A foreign company registered outside Kenya wishing to do business in Kenya may either register a branch office or a subsidiary in Kenya. A subsidiary is considered a local company with compliance requirements similar to those of local companies owned by locals. A branch office on the other hand is unique and is considered a foreign company under Part XXXVII of the Companies Act, 2015 (Companies Act).
A registered foreign company is required to establish and maintain a registered office in Kenya to which all communications and notices may be addressed. Any change to the registered office should be made known to the Registrar within a period of seven days. A registered foreign company is required to paint or affix in letters easily legible, on the outside of every office and place (including its registered office) that is in Kenya, at which its business is carried on and that is open and accessible to the public the following details:
- its name and the name of its place of origin
- if the liability of its members is limited and the last word of its name is neither the word -Limited nor the abbreviation Ltd. notice of the fact that the liability of its members is limited, and
- in the case of its registered office the expression -Registered Office.
The registered office must remain open on each business day from at least 10 a.m. to 12 noon and from at least 2 p.m. to 4 p.m. and a notice of the same lodged with the Registrar.
A registered foreign company is required to at least once in every calendar year and at intervals of not more than fifteen months, to lodge a copy of its financial statement made up to the end of its last financial year, in such form and containing such particulars, and including copies of such documents, as the company is required to prepare by the law for the time being applicable to that company in its place of origin, together with a statement in writing, supported by a statutory declaration, verifying that the copies are true copies of the documents so required. The o of the registry of companies in Kenya is English and it would thus follow that documents prepared in other languages must be accompanied by certified translations.
A registered foreign company is required to pay corporate tax annually at the rate of 37.5 percent on taxable income. The Income Tax Bill, 2018 contains a proposal to reduce the corporate tax rate for foreign companies to the resident rate of 30 percent. However, an additional tax of 10 percent will apply in 9the event these companies decide to repatriate any profits derived by their foreign branches in Kenya. This branch repatriation tax is set to be a move towards equity since both resident and foreign controlled companies in Kenya are always subject to withholding tax on any distributed profits.
Within twenty one days after a registered foreign company has ceased to carry on business in Kenya or has been dissolved or deregistered in its place of origin, the local representative of the company in Kenya is required to lodge with the Registrar for registration a notice of that fact. It is noteworthy that foreign companies that do not carry on business at a place of business of the company for a continuous period of six months are considered to have closed their businesses.