The Section 243A Contact Person: The KES 50,000 a Day Penalty Most Foreign-Owned Companies in Kenya Do Not Know About

In short, since 15 September 2023 every private company and every company limited by guarantee in Kenya which has neither a Kenya-qualified company secretary nor a director resident in Kenya must appoint a contact person, a natural person permanently resident in Kenya who keeps the company’s records of directors, shareholders and beneficial owners and produces them to the Registrar and the authorities on request. A company which fails to appoint one, and each of its officers, is liable to a fine of up to KES 500,000, and to a further fine of up to KES 50,000 for every day the default continues. Almost every foreign-owned Kenyan subsidiary with an all-foreign board and paid-up capital below KES 5,000,000 is caught, most were caught from November 2023, and most do not know. This article says who is caught, what the section requires, how the penalty accumulates, the three ways to comply and how to fix a default which has been running for three years.

The company this is written for

A group in Shenzhen, Mumbai, Dubai or Manchester incorporated a Kenyan subsidiary in 2022 or 2024. The directors are two executives at head office. The paid-up capital is nominal, because there was no reason to make it larger. The formation agent said nothing about a company secretary because none was required, and nothing about a resident director because none was required either, and both of those statements were true. The subsidiary trades, files its returns, pays its taxes and believes itself compliant. It has been in default of section 243A of the Companies Act since sixty days after 15 September 2023, or since the day it was incorporated if later, and the daily penalty has been running the whole time.

The same is true of a foreign-founded non-profit registered as a company limited by guarantee with a board abroad, of a Kenyan-owned holding company whose sole director has emigrated, and of the dormant subsidiary a group kept after a project ended. The section does not ask whether the company is active. It asks whether anyone in Kenya is answerable for its records.

What section 243A says

Section 243A was inserted into the Companies Act, 2015 by the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023, assented to on 1 September 2023 and in force from 15 September 2023, as part of the package of changes which followed Kenya’s international assessment on financial transparency. The Companies Act already required a company secretary only where paid-up capital is KES 5,000,000 or more, and never required a Kenyan director at all, which left a large class of companies with nobody in the country obliged to hold their records. The section closes the gap.

It applies to a private company or a company limited by guarantee which does not have either a Kenya-qualified company secretary or a director resident in Kenya. Such a company must appoint a contact person, who must be a natural person with a permanent residence in Kenya. The contact person keeps a copy of the company’s records relating to directorship, shareholding, beneficial ownership and any other information the company is required to keep under the Act, and makes them available to the Registrar and to the authorities when asked. The company lodges a notice of the appointment with the Registrar of Companies giving the contact person’s name and residential address, and lodges notice of any change within fourteen days. Companies already on the register on 15 September 2023 were given sixty days to appoint, which ran out in the middle of November 2023.

The penalty, and how it grows

A company which fails to appoint a contact person, and every officer of it in default, commits an offence and is liable to a fine not exceeding KES 500,000. Where the failure continues after conviction, the company and each officer are liable to a further fine not exceeding KES 50,000 for each day the non-compliance continues. A contact person who fails to keep or produce the records faces the same KES 500,000.

The arithmetic is worth doing once, because it is the reason this article exists. A subsidiary incorporated in January 2024 with two foreign directors and no contact person has been in default for three years. At the statutory maximum the continuing penalty alone is KES 50,000 multiplied by roughly 1,095 days, against the company and against each of the two directors separately. The fines are maxima, they are imposed by a court on prosecution rather than deducted at the registry, and no court has yet imposed the daily figure at its ceiling in a reported case. None of this is a comfort a board should rely on. The exposure exists from the day the default began, it is disclosed in the legal due diligence on any sale, financing or audit of the company, and the cost of removing it is an afternoon’s work.

Why nobody told you

Three reasons, and each is worth knowing because each will recur. Formation agents and online registration services sell incorporation, and the contact person is a post-incorporation compliance step which does not appear on their checklists. The requirement arrived through an anti-money laundering statute rather than a Companies Act amendment of its own, so it was reported as a banking and financial sector change and passed the corporate world by. And the section applies exactly to the companies least likely to have a Kenyan adviser reading the Gazette, the ones with no company secretary and no director in the country. The result is a class of default which is near universal among foreign-owned subsidiaries and almost never deliberate.

Are you caught

The company	Company secretary in Kenya	Director resident in Kenya	Contact person required
Private company, paid-up capital KES 5,000,000 or more	Required by section 243 in any event	Irrelevant	No, provided the secretary is appointed and notified
Private company below KES 5,000,000, one director lives in Kenya	None	Yes	No
Private company below KES 5,000,000, all directors abroad	None	No	Yes
Company limited by guarantee, board abroad, no secretary	None	No	Yes
Dormant subsidiary, all directors abroad	None	No	Yes
Public company	Required	Irrelevant	No, the section does not apply

Resident means resident in Kenya as a matter of fact, not a Kenyan citizen. A foreign national holding a work permit and living in Nairobi as a director takes the company out of the section. A Kenyan citizen director living in London does not.

