INTRODUCTION

The laws of Kenya allow for companies outside Kenya to be incorporated in Kenya and therefore such companies are able to conduct businesses within Kenya. Such companies are referred to as foreign companies. Companies incorporated outside Kenya are usually governed by the rules stated in Sections 366 up to 375 of the Companies Act of Kenya. A foreign company is a company incorporated outside Kenya which, after the appointed day, establishes a place of business within Kenya. It is a company which, before the appointed day, has established a place of business within Kenya and continues to have a place of business within Kenya on and after the appointed day:

These Sections (366�375) do not apply to companies registered under the Building Societies Act. Under the Companies Act in Sec. 366(2), a foreign company shall not be deemed to have a place of business in Kenya solely on account of it doing business through an agent in Kenya at the place of business of the agent.

In this chapter, we shall discuss in detail the laws governing the establishment, registration and how a foreign company operates in Kenya under the Companies Act. We shall also discuss the circumstances under which a foreign company may cease to have a place in Kenya and penalties imposed by the law for not complying with the laid down rules. 

PROVISIONS AS TO ESTABLISHMENT OF PLACE OF BUSINESS IN KENYA (Sec.

365)

Sections 366 to 375 of the Companies Act shall apply to all foreign companies. These are 

i)        Companies incorporated outside Kenya which, after the appointed day, establish a place of business within Kenya. 

ii)      Companies incorporated outside Kenya which have, before the appointed day, established a place of business within Kenya and continue to have a place of business within Kenya on and after the appointed day

Provided that such company is not which is registered, under the Building Societies Act  A foreign company shall not be deemed to have a place of business in Kenya solely on account of its doing business through an agent in Kenya at the place of business of the agent.

NAME OF THE FOREIGN COMPANY (Sec. 371)

Every foreign company shall�

(a)   in every prospectus inviting subscriptions for its shares or debentures in Kenya state the country in which the company is incorporated; and

(b)  conspicuously exhibit in easily legible roman letters on every place where it carries on business in Kenya the name of the company and the country in which the company is incorporated; and

(c)   cause the name of the company and of the country in which the company is incorporated to be stated in legible roman letters in all bill�heads and letter paper, and in all notices and other official publications of the company

If the liability of the members of the company is limited a notice of that fact must be stated in the English language in legible roman letters in every such prospectus as aforesaid and in all billheads, letter paper, notices and other official publications of the company in Kenya and to be affixed on every place where it carries on its business.

Every foreign company shall, in all trade catalogues, trade circulars, show cards and business letters on or in which the company�s name appears and which are issued or sent by the company to any person in Kenya, state in legible roman letters, with respect to every director being a corporation, the corporate name, and with respect to every director, being an individual, the following particulars �

(a) his present christian name, or the initials thereof, and present surname; (b) any former christian names and surnames; (c) his nationality, if he is not a Kenyan citizen:

Provided that, if special circumstances exist which render it in the opinion of the registrar expedient that such an exemption should be granted, the registrar may grant, subject to such conditions as may be specified, exemption from the obligations imposed by this subsection.

DOCUMENTS TO BE PRESENTED TO THE REGISTRAR (Sec. 366)

Foreign companies which, after the appointed day, establish a place of business within Kenya shall, within thirty days of the establishment of the place of business, deliver to the registrar for registration�

(a)    a certified copy of the charter, statutes or memorandum and articles of the company or other instrument constituting or defining the constitution of the company, and, if the instrument is not written in the English language, a certified translation thereof;

(b)    a list of the directors and secretary of the company containing their present christian name and surname their usual postal address, their nationality and business occupation, if any. In the case of a corporation, its corporate name and registered or principal office, and its postal address required. Where all the partners in a firm are joint secretaries of the company, the name and principal office of the firm may be stated instead of the particulars mentioned in this subsection.

(c)    a statement of all subsisting charges created by the company, being charges of the kinds set out in the Companies Act and not being charges comprising solely property situate outside Kenya;

(d)    the names and postal addresses of some one or more persons resident in Kenya authorized to accept on behalf of the company service of process and any notices required to be served on the company; and

(e)    the full address of the registered or principal office of the company.

CERTIFICATE OF REGISTRATION AND POWER TO HOLD LAND (Sec. 367)

Where a foreign company has delivered to the registrar the required documents and particulars the registrar shall certify that the company has complied with the provisions of the Companies Act. Any certificate given by the registrar of companies before the appointed day that a foreign company has delivered to him the documents and particulars shall be conclusive evidence that the company is registered as a foreign company.

