A Kenyan partner knows the market; you bring capital, equipment or technology. A joint venture can combine the two , provided the structure is written down before the first shilling moves.
How should a joint venture with a Kenyan partner be structured?
The two usual forms are a contractual joint venture , an agreement without a new company , and an incorporated joint venture, where the parties form a company registered with the Business Registration Service and hold shares in agreed proportions. Incorporated structures make ownership, governance and exit easier to manage, which is why investors with a longer horizon usually choose them. Whichever form is used, the parties should register the entity and its ownership before trading begins rather than after.
Which clauses protect both sides?
The shareholders’ agreement is where venture discipline lives. Getting these terms down in writing at the start is easier than negotiating them during a disagreement:
- Capital contributions, and what happens if a party fails to fund on schedule.
- Reserved matters , decisions that require both partners’ consent, such as borrowing or selling assets.
- Dividend policy and how surpluses are applied.
- Exit routes: transfer restrictions, pre-emption rights and valuation on deadlock.
- Non-compete and confidentiality undertakings that survive the venture.
What due diligence should precede signature?
Verify the partner’s company records, ownership and any charges registered against it, and confirm that the individuals negotiating have authority to bind the company. Where the venture will hold land or long-lived infrastructure, tenure and permitting questions belong in the first diligence round. The resulting documents should be enforceable in Kenya, with dispute resolution both sides can accept; our contract lawyers draft such agreements. Governance questions , board composition, reporting and financial controls , are as important as the shareholding percentages and deserve settling alongside the commercial terms; see our governance advisory services. A venture that works on paper also needs people who can run it, so the first finance and operations appointments deserve consideration in the same documents. Primary legislation underpinning companies and contracts is available on Kenya Law.
For guidance on your specific situation, contact CS Advocates LLP , call, WhatsApp, or book a confidential consultation at our Westlands, Nairobi office.