KENYA Law and Practice Contributed by: Anne Kinyanjui and Bonface Abuya, DLA Piper Africa, Kenya (IKM Advocates)
scribed minimum capital requirements (see 5.4 Minimum Capital Requirement ) must be met, and the CMA must declare the REIT to be an authorised scheme. The advantages of REITs are that: • they enable low capital investors to invest in real estate, which is typically capital intensive; • they are a source of capital for real estate development and investment; • they allow investors to diversify their real estate portfolio based on the schemes’ pool of assets; • if listed, they create liquidity by allowing easy and quick investment in real estate; • they can, in the case of I-REITs, provide con - sistent income, since they are required to pay out at least 80% of their taxable income to unitholders in the form of dividends; • since they are regulated entities, they benefit from transparency and professionalism in their management and operation; and • they enjoy tax exemptions (see 8.5 Tax Ben- efits ). Despite the benefits, there is still a low uptake of investment in REITs in Kenya for various reasons including low investor awareness, market volatil - ity and high set-up costs. 5.4 Minimum Capital Requirement There are no minimum capital requirements for LLPs and private LLCs. A public LLC must have a minimum capital of KES6,750,000 (approximately USD52,200). REITs must have:
• a REIT trustee, who is required to have a minimum paid up capital of KES100 million (approximately USD773,100); and • a REIT manager, who is required to have a minimum paid up capital of KES10 million (approximately USD77,300). 5.5 Applicable Governance Requirements Private LLCs A private LLC is required to: • convene one annual general meeting; • file annual returns at the companies registry; • procure an annual audit of its accounts; • remit and file tax returns annually with the KRA, and pay and file tax returns monthly for taxes due on a monthly basis; and • maintain registers of its members, directors and charges at its registered place of busi - ness. Public LLCs (Listed and Non-Listed) Listed public LLCs are those listed on the Nairobi Stock Exchange. In addition to the governance requirements listed above in respect of private LLCs, public LLCs are required to obtain a trad - ing certificate for their operations. Furthermore, listed public LLCs must comply with the Capital Markets Act, Cap 485A and relevant regulations applicable to listed companies. LLPs LLPs are required to: • file an annual declaration of solvency; • maintain registers of partners, nominee part - ners and beneficial owners; and • maintain accounting records pertaining to the LLP’s business, such as invoices.
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