Dear all Find attached and below various options for KICTANet registration submitted by Dr. Ben Sihanya. We are going to have a moderated discussion beginning Monday next week for seven days on this issue so we can conclude this matter. best regards alice ------------------------------------------------------------------------- Option 1: Incorporation of a Company Limited by Guarantee The Companies Act (Cap. 486 of the Laws of Kenya) defines a company limited by guarantee as "a company having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up." Such companies usually include associations where trade is carried on but the profits are employed in furthering the objects for which the company is formed. A company limited by guarantee may or may not have a share capital. If the company has a share capital the signatories must subscribe for at least one share, as is the case in a limited company. In this case therefore, each member will also be liable for the amount, for the time being, remaining unpaid on the shares held by him/her. A company limited by guarantee is required by law to clearly states, in its memorandum, the company's objects and that the liability of its members is limited. In addition, it shall have the word "limited" appearing as the last word of the company name. Please note however that associations that are not for profit may dispense with the use of the word "limited" after its name. Optimistically, it would probably take anywhere between one to three months to incorporate a company limited by guarantee. However, incorporation of such companies has been known to take about six (6) months to two (2) years! The reason for this is that such applications were in the past forwarded to the President's office whereupon verification of the particulars of the proposed directors was made. It seems that the rationale at the time was that there was possibly a suspicious motive behind such companies and thus why they did not wish to be incorporated as companies limited by shares. Today however, the process has theoretically improved though it is practically not viable in KICTANET's case (Issue of shareholding, appointing shareholders, directors, handling share transfers and such would complicate the organisation's operations). Option 2: Registration of a Charitable Trust A trust is a legal entity in itself and is established as soon as all the trustees sign the trust deed. A trust deed is the written instrument signed under seal by all the trustees in the presence of an independent witness. It stipulates the objects and rules of the trust including the regulations thereof. For it to be considered a charitable trust, the trustees must have constituted themselves for a religious, educational, literary, scientific, social, athletic or charitable purpose. It may be of interest to note that what is otherwise regarded to be a "foundation" is technically a trust. In Kenya, a foundation is established in the same way as a trust and is similar in all other aspects save for the fact that the parties to a foundation are referred to as founders/ settlers with additional persons appointed in the deed as trustees. In order to give the trust its own "corporate" identity and enable it make arrangements under seal in much the same way as a limited company, the trust is thereafter registered under the Trustees (Perpetual Succession) Act whereupon a Certificate of Registration is granted. This enables the trust to sue and be sued in its own name (as opposed to those of the trustees) and is especially useful where the trust wants to hold interest in movable and immovable property (i.e. land) in its name rather than in the individual trustees' names. In addition, by registering an organization as a trust, it may ultimately be possible to apply for charitable status. Eligibility for such status is obtained once the trust complies with the requirements of the Kenya Revenue Authority. My experience has been that a duly registered trust must have very strong justification for applying for charitable status with the general expectation of the authorities being proof that the objects of the trust are for the benefit of the majority of, or better still, all Kenyans rather than a narrowly defined group of beneficiaries. Further, in 2003 stringent measures and requirements were introduced by the Lands Registry, where trusts are registered, and these have caused the registration of trusts to take anywhere from a year to register. In fact, the Minister in charge at the time declared that turns would no longer be registered under his Ministry but instead, under the Societies Act. The Registrar of Societies responded in writing by stating that they too would not register trusts as it was not their mandate! The stalemate remains to date and applications for registration under the Trustee (PS) Act dating back to 2003 are still pending! It is nonetheless important to note that a trust deed duly registered at the Registry of Documents (but not under the Trustee (PS) Act) is sufficient proof of the existence of a trust and can be used, for instance, to open bank accounts in the name of the trust and employ people etc. Non-registration of a trust under the said Act does not mean that the trust is non-existent. Option 3: Registration of an NGO The Kenya Non-Governmental Organisations Co-ordination Act of 199 defines a non-governmental organisation (NGO) as a private, not-for-profit, voluntary grouping of individuals or associations organised nationally or internationally for promotion of social welfare, development, charity or research through the mobilisation of resources. A local NGO refers to that organization registered in Kenya and only operates in two (2) districts in Kenya while a national NGO is registered in Kenya and can operate in any area within Kenya. An international NGO on the other hand is registered in Kenya and can operate within or outside of Kenya. NGOs in Kenya are under intense scrutiny from the government and the NGO Co-ordination Board which was established to co-ordinate the activities of all NGOs and to consider applications for registration of NGOs. In addition, the Board advises the government on NGO activities and their role in development within Kenya as well as approves the Code of Conduct which governs the self-regulation of NGOs and their activities The Board is a Government entity under the Ministry of Home Affairs in the Office of the Vice-President. Since the Board meets