The Anti-money Laundering And Combating Of Terrorism Financing Laws (amendment) Act, 2023: A Focus On The Limited Liability Partnership Act, 2011

The Amendment Act has introduced changes to the various laws which are discussed in our continuing series. In this write up, we lay our focus on the changes the Amendment Act has had, on the Limited Liability Partnership Act,2011, as we point out the compliance issues to take note of. 

Changes to the Limited Liability Partnership Act,2011 

1. Registration requirements 

An application for the registration of a Limited Liability Partnership shall be accompanied with a copy of the register of beneficial owners. A beneficial owner is a natural person who ultimately owns or controls the LLP. 

2. Requirement to file annual returns 

LLPs are required to file annual returns with the Registrar within 30 days of their registration anniversary or any other period as the Registrar may allow upon application. The annual returns shall contain information as to: the address of the LLP; principal business activity; a declaration of solvency or insolvency; the manager and partners; as well as any person appointed by the LLP as an authorized person. 

3. Maintenance of a register  

LLPs are required to keep at their registered office: a notice of registration under the LLP Act; a register of the name and address of each partner, manager and legal representative; a copy of the most recent annual declaration of solvency or insolvency; a copy of any statement lodged with the Registrar; a copy of any certificate issued by the Registrar, the LLP agreement and any amendment; a register of charges and security rights as well as any other document that the Registrar may require to be kept. These documents shall be kept by the LLP for a minimum period of 7 years

4. Beneficial owners 

LLPs are required to keep a register of its beneficial owners. Information relating to a beneficial owners shall be kept for at least 10 years from the date which they ceased to be a beneficial owner. 

5. Register of nominee partners 

The Amendment Act requires LLPs including foreign limited liability partnerships to keep a register of nominee partners and to furnish this information with the Registrar within 60 days. A nominee partner is an individual or legal person instructed by their nominator to act on their behalf in a certain capacity in the LLP. Changes to this register should be lodged with the Registrar within 14 days of such amendment. This register shall not be open to public inspection. 

6. Power of the Registrar to strike of a limited liability partnership 

Where a limited liability partnership fails to file its annual returns for a period of 5 years or more, its beneficial ownership or nominee partner information despite a directive to do so, the Registrar may strike off that LLP. 

7. Record keeping after strike off 

A local representative and a manager in the case of a foreign LLP and LLP respectively are required to keep the records of the LLP for at least 7 years after it has been struck off the register. 

8. Foreign Limited Liability Partnerships 

The Amendment Act has established foreign limited liability partnerships as a form of LLPs that will be registrable as so under the LLP Act. For a foreign LLP to be registered in Kenya, the requirements for registering LLPs under the Act will need to have been met. Additional requirements include: a notarized copy of the certificate of registration from its country of origin; the partnership agreement; particulars of partners and managers; as well as those of the beneficial owners. Foreign LLPs are required to appoint at least one local representative. 

Conclusion 

The foregoing changes introduced by the Amendment Act to the LLP Act, point towards enhanced transparency in the registration and subsequent running of LLPs.We note that these amendments are in sync with those on the Companies Act, 2015 discussed in our previous alert. (Read our alert on changes to the Companies Act, 2015 here) They represent continuing obligations imposed on parties who intend to register and run LLPs in Kenya. It is important to note that failure to comply with the foregoing may attract liability in the form of penalties to both the LLP and to the officers in default. 

How we can help 

The Corporate and Commercial Business Unit at CM Advocates LLP is well versed in matters relating to business set up advisory and registration, post incorporation and registration, regulatory compliance, corporate governance, contract drafting and review. 

We assist you procure a registered office for your business and avail the services of a company secretary and a local representative where applicable. We also offer tax advisory services and procure the relevant work permits for the non-Kenyans and expatriate employees as well as their dependents. We draft and review the requisite contracts, deeds and agreements to be entered into as between parties. We take care of your regulatory issues in a constantly changing regulatory environment so that your business can focus on its substantive activities. 

Should you have any questions on this or any other matter, please do not hesitate to contact Emily Gitau on egitau@cmadvocates.com.