KENYA Law and Practice Contributed by: Anne Kinyanjui and Bonface Abuya, DLA Piper Africa, Kenya (IKM Advocates)
thermore, the seller will also pay CGT at the rate of 15% of the net gain on the transfer of shares. In instances where the holding company is incorporated outside Kenya, CGT will still be payable where the shares or comparable inter - est derive more than 20% of their value directly or indirectly from immovable property in Kenya. Transaction Costs The transaction costs typically borne by the seller are: • the costs of the subdivision or change of use of the land, if required (unless otherwise agreed); • the costs of obtaining relevant consents, including LCB consent in the case of agricul - tural land; • CGT; and • legal fees (unless otherwise agreed). The transaction costs typically borne by the pur - chaser are: • costs for valuation of the property; • stamp duty; • registration fees for the transfer; and • legal fees. 2.11 Legal Restrictions on Foreign Investors Foreign Ownership of Land Article 65 of the Constitution prohibits foreigners from owning freehold land. Foreigners may own land based on a leasehold tenure only, and such leases are for a maximum period of 99 years. Any freehold land or lease for a term exceeding 99 years held by a foreigner is deemed to be a lease of a maximum period of 99 years from 27 August 2010.
Under the Constitution, a body corporate is regarded as a Kenyan citizen only if it is wholly owned by Kenyan citizens. Where the property is held in trust, the property is regarded as being held by a Kenyan citizen if all its beneficiaries are Kenyan citizens. Dealings in Agricultural Land Sections 6 (1) (a) and (c) as read with Section 9 (1) (c) of the LCA prohibit LCBs from approving: • the sale, transfer, lease, mortgage, exchange, partition or other disposal of or dealing with any agricultural land situated within a land control area where the beneficiary is not a citizen of Kenya; and • the issue, sale, transfer, mortgage or any other disposal of or dealing with any share in a private company or co-operative society that, for the time being, owns agricultural land situated within a land control area in favour of a person that is not a citizen of Kenya. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate The acquisition of commercial real estate is usu - ally financed as follows: • by borrowing from financial institutions, including commercial banks and Savings and Credit Co-operatives; • through REITs; or • through joint ventures. Where the government is involved, acquisition may be financed by the government itself or by public-private partnerships.
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