Types of Business Entities in Kenya

This is the simplest form of a business entity where a person is solely responsible for owning and operating the business. A business name is not a legal entity in Kenya.

This means your business assets and liabilities are not separate from your personal assets and liabilities. You can be held personally liable for the debts and obligations of the business.

Registering a business name (sole proprietorship) can be a good choice for low-risk businesses and owners who want to test their business idea before forming a more formal business structure.

This type of company issues shares to its members, who have limited liability based on their shareholdings. It must have at least one director or director shareholder .

A company is considered a private company if:

• It restricts a member's right to transfer shares.
• Limits the number of members to 50. 
• Prohibits invitations to the public to subscribe for shares or debentures of the company. 
• Requires the consent of all members to add a new member.

A company is considered a public company if:

1. its articles permit its members to transfer their shares in the company.
2. its articles do not prohibit public invitations to subscribe for shares or debentures of the company; and
3. The name must end with the expression "Public Limited Company" or the abbreviation "PLC."

A company limited by guarantee (CLG) is an alternative type of corporation primarily used for non-profit organizations that require legal personality.

Unlike the more common companies limited by shares structure; 

• A CLG does not have any shares or shareholders. 
• It is owned by guarantors who agree to pay a set amount of money towards company assets.
• It's certificate of incorporate states that it is a company limited by guarantee.

Profits are typically not distributed to guarantors rather they are reinvested to further the non-profit objectives of the company.

A Limited Liability Partnership (LLP) is a unique form of business association legal structure available in Kenya, combining features of both a partnership and a company. It offers the advantage of limited liability, similar to a company, while maintaining the flexibility of a partnership.

LLPs are commonly utilized for professional services such as law firms, accounting practices, and consultancy services.

When a foreign company wishes to establish a presence in Kenya, it has the option of incorporating as a branch of the foreign company or as a subsidiary.

A branch does not create a separate legal entity from the foreign company, it is an extension of the foreign company, operating in Kenya as part of the same legal entity. The branch shares the same directors, constitutive documents, and policies as the foreign company.

A branch must have a local representative residing in Kenya, who can be either a citizen or a non-citizen.

Alternatively, a subsidiary company has its own legal identity, distinct from its parent company, and is subject to local laws and regulations in Kenya. Establishing a subsidiary involves setting up a new legal entity in Kenya.

A Limited Partnership is a formation registered under the Partnerships Act, 2012, where two or more persons come together to conduct business. It is characterized by the presence of at least one General Partner and at least one Limited Partner. The General Partner has unlimited liability, while the Limited Partner's liability is limited to the extent of their capital contribution to the business

For unlimited companies, there is no limitation on the liability of members to pay the debts of the company. The members are jointly and personally liable for the debts in case of company winding up.

The cost of registering a business in Kenya varies depending on the type of registration. Below are the fees for different business entities: