Procedure on how to Apply for Business License for a Capital Goods Finance Company in Kenya. Capital goods are physical assets that a company uses in the production process to manufacture products and services that consumers will later use. Capital goods include buildings, machinery, equipment, vehicles, and tools. Capital goods are not finished goods, instead, they are used to make finished goods.
Examples of Capital Goods
Below are some examples of capital goods that are used in the various industries as well as examples of goods that can be both capital and consumer goods.
- Factories or assembly line equipment used to manufacture cars and trucks
- Machines and technology
- Types of infrastructure, such as trains and cable or broadband lines
- Coffee machines used by a coffee shop
Capital and Consumer Goods
- Automobiles used by a delivery company would be a capital good, but for a family, they would be a consumer good.
- Ovens used by a restaurant would be a capital good but can also be a consumer good.
- Computers can be used by companies but also by consumers.
- Landscaping equipment can be used by landscaping companies and by consumers.
The following are the steps to follow in applying for a Capital Goods Finance Company license as shown below
- Step 1 –
- Approval of Name
- a) Contact the Central Bank of Kenya at an early stage for a preliminary meeting to discuss licensing requirements and related issues.
- b) Propose and book, in descending order of preference, at least three business names with the Registrar of Companies and Business Names.
- c) Submit the proposed names to the central Bank of Kenya descending order of preference accompanied by a brief concept paper on the proposed Capital good finance company, including evidence of sources and availability of capital. This should be done before incorporation of the proposed entity as a company limited by shares.
- d) The proposed name must incorporate the words Finance Company e.g. XYZ Housing Finance Company Limited
- e) The name approval is valid for 12 months from the date its granted by the Central Bank of Kenya within which you should have received a license to carry out Capital goods finance Company business.
- Step II –
Duly completed application form, as specified under Attachment IV of the Capital Goods Finance Business ,shall be submitted, together with all enclosures as stated herein, to Microfinance Institutions Supervision Directorate.
- Step III –
Evidence of paid-up capital which includes certificate of deposits in a blocked account and evidence for valuation of contribution in kind (if any).
- Step IV –
A Signed minutes of subscribers meeting with attendance sheet.with List of names, nationality, address, number and value of subscribed shares of founders to be published in newspaper.
- Step V –
Articles and memorandum of associations written in Amharic and preferably in English.
- Step VI –
Authenticated ownership certificate and/or lease agreement for building, land,vault, equipment, fixtures and professional services.
- Step VII –
Evidence for insurance coverage for premises acquired or leased.
- Step VIII –
Description of actual purchases made or proposed purchase of goods and services or lease of real estate by the capital goods finance company (under formation)from related parties and organizers.
- Step IX –
Duly completed general information and propriety test questionnaires for directors, and chief executive officer as per ANNEXES I and II of the Capital Goods Finance Business.
- Step X – Business plan stating at least the following
- i) executive summary,
- ii) introduction,
- iii) macroeconomic analysis,
- iv) financial sector analysis,
- v) capital goods finance sector analysis,
- vi) business environments,
- vii) products and services,
- viii) target sector and customer focus,
- ix) type/category of equipments and machineries to be leased,
- x) organizational chart of the company with brief description of the functions of the main organizational units,
- xi) strategic and operational plans,
- xii) source of capital and finances,
- xiii) accounting policies,
- xiv) assumptions for financial projections,
- xv) financial projections for the first three years including balance sheet,income statement, cash flow projections, and
- xvi) conclusion /recommendation.
- Step X1 –
Evidence of payment of licensing fee.
- A licensed capital goods finance company shall at all time display in a conspicuous place its valid original business license in its head office and copy of the business license in its branches.
- Business Plan
- macroeconomic analysis document
- Financial sector analysis Document
- strategic and operational plans,
- Evidence of registration of trade name from Ministry of Trade and/or Regional Trade Bureau.
