By Meshack Masibo
Are you a business person who loves to grow and scale beyond your borders? Perhaps you have settled on East Africa as your next market and realized that Kenya is the gateway to the close to 500 million strong East African market. If this is you, then this article is for you.
In this article, we will explore three ways in which a foreign company can establish its legal presence in Kenya. It can do so in 3 ways, either as a subsidiary, a branch company or a new company altogether
a. A Subsidiary
A subsidiary refers to a separate legal entity that is distinct from its parent company and which has a new name or which retains the parent company name with a slight change for example Cocacola can have a subsidiary called Cocacola Kenya. One of the pros of registering a subsidiary is that you receive the tax benefits of being a local company and also avoid any liability as a parent company for the actions of the subsidiary.
b. A Branch
Another way for a foreign company to be registered in Kenya is through a branch company. A branch company is the extension of the foreign parent company, which means that its activities and its name resemble that of the parent company. Additionally, the parent company is 100% liable for its branch’s activities. The branch is also taxed as a non-resident, at a rate of 37.5%, and is not eligible for any tax benefits or incentives. On the flip side, a branch is easier to form and has less bureaucracy about it.
c. A New Local Company
One of the more obvious choices is to simply register a new company that is not linked to your original company. In certain instances, the parent company or its directors can be shareholders in the new company but it still remains as a separate entity. One of the main pros of this is that the new company has autonomy and does not carry the ‘baggage’ of the older company.
Do you need help setting up a foreign company in Kenya? Feel free to contact us at info@masibolaw.co.ke
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