Kenya’s Startup Bill Remains Stuck in Mediation: What This Means for Founders Now

Kenya’s Startup Bill has been stuck in a mediation committee between the National Assembly and the Senate since August 2025. As of the most recent parliamentary Bills Tracker, updated 29 May 2026, its status has not moved: “Bill referred to a Mediation Committee.” No agreed version has been reported back to either House, no timeline for one has been published, and the bill remains, more than a year after its two chambers first passed conflicting versions, without the force of law. Founders and investors who have been structuring around the bill’s proposed rules, on the assumption that enactment is imminent, are planning around a text that does not yet exist in final form.

What Triggered the Deadlock

The Startup Bill, 2022 (Senate Bill No. 14 of 2022) originated in the Senate and was approved by the National Assembly with its own amendments. The two Houses then failed to agree: on 5 August 2025, the Speaker of the National Assembly reported a message from the Senate rejecting the National Assembly’s amendments. Under Article 113 of the Constitution, when the Senate rejects amendments the National Assembly has made to a Bill, the dispute goes to a mediation committee drawn from both Houses to attempt to produce a version each can pass. The National Assembly appointed nine members to that committee by 31 August 2025. Nothing in the public parliamentary record since then, including the 29 May 2026 tracker, shows the committee has reported back.

No Special “Startup” Legal Status Exists Yet

Until the Startup Bill is enacted, Kenya has no separate legal category for a “startup.” A business founded today registers the same way any company does, under the Companies Act, No. 17 of 2015, through the Business Registration Service, and is subject to the ordinary tax and regulatory regime that applies to any Kenyan company. There is no Kenya National Innovation Agency startup register in operation, no statutory eligibility test tied to company age or R&D spending, and no credit guarantee scheme created by this bill currently available. Any founder being advised to restructure ownership or spending now specifically to qualify for the Startup Bill’s proposed benefits is being advised against a text that is still being negotiated, not one that binds anyone.

The Provisions the Bill Would Have Imposed, As Drafted

The version of the bill on Parliament’s own records sets out, in section 8, the criteria an entity would need to meet to register as a startup under the Act. Two of these were the most substantively demanding: section 8(g) requires that the entity “is wholly owned by one or more citizens of Kenya,” and section 8(h) requires that “at least fifteen percent the entity’s expenses can be attributed to research and development activities.” Section 8(b) additionally caps eligibility at three years from incorporation for most sectors, extended to five years for biotechnology. These are registration eligibility criteria for accessing the Bill’s proposed status and incentives, not a general prohibition on foreign-owned or non-R&D-heavy businesses operating in Kenya; a foreign-owned technology company remains free to incorporate and trade in Kenya under ordinary company law regardless of what the Startup Bill eventually requires.

Why the Precise Current Text Is Unsettled

What is publicly documented is that the National Assembly amended the Senate’s bill, and the Senate rejected those amendments in August 2025. What has not been made public, at least not in the parliamentary records reviewed here, is precisely which provisions the National Assembly’s amendments changed, whether section 8(g) or 8(h) were among them, or what the mediation committee is specifically negotiating. Anyone relying on the originally introduced text, including the fifteen percent threshold and the wholly-Kenyan-ownership requirement, should treat those figures as the bill’s starting position rather than its likely final form. A mediation committee exists precisely because the two Houses could not agree, and either threshold could move before a reconciled bill re-emerges.

What to Do While the Bill Is Pending

Businesses currently structuring a Kenyan startup, or advising one on investment terms, gain little from pre-emptively adopting the Bill’s proposed ownership or R&D-spend thresholds as though they were binding law. The more useful step is to track the mediation committee’s report when it lands and to keep any Startup Bill-driven restructuring conditional on the bill actually reaching enactment in a form that matches what was planned for. In the meantime, ordinary company law, tax law and sector-specific licensing continue to govern exactly as they did before the bill was introduced.