Proposed Provision for Amendment Proposed Amendment Our Comments
2 a) Including the following definitions:

    • “address” has the same meaning as assigned under the Companies Act;
    • “alternate address” means an address used by a proprietor of a business that is not his primary address;
    • “board” means the Board of Directors established under section 5 of the Business Registration Service Act;
    • “Certificate” means the certificate of registration issued under section 14;
    • “proprietor” means an individual or corporation who has registered a business name;

b) Providing that a “minor” means a person who has not attained the age of 18

c) deleting the definition of the term “foreign concern”

d) deleting the definition of the term “Registrar” and substituting therefore the following new definition; “Registrar” means the Registrar appointed under the Companies Act;

e) Requiring all persons, when submitting their particulars under the Act, to also submit the particulars of their nationality, without subjecting British subjects only to this requirement.

f) deleting subsection (3), which does not require the disclosure of name changes of individuals before they attained the age of 2 years.

If passed, the proposed definitions would provide some much-needed clarity when it comes to the interpretation of these terms under the Act. As the Act commenced on 29th September 1951, it is expected that its provisions might be out of line with legal and other developments, which requires them to be updated. For example, an amendment to the meaning of the word “minor” is overdue.

An amendment to redefine the term “Registrar” is similar to the amendment proposed in the Movable Property Securities (Amendment) Bill, 2021 and is an effort to bring most matters to do with business registration and regulation in the purview of one public office.

As Kenyans no longer consider themselves British subjects, the requirement for only such persons to disclose their nationality is outdated.

 

3 The Bill proposes to have the Deputy Registrar and every Assistant Registrar appointed pursuant to section 831(3) of the Companies Act be the Deputy and Assistant Registrars of Business Names. The Registrar is obliged to keep and maintain a register in the prescribed manner, in which shall be entered the particulars required under the Act. This is an effort to streamline and centralise services related to business entities to make them effective and avoid duplication of similar roles by having one body serve this purpose.
4 a) The Bill proposes to delete all references to “firm individuals and corporations” and substitute them with “proprietors” in the section.

 

 

b) Delete the word “administrative receiver” immediately after the term “administrative”.

Replacing the words “firm individuals and corporations” with the term “proprietors|” is a means of providing clarity as this term is defined in the proposed amendment of section 2. Further, firm individuals and corporations may refer to artificial persons yet there is a shift towards identifying the natural persons who own business entities. The proposed amendment is in line with that policy.

There is no mention of “administrative receiver” in section 4.

5 The Bill proposes to delete section 5, which provides for registration by nominees i.e., that if a nominee or trustee wholly or mainly carries on business for firms, individuals or corporations with a place of business within Kenya or act as general agents of any foreign firm, the business is to be registered under the Act. The section also exempts businesses carried on by a trustee in bankruptcy or a receiver manager appointed by any court from having to register under the Act. Persons carrying out business in Kenya are required to be registered under the Act in any case, hence deleting this section would rid the Act of unnecessary sections.
6 The Bill proposes to delete and substitute section 6 with another new section setting out the particulars that proprietors under the Act are to submit when seeking to register their business. The particulars are:

    • The business name
    • Concise description of the true nature of the business
    • The address of each place where the business is to be carried on
    • The given names and the usual place of residence of each applicant who is an individual, and the corporate name and the place of incorporation office of each applicant that is a corporation
    • The full address of every other place of business
    • Alternate address of the proprietor
    • Proposed date of the commencement date of the business; and
    • Such other information concerning the Business Name as may be required by the Registrar

If the business is carried on under two or more business names, each of those business names are to be stated.

On receipt of a statement of particulars, the Registrar is to enter the firm, individual or corporation in the register subject to section 17.

The proposed particulars are clearer as compared to those currently in the Act. The particulars also indicate favouring increased disclosure for businesses. This is to ensure accountability for the actions of business proprietors. For example, the requirement for a concise description of the true nature of the business to be carried on in the business name is currently phrased as a requirement to disclose the general nature of the business under the Act.
6A The Bill proposes to clothe the Registrar with the power to require any document to be lodged or issued electronically under the Act. The Registrar may allow the document to be lodged by an agent of the person required to lodge it, subject to any conditions that the Registrar may impose from time to time.

