Mid-Year Compliance Check: Ensuring Your Kenyan Business Stays on Track in 2025

As we reach the midpoint of 2025, it's an opportune time for Kenyan businesses to conduct a thorough compliance review. This proactive approach helps identify potential issues, ensures adherence to legal obligations, and positions your company for sustainable growth.

1.      Business Registration and Licensing

a)      Verify Registration Status

Ensure your company is registered with the Business Registration Service (BRS) and that all information is up to date. Recent directives emphasize the importance of maintaining accurate records, including the Register of Beneficial Owners, as mandated by Section 93A of the Companies Act.

b)      Renew Business Permits

Confirm that all necessary business permits and sector-specific licenses are valid and renewed as required. Operating without valid permits can lead to penalties or business closure.

2.      Tax Compliance

a)      Filing Accuracy

Review all tax filings submitted to the Kenya Revenue Authority (KRA) to ensure accuracy and timeliness. Key tax obligations include:

• Corporate Income Tax: Due annually; returns must be filed by the sixth month after your company's financial year ends.

• Value Added Tax (VAT): Ensure timely monthly filings if registered.

• Pay As You Earn (PAYE): Accurate monthly deductions and remittances for employee salaries.

b)      New Tax Obligations

Stay informed about recent tax changes, such as the introduction of the Social Health Insurance Fund (SHIF) replacing NHIF, and the Housing Levy for employers.

3.      Employment and Labour Law Compliance

a)      Statutory Deductions

Ensure all employee deductions, including NSSF and SHIF contributions, are correctly calculated and remitted. Non-compliance can result in legal penalties and affect employee welfare.

b)      Employment Contracts

Review employment contracts to confirm they comply with the Employment Act and reflect any recent legislative changes. Contracts should clearly outline terms of employment, remuneration, and termination clauses.

4.      Data Protection and Privacy

a)      ODPC Registration

Confirm that your company is registered with the Office of the Data Protection Commissioner (ODPC) if handling personal data. The Data Protection Act, of 2019 mandates this registration for data controllers and processors.

b)      Data Policies

Evaluate data protection policies to ensure they align with the Data Protection Act and that staff are trained on data handling procedures. Implement measures to safeguard personal data against unauthorized access or breaches.

5.      Corporate Governance

a)      Board Meetings

Check that board meetings are held as scheduled and that minutes are properly documented. Regular meetings facilitate effective decision-making and compliance with governance standards.

b)      Statutory Records

Ensure that all statutory records, such as share registers and resolutions, are accurately maintained. These records are essential for transparency and may be required during audits or legal reviews.

6.      Annual Returns and Financial Statements

a)      Timely Filing

Verify that annual returns have been filed with the Registrar of Companies. Companies are required to file annual returns within 30 days of the anniversary of incorporation.

b)      Financial Statements

Ensure financial statements are prepared as per International Financial Reporting Standards (IFRS). Public companies must file their financial statements within six months after the end of their financial year, while private companies have nine months.

7.      Sector-Specific Compliance

a)      Industry Regulations

Assess compliance with regulations specific to your industry, such as those of the Capital Markets Authority (CMA) or the Central Bank of Kenya (CBK), if applicable. Staying abreast with sector-specific requirements ensures smooth operations and avoids regulatory sanctions.

 8.      Internal Audits

a)      Risk Assessment

Conduct internal audits, including governance audits, to identify potential risks and implement corrective measures. Integrating these audits into your mid-year compliance checks, your organization can proactively identify areas for improvement, enhance operational efficiency, and build stakeholder confidence.

Conducting a thorough mid-year compliance check can be complex, but you don't have to navigate it alone. Azali Certified Public Secretaries LLP specializes in company secretarial services, offering expert guidance to ensure your business remains compliant with all regulatory and compliance requirements. By partnering with Azali, you safeguard your business against legal and ethical risks, ensuring operational integrity and fostering stakeholder confidence.

Contact us today to schedule your mid-year compliance review and stay ahead in 2025.