ANALYSIS OF THE BUSINESS LAWS (AMENDMENT) ACT, 2020: FACILITATING THE EASE OF DOING BUSINESS IN KENYA

APRIL 2020

The Business Laws (Amendment) Bill, was assented into Law on 18th March 2020. With its enactment as a Law, the same has amended various statutes in order to facilitate the ease of doing business in Kenya. This Article shall highlight the specific key statutes that have been amended and their implication thereto as follows:

1.The Law of Contract CAP 23 Laws of Kenya

    Use of electronic signatures

The definition of the word ‘sign’ has been amended to capture both a physical and electronic mark. The implication of this is that electronic signatures are now recognizable under the Law of Contract. This means that Parties to a Contract can now execute their contracts vide electronic signatures.

2. Registration of Documents Act (RDA) CAP 285 Laws of Kenya

      Electronic and Advanced signature

The Business Laws (Amendment) Act (BLAA) has amended various definitions such as the term ‘signature’ which now includes advanced electronic signature and electronic signature. An advanced electronic signature as uniquely linked to the signatory; capable of identifying the signatory; created using means that the signatory may maintain under his or her sole control and linked to the data to which it relates in such a manner that any subsequent change to the data may be detectable. An electronic signature has been defined to mean data in electronic form affixed to or logically associated with other electronic data which may be used to identify the signatory in relation to the data message and indicate the signatory’s approval of the information contained in the data message

Maintenance and filing with Lands registry in electronic form

The RDA now also provides that the Registrar of Lands may establish and maintain the Principal and Coast registries in electronic form. Further, that a person may register a document conferring or extinguishing title by filing it in either physical or electronic form.

3.Survey Act CAP 299 Laws of Kenya

   Electronic and Advanced signature, filing and processing of documents

The BLAA has also introduced the advanced electronic signature and electronic signature under the Survey Act. Further, the BLAA introduces a new Sub Section 5(3) to the Survey Act to the effect that a document or plan that has been processed electronically and bears the prescribed security feature shall be deemed to bear the imprint of the seal of the Survey of Kenya. Further, a surveyor can now send to the Director of Surveys all plans and records either physically or electronically. The implication of this is that the process will now be both faster and easy to track the progress.

4.Income Tax Act, CAP 470 Laws of Kenya

    Capital deductions on capital expenditure to construct bulk storage and handling facilities for SGR

The rate of capital allowances has been set at 150% of the capital expenditure incurred. The qualifying amount is capital expenditure of at least 10 billion shillings, with a minimum storage of 100,000 metric tonnes. This will encourage investment in construction of these facilities which will aid in maintenance and operations of the SGR.

5. Stamp Duty Act, CAP 480 Laws of Kenya

     Digitization of the stamp

The term ‘stamp’ now has a new definition being a mark embossed or impressed by electronic means or by means of a dye, franking machine or adhesive stamp. It will now possible to have the digital stamping of forms. This will ensure efficiency and effectiveness as there will be no need for physical stamping of forms at the Registry.

6.Occupational Safety and Health Act, No. 15 of 2007 (OSHA)

    Registration under OSHA

Companies with less than 100 employees are exempted from applying for registration under this Act for the initial 12 months from the date of the registration of the business. However, certain business may not qualify for this exemption based on the regulations set by the Cabinet Secretary.

7. National Construction Authority Act, No 41 of 2011 (NCAA)

    Enforcement of policy by the NCA

The National Construction Authority will now be responsible for enforcement of the prescribed building code in the construction industry. Further, there will be penalties for a person who willfully fails to comply with an order of an investigating officer of a fine not exceeding 1,000,000 shillings or imprisonment for a term not exceeding three years or to both. This indeed comes as a relief for the Authority whose main challenge has been the enforcement of the policies and codes relating to the industry.

8. Land Registration Act, No. 3 of 2012 (LRA)

    Electronic instruments and land transfers.

The LRA introduces the use of electronic instruments and signatures including electronic seals. It should also be noted that where Parties consent to have an instrument electronically executed, then the same shall be treated as validly executed. Moreover, this allows for the instrument to be electronically processed. Further, parties will not need to obtain a Certificate of Land Rates or a Certificate of Rent as proof that rates and rent were paid before transferring a parcel of land. The implication of these changes will be the costs and processes related to rent and rates associated with the transfer of land will be reduced. Further land transfer can be executed and processed electronically without the parties being physically present.

9. Value Added Tax Act, No. 35 of 2013 (VAT)

      Exemption of supplies used to construct bulk storage and handling facilities for SGR

The exemption applies to taxable supplies of both goods and services used to construct facilities with a minimum capital investment of 10 billion shillings and a minimum storage capacity of 100,00 metric tonnes in support of the Standard Gauge Railway (SGR) operations. The exemption is subject to approval by the Cabinet Secretary responsible for transport. It should however encourage investment into construction of such facilities.

10. Companies Act, No. 17 of 2015

       Execution of contracts and company seals

A contract can now be made by a company in writing. The requirement for the same to be under the common seal of the company has been deleted. Companies no longer need to have an official seal for use outside Kenya and in respect to certain transactions. Further, the requirement of a document to be executed by company affixing its common seal (if any) and witnessed by a director is no longer applicable. Consequently, a document is now validly executed on behalf of a company if it signed by two authorized signatories or by a director of the company in the presence of a witness who attests the signature.

Bearer shares

A company in respect of which a bearer share is in issue shall ensure that the share is converted into a registered share. This shall be applicable notwithstanding any contrary provision in the company’s memorandum or articles of incorporation. The company shall ensure to notify the Registrar within 30 days of conversion of a bearer share into a registered share. A company commits an offence if it fails or refuses to comply with the above within nine months after coming into force and is liable to a fine not exceeding Kenya Shillings 500,000.

11. Insolvency Act, No. 18 of 2015

     Involvement of creditors in insolvency process

A creditor may request information from a relevant insolvency practitioner. Such insolvency practitioner shall provide the information within (five) 5 business days after receiving the request; or such longer period as may be agreed upon between the creditor and the insolvency practitioner.

Where the insolvency practitioner is satisfied that an extension of time is required due to the nature of the request made by the creditor, he may, by notice to the creditor in writing, extend the period for providing the information. Such notice shall be given to the creditor making the request; specify the period within which the requested information shall be provided and specify the reasons for the extension of time.The implication of this is that creditors are now involved in the insolvency process and can actually monitor the process more transparently.

12. Excise Duty Act, No. 23 of 2015

    Excise duty on imported glass bottles

There is now an imposition of 25% excise duty on imported Glass bottles. This is a move to encourage local manufacture of glass bottles by making importation of the same more expensive than purchasing locally manufactured bottles.

13. Miscellaneous Fees and Levies Act, No. 29 of 2016

    IDF and RDL exemption on goods imported for construction of bulk storage and handling facilities for SGR

The exemption applies to goods used to construct facilities with a minimum storage capacity of 100,000 metric tonnes of supplies as approved by the Cabinet Secretary responsible for transport

CONCLUSION

Having analyzed the above amendments, it goes without saying that the same has been introduced with the sole purpose of improving the efficient, fast and cost-effective way and ensuring the smooth engagement of business transactions in Kenya.

  • Diana Chepkemoi
    Diana Chepkemoi Senior Legal Analyst
    OFFICE: +254 (0) 20 2025320
Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Not readable? Change text. captcha txt

Start typing and press Enter to search