How To Start Your Construction Company In Kenya

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Before you can run your construction business, going for those government tenders or selling anything to anyone, you should first register your company and meet the legal compliance.

Getting Started: Company Registration

In Kenya, there are specific company registration requirements that you must comply with. Additionally, there are regulations for specific industries such as business permits, registration with industry bodies (National Construction Authority), compliance with specific standards, that you will have to meet for your business to start operating in that field. Please note that foreigners may have to meet additional requirements to operate their business in Kenya.

In this article, I will go through the process of complying with firstly, the business registration process and, secondly, meeting the industry specific requirements. A lot of the information that I will go through can be easily made available by applicants to comply with government or regulators. Either way, it pays to be well prepared by paying close attention to the following list of requirements:

Information Required

To register your construction limited company, here is information that you will need to prepare to comply to the Company Act 2015;

Director(s) Details

• Full names – your full names as displayed on your ID/Passport will be used on the application
• Occupation – you will need to state your occupation e.g. engineer, web designer, accountant, consultant, teacher etc. If you don’t have any occupation, then you can simply put either businessman or businesswoman.
• Postal address – if you don’t have one, you can register it with Posta Kenya.
• Physical Residential address – LR number or house number, building name (if any), street name, town name, country.
• Share Allocations – each director will need to be allocated at least 1 share. Remember that the total number of shares available for allocation is 1,000 shares. You can plan to allocate your 1,000 shares using percentages such as 60%/40%, 50%/50%. However, if you are just the sole director then you can have 100% share ownership.
  See also: Nominal Capital Share Explained
• Proof of Identity documents – you will need to provide the following documents for registration, without them your application will be rejected.
  • Copy of ID or Passport – you can scan or photocopy your identification document
  • Copy of KRA PIN certificate – all Kenyan directors/shareholders will need to provide KRA PIN, however foreigners won’t need to provide one for the registration
  • Photos – must have a clear background and show all your facial features, just like a passport photo. Please avoid submitting photos that has someone wearing sunglasses, hats; this could cause your application to be rejected by the Registrar.

Company Details

• Company Name Suggestions – it’s ideal to come up with 2-3 company name suggestions that you can use to check the availability of your company name. Please note that you are only allowed to perform one name at a time. You can perform name search at Huduma Center or eCitizen website or you can instruct us to help you with it. It usually takes 1-2 days.
• Nature of business – with the new Company Act 2015, you can now do all trade of business. This is good news especially for companies that would prefer to do multiple business activities. However, if you are specializing on a specific industry then you can list the business activities that you would like to be stated on the application form.
• Location of business premises – you will need to provide the location details of your office including LR Number or Plot Number, Building name (if any), Street name, Town name. If you don’t have a business premises yet, then you can provide your home address then make the changes later once you have secured a business premises.

What If I want To Upgrade My Existing Business To Become Limited Company

If you are looking to upgrade your sole proprietor or partnership business, then you will need to provide all the above requirements, however there is one additional document that you will need to provide us;

• Business Certificate – you will need to send us the original business certificate for your sole proprietor/partnership business since this will be required in the cessation process (winding up of your business) to allow the limited company to be formed.

What If I want To Register A Foreign Limited Company?

There are always additional requirements that foreign owned companies need to comply with.  In the process of company registration, foreigners need to provide:

• Identity documents – such as copy of Passport and photo
• Alien ID – when applying for Company PIN
• Certificate of Incorporation & Memorandum of existing foreign company – if you are looking to open a branch or subsidiary company for an existing foreign company, then you will be requested to provide the certificate of incorporation and memorandum.

You can see a full step by step guide for foreign company registration here.

Related Reading: How To Register A Foreign Limited Company

Company KRA PIN

Once you have been issued with your certificate of incorporation and memorandum, you will be able to apply for your company PIN. Data loading will need to be performed at any iTax centers or KRA offices. Here are some of the requirements you will need to have with you;

• Certificate of Incorporation
• Memorandum
• Individual KRA PIN for each director – you will need at least one individual KRA PIN for one director in order to register company PIN. If all directors are foreigners, then at least one of the directors will need to apply for Alien ID that will enable them to acquire their individual PIN.
• Director(s) details – including KRA PIN Number, Full names, date of birth, phone number, email address etc.
  

Company Seal & Stamp

In Kenya, Company Seal is considered a useful stationery for businesses. It is used for contracts, deeds, share certificates and most importantly for setting up subsidiary companies. Here is what you need to know if you are looking to get a company seal in Kenya.

CR-12 Letter and AGPO certificate

These are additional steps that only apply to those businesses intending to go for government (national or county) tenders. In order to apply for CR-12 letter, a letter will need to be written on your company letterhead requesting Company Registry to give you a CR-12 letter that contains list of directors in your registered company. You will also need to attach a copy of Certificate of Incorporation on your request.

Related Reading: CR-12 Letter for Limited Company

If you are looking to apply for Government Tenders as a youth, women or persons with disability, then you will need to pre-qualify your company so you can be given AGPO Certificate that will help you to bid for tenders.

See Also: How To Apply For AGPO Certificate for Government Tenders

Tax Compliance Certificate

Tax Compliance Certificate (TCC) is one of the crucial documents required when applying for a Government Tender.

For AGPO applicants, you must have a tax compliance certificate in order to get approval by AGPO to apply for the 30% government tenders preserved for youth, women and person with disabilities.

See Also: How To Apply For Tax Compliance Certificate

Business Permits

To apply for business permit for your business, it all depends on which county you intend to operate your business in. Some counties such as Nairobi and Mombasa counties have embraced online platforms where businesses can apply and renew their business permits. To get more information, check your respective county government’s websites.

Business permits costs usually vary from county to county, you will need to inquire with your county government for accurate cost. Business permit rates depend on the size of business premises, number of employees working there and the type of business. Estimate cost ranges from Ksh. 5,000 per year, this could be higher or lower for some businesses.

Related Reading: How To Apply For Business Permits In Nairobi

So what’s next after registering my company?

Your business is now a legal entity, but you will still have further requirements to meet before you can effectively start trading in your field.

Things to consider:

• Getting licensed – to comply with your industry, you will need to apply for license that can enable you to operate your businesses such as NCA, KEBS, NEMA.
• Getting insurance – depending on the type of business or type of product/service, insurance services will come in handy to protect yourself and your business from liability. Find insurance agent to see what type of insurance coverage you can get for your business.
• Getting funding – you will need to do research to see potential available source of funding that will help your business to meet demands. For example; applying for LPO financing when you successfully acquire a contract.
• Finding and hiring labour – you will need to identify where you can hire personnel to perform the tasks needed in the business. The best place to find people who you can hire are Fuzu.com, BrighterMonday.com etc.
• Understanding and complying with industry regulation such as National Construction Authority.
• Business Bank Account – While it is not a strict and enforceable requirement, you will find that a business bank account will help you in your accounting process, show your investors and customers that you are an established and professional business. Some investors will not give funding unless this is to be deposited into a business bank account.
  The market has a range of business bank accounts available to suit small start ups or larger businesses. You need to do your homework as to which one will best suit your needs.
• Government construction tenders – including roads or buildings, bigger projects (Class A, B, C, D etc.)
• Taxation – Annual Tax Returns, VAT Returns, Income Tax Return for Employees (Every June 30th)
• Protect your business – Trademark, Copyright
• Annual Returns to Company Registry

Now that you know some of the requirements and what it takes to start a construction company, you can start by registering your company.

Register Your Limited Company Today

Photo Courtesy of constructiondatacompany.com