A copy of a document lodged electronically with the Registrar purported to be certified by the Registrar as a true copy of the original document is, in the absence of evidence to the contrary, admissible in all legal proceedings as proof of the original document.

This would give legitimacy to documents lodged electronically with the Registrar, hence avoiding the need to subject them to strict proof. This is also an indication that electronic documents are increasingly being recognized as legitimate documents.
8 Deletion and substitution.

The Bill proposes to allow for the registration of a Business Name after a business has commenced and further obliges persons responsible for a business to apply to the Registrar for the registration of the business within 30 days from the date of the commencement of the business.

 

The current section 8 provides for furnishing of all statements of particulars under the Act within twenty-eight days of the business commencing. The proposed amendment, if passed, would give business proprietors an additional two days to comply with the registration requirement.

9 The Bill proposes that if a change is made or occurs in any of the particulars registered in respect of any proprietor of a business or of the business, that proprietor or the person responsible for the business shall submit to the Registrar in the prescribed form the particulars of the change within 30 days after the change occurs.

The relevant particulars may include a change in the general nature of a business; addition or removal of a proprietor; name of a business; or address of the proprietor or of the principal place of the business or any other place where the business is carried out.

The Bill also proposes to authorise the Registrar to request for particulars from individuals or their authorised agents as necessary to ascertain whether the individual should be registered under the Act or whether any alteration in the registration particulars should be made. Further, the Registrar may require any such particulars to be verified by a statutory declaration.

Once the application for the change of particulars of a business name are approved, the Registrar shall issue a certificate of change of particulars.

The amendment, if passed, would give business proprietors an additional two days to comply with the registration requirement as compliance is currently required within 28 days.

The increased disclosures are indicative of a move toward business transparency in Kenya, more so when it comes to the identity of the proprietors of a business.

There also seems to be a need to increase the veracity of particulars asserted through request of particulars or verification via a statutory declaration.

It is not clear what happens after an existing certificate of registration is cancelled. Would it mean that the certificate of change of particulars is what is to be used henceforth in place of the certificate of registration? There is need for clarification as to what happens when an existing certificate of registration is cancelled; and whether the certificate of change of particulars will take the place of the certificate of registration.

 

10 The Bill proposes to make it an offence to fail to furnish a statement of particulars for a notice of any change in particulars without reasonable excuse in the manner and within the time specified. The sanction is KES 20,000 or the Court shall order a statement of the required particulars or notice of the change in particulars to be furnished to the Registrar within such time as may be specified in the order or to both.

Where a person submits particulars that they know is false or authorizes or permits the submission to the Registrar such a statement commits an offence and on conviction is liable to a fine of KES 100,000 or to imprisonment for a term of three years, or to both.

The use of the word “for” seems to be the result of a grammatical error, since the word “or” would make better sense of the clause.

The threatened sanctions are intended to act as deterrents of non-compliance. This proposed amendment provides harsher sanctions for failure to comply compared to the current provision in the Act, which imposes a court order requiring compliance from the defaulter as may be specified in the order. Perhaps this sanction was not as effective at ensuring compliance and strenuous measures are needed.

12 Deletion and substitution.

The Bill proposes to impose penalties for signing or submitting to the Registrar a statement or particulars made or purporting to be made for the purpose of the Act, that to his knowledge is false or authorizes or permits the submission to the Registrar such a statement or particulars that to their knowledge is false. Such actions constitute offences and on conviction, an individual would be liable to a fine of KES 100,000 or imprisonment for a term of three years, or to both.

 

This would be an enhancement of the penalty for making false statements, which is currently an imprisonment for a term not exceeding twelve months or to a fine not exceeding KES 2,000 or to both. Enhancing penalties is meant to encourage more compliance through deterrence and punitive action in case of default. Should it pass, only time will tell if it would have the desired effect.

13 Deletion.

The section provides for the Registrar’s power to require an individual to furnish him or her with particulars that are necessary to decide whether a business should be registered under the Act.

 

The proposed amendment is acceptable since more comprehensive provisions on the power of the Registrar to require an individual to furnish him or her with particulars is adequately provided for in the proposed section 6A.

14 Deletion of subsection (2)

Amendment of subsection (3)

The Bill proposes to remove the requirement of the Registrar to issue a fresh certificate in the prescribed form after any change in the particulars is made.

