A Company Limited by Guarantee (CLG) is an alternative corporation used primarily for non-profit organizations that require legal personality. The CLG ensures that the liability of its members is limited to an amount which the members have undertaken to contribute to the assets of the company in the event of it being wound up.
Please note, a Company Limited by Guarantee does not have/require a share capital.
How to incorporate a company in Kenya.
Below is a summary of the steps towards incorporation of a CLG as guided by Ondaba & Partners Advocates
- An application Form (CR14) is completed to reserve the proposed name with The Registrar. The Registrar may reject names he considers undesirable or which are similar to the names of existing companies. The cost applicable is KES. 200.
- Preparation of the Memorandum and Articles of Association of the company, which should be guided by Legal Counsel, is important because the Memorandum sets out the details and objects of the company and therefore setting a legal blanket within which the company may can operate. In this case of a CLG, the Companies Act requires the Memorandum of Association to state the minimum amount which each members guarantee to contribute to the assets of the companies in the event of liquidation and this amount is purely at the discretion of the promoters.
- It is necessary to set out all the expected activities of the company as part of its principal objects of association.
The Articles will contain the regulations for conducting the company’s affairs. It will be necessary to consider various matters i.e. the size of the board of directors, the quorum for meetings of members and directors, whether the directors are subject to retirement by rotation and any special rights conferred on members to appoint directors, etc.
- 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.
- The Memorandum and Articles and a Statement of the Nominal Capital are then lodged for stamping with duty.
- After stamping, the documents are presented to the Registrar of Companies together with the following prescribed forms:
- Details of the registered office. The address i.e. physical location and postal address of the registered office must be included.
- Details of the directors and company secretary including their full names, passport photographs, copies of their National IDs, personal postal address, nationality and their occupation.
- There are no unusual restrictions on who may be appointed director. It is important to note, there is no requirement that a director be a resident or citizen of Kenya.
Please note: Companies or entities with a legal personality may also act as directors.
- A Declaration of Compliance by the advocate attending to incorporation of the company.
- Because of the sensitive nature of business that most CLGs will engage in overtime, it is a requirement that the documents be forwarded to the Director of National Intelligence Service (NIS) to carry out further investigation and inquiries on the objects of the proposed company. This process serves to ensure applicants are not engaged in illegal businesses.
This process may take 2 to 3 months pending approval of the NIS. Once accepted, the documents of the proposed company are sent back to the Registrar of Companies for incorporation.
- Incorporation is complete when the Registrar issues a Certificate of Incorporation.
Most companies will require a government or local authority license before commencing business, depending on the proposed nature of the business. At Ondaba & Partners Advocates we are ready to guide and advice on the licenses which may be required.
Legal Counsel will guide you on which tax registrations are required. They include:
- The obtaining of a KRA PIN number.
- Various employees’ related tax registrations (PAYE, NSSF, NHIF and Local Authority Service Charge)
- VAT (where appropriate)
Finally, the CLG Application will take several months to be complete and registered.
Should you have any queries or seek clarification, kindly contact our experts at Ondaba & Partners Advocates.