Company Limited by Guarantee in Kenya

Company Limited by Guarantee in Kenya

Kenya offers a legal structure specifically designed for non-profit organizations: The Company Limited by Guarantee (CLG). This structure creates a separate legal entity for your organization, protecting members with limited liability.

Company Limited by Guarantee in Kenya

Unlike for-profit companies chasing shares and dividends, CLGs are all about social impact.Any profits a CLG generates are reinvested directly back into achieving its organizational goals.

Registration Requirements for Company Limited by Guarantee

1. Memorandum and Articles of Association (MoA & AoA): This is your CLG’s foundation document, similar to bylaws. Here’s what you’ll need to define:
2. Statement of Guarantee: This document sets the limit of each member’s financial liability if the CLG dissolves.
3. Minimum of Three Directors:
   • One key requirement is that at least one director must be a resident of Kenya.
   • Personal Information: Collect valid passports (foreigners), Kenyan IDs (locals), email addresses, physical addresses, phone numbers, occupations, and passport-sized photographs for all directors and members.
   • Appointment and Removal: The MoA & AoA typically outline procedures for appointing and removing directors.
4. Minimum of Three Members:
   • Commitment to Objectives: Members are individuals who share the CLG’s vision and are dedicated to its cause.
   • Membership Types: You can establish different membership categories with varying levels of involvement and voting rights (as specified in the MoA & AoA).
5. Company Name Check:
   • Availability Check: Before registering, conduct a name search using the Business Registration Service (BRS) online portal (https://brs.go.ke/) to ensure your desired company name is available.
6. Registration Fees:
   • BRS Fees: The Business Registration Service charges fees for processing your CLG registration application.
7. Limited Financial Risk: Members’ financial responsibility is capped at a predetermined amount, typically a small sum.
8. Guarantee Amount: This is typically symbolic, often Ksh 100 (around $1 USD) per member.
9. Clearly Defined Objectives: Outline the social cause, charitable activities, or public benefit your CLG aims to achieve.
10. Established Management Structure: Detail the roles and responsibilities of directors, including appointment/removal procedures and meeting protocols.
11. Specified Member Rights and Responsibilities: Clearly define member rights and responsibilities in the Memorandum and Articles of Association (MoA & AoA). This includes voting rights, the termination process, and how any potential profits will be reinvested back into the organization’s mission.

Benefits of a CLG:

• Limited Liability: Protects members’ personal assets.
• Suitable for Non-Profits: Ideal for organizations focused on social good.
• Credibility: Limited liability structure portrays professionalism and attracts trust.
• Legal Recognition: Gains a separate legal identity, facilitating fundraising and activities.

Who Can Register a CLG?

• Individuals: Anyone passionate about a cause can register a CLG.
• Groups: NGOs, charities, social enterprises, and other non-profit groups commonly use this structure.

Important Notes:

• Vetting Process: Factor in approximately six months for vetting by the National Intelligence Service as part of the registration process.
• Seek Guidance: Consider seeking help from business advisors to ensure a smooth registration process. Afrilink Consultants offers free consultations – reach out today! (https://afrilinkconsultants.com/)

By understanding the CLG structure and its benefits, you can make an informed decision for your non-profit organization in Kenya.