What You Need to Know About Business Law

Business law encompasses all of the laws that dictate how to form and run a business.Owning a  business means navigating the many laws meant to regulate the Kenya businesses. We shall be engaging more in that conversation on the categories of law that businesses should be aware of.Without further ado lets get legal.

Fintech Law

The Central Bank of Kenya (CBK) is the main regulator of the financial sector and this extends to fintech businesses that fall within its realm.The CBK Act empowers the CBK to regulate financial services in the country while the  National Payment System (Anti-Money Laundering Guidelines for the provisions of Mobile Payment Services) Guidelines provides for the licensing of payment service providers.

Regulations and guidelines have also been passed to enhance financial regulation including the Money Remittance Regulations which require the licensing of all persons intending to offer money remittance services in the country.

As fintech businesses generally involve a technological aspect, licensing under the Kenya Information and Communications Act (Chapter 411A of the Laws of Kenya) may be applicable if the implementation of the innovation requires the fintech business to establish its own telecommunications infrastructure.  In this instance, an approval and licenses issued by the Communications Authority of Kenya may be required.

Advertising and Marketing Law

The Competition Authority of Kenya (CAK) mandate is to enforce the Act with the objective of enhancing the welfare of the people of Kenya by promoting and protecting effective competition in markets and preventing misleading market conduct.It’s increasingly focusing on enforcement against businesses and undertakings engaging in Restrictive Trade Practices (RTPs), cartel behavior and abuse of dominance.  The recent amendments now permit the CAK to impose increased fines on persons or firms for breach of the RTPs and/or cartel conduct of up to 10% of their gross annual turnover for the preceding year, in addition to 5 years imprisonment.

A few things to keep in mind are the correct labeling of products, steering clear of untrue or unproven health claims and staying within legal boundaries when advertising to children.

Finance Law

I will lightly touch on this law because I purpose to talk more about it in the scheduled post but for now: Antitrust, bankruptcy and securities laws exist to protect small businesses. Among the reasons that small businesses should be aware of these laws is to protect their companies from bankruptcy. Or, if a company is already facing bankruptcy, awareness of these laws and the tax consequences of bankruptcy become important.In a welcome move, transactions related to transfer of assets and other transactions into Real Estate Investment Trusts (REITS) and Asset Backed Securities (ABS) have been proposed to be VAT exempt. It is hoped that this will diversify the sources of infrastructure financing. Similarly, any service in connection with an Islamic Finance Arrangement is proposed to be exempt from VAT.

Intellectual Property Law

There are few things more important than protecting a company’s great idea, logo or business name, and that’s where intellectual property(IP) law comes in.The law entails the following  major Acts governing the protection of IP in Kenya.These include;

1. Copyright Act; The smartest thing to do to protect your copyright of a creative concept is to ensure your idea is drafted and dated.The Act provides;

Statutory cost: Sh 1,000

Application Duration:5-7 working days

Government Body in Charge: Kenya Copyright Board (KECOBO)

Ownership duration: Your entire lifetime + 50 years after your death.

2. Trademark Act; Trademarks provide exclusivity to the use of your brand, which also protects the reputation of your brand.The Act provides;

Statutory Cost: From Sh 10,000 upwards, depending on the trademark category.

Application Duration: Six months

Government Body in Charge: Kenya Industrial Property Institute

Ownership duration:10 years and renewable on expiration of the 10 years

3.Patents Act; This is the highest form of IP protection.  Owning a patent means you are the only brilliant mind on earth to have created what you created. Your creation is extremely novel, never been seen before, a factor that skyrockets your company’s value.The Act provides;

Statutory cost: From Sh 100,000 upwards.There is also an annual fee to be paid once it is granted.

Application Duration:20 years

Government Body in Charge: Kenya Industrial Property Institute

Ownership duration:20 years and renewable on expiration of the 20 years

4.Industrial Act ; This is IP protection for the beauty of your creation, and combines lines and colour.

Statutory cost: From Sh15, 000 onwards per design

Application Duration:4-6 months with several stages of registration

Government Body in Charge: Kenya Industrial Property Institute

Ownership duration:15 years renewable, renewal fees paid every five years

Intellectual Property protection does not also end with a patent or copyright certificate, you still need to legally protect yourself in two key areas: non-disclosure agreement and licensing .Remember No copyright certificate, no non-disclosure agreement-do not disclose your ideas to anyone!

Online Business Law

As online sales grow, so do the rules and regulations that govern them. Most important is the collection of sales tax which we discussed on the tax post.Likewise, when sales go international, companies face additional challenges in dealing with customs laws and consumer protection regulations. 

Privacy Law

For many companies, collecting sensitive consumer and employee information is an essential part of doing business.It is your legal responsibility to take steps to properly secure or dispose of it. Financial data, personal information from children, and material derived from credit reports may raise additional compliance considerations. In addition, you may have legal responsibilities to victims of identity theft.

Kenya’s data privacy laws apply to organisations established in other jurisdictions in respect of data collected in the country. Organisations are required to give due regard to the right to privacy of the owner when handling this data.  However, the enforcement of orders against organisations found to be in breach of this right may be challenging where they have not established a legal presence in Kenya and there no reciprocal enforcement of judgments between Kenya and the country where the organisation is based.

There are no restrictions on the transfer of data outside the country, provided it is done within the remit of the right to privacy.  Consent of the owner should be sought where applicable before transferring or storing such data outside the country.

The Occupational Health and Safety Act (OSHA)

The Act provides  for the health, safety and welfare of persons employed, and all persons lawfully present at workplaces and related matters.Protecting employees by establishing a safe workplace is not only important to employees, but it’s critical to the success of your business.

Starting and owning a business is always exciting, but it_s important that companies dot their I_s and cross their T_s when it comes to the legal process. Doing so could be the dif



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