Rules & Regulations
A Closer Look at the Recently Published Kenyan Startup Bill 2020
Kenya has published The Startup Bill, 2020 in the Kenya Gazette, the official publication of the government of the Republic of Kenya.
Kenya joins Tunisia, Senegal, Mali, Ghana and Rwanda as countries that have or currently enacting such legislation that recognizes startups as an integral part of their economic transformation.
The main purpose of the bill which is expected to go through several stages including comprehensive public participation before becoming law aims to provide a framework that fosters ‘a culture of innovative thinking and entrepreneurship.’
Other provisions that the bills aim to achieve include registrations of startups and linkage such startups to financial and research institutions, facilitation of fiscal and non-fiscal support to startups in Kenya; establishment of incubation facilities at the National and county levels of government; monitoring and evaluation of the legal and regulatory framework to encourage the development of startups.
The bill proposes the establishment of incubation programmes and highlights the roles of the county and national governments including setting the necessary incubation policy framework.
The bill also provides for the registration and admission of startups into the incubation programmes and their obligations.
According to the Bill, the Kenya National Innovation Agency will be tasked with the registration of startups and maintaining a startup database. The bill further drills down on the criteria that an entity shall be declared a startup.
The entities need to have been registered in Kenya as a company, partnership, limited liability partnership or non-governmental organization all under the Companies Act over not more than seven years, and up to ten years for biotech startups; The entity will also need to have at least fifteen per cent the entity’s expenses can be attributed to research and development activities.
The entity will need to have its headquarters in Kenyan and wholly-owned by one or more Kenyan citizens. A guideline that reverberates with the recently passed law that requires foreign ICT firms setting up base in Kenya to have a 30 per cent local shareholding to be considered Kenyan.
The bill also dictates that the Kenya National Innovation Agency can initiate measures to support the establishment and growth of startups by subsidizing their formalisation and facilitating the protection of intellectual property (IP) rights of innovation by local startups, and support in terms of research.
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