OPINION ON RETROSPECTIVITY INTRODUCED VIDE SECTION 78 (1) OF THE LAND ACT AS READY WITH SECTION 79 (3) OF THE SAME ACT ON SPOUSAL CONSENT WHEN CHARGING A MATRIMONIAL PROPERTY

The Land Act, Act No. 6 of 2012 came into force on 2^nd May, 2012. The Implication of Section 78 of thereof is that the Act shall operate retrospectively and shall therefore apply to charges which were created before 2^nd May, 2012 when the Act company into place. Section 79 (3) of the Act requires lenders to obtain spousal consent before accepting a matrimonial home as security for a loan. Similarly, Section 84 of the Land Act which deals with variation of interests provides that:

“Where it was contractually agreed upon that the rate of interest is variable, the rate of interest payable under a charge may be reduced or increased by a written notice served on the chargor by the chargee:

a)       giving the chargor at least thirty days notice of the reduction or increase in the rate of interest; and

b)       stating clearly and in a manner that can be readily understood, the new rate of interest to be paid in respect of the charge.”

It’s also instructive to note that, vide Section 106 (2) of the Land Registration Act (which is the relevant procedural law for purposes of the Land Act, 2012) which provides that:

“Nothing in this Act shall affect the rights, liabilities and remedies of the parties under any mortgage, charge, memorandum of equitable mortgage, memorandum of charge by deposit of title or lease that, immediately before the registration under this Act of the land affected, was registered under any of the repealed Acts”,

banks’ rights to exercise statutory power of sale would remain valid notwithstanding lack of obtaining of spousal consents for charges/mortgages already made.

An inconsistency between the two Acts therefore arises. However, it is arguable that the Land Act is the substantive law and superior to the Land Registration Act.

Accordingly, we are of the opinion that Banks must as soon as possible comply with provisions on spousal consent lest borrowers who secured loans using matrimonial property default in payment and on attempt by the banks on realization, rely on restrospectivity clauses and any banks’ non-compliance with the same in challenge of exercise of statutory power of sale. 

In view of the above, it is important for banks and other financial institutions to partner with law/consultancy firms to undertake an audit of all titles to determine whether the same are secured by matrimonial properties, and whether consents were obtained at the time of registration of the charges. Thereafter, the identified borrowers may be issued with a notice requiring them to obtain spousal consents in respect of charges and or mortgages already taken in compliance with these provisions.

CONCLUSION

We hope that the above will suffice your concerns regarding retrospective effects under the Land Act, 2012 vis-a-vis requirement for spousal consent when using matrimonial property as security for a charge under the same Act. 

However, feel free to contact us at ceo@stralexgroup.co.ke or okelloted@sichangi.com for further any further information or clarification regarding implications of the new land laws - the Land Act 2012, Land Registration Act 2012, and National Land Commission Act, 2012. You may also reach us on +254 773 865 798/+254 715 310 677.

Yours faithfully,

FOR: STRATEGIC LEGAL SOLUTIONS GROUP LIMITED

Conveyancing & Property Law Consulting Group – a participating consultancy in the SLS Group of consultancies.

POWER OF ETHICS AND ANTI-CORRUPTION COMMISSION TO INVESTIGATE A BANKER - CUSTOMER AFFAIRS IN KENYA

Introduction

The issue this opinion seeks to interrogate is whether or not the Ethics and Anti-Corruption Commission has the power to investigate the business affairs/Banker-Customer Relationship Interface between a Bank and a private company under the Ethics and Anti-Corruption Commission Act, Act No. 22 of 2011 as read with the Anti-Corruption and Economic Crimes Act 2003 (the Acts). A hypothetical situation is where the anti-corruption body seeks to obtain information regarding the banking affairs of another company through such company’s bank.

To lay a foundation for the argument, let’s interrogate the role of Central Bank of Kenya in regulation of the banking industry.

The Regulatory Role of the Central Bank of Kenya

The Central Bank of Kenya is established to inter alia “…assist in the development and maintenance of a sound monetary, credit and banking system in Kenya...”

The Banking Act provides at Section 27 that the Central Bank of Kenya shall collect such data and other information as may be necessary to enable it to maintain supervision and surveillance of the affairs of institutions and the protection of their depositors. For this purpose, central bank may require institutions to submit statistical and other returns on a periodic basis in addition to any other returns required by the act, if, at any time, the central bank has reason to believe that the business of a bank is being conducted in a manner contrary to or not in compliance with the act or in any manner detrimental to its depositors or members of the public etc.

The Central Bank, therefore, does not interfere with individual banker-customer relationships unless it discovers (whether on an inspection or otherwise) or becomes aware of any fact or circumstance which, in its opinion, warrants the exercise of the relevant power in the interests of the institution or its depositors or other creditors.

