Investors who work around loopholes to conceal their identities are set for a rough road ahead after The State Law Office drafted regulations that will enable it to from now on collect the names, phone numbers, and residential addresses of investors who hold more than 10% stake in companies in an effort to expose illicit wealth.

The Attorney General’s Office has launched an online portal that will list ownership details including significant stakeholders in both listed and private companies. The Business Daily reported on Thursday.

It will now be mandatory for firms to fill out the beneficial ownership registers ahead of registration while existing firms will be offered a deadline when they will be expected to update their shareholder records in November.

Under the new order, records made available to the Kenya Revenue Authority (KRA), security agencies and the Financial Reporting Centre, the government agency that keeps tabs on illicit financial flows.

The State Law Office intervention has been informed by the need to clamp down on insider trading by curbing the use of nominee accounts that investors have been using to circumvent ownership limits in firms listed at the Nairobi Securities Exchange (NSE).

The move has also been informed by the need to stop money laundering by revealing the true identify of investors owning large blocks of shares in both private and listed companies.

Before the rules on secret company records took effect, firms were expected to file a register of members, containing date of share acquisition, share ownership and shareholder names including nominees.

This allowed companies not to name controlling shareholders in the quest to conceal their true ownership.

Companies will now be required to reveal the identities of secret shareholders who control more than 10 percent in the companies to the Attorney-General through the Registrar of Companies.

The details required for filing include names of the substantial shareholder, KRA PIN, national ID or passport copies, postal address, residential address, occupation, telephone number, and the date when the investor became a beneficial owner.

Companies that fail to hand over the details risk a fine of Sh500,000 and a penalty of Sh50, 000 for every day they breach the rules.

“A company shall take reasonable steps to identify the beneficial owners,” says Attorney-General Kihara Kariuki through the regulations. “It is the companies’ duty to investigate and obtain beneficial owner particulars.”

The new regulations will therefore culminate into amendments to the Companies Act with the view of unmasking rich and influential businessmen who choose to hide their identities behind trusts, foundations, and law firms to avoid scrutiny.


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