Govt Shuts Down 2500 Companies

  • File image of Attorney General Paul Kihara appearing before a Parliamentary Committee.
    File image of Attorney General Paul Kihara appearing before a Parliamentary Committee.
    File
  • The government has shut down over 2,500 companies in the country over failure to disclose the identity of their owners.

    In a report by a local publication on Tuesday, November 23, it was reported that the Registrar of Companies had de-registered 2,541 companies in the past year following a directive issued by Attorney General Paul Kihara in 2020.

    Additionally, the Registrar of Companies reported that there was an increase in the number of delisted companies from 1,255 recorded in 2019.

    Registrar of Companies offices in Nairobi.
    Registrar of Companies offices in Nairobi.
    File

    “2,540 entities were struck off the register in 2020. This was an influx. This was occasioned by enforcement of the beneficial ownership information(BIO) disclosure requirements since the BOI e-register was operationalised on October 13, 2020,” the Registrar of companies stated.

    The government’s directive came after the enactment of the Companies Act of 2015 making it mandatory for both public and private companies to publish names of owners. 

    Additionally, the companies were warned of a fine of Ksh500,000 if they failed to comply with the requirement.

    Following the enactment of the Act, over 6,000 firms have been deregistered since 2017. The report by the Registrar of companies also indicated that over 148,908 private companies had complied with the requirement.

    In the directive that was issued by Kihara, companies were required to reveal the information of shareholders with shares above 10 percent and individuals who have the power to make appointments of directors in the company.

    Part of the information that was to be provided by the companies included the names, phone contacts, national identification numbers, and home addresses of the shareholders.

    At the time of the announcement of the directive, the government explained that the move would create transparency given that many of the companies were engaged in business with various state departments in the national government and county governments. 

    It was also stated that the move would help the government in combating money laundering and embezzlement of public funds that were identified as the main concerns by the government at the time.

    This was after public concern over the increasing number of business individuals and state officers who used bogeymen to register companies to get tenders from the government. 

    Some lapses in law were also revealed during parliamentary committee investigations where individuals would reveal that they own numerous companies without providing the beneficiaries of the companies.

    CS Fred Matiang'i before a parliamentary committee in Mombasa on August 13, 2021
    CS Fred Matiang'i before a parliamentary committee in Mombasa on August 13, 2021
    Twitter