KENYA: BENEFICIAL OWNERSHIP DISCLOSURE REQUIREMENTS EXPANDED AND EXTENDED TO PUBLIC PROCUREMENTS AND PPPS

By Edwin Baru,Aleem Tharani Wednesday, March 30, 2022
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The recently published Companies (Beneficial Ownership Information) (Amendment) Regulations, 2022 (the New Regulations) expand the beneficial ownership disclosure requirements. Further, the New Regulations introduce new disclosure requirements in relation to companies participating in public procurements and Public Private Partnerships (PPPs) in line with the Constitution which provides that when a State organ or any other public entity contracts for goods or services, it shall do so in accordance with a system that is transparent.

The New Regulations amend The Companies (Beneficial Ownership Information) Regulations, 2020 (BO Regulations) which give effect to the requirements under the Companies Act, 2015 for companies to keep a register of beneficial owners (you can read our previous alert on the BO Regulations here).

While the BO Regulations require all companies to file information on their beneficial ownership with the Registrar of Companies, this information was not made available to the public. The New Regulations can therefore be seen as a response to the ongoing pressure on the Government for greater transparency in public sector dealings. For example, as part of its recommendations, the Presidential Taskforce on the Review of Power Purchase Agreements (see our previous alert on the PPA Taskforce here), proposed:

  1. that KPLC conduct an audit on the power purchase agreements and independent power producers (IPPs) to ascertain, among other things, the identification of beneficial owners;
  2. KPLC’s annual reports include the names and beneficial ownerships of IPPs with which it has contractual arrangements; and
  3. that due diligence be conducted by KPLC in all instances where there is a change of control or the structure of the project company, including a change in beneficial ownership.

A Summary of the Changes Introduced

  1. In determining if a person’s beneficial ownership meets the beneficial ownership threshold for notification, companies will now be required to consider both individual and joint A beneficial owner is now someone who individually or jointly:
    1. directly or indirectly holds at least 10% of the issued shares in a company;
    2. possesses the direct or indirect power to appoint or remove a director of the company;
    3. indirectly or directly exercises significant influence or control; and
    4. directly or indirectly exercises a minimum of 10% of the voting rights in a company.
  2. Companies participating in public procurements and PPPs will henceforth be required to disclose their beneficial ownership information to the procuring entity/contracting authority.
  3. For companies that win or are awarded a tender by a procuring entity pursuant to a public procurement, their beneficial ownership information shall be published and made publicly available alongside other information that is traditionally published in relation to contract awards.
  4. The Public Procurement Regulatory Authority and the Public Private Partnership Committee will now have the power to submit a written request to the Registrar of Companies to obtain beneficial ownership information relating to an entity participating in a PPP or a procurement.
  5. Further, the New Regulations grant the Government broad powers to seek, publish and publicize any beneficial ownership information relating to any company if such information affects the country.