four times a year to conduct business, the length of time it takes to register an NGO is dependent upon the time one submits their application relative to the Board meetings. Please also note that there exists an arm of the Board, which operates in the field and reports to the Board on a weekly basis on the effectiveness of projects or activities of NGOs all over the country. Such regular checks and balances ensure proper conduct by NGOs. The NGO Co-ordination Act, 1990 provides that registered NGOs must submit to the Board annual reports of their activities in the prescribed format although it is wise to submit reports on a quarterly basis together with audited reports for that quarter, as opposed to at the end of the year. Upon registration, the organization will be issued with a Certificate of Registration which is valid for sixty (60) months and renewable upon application. In addition, please note that upon registration, all NGOs are supposed to be members of the Kenya National Council of Voluntary Agencies. This is a collective forum through which the NGOs and the Government can meet annually to discuss the difficulties encountered in their activities and the NGOs can recommend ways in which the Government can better assist them achieve their objectives. The Council also acts as an arbitrator for disputes within and between NGOs or between NGOs and courts etc. Where disciplinary cases are referred to the Council for consideration and the NGO in question is found guilty of an act or omission contrary to the NGO rules of conduct yet remains unwilling to make amends, then such cases are forwarded to the Board for actioning. All this notwithstanding, issues related to the Council's constitution and membership are uncertain and, as far as I am aware, there are actually NGOs that are not members of the Council. Option 4: Registration of a Society Societies are governed by the Societies Act (Cap. 108, Laws of Kenya). A society is defined under the Act as any club, company, partnership or other association of ten or more persons, whatever its nature or object, established in Kenya or having its headquarters or chief place of business in Kenya. The Act specifically provides that the following are not societies: · A company registered under the Companies Act, or a branch office of a foreign company; · Any corporation incorporated by or under any other written law; · A registered trade union; · A company, firm, association or partnership consisting of not more than 20 persons formed with the view of carrying on business for profit; · A registered co-operative society; · A school registered under the Education Act; · A building society defined by the Building Societies Act; · A bank licensed under the Banking Act; · An international organisation of which Kenya is a member, or any branch, section or organ of any such organisation; Every society is required to apply for registration to the Registrar of Societies within 28 days after formation. In applying for registration, a society is first required to conduct a search of the Registry to confirm that there are no existing societies with the same name. The application process includes submitting an application form, a copy of the constitution or rules of the society and a notification of the registered office of the Society. In particular, the Society should have at the very least, three appointed officers who shall be required to sign the application forms. Appointments are, therefore, done even prior to application for registration. Once the Registrar receives the application, he should communicate his decision on whether or not to register the Society and if the former, arrange for a Certificate of Registration to be issued and the Society to be published in the Kenya Gazette. Please note that registration under the Societies Act presumes that the Society has already been constituted and is operational prior to the application for registration. In fact, once an application for registration is made, officers from the Registrar's office are required to visit the registered office of the Society to confirm if indeed the Society is operational. Whether or not this actually happens is another matter altogether, although in the recent past there has been effort on the Registrar's part to ensure that this is complied with, the result being that the entire process has been known to take over 6 months to conclude. Nevertheless, the Registrar has been clearing the backlog accumulated over the years and, as far as I am aware, the registration process has since been less time-consuming. Finally, please note that for any transaction carried on in Kenya, a Personal Identification Number (PIN) is required. As such, whatever organization you chose to register would have to apply for a PIN Certificate upon its registration. This is a fairly straightforward matter. You should also seek the opinion of a registered auditor in Kenya regarding issues of tax implications of the above organisations such as employee's tax returns, work permits, tax exemptions and the like. I trust that the above information is of some assistance in determining what type of entity to register in Kenya. In my view is that the fourth option would be most viable for KICTANET's present needs. ----- Original Message ----- From: "Innovative Lawyering" <sihanya@innovativelawyering.com> To: <alice@apc.org> Cc: <n_awino@hotmail.com> Sent: Wednesday, April 05, 2006 3:25 PM Subject: RE: KICTANET REGISTRATION
Dear Alice,
I wont be able to attend today's emergency KICTANet meeting. Kindly accept my apologies. Please keep me posted on any of the decisions made at this meeting. I have attached two opinions for your perusal and comments.
Thank you.
Yours sincerely,
Dr Ben Sihanya, Advocate ___________________________________________________________________________ Dr Ben Sihanya, Ph.D. (Stanford) Teacher, Intellectual Property Attorney, Author, CPS (K), Consultant Intellectual Property, Constitutionalism, and Communication Law Chair, Department of Commercial Law University of Nairobi Law School & ©opyright Africa & Innovative Lawyering Trainer on TRIPs, WTO's Regional Trade Policy Course, University of Namibia Parklands Law Campus, Room B10 Box 1313, Sarit Centre, 00606 Nairobi, Kenya Telefax (254-20) 3741769 (O); +4343259 (H); Cell: +722897825 email: copyrightafrica@innovativelawyering.com; sihanya@innovativelawyering.com :innovativelawyer@wananchi.com;url:www.innovativelawyering.com