_____________________________

LEGAL ISSUES AND THE

ENTREPRENEUR
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The major legal forms of business are the

1.
2.
3.
4.

Sole proprietorship,
Partnership,
Corporation,
Saccos,

Doing Business in Kenya

Procedure

Name search at Sheria House

Time to
Complete
3 days

Associated Costs

KES 100 per name

reservation
Stamp the memorandum and articles 5 days
1% of nominal capital +
and a statement of the nominal capital
KES 2,020, stamp duty on
MOA and AA
Pay stamp duty
1 day (included KES 100 bank commission
in the previous
procedure
Declaration of compliance (Form 1 day
KES 200
208) is signed before a Commissioner
of Oaths /notary public
File deed and details with the 7- 14 days
Registrar of Companies at the
Attorney General's Chambers in
Nairobi

KES 6360

Doing Business in Kenya

Register
with
the
Tax 1 - 2 days
Department for a PIN and VAT
online

no charge

Apply for a business permit

5 days
Register with the National 1 day
Social Security Fund (NSSF
Register with the National 1 day
Hospital
Insurance
Fund
(NHIF)

KES 5,000
no charge

Register for PAYE

1 day
Company
Seal 2 days
Make a company seal after a
certificate of incorporation has
been issued.

no charge
KES 2,500 and KES
3,500

no charge

SOLE PROPRIETORSHIP

It is an enterprise that is owned and operated by one

person.
Usually, he is the individual who

has day-to-day responsibility for running the business

owns all the assets of the business and the profits generated by it
assume complete responsibility for any of its liabilities or debts
in the eyes of the law and the public, he is one in the same with
the business.

Legal Requirements for Sole Proprietorship

Name

search at Sheria House @ KES 100

If the name is ok get license of operation from NCC @
KES 5,000

PARTNERSHIP
A Partnership is where two or more people share
ownership of a single business.
Like proprietorships, the law does not distinguish
between the business and its owners.
The partners should have a legal agreement known
as a partnership deed.

Legal Requirements for Partnership

Name search at Sheria House @ KES 100

Then get operating license of operation from NCC @ KES
5,000
Since a partnership has more than one owner entrepreneurs
are advised to register a partnership deed as well @ 3,999 to
the lawyer

LIMITED LIABILITY COMPANY (LLC)

It is designed to provide the limited liability features of a

corporation and the tax efficiencies and operational
flexibility of a partnership.
Formation is more complex and formal than that of a
partnership because of MOA and AA

INTELLECTUAL PROPERTY
There are 5 basic forms of intellectual property that can be protected:
a) Patents
b) Copyrights
c) Trademarks
d) Mask works
e) Trade secrets.

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LACK OF PATENTING HURTS INFORMAL

SECTOR INNOVATORS

LACK OF PATENTING HURTS INFORMAL SECTOR

INNOVATORS.docx

http://www.businessdailyafrica.com/Corporat
e%20News/Kenyan%20innovators%20face%20off%
0with%20big%20business/-/539550/1048816/-/v
iew/printVersion/-/idmtirz/-/index.html

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INTELLECTUAL PROPERTY: Patents

A patent is a set of exclusive rights granted by a government (Kenya
Industrial Property Institute)to an inventor for a limited period of
time in exchange for the public disclosure of an invention.
When a patent is issued, the government grants the owner of the
patent, the right to exclude others from making, using or selling the
invention.
I.e. others may not make, use or sell the patented invention without
the authorization of the patent owner.
After the patent expires, anyone may make, use or sell the invention.

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What can you Patent?

Inventions in any field of Technology. Any device, substance,

method or process
Human Necessities: Agriculture, foodstuff, to personal or domestic
articles, health and amusement.
Performing operations and transporting: separating, mixing,
shaping, printing and transporting.
Chemistry and metallurgy.
Textiles and paper. Fixed Construction: Building, earth moving
mining.
Mechanical engineering, lighting, heating, weapons, blasting
including engines, pumps and engineering in general
Physics: Instruments and nucleonic.
Electricity
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CASES: Mariandazi

It is unfortunate that most of the innovators are losing big time for not
registering their patents. They are going out there with their innovations
before securing the rights over the ideas and in such cases, the innovation,
irrespective of whether it is yours or not is as good as lost, Such is the
challenge that Ronald Angwenyi, a UON graduate in food science and
technology, faced in his battle against Bidco Oil over a baking powder
brand that the consumer goods giant launched in the Kenyan market last
year.
Mr Angwenyi moved to court claiming that the product, launched under the
Mariandazi trade name, was his invention. Bidco, he said, had used a
formula he invented while on attachment with the consumer goods giant to
develop the product without compensating him for his skill, knowledge and
originality.
Bidco had argued the plaintiff had not registered the innovation as a patent
and could therefore not claim ownership of it. Lady Justice Martha Koome
ruled that with oral evidence, it was impossible to know whether Bidco was
using Mr Angwenyis research paper and ideas to make the product and
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threw out the case.

