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Relief for Business Owners as Govt Extends Disclosure Deadline

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The Business Registration Service (BRS) has extended the beneficial ownership information submission deadline for a period of six months with effect from 1st February, 2021.

All firms were expected to update and submit beneficial ownership registers before January 31, 2021. The firms now have up to 31st July 2021.

BRS noted that it had extended the submission duration after taking note of the progress made in filling the registers and also in the spirit of encouraging compliance.

Failure to comply with the requirements after 31st July 2021 will expose both public and private companies and their directors to stiff penalties.

Businesses that disregard the new rules were to face a fine of Ksh500,000 and a daily penalty of Ksh50,000 for each day in breach.

Forms seen by Business Today require companies to fill out particulars of beneficial owners including full name, national ID number, personal identification number, nationality, date of birth, occupation, residential address, postal address and current phone number and email address.

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A beneficial owner is defined by the Companies Act as “the natural person who ultimately owns or controls a legal person or arrangements or the natural person on whose behalf a transaction is conducted, and includes those persons who exercise ultimate effective control over a legal person or arrangement”.

At the time of their introduction, the new rules were touted as a means of unmasking powerful figures who hide their identities behind trusts, proxies, law firms, and foundations to avoid scrutiny.

It was also seen as a move to rein in insider trading, as it curbed the use of nominee accounts commonly used by investors in firms listed on the Nairobi Securities Exchange (NSE) to avoid ownership limits.

Previously, firms were expected to file a register of members or its owners, with the date of the share acquisition, share ownership, and shareholder names including nominees.

This made it possible for companies to avoid naming controlling shareholders by hiding their interests.

BRS has maintained that the disclosure of the beneficial ownership information is a positive exercise that will promote good governance. According to the agency, it will also increase the trust in Kenyan companies and ensure transparency of company ownership.

The disclosure will also support the fight against corruption, money laundering, and financing terrorism.

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