How Company Secretarial Services Ensure Compliance in Kenya
Consider a scenario where a manufacturing company in Kenya is expanding its operations and plans to raise capital through an Initial Public Offering (IPO). Company secretarial services would play a crucial role in ensuring compliance with regulations set by the Capital Markets Authority (CMA). They would assist in preparing the necessary documentation, ensuring transparency in financial reporting, and facilitating communication between the company and regulatory authorities throughout the IPO process.
Understanding the Regulatory Environment
The above scenario is a perfect example of the huge role that a company secretary plays in helping businesses navigate the complex web of regulations, laws, and compliance standards in their daily operations.
Kenya's regulatory environment spans various sectors including finance, telecommunications, manufacturing, and more. Key regulatory bodies such as the Capital Markets Authority (CMA), the Communications Authority of Kenya (CA), and the Kenya Revenue Authority (KRA) set guidelines and standards that businesses must adhere to. These regulations cover areas such as taxation, licensing, corporate governance, data protection, and environmental sustainability.
The Role of Company Secretarial Services
Company secretarial services are integral to ensuring that businesses remain compliant with these regulations. They provide expert guidance and support to companies, helping them navigate the complexities of the legal and regulatory landscape. Here's how they do it:
1. Corporate Governance Compliance.
Company secretaries ensure that companies comply with corporate governance requirements mandated by regulatory bodies such as the Capital Markets Authority and Central Bank of Kenya. They help in organizing board meetings, maintaining statutory records, and ensuring that proper procedures are followed in decision-making processes.
It is recommended and good practice that the board shall ensure that a governance audit is carried out at least annually to confirm the company is operating on sound governance practices. The authority shall work with other complementary institutions in ensuring compliance with the code such as the licensed Security Exchanges and the Registrar of Companies
2. Legal Compliance.
They keep track of changes in laws and regulations relevant to the company's operations and ensure that the company adapts its practices accordingly. For example, they assist in filing annual returns, updating company records, and ensuring compliance with tax laws.
A comprehensive legal audit should be carried out at least once every two years by a legal profession in good standing with the Law Society of Kenya. The main objective is to establish the level of adherence to applicable laws, regulations, and standards. The findings must be acted upon and any non-compliance issues arising corrected as necessary.
3. Risk Management.
Company secretaries help identify potential compliance risks and develop strategies to mitigate them. This may involve conducting compliance audits, monitoring regulatory changes, and implementing internal controls to ensure adherence to standards.
The board should ensure the development of a policy on risk management and set out its responsibility for risk management in the board charter. It is the duty of the board to approve the risk management policy and the risk management framework, The board should delegate to management the responsibility to implement the risk management framework.
4. Regulatory Filings and Reporting.
They are responsible for preparing and filing various regulatory documents with government authorities such as the Business Registration Services (BRS), the Registrar of Society, and The NGO Co-ordination Board. and the Kenya Revenue Authority (KRA) through the Kenya Investment Authority. This includes submitting financial statements, statutory forms, annual returns, annual reports, documents related to KRA PIN applications and other disclosures required by law.
Conclusion
In an era where regulatory requirements are constantly evolving, company secretarial services provide indispensable support in ensuring that businesses remain compliant. By handling the complexities of legal and regulatory landscapes, they allow companies to focus on their core operations, secure in the knowledge that they are meeting all necessary obligations.
For deeper, industry specific insights on compliance for your organization, please contact our team, at Azali CPS, on +254 (0) 707 456 140 or admin@azali.co.ke
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