- Signed minutes of first meeting of organizers along with attendance sheet.
- Submission of prospectus, which is a printed statement that describes and forecasts the course or nature of the company along with expected risks, to be distributed to prospective investors.
- Written application requesting to open blocked subscription account indicating the name of the bank(s)/branch (es) or microfinance institution.
- Duly completed application form, as specified under Attachments I and II of these Directives, for organizers and project manager.
- Properly completed propriety test questionnaire, as specified under Attachment III of these Directives, for organizers and project manager.
- Evidences of payment of investigation fee
Office Locations & Contacts
- Central Bank of Kenya.
Haile Selassie Avenue,
P.O Box 60000-00200,
Business License for a Capital Goods Finance Company Eligibility
- A Capital Goods finance company may be established by any eligible corporate body or corporation duly licensed by the National bank of Kenya to deal in financial lease and hire purchase.
- A Capital goods finance company applicant must be of kenyan Nationality.
- All Individual or company registered for Finance lease and hire purchase Business in Kenya with the registrar of Companies.
Business License for a Capital Goods Finance Company Fees
A company applying to obtain new capital goods finance business license shall pay
- Application Fee: Ksh 5,000/=
- Business License for a Capital Goods Finance Company License Fee
- (a) Ksh 400,000/= granting of a license to an institution and each anniversary thereof:
- (b) Ksh150,000/= for branch within municipality
- (c) Branch within a town council ksh 100,000/=
- (d) Branch within an urban council Ksh 30,000/=
- investigation fee of Ksh 5,000; and
- A capital goods finance company applying for renewal of its business license shall pay renewal fee of Ksh 50,000.
Valid for 3 years
Processing take 60 days
- No person shall carry out a Capital good finance company business unless he/she is in possession of a Capital goods Finance Company business License.
- A person who fails to contravenes or fail to comply with section of Commercial Code of Kenya shall be guilt of any offence and shall be dealt with in accordance with law.
Business License for a Capital Goods Finance Company Required Information
- Proposed name of the capital goods finance companies (under formation)
- Name of organizing committees chairperson
- Full Name of Applicant
- Address of Applicant
- Location of capital goods Finance Business
- License Number
- A tax clearance certificate.
- Evidence of provisional tax payment
- Full names, addresses and designations of the employees of the CGFC.
- Proof of legal identification. Your national driver’s license or international passport are the best for this.
- Proof of legal address. House rent receipts, and utility bills stating your house address are acceptable.
- Bank statement. Not all Authorities require this except for further verification purpose or alternatives.
- Utility Bill Receipt. Some Authorities require this to further verify your legal identity and proof of social responsibility.
Need for the Document
To operate your capital goods Finance company business legally, there are certain finance licenses and permits you will need to obtain. This procedure resources will help you understand the requirements for your Capital goods Finance company business in Kenya.
Kenya has a designed legal framework to govern the capital goods Finance company activities under commercial code of Kenya (CCK)Finance. Act of 2008. . The CGFC are licensed and regulated by the Central Bank of Kenya Financial Act of 2008. Considering the separate needs and dynamics of Capital goods financial company, Central Bank of Kenya has in place a separate regulatory and supervisory framework for CGFC.
To promote the mainstreaming of Capital goods finance company into overall financial system, Central Bank of Kenya encourages creation of new Financial lease and hire Purchase and transformation of existing operationally sustainable CGFC. The presence of a large potential market and availability of an enabling policy environment offer the opportunities for both social and commercial investors to explore this segment of the financial market.
The licensing, regulation and supervision of CGFC established under CCE Ordinance has been entrusted to Central Bank of Kenya. No institution/person can commence operations as Capital goods Finance company Bank unless granted license by the Central Bank of Kenya.
Capital Goods finance includes financial lease and hire-purchase.A Capital Goods Finance Company shall be established as share company as defined under the commercial code of Kenya.
Business License for a Capital Goods Finance Company External Links