Accordingly, the authority of the Central Bank of Kenya over any commercial bank is of a supervisory nature, generally limited to ensuring that banks are engaged in proper business practice and inspection is limited to supervision and investigation into the practices of a bank and the latter only happens if for whatsoever reason the Central Bank of Kenya is of the opinion that a bank is engaged in some form of banking malpractice.

The “Banking Business” of a bank is regulated by the Central Bank through the Banking Act. This regulation extends only to systemic issues. As such, Central Bank can only interfere with the bank-customer relationships to the extent permitted by law.

Systemic issues are generic and therefore no particular customer may have a relationship with the bank below the regulated threshold. Or rather, the regulator, Central bank, may not require a bank to establish any special systems for a particular customer (including Public bodies).

Power of Ethics and Anti-Corruption Commission to Investigate a Banker - Customer Affairs

On this background, the Ethics and Anti-Corruption Commission cannot carry out an intended examination of the systems, policies, procedures and practices of a bank and/or in relation to any particular customer, and any attempt by the anti-corruption body to examine the systems of a bank as regards a particular customer would at best be superfluous.

Accordingly, the Ethics and Anti-Corruption Commission can only involve a bank in case of an investigation of private company and it must follow the procedure prescribed in the Ethics and Anti-Corruption Commission Act i.e. it must give a notice to the affected parties and obtain a court order requiring a person (whether or not suspected of corruption) to produce specified records in his possession that may be required for an investigation. Such person may further be required to provide explanations or information within his knowledge concerning the records.

In conclusion, therefore, the Ethics and Anti-Corruption Commission may obtain whatever information it requires from a private company, and or, with the mandatory and specific instructions of such company, from its bank, but limited only to that which the bank would be obliged to provide under the bank-customer contract. It cannot compel the bank (a 3^rd party) to release banking details of its customers.

A bank on the other hand is not obliged to reveal its systemic practices and can safely decline requests for information regarding its clients unless sanctioned by a court order premised on an on-going investigation into the affairs of that company.

For more enquiries on potentially litigious matters in Kenya, please contact us at info@stralexgroup.co.ke, and our Patrick ANAM and other legal consultants will attend to your concerns. You may also call us on +254 773 865 798.

For: STRATEGIC LEGAL SOLUTIONS GROUP LIMITED

Centre for Litigation & ADR Processes – a participating consultancy in the SLS Group of Consultancies.

LEGAL IMPLICATION OF A LEASE OVER A LICENSE

Background

A lease is defined under Section 3 of the Registered Land Act as a grant without consideration by the proprietor of land to exclusive possession of that land. A lease may also be defined as a contract by which the one party, while reserving a reversion to himself confers upon the other the right to the exclusive possession of real property for a limited time. There are various classifications of leases, which include: A lease for a fixed period, Periodic tenancies, Tenancy at Will Tenancy at Sufferance, Lease in Possession: Reversionary (or future) lease. A lease may be terminated by expiry or effluxion of time, by notice -i.e. notice to quit, by forfeiture, by surrender - may be express or implied, by merger, or by frustration.

A license on the other hand is defined as permission granted by the proprietor of land, which allows the licensee to do some act in relation to the land which would otherwise be a trespass. Thou licenses may assume various forms and perform a multiplicity of purposes, the law has in the past recognised the following four categories of licenses: the bare license, the license coupled with the grant of an interest, the contractual license and the license based on proprietary estoppel. A license may be revoked with or without notice thou most contractual licenses require for a notice to be issued the rest of the categories of licenses may be revoked without giving notice. 

License And Lease Distinguished.

The following distinctions can thus be drawn be drawn between a lease and license. Whereas a lease creates an estate or proprietary interest in land, a license creates only a personal permission to be on land.  A license only makes an action that would otherwise be unlawful to be lawful, this distinction is important in relation to protected tenancies and also inheritance. Concerning protected tenancies, the Rent Restriction Act (Cap 296) and the Landlord and Tenant (Shops Hotels and Catering Establishments Act (Cap 301) only give protection to a tenant and not a licensee. Concerning inheritance, a lease, can be inherited, assigned or sub-let. A licence on the other hand, is a mere personal privilege of occupation and therefore it cannot be the subject of inheritance or assignment.

We invite your enquiries and or consultation on leases and transfer of property in Kenya, generally. You may call us on +254 715 310 677/+254 773 865 798 or you may email us at info@stralexgroup.co.ke.

Yours faithfully,

FOR: STRATEGIC LEGAL SOLUTIONS GROUP LIMITED

Centre for Legal Research & Policy Development - a participating consultancy in the SLS Group of consultancies

LEGALITY OF SELLING AN ALREADY INCORPORATED COMPANY AT LESS THAN KSHS. 50,000.00 IN KENYA

The law governing fees chargeable by advocates for various legal services is found in the Advocates (Remuneration) Order (ARO) as read with the Advocates Act, Chapter 16 of the Laws of Kenya. The ARO stipulates that lawyers should charge a minimum of Ksh. 50,000 for registration of companies as PROFESSIONAL FEES. 

