How to register a Company Limited by Guarantee in Kenya: A Complete Guide.

If you're establishing a non-profit, charitable, or community-based organization in Kenya, a Company Limited by Guarantee (CLG) is often the ideal legal structure. This guide provides a comprehensive overview of what a CLG is, its benefits, and a step-by-step breakdown of the registration process in Kenya.

What is a Company Limited by Guarantee?

A Company Limited by Guarantee (CLG) is a specialized legal structure designed for non-profit organizations that does not have share capital or shareholders. Instead, it is owned by guarantors (or members) who agree to contribute a nominal, predetermined amount (e.g., Ksh 100) towards the company's debts only if it is wound up.

Key Characteristics

  • No Share Capital: Unlike for-profit companies, a CLG has no shares and therefore no shareholders.
  • Limited Liability: Members' financial liability is limited to the amount they guarantee.
  • Non-Profit Motive: Any profits generated are reinvested into the organization's objectives rather than distributed to members.
  • Separate Legal Entity: Once incorporated, the CLG can sue, be sued, own property, and enter into contracts in its own name.

Legal Framework

The registration and operation of a Company Limited by Guarantee in Kenya are governed by the Companies Act, 2015. According to Section 7 of the Act, a CLG is defined by:

  • The absence of share capital
  • The liability of its members being limited to the amount they guarantee in the company's articles
  • Its certificate of incorporation stating it is a company limited by guarantee

Requirements for Registration

To register a Company Limited by Guarantee in Kenya, you will need to provide the following documents and information:

  1. Three proposed company names in order of preference
  2. Clear objectives of the non-profit company
  3. Full details of directors (minimum of two):
    • Full Names, National ID/Passport copies, and KRA PIN
    • Residential and postal addresses
    • Email addresses and telephone numbers
    • Passport-sized photographs
  4. Details of members/guarantors (minimum of two)
  5. A proposed physical address for the company
  6. Memorandum and Articles of Association (Constitution): This includes the Statement of Guarantee, where members specify the amount they will contribute upon winding up

Note for Foreigners: Foreign nationals can be directors but must have at least one local citizen serving as either a director or the company secretary.

Registration Process & Timeline

The entire registration process is conducted online via the eCitizen portal under the Business Registration Service (BRS).

1

Name Search and Reservation

Submit three name choices for approval by the Registrar of Companies. This typically takes 1-2 days.

2

Document Preparation and Submission

Prepare and upload the required documents, including:

  • Form CR1 (Application for Registration)
  • Form CR3 (Memorandum for a Company Limited by Guarantee)
  • Form CR6 (Notice of Director Appointment)
  • Form CR8 (Notice of Director's Residential Address)
  • The Articles of Association
3

Security Vetting

The Registrar forwards the directors' details to the National Intelligence Service (NIS) for clearance. Directors may be called for an interview. This is the most time-consuming phase, typically taking 2-3 months.

4

Registration and Issuance

Upon successful vetting, the Registrar issues:

  • Certificate of Incorporation
  • CR12 (List of Directors)
  • Certified Copies of the Memorandum and Articles
5

Apply to Dispense with "Limited" (Optional)

Post-incorporation, you can apply to the Attorney General to remove the word "Limited" from the company name under Section 55 of the Act.

Total Timeline: The entire process typically takes between 4 to 6 months, largely due to the NIS vetting process.

Cost of Registration

The official government filing fee is approximately Ksh 10,650. However, this does not include:

  • Legal fees for document preparation and guidance
  • Advocate fees for procuring a common seal
  • Potential costs for applying for a tax exemption

Professional service providers typically charge a consolidated fee (often around Ksh 60,000) to handle the entire process on your behalf.

Advantages and Disadvantages

Advantages

  • Limited Liability: Protects members' personal assets
  • Enhanced Credibility: Boosts trust with donors and partners
  • Perpetual Succession: The company exists independently of its members
  • Property Ownership: Can hold assets in its own name
  • Tax Exemptions: Can apply for income tax exemptions on qualifying activities

Disadvantages

  • Lengthy Process: Registration can take 4-6 months
  • Security Vetting: All directors must be vetted by the NIS
  • Higher Costs: Registration fees and legal costs are higher than for societies
  • Lending Challenges: Banks may be hesitant to offer loans to non-profits
  • Ongoing Compliance: Must file annual returns and audited accounts

Post-Registration Requirements

After incorporation, a CLG must comply with ongoing statutory obligations:

  • Hold Board and Annual General Meetings (AGMs)
  • Prepare and file Annual Returns with the Registrar every year
  • File Audited Financial Statements together with the annual return
  • Notify the Registrar of any changes in directors or company details
  • Apply for a PIN and Tax Compliance Certificate from the Kenya Revenue Authority (KRA)
  • Apply for Income Tax Exemption under the Income Tax Act (for charitable activities)
  • Open a corporate bank account
  • Engage a qualified Company Secretary

Frequently Asked Questions

Can a foreigner be a director of a CLG in Kenya?

Yes, but the company must have at least one local citizen as a director or company secretary.

What is the difference between a CLG and a charitable trust?

A CLG is a corporate body with a formal structure defined by the Companies Act, while a trust is created by a trust deed. CLGs often offer stronger credibility and better structure for operational organizations.

Is the guarantee amount paid upfront?

No. The guaranteed amount (e.g., Ksh 100) is only payable if the company is wound up and has outstanding debts.

Can a CLG engage in profit-making activities?

Its primary purpose must be non-profit. Any surplus income must be reinvested. Income from unrelated business activities may be subject to taxation.

Need Help Registering Your Company Limited by Guarantee?

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