The Startup Bill, 2020, has been published in the Kenya Gazette.
The main aim of the Act is to provide a framework that fosters ‘a culture of innovative thinking and entrepreneurship.’
It has also been developed to detail the process of registration of startups and providing a framework for linkage of startups with the private sector, financial institutions, investors, and research organizations.
Other aims include the following:
- Facilitate the provision of fiscal and non-fiscal support to startups in Kenya;
- Provide a framework that promotes an enabling environment for the establishment, development, conduct of business and regulation of startups;
- The establishment of incubation facilities at the National and county levels of government;
- Establish an environment that promotes the establishment of startups; and
- Monitoring and evaluation of the legal and regulatory framework to encourage the development of startups.
The Agency and Registrar of Startups
According to the Bill, the Kenya National Innovation Agency will be tasked with the registration of startups under the Startup Bill, 2020.
The Bill further details the role of the Registrar of Startups, who will keep an updated database of all registered startups, register and supervise startups registered under this Act to ensure compliance with the provisions of the bill and keep all documents and records of registered startups, to mention a few.
Incubation
The Bill adds that a startup can enter an incubation program if it is:
- registered in Kenya as a company, partnership, limited liability partnership or non-governmental organization – all under the Companies Act, Limited Liability Partnership Act and Non-Governmental Organizations Coordination Act, respectively;
- is newly registered or has been in existence not more than seven years from the date of its incorporation or registration; and for biotech startups, up to ten years from the date of its incorporation or registration;
- has its human resources, total assets, and annual turnover number as prescribed by the Cabinet Secretary;
- has its headquarters in Kenya;
- is majority owned by one or more citizens of Kenya;
- at least fifteen percent the entity’s expenses can be attributed to research and development activities; and
- is a holder, depositary or licensee of a registered patent or the owner and author of a registered software.
Incentives
The Bill provides some key incentives for startups. The Kenya National Innovation Agency and executive committee members can initiate measures to support the establishment and growth of startups by subsidizing their formalization and facilitate the protection of IP of innovation by local startups and support in terms of research.
Lastly, the Bill has detailed guidelines for certification of incubators, withdrawal from an incubation programme and obligations of an incubator, among other features.