The Act requires persons of all nationalities other than those of British nationality from indicating their nationality on the certificate issued by the Registrar upon registration under the Act. The Bill proposes to remove this exception such that the nationality of all partners and individuals will be indicated in the certificate.

The Act requires the minority of minors to be shown on the certificate the Registrar issues. The Bill proposes to remove this requirement.

 

 

The Bill proposes to have the Registrar under its proposed section 9 to issue a certificate of change of particulars and cancel the certificate issued upon registration. Therefore, the section providing that the Registrar issue a fresh certificate must be removed from the Act should it pass.

The removal of the two latter exceptions is to avoid discrimination, which is not permitted under Article 27 of the Constitution, which prohibits discrimination based on age and nationality, among others.

14A Insertion

The Bill proposes to enhance the effect of registration of a business to include the entitlement of every person whose business name has been entered in the register to adopt and use the registered business name.

Further, a certificate of registration or a certified copy of any entry in the register in respect of any business name is to be prima facie evidence of the truth of the facts stated therein. However, the admission of such evidence shall not prevent any person who is not registered as such from proving that they are nevertheless an associate of a business.

 

This proposal increases the value of registering one’s business in that it includes all persons whose business name has been registered.

Giving prima facie high probative value to certificates of registration or certified copy of entries in the register in respect of any business would be a way of avoiding a situation of having to subject them to strict proof on the first instance. This can save time in proceedings as well as give legitimacy to the documents issued by the Registrar.

 

14B

Insertion

The registration of a business name is proposed to remain in force for a period of three years, but the registration may from time to time be renewed by lodging with the Registrar, at any time within the period of one month before or after the expiry of the registration, a statement in the prescribed form signed by the person or an authorized agent and upon payment of the prescribed fee. The Registrar will only accept this from only the person in relation to whom the business was registered. If the Registrar refuses to renew any registration, the Registrar shall notify the applicant in writing of the decision.

Upon the expiry of three years from the date of registration or last renewal of a Business Name, the Business Name shall be deemed to be deregistered. The last certificate of registration and the Business Name shall be cancelled from the register.

If a person is aggrieved by a decision of the Registrar, they may appeal to a court of competent jurisdiction.

 

These consequences are geared at ensuring compliance on the part of the proprietors of a business. They also increase the regulation of business entities for the purpose of accountability.

 

15(3)

Section 15(3) of the Act provides for a period of twelve weeks within which a firm, individual or corporation must respond to the Registrar’s notice to confirm whether they are still in business. The Bill proposes to change this period to three months. This amendment does not seem to introduce any substantive change given that three months is equivalent to twelve weeks.
 

15A

Insertion

The Bill proposes a reprieve for persons whose registration has been cancelled. This is through an application to the Registrar to restore a business name that has been struck off, on the ground that the applicant was carrying on business or in operation at the time of striking off of the business name. The application is accompanied by registration documents relating to the business.

An application may be made even if the business has in consequence been dissolved. It is to be made only by a former partner of the business in such a case and not be made after the expiry of six years from the date on which the business was dissolved.

 

Given the automatic consequence of being struck off the register for failing to make the requisite statement and paying the prescribed fee set out in the proposed section 14B, a reprieve for businesses is welcome to ensure that they can be restored to the register upon compliance.

It is also interesting to note that this option is available for businesses that have since been dissolved. This makes it possible for businesses to start over without having to restart the registration process all over again.

17 Deletion and substitution

The Bill proposes to prohibit the registration of a business name if the use of the name would constitute an offence; the name consists of abbreviations or initials not authorised by or under the Act or the Registrar is, after considering the relevant criteria, of the opinion that the name is offensive or undesirable. The relevant criteria is to be as prescribed by the regulations.

 

This proposed deletion and replacement of section 17 would ensure that there is more discretion on the part of the Registrar to consider names rather than working within the five criteria provided for under the Act that may limit the Registrar’s discretion. Further, the classification of the prohibitions would also help persons who want to register business names to understand the parameters of acceptability. Regulations to elaborate on the same would be a welcome change.

17A Insertion

The approval of the Registrar is required where the name of a company to be registered under the Act suggests a connection with a state organ, a county government or any public authority prescribed by the regulations.

