A Comprehensive Guide for Not-for-Profit Organisations in Kenya

The process of setting up a foundation company limited by guarantee in Kenya is a structured legal procedure for establishing a not-for-profit entity. Governed by the Companies Act, 2015, this corporate structure is ideal for charities, foundations, community projects, professional associations, and other non-commercial organisations. Unlike a company limited by shares, it does not have shareholders or share capital. Instead, it has guarantors whose liability is limited to a nominal amount they agree to contribute if the company is wound up. Any surplus or profit generated must be reinvested to achieve the organisation's core objectives, not distributed to members. This makes it the premier choice for formalising philanthropic and social-impact initiatives within the Kenyan legal framework.

Legal Framework: The Companies Act, 2015 & Key Regulations

The primary legislation governing the formation of a company limited by guarantee in Kenya is the Companies Act, No. 17 of 2015. This Act, administered by the Business Registration Service (BRS) through the Office of the Registrar of Companies, modernised corporate law in the country. For foundations, the Act specifically dictates that their core governing documents—the Memorandum and Articles of Association—must clearly state their not-for-profit objectives. The Memorandum of Association defines the organisation's purpose and scope of activities, while the Articles of Association outline the internal governance rules, such as the appointment of directors, members' rights, and procedures for meetings. A critical clause required by the BRS for such entities is one that expressly prohibits the distribution of profits to members and directs that all assets upon winding up be transferred to another entity with similar objectives. This ensures the integrity of the not-for-profit structure. Compliance with the regulations on the eCitizen portal is mandatory for the entire registration process, from name reservation to the final issuance of the Certificate of Incorporation.

The Certificate of Incorporation for a new company limited by guarantee in Kenya.
Achieve your not-for-profit goals with a fully compliant, registered foundation in Kenya.

Step-by-Step Registration Procedure & Required Documents

Registering your foundation company limited by guarantee in Kenya is an entirely online process managed through the Business Registration Service (BRS) portal on eCitizen. Following the correct procedure is crucial for a smooth and compliant setup. The key steps include:

1. Name Reservation: Propose between 3 to 5 unique names for your foundation. A name search is conducted via the BRS portal to ensure it's not already taken and complies with naming regulations.

2. Drafting Foundational Documents: This is the most critical stage. You must prepare a detailed Memorandum of Association outlining the company's objectives (the 'objects clause') and a comprehensive Articles of Association for internal governance.

3. Filing Application Forms: You will need to complete and sign the 'Form CR-1 – Application to Register a Company' and 'Form CR-3 – Notice of Director’s Residential Address'.

4. Collation of Documents: Gather the required documentation for all proposed directors and members, including:
• Copies of National ID or Passport.
• KRA PIN certificates from the Kenya Revenue Authority.
• Recent passport-sized photographs (with a white background).
• Full names, contact details, and postal addresses.

5. Online Submission & Payment: All drafted documents and forms are uploaded to the eCitizen BRS portal, and the requisite statutory fees are paid. Once the Registrar of Companies verifies the submission, a Certificate of Incorporation is issued electronically.

Legal Representation in Kenya

Mwenda Njagi & Co. Advocates provides legal advisory and court representation across Kenya and all 47 counties in Kenya.

Estimated Costs & Fees for Setting Up Your Foundation (KES)

A legal professional reviewing documents for setting up a foundation company limited by guarantee in Kenya.

Understanding the financial requirements is a key part of planning when setting up a foundation company limited by guarantee in Kenya. The costs can be broken down into two main categories: statutory government fees and professional legal fees.

1. Statutory Fees (Payable to the Business Registration Service):
• Name Reservation Fee: Approximately KES 150 per name search.
• Company Registration Fee: The official government fee is currently KES 10,750.

It is important to note that these government fees are subject to change by the BRS and should be verified on the eCitizen portal at the time of registration.

2. Professional Legal Fees:
Engaging a law firm is highly recommended to ensure your Memorandum and Articles of Association are drafted correctly to meet your objectives and comply with the Companies Act. Professional fees for drafting, advisory, and managing the entire submission process can range from KES 50,000 to KES 150,000, depending on the complexity of the organisation's structure. At Mwenda Njagi & Co. Advocates, we provide a transparent fee structure that ensures comprehensive and compliant registration services.

Frequently Asked Questions

Can a company limited by guarantee in Kenya make a profit?
Yes, it can generate a surplus or 'profit' from its operations. However, under the Companies Act, 2015, these funds cannot be distributed to its members or directors as dividends. All surplus income must be re-invested to further the company's not-for-profit objectives as stated in its Memorandum of Association. This is the defining feature of the structure.
How many directors are needed for a company limited by guarantee in Kenya?
Kenyan law requires a company limited by guarantee to have a minimum of one director. However, for good corporate governance, transparency, and operational effectiveness, it is standard practice and highly advisable to establish a board with at least three directors. The maximum number of directors can be specified within the company's Articles of Association.
What is the difference between a foundation (company limited by guarantee) and an NGO in Kenya?
A foundation set up as a company limited by guarantee is registered under the Companies Act and regulated by the Business Registration Service (BRS). An NGO is registered under the NGO Co-ordination Act and is regulated by the NGO Co-ordination Board. While both are not-for-profit, the registration process, compliance requirements, and regulatory oversight are distinct. Our team at Mwenda Njagi & Co. Advocates can advise on the best structure for your specific charitable goals.