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Procedure of incorporation
A summary of the information required for the purposes of incorporation and the costs
involved are set out below;
1. An application is made to reserve the proposed name with the Registrar. The Registrar
has the right to reject names he considers undesirable or which are similar to the names of
existing companies. It is therefore advisable to apply for 2 or 3 alternative names. The
name must include the word “Limited”. However, this requirement can be dispensed in case
of charitable companies (essentially companies limited by guarantee).
The Articles will contain the regulations for conducting the company’s affairs. It will be
necessary to consider various matters including: the size of the board of directors, the
quorum for meetings of members and directors, whether the directors are subject to
retirement by rotation, any special rights conferred on members to appoint directors etc.
3. The Memorandum and Articles of a private charitable company must be signed by at least
2 persons who state the minimum amount they undertake to contribute in the event of
liquidation of the company.
4. The Memorandum and Articles and a Statement of the Nominal Capital are then lodged
for stamping with duty.
5. After stamping, the documents are presented to the Registrar of Companies together
with the following prescribed forms:
(a) Particulars of the registered office. The full physical and postal address of the registered
office must be supplied. This includes the land reference number.
(b) Particulars of the directors and company secretary including their full names, usual
postal address, nationality and business occupation. It is usual to have a minimum of 2
directors. There are no unusual restrictions as to who may be appointed a director. In
particular, there is no requirement that a director be a resident or citizen of Kenya.
Companies may also act as directors.
(c) A Declaration of Compliance by the advocate attending to the incorporation of the
company.
6. For companies limited by guarantee, the documents are usually forward to the Director of
National Intelligence Service in order to carry out further investigation and inquiries on the
objects of the proposed company. This process may take 2 to 3 months and if the National
Intelligence Service approves the incorporation of the proposed company, these documents
are sent back to the Registrar of Companies for incorporation.
7. Incorporation is complete when the Registrar issues a Certificate of Incorporation which
must be displayed at the registered office. At this stage, the Attorney General will usually
exempt the company from using the word “limited” as part of its name.
Post-incorporation
Common seal
The company will require a common seal for executing certain types of documents (e.g.
office leases). Common seals are manufactured locally at a cost of approximately
KShs.2,500 and we should be pleased to make the necessary arrangements.
Effects of Registration
Upon incorporation, the Foundation becomes a body corporate capable in its name of:
a) suing and being sued;
b) taking, purchasing or otherwise acquiring, holding, charging or disposing of movable and
immovable property;
c) entering into contracts; and
d) doing or performing all such things or acts necessary for the proper performance of its
functions.
EFFECT OF INCORPORATION
One the trustees of a charitable entity have been incorporated under the Act, they become
a body corporate with a perpetual succession and all other legal indicia appertaining to a
body corporate. Section 3(3) of the Trustees (Perpetual Succession) Act states that, once
incorporated “the trustees shall thereupon become a body corporate by the name described
in the certificate, and shall have perpetual succession and a common seal, and power to sue
and be sued in their corporate name and, subject to the conditions and directions contained
in the certificate, to hold and acquire, and by instruments under the common seal to
convey, transfer, assign, charge and demise any movable or immovable property or any
interest therein now or hereafter belonging to, or held for the benefit of, the trust concerned
in the same manner and subject to such restrictions and provisions as trustees might so do
without incorporation”.
Stages of Incorporation.
The incorporation of a charitable trust involves two stages:
The registration under this Act takes about 1 or 2 weeks. It should be noted that
registration under the Registration of Documents Act does not make a trust into a body
corporate. However, once the trust is registered under this Act, the trustees can commence
implementing the objects of the trust as a simple trust.
TRUSTEES
Please note that the first trustees of an incorporated trust are nominated in the trust deed,
and their names will be noted in the certificate of incorporation of the trust. Thereafter,
these trustees may retire and new ones appointed as per the provisions of the trust deed.
Moreover, additional trustees may be appointed as per the provision of the trust deed.
Every change of trustees must be reported to the Registrar of Documents in the prescribed
form and noted in the original certificate of incorporation of the Trust.
Nationality of Trustees
The trustees of an incorporate trust may be individuals, both local and foreigners, or a body
corporate in the nature of a trust corporation, or a mixture of both. However, the Trustee
Act provides that a foreign trustee who remains out of Kenya for a period exceeding 12
months may be removed from office by the remaining trustees.
The trustees are duty bound to comply with the provisions of the trust deed establishing the
trust as well as the applicable legal provisions. Trustees must also act in the best interest of
the trust and avoid conflict of interest situations. The trustees are however permitted to
delegate some of their functions to a committee of trustees or employees of the trust.
When incorporated the trustees are require to exercise their powers and make decisions
through resolutions of the board of trustees at duly constituted meetings of trustees.
Meetings may also be held through an electronic medium which allows participants to
communicate with each other e.g. teleconference or video conference, if this is provided for
in the trust deed. Most trust deeds also provide that a resolution assented to in writing by
all the trustees shall be deemed to have been duly made notwithstanding the absence of a
meeting to resolve the matter.
Normally, the trust deed will also contain a provision empowering the trustees to enact
regulations to govern the conduct of their meetings including order of business, voting
rights, procedure of recording minutes.