By Batuli Majid, Associate at Grant Thornton
A beneficial owner is an individual person other than a legal person/corporate body who has control over express trust or fiduciary relationships or on whose behalf an undertaking takes place.
The BRS (Business Registration Service); an online platform where Companies and entities are required to lodge the Beneficial Ownership (B.O) information, reiterates on the need for transparency and disclosure on B.O information so as to promote good governance and help mitigate cases of transgression and treachery.
Pursuant to the BO Regulations 2020 and BOI amendment regulations, 2022, a person qualifies as a Beneficial Owner if the person falls under any of these categories:
- Holds at least ten percent (10%) of the issued shares in a Company either directly or indirectly;
- Exercises at least ten percent (10%) of the voting rights in a Company either directly or indirectly;
- Holds a right, directly or indirectly, to appoint or remove a Director of the Company; and
- Exercises significant influence or control; directly or indirectly, over the company. This includes person(s) responsible for making strategic decisions that ultimately affect the business or determines the itinerary of the legal person.
Disclosure of B.O information is restricted to:
1. Disclosure by the Company
A Company is not required to disclose its B.O information everywhere, however, it should go ahead and disclose to the following:
- The Registrar of Companies;
- A procurement entity where the Company participates in Public procurement: this is necessary as it promotes ease of doing business and focuses on protection of minority investors as it reduces risks of transgression and treachery;
- A contracting authority where the Company participates in Public Private Partnerships: the B.O information shall not be made available to the public except for publishing the information related to entities that have participated in the tendering process undertaken by a Contract Authority pursuant to the Public Private Partnership Act, No.15, 0f 2013;
- The court (if need be); and
- A third party, by written consent.
2. Disclosure by the Registrar
The Registrar may disclose B.O information to:
- Public Procurement Regulatory Authority;
- A Competent Authority;
- Public Private Partnership Committee; and
- The Court.
3. Disclosure by Public Procurement Regulatory Authority
PPRA shall publish in its public portal the BO information of the entities that have been awarded tender by a procuring entity or a contracting authority.
4. Disclosure by the Government
The Government may disclose to the public BO information of any entity if such information affects the country.
Steps of Filing Beneficial Ownership Information of a Company with the Registrar of Companies:
- The Company should identify who their beneficial owners are.
- The company should give notice to the person it has identified as being a beneficial owner of the Company requiring the person to provide the following information within twenty-one (21 days) from the date of the notice;
- Full name ;
- copy of his/her National Identification Cards, Passports or Birth Certificate;
- Postal Address;
- Residential Address;
- copy of his/her PIN Certificate;
- his/her telephone number and occupation;
- the nature of ownership or control the beneficial owner has in the company;
- the name of shareholder (if any) holding shares on behalf of the beneficial owner;
- The date on which any person became a Beneficial Owner; and
- The date which any person ceased to be a Beneficial Owner.
The company should prepare Form BOF1 which contains the information set out and lodge the same with the Registrar of Companies within thirty (30) days of preparing the said Form BOF1.
When a B.O fails to provide the details required to lodge a BOF1, the Company should issue a warning notice stating that it is proposing to restrict the relevant interest of the Beneficial Owner.
The effect of the said restriction is:
- any transfer of the beneficial owner’s interest is void;
- no rights are exercisable in respect to the beneficial owner’s interest;
- no shares may be issued in right of the beneficial owner’s interest; and
- No payment may be made of sums due from the company in respect to the beneficial owner’s interest.
A Company is further required to keep a register of its beneficial owners separate from the register of members: The BO information can be kept either in a manual register or in an electronic Register.
Once the register is prepared, the company must lodge the register with the Registrar of Companies within thirty (30) days.
These requirements refer to the first time the BO Register is submitted by a newly registered company or by an existing company in compliance with the BO regulations, failure to which the company may be liable for committing an offence which attracts a maximum fine of Kenya Shillings Five Hundred Thousand (KShs.500,000/-).
An individual who illegally discloses beneficial ownership information for other purposes which are different from what is provided by the regulations commits an offence and upon conviction will be liable to pay a fine not exceeding KShs 20,000/- or to be imprisoned for a period not exceeding six months or to both.