25 percent shareholding, for an owner to qualify to
be a beneficial owner of a company, the Kenyan Beneficial Owners regulations
have capped the threshold at 10 percent shareholding, to this end it is
opined that the capping will be effective in curbing the use of
offshore accounts for money laundering, corruption and tax evasion by public
officers.
It is pursuant the regulations
that the registrar of companies has issued a deadline of 30th
January 2021 deadline for the registration of beneficial owners of all private
companies, with a penalty of Kshs500,000 for non-compliance.
CHEGE KAMAU ADVOCATE
Partner @ CHEGE & SANG CO
ADVOCATES.