 

Limiting this to companies only is curious at best but generally seems to be an oversight on the part of the drafters of the Bill. If passed, it should apply to all business entities under the purview of the Act.

17B Insertion.

The Registrar may require an applicant in who proposes to use a business name that resembles that of a public body to seek the authority of a state organ or any public entity specified in the Regulations for the use of a specified name in the Regulations, who may veto the use of the name but only on reasonable grounds.

 

The aim is to prevent business entities or individuals from using names that may result in confusion between government agencies and business entities.

 

17C

Insertion

The proposed section provides that the regulations may permit or prohibit the use of certain characters, signs or symbols including accents and other diacritical marks that may be used in the name of a business name to be registered under the Act.

The regulations may specify a standard style format for the name of a business for the purpose of registration.

The regulations may also prohibit the use of specified characters, signs or symbols when appearing in specified positions at the beginning of a name.

The Registrar may not register a company by a name that consists of or includes anything not permitted in accordance with the regulations.

 

This provision gives the Registrar some discretion in deciding what names are acceptable and which are not, rather than giving mandatory compliance requirements.

17D Insertion

The Registrar may refuse to register a business if:

  • its name is the same as, has a close phonetic resemblance to, is identical to, or closely resembles that of another name reserved or registered by the Registrar or of a dissolved business entity or one that has been struck off the Register;
  • it differs from the name of another business name or other entity only by the addition of a name of a place, locality or region within Kenya;
  • it is the same as a name of a body corporate or established under a written law; or
  • the Registrar believes on reasonable grounds that its use would involve the commission of a criminal offence or that is offensive or undesirable or contrary to public interest.
 

These provide adequate guidelines for business owners seeking to register the names of their business. Further, the provision also gives the Registrar discretion in deciding such matters.

 

17E

Insertion

The Bill proposes to empower the Registrar to direct a change of a business name in writing where it has been registered by a name that is the same as or in the opinion of the Registrar, too similar to a name appearing at the time of the registration in the Registrar’s index of company names; or a name that should have appeared in the index at that time.

The Registrar is to specify the period within which the business would be required to comply with the direction. If the business does not comply with this direction, the Registrar shall cancel the entry in the register relating to such proprietor.

 

The proposed amendment would give the Registrar discretion to decide the question of the appropriateness of a business name. Further, in as far as it applies to past entries in the register, this proposed amendment, if passed would give the Registrar an opportunity to remedy such occurrences.

Presumably 17F The proposed amendment is not numbered.

If a proprietor is dissatisfied with the Registrar’s direction to change its name in case of a similarity, they may apply to the Court to quash the direction within 21 days after the date on which the direction is notified to the Company. On hearing the application, the Court may either quash or confirm the direction. If the direction is confirmed, the Court shall specify the period within which the proprietor is required to comply with the direction.

The proposed amendment should be numbered.

If passed, this would give business proprietors recourse to court in case of an unreasonable exercise of discretion on the part of the Registrar.

23 Deletion of subsections (2) and (3)

The Act requires the publication of the true names of every individual, including, in the case of a married woman, an obligation to indicate whose wife they are. Further, minors are also required to publish their minority. This publication is mandatory in all trade circulars and business letters on which the business name appears and are issued or sent by the firm, individual or corporation or to any person in legible Roman letters.

 

These discriminatory provisions are not adhered to in practice, and it is time that the Act catches up with the Constitution and consensus in the business world. A step in the right direction.

25 Deletion and substitution with a new section 25

The Bill proposes to provide for a general penalty for when an offence is committed, and a person is found guilty but there is no penalty prescribed in the Act. The proposed general penalty is a fine not exceeding KES. 100,000 or imprisonment for a term not exceeding one year, or to both.

 

The Act currently prescribes a fine not exceeding KES 1,000 and in default of payment, an imprisonment term not exceeding three months. Perhaps the drafters found this to be not enough of a deterring factor and are seeking to increase its deterrent effect.

 

26

Deletion

The Bill proposes to delete the section that provides for the jurisdiction of subordinate courts of the first and second class in trying the offences provided for under the Act.

 

The Magistrates Court Act, 2012 provides for a different classification of the Magistrates Courts as well as their jurisdiction. There is thus no need for the Act to provide for this, especially where its provisions are outdated.