The government is mulling extending a requirement ordering all companies to reveal their beneficial owners to the state. The government, on August 2, said it was considering extending the deadline to allow companies to comply with the directive through the Business Registration Service (BRS) portal.
This follows the high volume of applications made by company owners as at the close of business on July 31, 2021, when the set deadline lapsed. The Business Registration Service noted that it had suffered technical challenges on its portal owing to a large number of last-minute applications.
“We have made all considerable efforts to process applications lodged at the Registry of Companies, but there are still some delays in processing pending applications due to the large numbers,” explained the service's Director-General, Kenneth Gathuma.
Gathuma also noted that the registry had received numerous requests from stakeholders to push the deadline to a later date.
The service has agreed to grant business owners more time to fill in details as required by the government, saying that once the backlog has been cleared, those who will be found to be non-compliant will suffer the consequences.
Business entities that fail to adhere to this requirement will be penalised to a tune of Ksh 500,000.
Gathuma clarified that applications filed by companies seeking to update the Beneficial Ownership information on the portal remain valid.
The government is pursuing full disclosure of real owners of companies as part of efforts to monitor trails of illegal money. Directors and shareholders of businesses are expected to submit their home addresses, phone numbers, emails as well as the amounts of stake owned in the registered firms.
Moreover, this step is aimed at sieving out proxy companies and entities used by investors to up their shareholding in firms and insider trading.
This move was highly prioritized in the revamped 2015 Companies Act. The Act was a recommendation from the Financial Action Task Force on International Standards on Combating Money Laundering.
In addition to that, the government was urged to maintain adequate information on the beneficial ownership of businesses.
Under the Regulations, a beneficial owner is a natural person who directly or indirectly holds at least ten per cent (10%) of the issued shares of the company, exercises at least ten per cent (10%) of the voting rights in the company and has the right to appoint or dismiss a director of a company.
