Phasing Regulated Activities Into a Kenyan Company: One Entity or a Holding Structure?

A common plan for a foreign tech company entering Kenya is to start with one activity that needs no licence, usually software or consultancy, and add a regulated line such as payments, digital lending or telecoms once the business has traction. The practical question is whether to keep growing inside the same Kenyan company or hive each regulated activity off into its own licensed entity.

A Single Company Can Lawfully Do All of It

Nothing in Kenyan company law stops one company from carrying on several activities, regulated or not. Section 28 of the Companies Act, 2015 makes a company’s objects unrestricted unless its articles specifically limit them. Kenya’s sector licensing statutes are written in terms of the activity, not the corporate vehicle: section 24 of the Kenya Information and Communications Act says no person may operate a telecommunication system without a licence, and the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 licence a person carrying out digital credit business. A single Kenyan company can, in principle, hold a telecoms licence, a digital credit licence and a payment service authorisation all at once, so long as it satisfies each regulator separately.

But Each Licence Is Still Applied for Separately

Being allowed to hold multiple licences in one company does not shorten the path to getting the second one. A digital credit licence under regulation 4 of the DCP Regulations, a payment service provider authorisation under section 12 of the National Payment System Act, and a telecoms licence under section 24 of the Kenya Information and Communications Act are each their own application, with their own vetting of directors, shareholders and capital. Having an existing, unrelated business inside the same company does not create a shortcut; if anything, it adds a line the regulator will ask about, since most licence applications require disclosure of the applicant’s other business activities.

Why Groups Still Ring-Fence Each Licence in Its Own Entity

Despite the legal freedom to combine activities, most groups that plan to hold more than one regulated licence eventually split them into separate companies under a common holding structure. The reasons are practical rather than statutory. A problem, a default, or an enforcement action in one regulated line stays inside that company’s own liabilities rather than exposing the software business or another licensed line sitting in the same entity. A regulator reviewing a licence renewal is also reviewing everything else the licensee does; a clean, single-purpose licensee is a simpler renewal than one carrying an unrelated trading history. And if the group later wants to sell, restructure, or bring in a separate investor for just the regulated line, a standalone entity is far easier to carve out than a division of a company that also runs the original software business.

Consider a company that starts by selling software to Kenyan retailers, then wants to add a buy-now-pay-later credit product for the same customers. If the credit product sits inside the original company, a regulatory problem with the credit book, a licence suspension, an enforcement notice, sits on the same balance sheet as the software revenue, and the same directors face fit-and-proper scrutiny for both. If the credit product sits in a separate, purpose-built subsidiary, the software business keeps trading and keeps its own clean regulatory history regardless of what happens to the credit licence. The trade-off is that the group now runs two sets of accounts, two annual returns, and, if the board is entirely foreign, two contact person obligations.

The Practical Cost of Splitting Too Early

Each additional Kenyan company means its own incorporation cost, its own annual return, its own beneficial ownership filing under section 93A of the Companies Act, and, for an all-foreign board, its own contact person obligation under section 243A; see our guide to the contact person rule. Shared staff, shared premises, or one company providing services to another within the group also need proper intercompany agreements so each entity’s own accounts reflect what it actually does. Splitting before there is a genuine second regulated activity to license usually just multiplies this overhead for no present benefit.

A Practical Sequencing Approach

Start in a single company for the unregulated activity. Incorporate a second, purpose-built entity when you are actually ready to submit a specific regulated licence application, not before, unless the particular regulator’s own rules require the licensee to carry on no other business, which varies by sector and should be checked against that regulator’s own regulations before you commit to a structure. If you already hold one licence and are adding a second regulated activity, weigh the ring-fencing benefit of a new entity against the cost of running two Kenyan companies before deciding, rather than defaulting to either approach.