Commercial Contracts

Contracts provide the legal framework for any agreed commercial activity between two or more parties.

They should be clearly drafted, reflect reality and strike a reasonable balance between the commercial interests of the parties. Businesses usually need standard conditions of business, which define and limit the liability of the business, and provide a safety net if things go wrong.

Joint Venture Agreements are used to regulate the contributions, rights and obligations of the parties engaging in a joint commercial enterprise with others, where that enterprise is not incorporated. Typical examples of other contracts we draft include:

• Agency and distribution agreements.
• Management agreements.
• Consultancy contracts.
• Building contracts.
• Framework agreements.
• Licensing agreements
• Joint Venture Agreements,
• Shareholders agreements.

We advise foreign companies and individuals on all aspects of setting up and running a business in Kenya – from establishing a branch or subsidiary etc.

We also advise foreign nationals on property acquisition in light of restrictions placed by the Kenyan constitution.Our corporate team has many years’ experience of advising foreign clients, and guiding them through the intricacies of Kenyan law.

Below is a digest on Kenyan laws pertaining to property ownership by foreigners:

• • Foreigners can own property in Kenya in their name.
    The Constitution (2010), the Lands Act (6/2012) and the Land Registration Act (3/2012), subject to certain limitations, grant the right to any person, either individually or in association with others, to acquire and own land in Kenya. This is important as many foreign investors have been duped into believing that they cannot own land in their own name in Kenya.
  • Limitation of property ownership by foreigners.
    The limitations of property ownership in Kenya by foreigners can be found in the Constitution and the Land Control Act (Cap 302). As per Article 65(1) of the Constitution, a “person who is not a citizen may hold land on basis of leasehold tenure only, and any such lease, however granted, shall not exceed ninety nine years”. However, on expiry of the leasehold term a renewal of the lease may be sought. Article 65 further provides that any document which purports to confer on a foreign investor an interest in land with a lease of more than 99 years is deemed and regarded as conferring on that foreigner a 99-year lease and no more. This means that foreign investors can purchase leasehold properties for more than 99 years. However, the constitution implies that it will be deemed as conferring only a 99-year leasehold interest on the foreigner.
    A company, as per the Constitution and for purposes of property ownership, is regarded as a Kenyan company only if it is wholly owned by one or more Kenyan citizens. Therefore, a company with foreign shareholders is regarded as a foreign company and cannot own freehold land. Moreover, a trust cannot be formed to obviate this requirement. The Constitution was promulgated on August 28 2010. Under Article 8(1) in the Sixth Schedule to the Constitution, any freehold interest in land in Kenya held by a person who is not a Kenyan citizen shall revert to the Republic of Kenya to be held on behalf of the people of Kenya, and the state will grant a peppercorn rent for 99 years to that individual. This means that from the effective date, any freehold land or absolute proprietorship held by a foreigner is truncated to a 99-year lease with a peppercorn rent. The government has been forced to call for these titles and issue foreigners with leasehold titles with a commencement date of August 28 2010.
  • Agricultural land
    Under the Land Control Act transactions affecting agricultural land and other land which may be gazetted by the minister of lands are defined as ‘controlled transactions’. Controlled transactions are void in law for all purposes unless the land control board for the land control area or division in which the land is situated has given its consent in respect of the transaction.As per the act, the land control board cannot grant consent to a transaction in which the land is to be disposed of by way of sale, transfer, lease or exchange or partition to a person who is not:
    – a Kenyan citizen;
    – a private company or cooperative society, all of whose members are Kenyan citizens;
    – a group representative incorporated under the Land (Group Representatives) Act; or
    – a state corporation as per the State Corporation Act.The effect of this is that foreign investors and private companies owned by foreigners cannot hold agricultural land in Kenya. However, through a notice in the Kenya Gazette, the president may exempt any person from all or any of the act’s provisions. Therefore, foreign investors wishing to acquire agricultural land may apply for such exemption. Further, public companies in which foreigners are members may acquire agricultural land.