CASE: M-Kesho
Equity Bank and Safaricom are facing a similar court battle against
businessman Hoswell Mbugua Njuguna, who wants the two corporate
giants blocked from using M-Kesho, the mobile banking platform that they
launched in May and which has more than 600,000 users.
Mr Njuguna alleges that M-Kesho is a registered trademark that Equity
Bank got to know of four years ago when he presented the mobile banking
concept to them but the meetings stopped without any deal being struck, Mr
Njuguna submitted in a case that is fixed for hearing on November 19.
Though not in the original suit, Safaricom has recently been enjoined in the
suit as an interested party.

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CASE: M-Kesho: mobile phones device

Nokia is fighting a similar battle against two University of Nairobi students,
Pascal Katana and Jeremiah Murimi, who want the mobile phone
manufacturer stopped from exploiting a device they claim to have invented
to charge mobile phones.
The duo accuses the company of unauthorised exploitation of the product
that involves use of bicycles to charge phones for commercial gain without
compensating them.

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Exceptions
The following are not regarded as inventions and are excluded from patent :
1. Discoveries or findings that are products or processes of nature where
mankind has not participated in their creation e.g. plants, microorganisms
2. Scientific and mathematical methods and theories.
3. Schemes e.g. investment, methods of bookkeeping or insurance schemes.
4. Business methods e.g. credit or stock methods
5. Computer programs
6. Rules for playing games (The games equipment may be patentable).
7. Methods for treatment of human or animal body by surgery or therapy,
as well as diagnostic methods;
8. Public Health related methods of use or uses of any molecule or other
substances whatsoever used for the prevention or treatment of any disease
which the Minister responsible for matters relating to health may
designate as a serious health hazard or as a life threatening disease.
9. Mere presentation of information.
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INTELLECTUAL PROPERTY
There are 5 basic forms of intellectual property that can be protected:
a) Patents
b) Copyrights
c) Trademarks
d) Mask works
e) Trade secrets.

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INTELLECTUAL PROPERTY: Copyrights

The exclusive legal right, given to an originator or an assignee to print,

publish, perform, film, or record literary, artistic, or musical material, and
to authorize others to do the same.
Copyrights are directed to forms of expression.
A copyright is obtained the moment the expression is created so that it
may be perceived either directly or through the aid of a machine or
device.

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INTELLECTUAL PROPERTY: Copyrights

Fight against software piracy.docx

http://softkenya.com/law-kenya/copyright-kenya.htm

http://www.mcsk.or.ke/
Kenya

Music

copyright

Society

of

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INTELLECTUAL PROPERTY: Kenya Copyright Board

Works covered by the copyright includes;
i.
Books
ii.
Music
iii. Dances
iv. Plays
v.
Movies
vi. Paintings
vii. Sculptures
viii. Photographs
ix. Broadcasts
x.
Sound Recordings
xi. Computer Software

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INTELLECTUAL PROPERTY
There are 5 basic forms of intellectual property that can be protected:
a) Patents
b) Copyrights
c) Trademarks
d) Mask works
e) Trade secrets.

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INTELLECTUAL PROPERTY: Trademarks

A Trade Mark is a sign which serves to distinguish the goods of an

industrial or a commercial enterprise or a group of such enterprises.
The sign may consist of one or more distinctive works, letters,
numbers, drawings or pictures,, signatures, colours or combination of
colours etc.
A Trade Mark can be a word, a symbol , a design, or a combination of
these, used to distinguish the goods or services of one person or
organization from those of others in the market place.
Upon registration, a trademark is valid for ten years.
The regulatory authority in Kenya is Kenya Intellectual Property
Institute located at South C, Nairobi.

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What is the purpose of a trademark?

They protect the goodwill and reputation of the
respective business entities.
They also prevent confusion, helping consumers identify
the trademarked products or services.

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Example of trademark?

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INTELLECTUAL PROPERTY
There are 5 basic forms of intellectual property that can be protected:
a) Patents
b) Copyrights
c) Trademarks
d) Mask works
e) Trade secrets.

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INTELLECTUAL PROPERTY: Mask works

A mask work is a creative work protected under the Semiconductor

Chip Protection Act.
Although nowadays few chip makers worry about it, there was a time
several years ago when semiconductor chip makers were concerned
that a competitor would knock off a semiconductor chip by
purchasing one of the chips, removing the semiconductor layers one
by one, photographing the layers, and using the photographs to
generate replicas of the chip.
The Semiconductor Chip Protection Act was intended to allow chip
makers to register the masks, which would then provide certain
remedies against copiers. The protection is thus a copyright-like
protection.

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INTELLECTUAL PROPERTY
There are 5 basic forms of intellectual property that can be protected:
a) Patents
b) Copyrights
c) Trademarks
d) Mask works
e) Trade secrets.

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INTELLECTUAL PROPERTY: Trade Secrets

A trade secret is a formula, practice, process, design, instrument,

pattern, or compilation of information which is not generally known
or reasonably ascertainable, by which a business can obtain an
economic advantage over competitors or customers.
In some jurisdictions, such secrets are referred to as "confidential
information" or "classified information".
To qualify as a trade secret, the company/owner must take reasonable
efforts to keep it secret.
Sales and marketing plans can be considered trade secrets, as are
computer files sales data.
Best example of a trade secret is the formula for Coca-Cola.

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Motto for Entrepreneurs

Conceive

it

Believe

it
Achieve it!

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