Types of Companies in Kenya

Types of Companies in Kenya
A company is a legal and separate entity formed either by a single individual or a group of individuals, who want to engage in and operate a business whether in a commercial capacity or an industrial enterprise. A company in Kenya is a recognized legal entity, which is also known as a limited liability company. A limited liability company is an entity that is owned by its members and is incorporated under the laws of the country to operate
The constitution of Kenya provides 2 major types of companies in Kenya.
Statutory Companies
These companies are incorporated and support profits through a special act of parliament. They have no shareholders, but do operate according to stated commercial laws.When it has a lot of losses, the government can come to its rescue. An example of a company like this is the Kenya Power Limited Company (KPLC). Kengen and the Kenya Tea Development Agencies (KTDA).

  1. Registered Companies
    These are companies that are registered under the companies act. This is where companies fall under.
    Registered companies can be classified into two sets: Unlimited companies and limited companies.
    Unlimited companies
    The company has no limits on the personal liability of the company members to pay debts. They have no limitations on the liability for debts in case of a winding-up scenario. If the company has to get more money to pay debts or liabilities ona company can call on shareholders to contribute something to make up for a shortfall. For example; when a company needs additional capital for expansion, a firm could call on shareholders to contribute to making up for a shortfall in capital
    Where the risk of insolvency is small.
    Where the owners do not wish to publicly file financial information and are keen on secretion in relation to financial matters.
    The company will operate in a field where limited liability is frowned upon.
    Where it can be seen that reductions in the capital may become desirable.
  2. Limited companies
    The shareholders keep their own assets and finances separate from the company. The liability of the shareholders is limited to the extent of the amount of capital they originally invested or the amount they contributed to the company. The law provides that the shareholders do not have unlimited liability and cannot be held personally responsible for debts or for any other liabilities of the company in the event of its liquidation. Limited liability allows the shareholders to operate the company without having their personal assets or finances affected
    This is a very suitable arrangement as one can get involved without risk to personal wealth.
    They can either be limited by shares or by guarantee
    Limited by Guarantee
    If the company is being wounded, the Memorandum of association provides for the liability on the part of its members to contribute a fixed sum towards its debts. The shareholders put up a guarantee to pay an amount to pay up the debt.
    The following are instances where one should register it as a company limited by guarantee.
    When there is no immediate need for capital.
    If you are looking to avoid the need of having to transfer shares every time a member leaves or joins.
    When you want to limit the liability of the members.
    Incorporation is necessary or desirable.
  3. Limited by shares
    The liability of its members is limited by the memorandum to the amount if any, unpaid on the shares respectively held by them.
    This category can be further classified into Sole proprietorship, Partnerships, and limited liability companies.
    Sole Proprietorship
    This type of business is known for its simplicity and ease of setup. It is the easiest form in which one can operate. The owner and the business are regarded as one and therefore the owner assumes all the risks of the business and is personally liable to the extent of all his or her assets that are used in the business and those that are not.
  4. Partnerships
    Types of Partnerships are normal partnerships, limited partnerships, and limited liability partnerships.
    General/Normal Partnerships
    Two or more people collaborate to form an organization with the purpose of carrying on a business. Partner contribute their share which can be in the form of their expertise, money and or property, etc. They are liable for any/all debts taken on by the business
    Limited Partnerships
    This type of company is composed of both a general partner and a limited partner. The general partner is responsible for the day to day management of the company while the limited partner acts as an investor and does not have limited liability (liability would be ‘active’)investors of the business are responsible up to the amount they invest within the business..
    Limited Liability Partnerships.
    This type of legal entity shields the other partners from negligent actions of the other partners, making every partner individually liable for their actions or inactions. They combine the elements of a company with those of a partnership and can only be created by certain types of professionals like law firms, accountants, etc.
    Once an LLP is registered, it becomes a corporate, legal, entity separate from its members and may own property in its own name. It is not subjected to corporate tax
  5. Limited Liability private companies.
    They are separate entities from their owners but still distinct entities. After being registered for tax they have their own rights, obligations and a life separate from their owners. They require a minimum of one director and a maximum of 50 members.
  6. Limited Liability public company
    The public can buy and sell shares in the company. The stock can be traded at the OTC market and the Nairobi Securities Stock Exchange.

It requires a minimum of 7 shareholders and 2 directors and has no maximum limit.
The company will have to publish and file its audited financial statement and statutory reports with the Registrar of companies.
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Original: The company will have to publish and file its audited financial statement and statutory reports with the Registrar of companies.
It is allowed to only start its operations only when they are granted a certificate of commencement of business.
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contact ocl business associates for company registration in kenya