POWER TO HOLD LAND(Sec 367(2))

Where a foreign company has, after the appointed day, delivered to the registrar the documents and particulars required by law, it shall have the same power to hold land in Kenya as if it were a company incorporated under Companies Act.

Where a foreign company has, before the appointed day, delivered to the registrar of companies the documents and particulars required the company shall have the same power to hold land in Kenya as if it were a company incorporated under the Companies Act.

REGISTRATION OF CHARGES CREATED (Sec. 369)

The provisions on registration of charges shall extend to charges on property in Kenya which are created, and to charges on property in Kenya which is acquired, after the commencement of the Companies Act and by a foreign company which has an established place of business in Kenya. Provided that in the case of a charge executed by a foreign company out of Kenya comprising property situate both within and outside Kenya�

i)         it shall not be necessary to produce to the registrar the instrument creating the charge if the prescribed particulars of it and a copy of it, verified in the prescribed manner, are delivered to the registrar for registration; and

ii)       the time within which such particulars and copy are to be delivered to the registrar shall be sixty days after the date of execution of the charge by the company or, in the case of a deposit of title deeds, the date of the deposit

ACCOUNTS OF FOREIGN COMPANIES (Sec. 370)

Every foreign company must, in every calendar year, make out a balance sheet and profit and loss account. If the company is a holding company, group accounts, in such form, and containing such particulars and including such documents, as under the provisions of the Act (subject, however, to any prescribed exceptions) it would, have been required to make out and lay before the company in general meeting, and deliver copies of those documents to the registrar for registration:

Provided that a foreign company shall not be obliged to comply with the provisions relating to foreign companies if�

i)            it was incorporated in the Commonwealth; and

ii)          it would, had it been incorporated in Kenya, (having been exempted from the provisions of section 128 of Companies Act by virtue of subsection (4) of that section; and

iii)        in every calendar year there is delivered to the registrar for registration a certificate signed by a director and the secretary of the company verifying the conditions requisite for such exemption.

iv)         If the balance sheet or profit and loss account is not written in the English language there shall be annexed to it a certified translation thereof.

SERVICE ON FOREIGN COMPANY (Sec. 372)

Any process or notice required to be served on a foreign company shall be sufficiently served if addressed to any person whose name has been delivered to the registrar and left at or sent by registered post to the address which has been so delivered:

Provided that�

i)            where any such company makes default in delivering to the registrar the name and address of a person resident in Kenya who is authorized to accept on behalf of the company service of process or notices; or

ii)          if at any time all the persons whose names and addresses have been so delivered are dead or have ceased so to reside, or refuse to accept service on behalf of the company, or for any reason cannot be served,any process or notice may be served on the company by leaving it at or sending it by registered post to any place of business established by the company in Kenya.

RETURNS (Sec. 368)

If any alteration is made in�

a)  the charter, statutes or memorandum and articles of a foreign company 

b) the directors or secretary of a foreign company or the particulars contained in the list of the directors and secretary; or

c)  the names or postal addresses of the persons authorized to accept service on behalf of a foreign company; or

d) the address of the registered or principal office of a foreign company,

e)  the company shall, within sixty days, deliver to the registrar for registration a return containing the prescribed particulars of the alteration.

Where in the case of a company applies to �

a)      a winding�up order is made by; or

b)      proceedings substantially similar to a voluntary winding up of the company under this Act are commenced in,a court of the country in which such company was incorporated, the company shall within thirty days of the date or the making of such order or the commencement of such proceedings, deliver to the registrar a return containing the prescribed particulars relating to the making of such order or the commencement of such proceedings and shall cause the prescribed advertisements in relation thereto to be published.

CESSATION OF BUSINESS (Sec. 373)

If any foreign company ceases to have a place of business in Kenya, it shall give notice in writing of the fact to the registrar for registration. From the date on which notice is so given, the obligation of the company to deliver any document to the registrar shall cease and the registrar shall strike the name of the company off the register.

Where the registrar has reasonable cause to believe that a foreign company has ceased to have a place of business in Kenya, he may send by registered post to the person authorized to accept service on behalf of the company, a letter inquiring whether the company is maintaining a place of business in Kenya.

If the registrar receives an answer to the effect that the company has ceased to have a place of business in Kenya or does not within three months receive any reply, he may strike the name of the company off the register.

PENALTIES (SEC. 374)

If any foreign company fails to comply with any of the rules regarding companies incorporated outside Kenya, the company and every officer or agent of the company who knowingly and willfully authorizes or permits the default shall be liable to a fine not exceeding one thousand shillings, or, in the case of a continuing offence, one hundred shillings for every day during which the default continues.