Kenya

Starting a Business in

Kenya

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Kenya. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 185 economies. The most recent round of data collection was completed in June 2012.

Compare Kenya to 184 other economies.

YearNew business densityNumber of new limited liability companies
2011 1.122,391

  • Standardized Company

  • Legal Form: Private Corporation
  • Paid in Minimum Capital Requirement: None
  • City: Nairobi

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No. Procedure Time to Complete Associated Costs
1 State registration of legal entity, statistical, and tax registration with the Center for Public Registration

The company name reservation lasts 30 days but can be renewed for a similar period.
3 days KES 100 per name reservation
2 Stamp the memorandum and articles and a statement of the nominal capital

Effective January 1, 2005, the Kenya Revenue Authority (KRA) took over stamp duty collection from the Ministry of Lands and Housing. As an administrative requirement, the KRA now requires the personal identification numbers (PINs) of all parties on whose behalf duty-stamped documents are submitted. Documents must be first assessed by the Stamp Duty Office before payment can be processed by the KRA-designated banks. The process has lengthened initially to about 2 weeks because the Stamp Duty Office waited to receive confirmation of bank payment after clearance of funds. However, the time has reduced in 2008 as a result of better communication between the Ministry of Lands and housing and Kenya Revenue Authority (KRA) to 5-10 days. Bank handling charges of KES 100 for each transaction are also due.
5 days 1% of nominal capital + KES 2,020 for stamp duty on Memorandum and Articles of Association
3 Pay stamp duty at bank


1 day KES 100 for bank commission
4 Declaration of compliance (Form 208) is signed before a Commissioner of Oaths /notary public

According to the Companies Act (Cap. 486), An advocate engaged in the formation of the company or a director or company secretary named in the Articles must sign Form 208, the declaration of compliance, which accompanies the registration documents to be submitted to the Registrar of Companies. (Simuletanous with procedure 2)
1 day KES 200
5 File deed and details with the Registrar of Companies at the Attorney General's Chambers in Nairobi

The founder must file the incorporation deed and the required documents and forms (listed below) with the Registrar of Companies, which includes:

• Stamped memorandum and articles of association
• Statement of capital
• Form 201, Notice of Situation of Registered Office
• Form 203, Particulars of Directors and Secretary
• Form 208, Declaration of compliance with the Companies Act
• Copy of the company name approval

Fee schedule for registration:

• For the first KES 100,000: KES 2,800
• For every KES 20,000 after the first KES 100,000: KES 120, subject to a maximum of KES 60,000
• Filing fee for three forms: KES 600

 7- 14 days KES 6,400
6 Register with the Tax Department for a PIN, VAT and PAYE online

Registration for a personal and a company identification number (PIN) is required to register for the VAT (PIN certificates of at least two directors or 2 shareholders or a director and the secretary are required), the local service tax, and the pay-as-you-earn (PAYE) tax. The founder must file the certificate of registration and a copy of the memorandum and articles of association. IDue to new online reforms, the application for a PIN and VAT registration can now be done concurrently on-line. Unless the KRA has already received confirmation of incorporation of the company from the Companies Registry, one must still submit the Certificate of Incorporation and receive log-in details from the KRA for the purpose of applying for a PIN, VAT and PAYE registration.
1 day no charge
7 Apply for a business permit

The fee to apply for a business permit varies by type of business, number of employees, and size of the company’s premises. The fee is payable to the Nairobi City Council, Licensing Department. The City Council will issue a business permit.

Fee schedule for business permit:
Medium trader, shop, or retail service from 5 to 20 employees and/or premises 50–300 sq. m. (fair location): KES 10,000.

The Licensing Laws (Repeals and Amendments) Act , 2006 (enacted in December of 2006 and came into effect on May, first, 2007), amends the Local Government Act (Cap. 265) by reducing the number of business permits required for a distributor of goods or provider of services to carry on its business activities. Applicants having obtained a business permit to operate from one local authority will not be required to obtain another business permit in another local authority. In addition, business permit applicants will have an opportunity to elect whether to apply for a 1- or 2-year permit. The 2006 law also eliminated the requirement to obtain a trading license in addition to the permit.
5 days KES 10,000
8 Register with the National Social Security Fund (NSSF)

The National Social Security Fund provides the employee with a lump-sum retirement benefit. Historically, the rate of return paid by the state is considerably less than that achieved by private schemes, but participation is mandatory. The employer pays a standard contribution of about 1% of salary, subject to a maximum of KES 400 per month. Half the contribution is deductible from the employee’s salary. The precise amount of the contribution (where less than the maximum) is determined by reference to salary bands.
1 day no charge
9 Register with the National Hospital Insurance Fund (NHIF)

The employee contributes a fixed sum to the National Hospital Insurance Fund (NHIF), which must be deducted by the employer from the employees’ salary. The maximum contribution is KES 320 per month. The contributions are used to offset the costs of medical treatment, but they only cover a fraction of actual costs. Hence, most companies provide employees with medical insurance.
1 day no charge
10 Make a company seal after a certificate of incorporation has been issued

Seals are made by private entities who require sight of a copy of the certificate of incorporation.
2 days between KES 2,500 and KES 3,500
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