Examining the Limited Liability Partnership Act, 2011 in Light of the Anti-Money Laundering and Terrorism Financing Laws (Amendment) Act, 2023.

Introduction

The Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Act, 2023 (the Amendment Act) was signed into law on 1st September 2023 and came into effect on 15th September 2023.

The amendments introduced are aimed at combating terrorism financing and ensuring transparency in financial transactions in Kenya. This article focuses on the changes to the Limited Liability Partnership Act, 2011 (the LLP Act) pursuant to the Amendment Act.

Key Changes to the LLP Act

Filing of annual returns

A limited liability partnership is required to file its annual returns with the Registrar within thirty (30) days of the anniversary of its registration or any other period as the Registrar may upon application allow.

The annual returns shall contain information in relation to the address, its principal business activity, a declaration of solvency or insolvency, the manager and partners and any person appointed as an authorised person. There is an administrative penalty of Kenya shillings two thousand (KES. 2,000.00) payable in default of filing of annual returns.

Registers and documents to be kept

A limited liability partnership is required to keep at its registered office: a notice of its registration; 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 a certificate, if any, issued by the Registrar; a copy of the limited liability partnership agreement and any amendment thereto; a register of charges and security rights and any other documents that the Registrar may require to be kept from time to time. The documents are required to be kept for a minimum period of seven (7) years.

In the event that a limited liability partnership fails to comply, it commits an offence and shall, on conviction, be liable to a fine not exceeding Kenya shillings five hundred thousand (KES. 500,000.00) and in the case of a continuing offence, to a further fine not exceeding Kenya shillings fifty thousand (KES. 50,000.00) for each day that the offence continues.

Beneficial ownership

A limited liability partnership is required to keep a register of its beneficial owners and to enter in its register, information relating to its beneficial owners. Additionally, beneficial ownership records are required to be kept for at least ten (10) years from the date, which a person ceases to be a beneficial owner. An administrative penalty of Kenya shillings two thousand (KES. 2,000.00) will be payable in default of lodging a copy of any amendment to its register of beneficial owners.

Register of nominee partners

A limited liability partnership is required to keep a register of nominee partners at its registered office. The register of nominee partners shall contain the name and address of the nominee partner, the date on which the person became a nominee partner and the name and address of the partner’s nominator. If there are any amendments to be made, a copy of any amendment to its register of nominee partners within fourteen (14) days after making the amendment.

A limited liability partnership registered before the coming into effect of this provision shall lodge a copy of its register of nominee partners within sixty (60) days.

The register of nominee partners shall not be open to the public for inspection.

An administrative penalty of Kenya shillings two thousand (KES. 2,000.00) will be payable in default of lodging a copy of the register of nominee partners or any amendment to its register of beneficial owners.

Striking off Limited Liability Partnerships

The Registrar may send to the registered address of the limited liability partnership a communication inquiring whether it is carrying on business or is in operation. In the event that the Registrar determines that the LLP is not carrying on business or is not in operation, it is given a month from the date of the communication to respond.

The Registrar may strike it off the Register a limited liability partnership where it has failed to file annual returns for a period of five (5) years or more or it has failed to comply with the requirement to lodge a copy of the register of beneficial ownership after being issued with a directive. After striking off, the Registrar shall publish in the Kenya Gazette a notice indicating that the name of the limited liability partnership has been struck off from the Register.

A manager in a limited liability partnership shall be required to keep records for at least seven (7) years after the it has been struck off.

Conclusion

The changes introduced in the LLP Act will have an impact on ownership and control structures as it ensures transparency and accountability in the running of limited liability partnerships.

If you have any queries relating to the above, please do not hesitate to  contact Bernard Musyoka and Keith Gongolo.Please note that this e-alert is meant for general information only and should not be relied upon without seeking specific subject matter legal advice.