The three ways to comply

1. Appoint a contact person. The simplest and cheapest. A board resolution, the person’s written consent, the notice to the Registrar through the Business Registration Service, and a records protocol under which the contact person holds current copies of the registers of directors, members and beneficial owners and every change is sent to them within days. The contact person carries a personal fine for failing to keep or produce the records, so a professional who does this for a living, with a written engagement, is the usual choice. The firm provides the service.
2. Appoint a Kenya-qualified company secretary. A member of the Institute of Certified Secretaries appointed and notified under the Act. It costs more than a contact person, because a company secretary does more, and it becomes compulsory anyway once paid-up capital reaches KES 5,000,000, so a company approaching the threshold may as well appoint one now.
3. Appoint a director resident in Kenya. This also takes the company outside the section, and it is the route boards reach for first and should reach for last. A director owes the duties in sections 140 to 147 of the Act and carries personal liability for the company’s compliance across the board, so a local manager or a friend of the group appointed to solve a filing problem has been handed a great deal more than a filing problem. Where the group wants a resident director for its own reasons, the appointment is made on proper terms. Where it wants only to satisfy section 243A, the contact person is the answer.

Fixing a default which has been running since 2023

The default ends on the day the notice of appointment is lodged. Nothing in the section prevents a late appointment, and the daily penalty runs on non-compliance, so the first step in every case is to appoint and file, this week, before anything else. The second step is to bring the records the contact person must hold up to date, since a company which has not maintained its register of beneficial owners has a second default alongside the first. The third is to minute the board’s decision and the reasons for the delay, because if the Registrar or a court ever looks at the period of default, a company which acted the moment it learned of the requirement is in a different position from one which knew and waited. Whether to make any voluntary disclosure to the Registrar beyond the notice itself is a judgment on the facts, and it is one we take with the board rather than by default.

A company which is being sold, refinanced or audited has a fourth reason to move. The buyer’s or the bank’s advocates will find the gap in the first hour of due diligence and price it.

What it costs

The appointment itself carries no registry fee. The firm’s fixed fee for the resolution, the consent, the notice and the records protocol is modest, and the annual fee for acting as contact person, holding the registers and responding to the Registrar and the authorities sits in the range set out in our article on the cost of registering a company. Against a maximum daily penalty of KES 50,000 per officer, it is the cheapest item of compliance a foreign-owned company in Kenya will ever buy.

Questions we are asked every week

What is a contact person under section 243A of the Companies Act?

A natural person permanently resident in Kenya, appointed by a private company or company limited by guarantee which has no Kenya-qualified company secretary and no Kenya-resident director, to keep the company’s records of directors, shareholders and beneficial owners and produce them to the Registrar and the authorities on request.

Does my foreign-owned company need a contact person?

Yes, if its paid-up capital is below KES 5,000,000, it has no company secretary and none of its directors lives in Kenya. Most foreign-owned subsidiaries with an all-foreign board fit this description.

What is the penalty for not appointing a contact person?

A fine of up to KES 500,000 against the company and each officer in default, and a further fine of up to KES 50,000 for each day the failure continues after conviction.

Is a Kenyan citizen director living abroad enough?

No. The section asks whether a director is resident in Kenya, not whether one is a citizen. A foreign national living in Nairobi as a director satisfies it. A Kenyan living in London does not.

Is it possible to appoint late?

Yes. The default ends when the notice of appointment is lodged. Appoint now, bring the registers up to date, and minute the decision.

Who is allowed to be the contact person?

Any natural person permanently resident in Kenya. Because the contact person carries a personal fine for failing to keep or produce the records, most companies appoint a professional under a written engagement.

Does the requirement apply to a branch of a foreign company or an LLP?

Section 243A is written for private companies and companies limited by guarantee. Branches and limited liability partnerships carry their own record-keeping obligations under the same 2023 amendments, and we check those separately when we review the group.

Next step

Send us the certificate of incorporation, the current CR12 and the names and residence of the directors by e-mail to peter@pmlaw.co.ke or WhatsApp through +254 714 644 080. We reply within one working day with whether the company is caught, since when, and a fixed fee to appoint and file. Nothing is charged until you instruct us.

Peter Maina is a Partner of Peter Maina & Company Advocates, Hazina Towers, Nairobi. He is an Advocate of the High Court of Kenya practising in corporate and commercial, capital markets, immigration and real estate law, and acts for foreign investors setting up and operating companies in Kenya.