Name-Lending Pharmacists in Kenya: The Legal Consequences

Name-lending is one of the most common shortcuts in Kenya’s pharmacy sector. A registered pharmacist allows a business to use their name and registration, for a monthly fee, while someone else actually runs the pharmacy or wholesale operation. It is also one of the most dangerous. The Pharmacy and Poisons Act (Cap. 244) is built on the requirement that a qualified pharmacist genuinely controls the business, and an arrangement designed to avoid that requirement exposes the pharmacist, the investors and the directors at the same time. This guide sets out the legal consequences for each of them.

What the Law Requires

Section 19 of the Act prohibits anyone other than a registered pharmacist from carrying on the business of a pharmacist, on their own behalf or on behalf of another, except as permitted by sections 21 and 22. It also prohibits dispensing except under the immediate supervision of a registered pharmacist. Contravention is an offence carrying a fine of up to thirty thousand shillings, imprisonment for up to three years, or both.

Section 21 is the exception that companies rely on. A body corporate may carry on the business of a pharmacist if, among other conditions, the business is under the management of a superintendent who is a registered pharmacist and a director, and who is not acting as superintendent for any other company. For wholesalers, section 27(4) adds that the licence can only be issued or renewed if a registered pharmacist, resident in Kenya, is in control of distribution.

The words that matter are “management” and “control”. The Act does not ask for a pharmacist’s name on a form. It asks for a pharmacist who runs the business.

How Name-Lending Usually Works

The patterns are familiar to anyone in the sector:

• a pharmacist is listed as superintendent or person in control but rarely or never attends the premises;
• the pharmacist is listed for several outlets or companies at once;
• the pharmacist receives a flat monthly fee unrelated to any real work;
• dispensing, ordering and stock control are handled by unqualified staff or by the investor directly.

Each of these defeats the purpose of sections 19, 21 and 27, whatever the paperwork says.

Consequences for the Pharmacist

The pharmacist carries the heaviest professional risk. Section 12 allows the Pharmacy and Poisons Board, after inquiry, to direct that a registered pharmacist’s name be deleted from the register where the pharmacist, or a person they employ in the business, has been convicted of an offence or is guilty of misconduct that renders them unfit to remain registered. Lending a registration so that unqualified people can run a pharmacy is the kind of conduct that inquiry is designed to address.

A pharmacist named as superintendent is also a director of the company. That brings personal criminal exposure under section 49, discussed below, for whatever the business does in their name, including dispensing errors, sales of unregistered products and supply to unlicensed outlets.

Consequences for Investors and Directors

Section 49(1) of the Act provides that where a company commits an offence under the Act or its rules, every director, secretary and manager is also guilty of that offence, unless they prove it was committed without their consent or connivance and that they exercised all the diligence they ought to have exercised. Directors who set up or knowingly tolerate a name-lending arrangement will struggle to show either.

The business consequences are just as serious. If the section 21 conditions are not genuinely met, the company is carrying on a business reserved for registered persons. The Board may refuse to renew or may revoke a wholesale licence for any good and sufficient reason relating to the licensee, and a superintendent who exists only on paper is such a reason. An investor can lose the business it paid for.

Where controlled medicines are involved, the risk escalates sharply. Under the Narcotic Drugs and Psychotropic Substances (Control) Act (Cap. 245), dealing in narcotic or psychotropic medicines falls within the definition of trafficking unless done under and in accordance with a licence, or by a registered pharmacist acting within the Act. A business run by unqualified people behind a borrowed name is poorly placed to rely on those exclusions. Our guide to importing narcotic and psychotropic medicines into Kenya explains the regime.

Doing It Properly

Foreign investors are often drawn into name-lending because they assume the pharmacist must own the business. Section 21 requires the superintendent to be a director, not a shareholder, so a legitimate structure is available. Our guide to the superintendent pharmacist in a Kenyan pharma company explains it in detail. In short:

• employ the pharmacist under a real service agreement with defined duties and authority;
• appoint them to the board and record the appointment with the Business Registration Service and the Board;
• make sure they are resident in Kenya and do not hold another superintendent post;
• give them authority over procurement, storage, dispensing and recalls, and a direct line to the board.

Buyers should test all of this during due diligence. A nominal superintendent is one of the clearest warning signs in a target business; see our guide to buying a licensed pharmaceutical wholesaler in Kenya.

Frequently asked questions

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.