A Highlight of the Trade Laws of Kenya

The African Development Bank’s Report on the State of the Private sector in Kenya,  defines the private sector as well developed and large by the Sub-Saharan and Regional standards. It plays a leading role in the Kenyan economy, made up of the formal large business sector and the informal small business sector, estimated to support a majority of the Kenyan population. Kenya has developed a wide range of policies and regulations commonly referred to as the Commercial Laws which provide guidelines for companies and individuals engaged in trade.

Commercial Laws mainly include Company Law, Sale of Goods Law, Law of Agency, Carriage and Shipping, Insurance Law, Contract Law, Law of Partnership among others. A clear distinction exists between Trade Law and Economic Law as the latter deals with the monetary and fiscal aspects of trade. The Commercial Laws umbrella includes a number of branches that deal with business and financial transactions including Tax Law, Banking Law and Insolvency or Bankruptcy Law. Commercial transactions in Kenya are regulated by a number of Statutes that play a key role as important sources of Law, with some designed to promote social and economic policies of the state such as the Restrictive Trade and Monopolies Act.

As a measure to regulate the economy and create an environment that attracts foreign direct investment, Kenya has legislation on issues such as anti-dumping, money laundering and intellectual property. The Ministry of Industrialization, Trade and Enterprise Development is the main government agency in charge of trade matters in Kenya together with supporting ministries that provide specific procedures and regulations such as registration, business permits, and revenue collection.  Permits and licences are required for business operation and are issued by the government annually. Non-compliant businesses are fined and may even be forced to cease operations pending resolution and renewal of their permits.

The regulation of trade in goods and services mainly falls under the Law of Contract. It is important for all companies and traders contemplating doing business to understand the laws that apply to their choice of trade and ensure they have properly drafted contracts. Well drafted agreements save businesses high unnecessary costs associated with ill-prepared contracts, which is a major concern. Contract Law regulates the formation and enforcement of contracts, sets out the essential elements of validity and remedies available to parties in the case of breach of contract. The boundaries of Trade Laws overlap in the underlying foundations of the Law of Contract.

Traders who engage in Import-export businesses are subject to related regulations. Controls are imposed by statutes to prohibit the export and import of listed products and also limit the import and export of other listed products as a protection measure by the government. The regulations also include tariff measures listing taxes to be levied for import and export of products, regulated by the Excise and Customs Act.

Kenya is a signatory to a number of Regional Law and International Trade Law Agreements which have been ratified and adopted as Law. These regulations have been designed to encourage International transactions by foreigners who wish to do business, invest in Kenya, and also as a result of increased international cooperation of businesses. Examples include agreements by the World Trade Organization, The East African Community and The African Union.  

Commercial Laws are sets of government rules and regulations for business organizations, factories, trade unions, and employment sectors. These regulations deal with corporations, their legal powers and their respective limits. Corporate Law deals with the formation, management, and termination of corporations. It sets out legal procedures for issues such as election of directors, raising of capital, distribution of dividends, redemption of shares, and mergers and acquisitions.

This article has listed a summary of the Trade Laws in Kenya, which list is not exhaustive. Traders and businesses are advised to conduct due diligence, and find out the related laws that apply to their businesses, the relevant authorities, processes to be followed and the costs due in order to avoid hefty legal fines and cancellation of their business permits.

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