Thousands of companies in Kenya are staring down the prospect of deregistration following a sweeping enforcement move by the Business Registration Service (BRS).
The government agency has flagged over 9,000 firms for potential removal from the official registry after they failed to comply with critical statutory requirements, particularly around the disclosure of beneficial ownership and the timely submission of annual returns.
What’s Behind the Crackdown?
At the heart of the issue is Section 93A of the Companies Act, which requires companies to declare their beneficial owners, individuals who ultimately own or control the company, even if they aren’t listed as directors or shareholders on paper.
The regulation is a key element in the government’s effort to fight corruption, reduce financial opacity, and clamp down on shell companies used for illicit activities such as money laundering, tax evasion, and fraud.
To enforce this, Directive No. 1 of 2024 set a firm deadline: companies were required to submit their beneficial ownership registers by November 30, 2024. However, thousands of companies failed to comply.
In addition, a significant number of these firms have neglected other legal obligations. According to BRS, many haven’t filed annual returns or financial statements for over five years, prompting the agency to initiate actions under Section 894(1) of the Companies Act.
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This section empowers the registrar to strike off companies that appear dormant or non-compliant with the law.
BRS Issues 30-Day Ultimatum
The BRS has formally notified the affected companies, giving them 30 days to respond. They are required to confirm whether they are still operational and must provide adequate proof. Acceptable documentation includes:
- Recent tax filings
- Valid trade or business licences
- Active contracts or business agreements
- Up-to-date financial statements
- All outstanding statutory submissions, including annual returns and the required beneficial ownership records
Companies that fail to act within this grace period risk being struck off the registry. The list of affected firms has been published on the BRS website at brs.go.ke/boi-notice.
What Deregistration Means
Non-compliant companies will face deregistration proceedings, including gazettement under Section 894(2). This will effectively render the business defunct in the eyes of the law.
Once a company is deregistered, it loses its legal status and can no longer conduct any business under its current name. It also eliminates any protections or benefits associated with being a registered legal entity.
The implications of deregistration are severe:
- Loss of business legitimacy.
- Inability to enter contracts, open bank accounts, or secure financing.
- Potential penalties for directors and shareholders.
- Disruption of supply chains and vendor agreements.
- Legal liabilities if any outstanding obligations remain unfulfilled.
A Move Toward Corporate Accountability
This regulatory push is part of broader government efforts to enhance corporate governance and financial transparency.
By enforcing compliance with disclosure rules and ensuring that only active, accountable entities remain on the register, the BRS aims to create a healthier and more trustworthy business environment in Kenya.
“Too many dormant or shell entities have been allowed to exist unchecked,” noted a senior compliance officer. “This initiative sends a strong message: if you’re doing business in Kenya, you must play by the rules.”
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What Companies Should Do Now
If your company appears on the BRS list, here’s how to act:
- Check the list at brs.go.ke/boi-notice.
- Gather and submit the required documents within 30 days.
- File any outstanding returns or ownership disclosures immediately.
- Consult your legal or compliance advisor to ensure full statutory compliance moving forward.
Looking Ahead
Businesses must prioritise transparency, proper documentation, and timely compliance if they want to maintain good standing and thrive in an increasingly regulated landscape.
For those that act quickly, there’s still a window to correct course. But for others, the clock is ticking, and deregistration may just be around the corner.
