THE DRAFT COMPANIES (BENEFICIAL OWNERSHIP INFORMATION) (AMENDMENT) REGULATIONS, 2021
INTRODUCTION
The Attorney General of Kenya has developed the draft Companies (Beneficial Ownership Information) (Amendment) Regulations, 2021 (hereinafter referred to as the “Proposed Regulations”), in exercise of the powers conferred by Section 1022 of the Companies Act, 2015. These Proposed Regulations intend to amend various provisions of the Companies (Beneficial Ownership Information) Regulations, 2020 (hereinafter referred to as the “Principal Regulations”).
A beneficial owner is described as, “the natural person who ultimately owns or controls a legal person or arrangements, or the natural person on whose behalf a transaction is conducted, and includes those persons who exercise ultimate effective control over a legal person or arrangement,” under Regulation 2 of the Principal Regulations. The Principal Regulations require a company to keep a register of its beneficial owners and their particulars, and register it in the office of the Registrar of Companies. This information is also known as ‘Beneficial Ownership Information’ (hereinafter referred to as “BOI”).
In essence, the proposed regulations amend the Principal Regulations by increasing the situations in which the BOI may be disclosed, the authorities which may request the BOI of a company from the Registrar of Companies and indicate that the regulations shall not prevent the state from disclosing the BOI of a company, if it is a matter of public interest.
PROPOSED AMENDMENTS
The following are the proposed amendments:
a) Addition of new definitions:
Clause 1 of the Proposed Regulations amends Regulation 2 of the Principal Regulations by adding the definitions of the following new terms;
- Public procurement as described under Section 2 of the Public Procurement and Asset Disposal Act, No. 33 of 2015;
- Procuring entity as described under Section 2 of the Public Procurement and Asset Disposal Act, No. 33 of 2015;
- Public private partnership as described under Section 2 of the Public Private Partnership Act, No. 15 of 2013; and,
- Contracting authority as described under Section 2 of the Public Private Partnership Act, No. 15 of 2013.
b) Specifies that the Regulations shall apply to a beneficial owner who owns a company either individually or jointly:
Clause 2 of the Proposed Regulations proposes to amend Regulation 3 (2) of the Principal Regulations by adding that the qualifications for a beneficial owner shall apply to a natural person who own a company either individually or jointly.
c) Addition of situations in which the BOI may be disclosed:
Clause 3 of the Proposed Regulations amends Paragraph 2 of Regulation 13 of the Principal Regulations by adding that information relating to a beneficial owner may be disclosed;
- With written consent of the beneficial owner;
- Where the company participates in public procurement and assets disposal under the Public Procurement and Asset Disposal Act, No. 33 of 2015; or,
- Where the company participates in a public private partnership arrangement under the Public Private Partnership Act, No. 15 of 2013.
In addition, Clause 3 of the Proposed regulations amends Paragraph 4 of Regulation 13 of the Principal Regulations by adding that BOI relating to companies which either participate in tendering or participate in a public – private partnership arrangement, shall be made available to the public.
d) Addition of authorities to which the BOI may be disclosed:
Clause 3 of the Proposed Regulations amends Paragraph 5 of Regulation 13 of the Principal Regulations by providing that the BOI of a company shall be made available by the Registrar of Companies to a competent authority, the Public Procurement Regulatory Authority and the Public Private Partnership Committee, once they request for it through writing.
Under Paragraph 5 of Regulation 13 the Principal Regulations, the Registrar of Companies can only disclose the BOI to a competent authority upon a written request by the competent authority. A competent authority is defined as, the Attorney General, criminal investigation and law enforcement agencies, and authorities that supervises and monitor the financial sector, including Financial reporting Centre and the Kenya revenue Authority, under Regulation 2 of the Principal Regulations.
e) Provides that the regulations shall not prevent the state form publishing or publicizing BOI if it of public interest:
Clause 3 of the Proposed Regulations amends Paragraph 6 of Regulation 13 of the Principal Regulations by providing that the regulations shall not prevent the state from publishing or publicizing any important information that is of public interest, including BOI.
RECENT DEVELOPMENTS
On 30th November 2021, the Business Registration Services (BRS), through a public notice, called for comments on the proposed regulations.
CONCLUSION
As has been showcased above, the proposed regulations are a positive development of the Principal Regulations, as it aims to bring clarity to the application of the provisions of the Principal Regulations. The most significant amendments include, increasing the situations in which a company’s BOI may be disclosed, increasing the authorities which may request for the BOI of a company from the Registrar of Companies, and indicating that the regulations shall not prevent the state from disclosing the BOI of a company if it is a matter of public interest.