Economy

AG shuts 2,000 firms for failure to disclose owners

AG

Attorney-General Paul Kihara. FILE PHOTO | NMG

More than 2,000 companies were closed down by the Attorney-General in the year ended June 2021 for failing to disclose their owners.

Latest data from the Registrar of Companies show 2,540 entities were closed in the year, more than 1,255 in the previous year.

Attorney General in October last year ordered public and private companies to provide personal information of shareholders who own more than 10 percent or exercise control in a firm, failure to which they would be charged Sh500,000 fine for the company and each defaulting official.

Companies are struck off from the registry on directors’ order after shutting operations, bankruptcy, or if they don’t declare their beneficial directors after enforcement of the policy.

“2,540 entities were struck off the register in 2020. This was an influx. This was occasioned by enforcement of the beneficial ownership information disclosure requirements since the BOI e-register was operationalised on October 13, 2020,” Business Registration Service stated.

Over 6,000 firms have been closed since July 2017.

The firms were to state their secret owners including their names, phone numbers, residential address, national ID or passport copies, occupation, the date they became, and cease to become owners.

The rules were put in place to curb money laundering, financing of terrorism, unmask illicit wealth, corruption, and reveal the true identity of investors owning large blocks of shares in both private and listed companies, who will also be of interest to the taxman.

About 148,908 private companies had declared the information in mid-June ahead of the deadline in July 31.

Public companies listed at the Nairobi Securities Exchange are yet to declare as their e-registrar is yet to be operationalised.

The Registrar is also undertaking a link-a-business procedure for companies established before 2016 under the previous manual system with hardcopy files at the registry in order to declare the shareholding and file annual returns.

Firms that fail to link also risk closure.

The business names registered in the year to June rose 38.7 percent to 101,674 compared to 73,302 in a similar period last year, while private companies increased by 15.4 percent to 50,932 from 44,128 over the periods.

The increase has triggered layoffs and fears of job losses after economic fallout from pandemic that forced companies to undertake cost-cutting measures mid declined revenues.

The listings were also driven by Kenyans targeting supplying the national government, county governments and State corporations with goods and services.