Section 36 (1) of the Advocates Act on the other hand provides that “Any advocate who holds himself out or allows himself to be held out, directly or indirectly and whether or not by name, as being prepared to do professional business at less than the remuneration prescribed, by order, under this Act shall be guilty of an offence.” Section 36 (2) thereof provides that “No advocate shall charge or accept, otherwise than in part payment, any fee or other consideration in respect of professional business which is less than the remuneration prescribed, by order, under this Act.”

On the face of it, it would therefore appear that selling an already registered company at less than Kshs. 50,000 would be an illegality by virtue of section 36 of the Advocates Act. However, the ARO does not prescribe the PRICE at which a lawyer and or anyone else for that matter may SELL his existing companies to someone else. As such, once a company is registered, its shareholders may as well sell the company at Kshs. 1 as consideration.

Unfortunately or otherwise, this lacuna in the law has been used by practitioners keen on defeating the import of Section 36 of the Advocates Act in so far as legal fees for incorporation of companies is concerned.

Be that as it may, that which the law does not prohibit expressly or otherwise remains lawful. Accordingly, it's perfectly lawful to incorporate a company (shelf) and thereafter sell the same at whichever price the buyer is willing to part with.

We welcome any enquiries regarding registration of companies, business names and any other corporate entity. Our email address is stralexgroup@gmail.com or you may call us on +254 773 865 798. We will endevour to revert to your queries within 24 hours.

For: Strategic Legal Solutions Group Limited

Corporate Law & Business Services Consulting Group * a participating consultancy in the SLS Group of Consultancies.

TAX RESIDENCY IN MAURITIUS

Mauritius is a tax treaty planning jurisdiction with a network of 36 Double Taxation Avoidance Agreements. Entities holding a GBC 1 License wishing to avail to the benefits of a tax treaty must obtain a Tax Residence Certificate from the Mauritius Revenue Authority.

So far Mauritius has concluded 36 tax treaties and is party to a series of treaties under negotiation.

The treaties currently in force are: Barbados Belgium Botswana, Croatia, Cyprus, Sri Lanka, France, Germany, India, Italy, Kuwait, Lesotho, Luxembourg, Madagascar, Malaysia, Mozambique, Namibia, Nepal, Oman, Pakistan, People’s Republic of Bangladesh, People’s Republic of China Rwanda, Senegal, Seychelles, Singapore, South Africa, State of Qatar, Swaziland, Sweden, Thailand, Tunisia, Uganda, United Arab Emirates, United Kingdom, and Zimbabwe. 

Treaties Awaiting Ratification: Russia, Zambia and Republic of Congo.

Treaties Awaiting Signature: Egypt Kenya, Malawi, Nigeria, and Ghana. 

Treaties Under Negotiation: Algeria, Greece, Yemen, Burkina Faso, Republic of Iran Portugal, Canada, Saudi Arabia, Czech Republic and Vietnam. 

Pre-requisite for Tax Residence Certificate (to be given in form of undertakings)

1. The Company shall at all times have at least one general partner resident in Mauritius. The general partner shall be of appropriate calibre who can exercise independence of mind and judgment;
2. All meetings of the Board of general partners shall be held, chaired and minuted in Mauritius; 
3. The Partnership shall at all times keep all its accounting records at its registered office in Mauritius; and 
4.  The Partnership shall ensure that all its banking transactions are channeled through a bank account in Mauritius.

For further consultation and or advisories, please contact us at stralexgroup@gmail.com or call us on +254 773 865 798

For: Strategic Legal Solutions Group LLP

Globalex Consulting Group * a participating consultancy in the SLS Group of Consultancies. If provides advisory services on laws affecting conduct of business in other jurisdictions, including international tax law.

REPLACEMENT OF PASSPORT AFTER (EXPIRED OR FILLED UP) 5 -10 YEARS

The following are the requirements for replacement and or renewal of passport in Kenya.

1. Duly completed Passport application form Form PP1;
2. Expired or filled up Passport being replaced and its copy;
3. Three coloured Passport size photographs of the applicant with one of photos duly certified as true likeness of the applicant by the recommender - It is advisable to take the passport at Nyayo House as the Registrar is very particular about the passport size requirements; and
4. Certified copy of the recommender’s National Identity Card. (This is a regulation recently established with a view to phasing out the old generation of National Identity Cards).

 These must then be filed at Nyayo House and a passport issued usually within one month from the date of submission of all documents and meeting all requirements.

Please call us on +254 773 865 798 or +254 734 330 100 for any enquiries concerning replacement and or renewal of passports in Kenya.

For Strategic Legal Solutions  Group Limited

Corporate Law & Business Services Consulting