Introduction: Why this matters
Your family has built a solid portfolio of property, businesses and investments. However, how do you make sure it doesn’t unravel in a court battle, family dispute, or tax drag when you’re no longer around?
For families in Kenya looking to secure generational wealth and simplify succession , two legal structures will often come up: Trusts (onshore /offshore) and Holding Companies.
We help founders , families and individuals walk through the maze of asset protection.This Article is not a substitute for professional advice, it is your starting point for that deeper, necessary conversation !
What is the difference between a Trust and a Holding Company ?
While both structures separate legal ownership of assets from personal ownership, they vary in various ways:-
A trust vests ownership of the assets on the trustee, pending discretionary or fixed transfer, to the beneficiaries.The incorporation of trusts is governed by the Trustees (Perpetual Succession) Act, Cap. 164, Laws of Kenya.
A holding company is a registered entity that owns family assets or businesses.The family retains control as shareholders or directors.This is registered as a company under the Companies Act 2015.
Why should you consider either of the structures ?
Both structures are powerful vehicles, but they achieve it through different mechanisms. Here are a few factors that dictate which vehicle is most appropriate :
Purpose of the structure ;
Level of control desired;
Privacy and Regulations;
Tax efficiency;
Succession planning needs;
Complexity and set up and administration costs;
Risk profile;and
Desired timelines.
Which of the two structures is more regulated? And what are the implications of regulation?
Companies in Kenya are generally subject to comprehensive regulations under the Companies Act, 2015. Companies are required to file annual returns, maintain a register of beneficial owners, hold annual meetings and conduct audits. Additionally, they are subject to public disclosure requirements- details of directors, shareholders and beneficial owners are generally available to the platform on the BRS eCitizen platform. Thus a holding company is regulated and may not be preferable for families considering privacy.
Alternatively, for trusts, the trust deed is a private document between the settlor, trustees and beneficiaries. Whilst trusts are registered with the Ministry of Lands, the detailed provisions of the trust remain private.
When should you choose a Trust or a Holding Company ?
Choose a Trust if:
Your goal is a long-term and want certainty of wealth transfer beyond your lifetime;
You want to shield your assets from external risks;
You want to avoid the lengthy probate process by courts; and
You prioritize privacy and confidentiality regarding your family’s assets and their distribution.
Choose a Holding Company if:
You are running an active family business or investment;
You desire to segregate business assets from operational risks of other ventures;.
You prefer to maintain direct control and flexibility over the management and strategic decisions related to the property; or
There is a possibility of attracting external investors or selling off parts of the business in the future.
Can a family combine both a trust and a holding company?
Yes, it is common and often beneficial to use a hybrid structure. This complex arrangement requires meticulous planning and expert legal and tax advice, as the devil is in the details, to ensure it is structured effectively and is compliant within Kenyan law.
Final Thought: Which structure will truly protect your legacy ?
We specialise in Commercial and Tax matters and have modelled sound structures for a number of our clients that have achieved asset protection, continuity of control , succession planning.
We help families like yours:
Draft custom trust deeds
Register holding companies for wealth protection
Navigate tax exemptions and compliance
Your legacy deserves more than guesswork. Let’s design it with intention
📩 Email: info@wmcoadvocates.co.ke
🗓️ Book a Discovery Call: + 254 796 232 455
Authors:
Waithira Mugo- Commercial and Tax Lawyer | Family Wealth Architect
Valentine Magato – Conveyance & Estate Planning Associate
Contact us : info@wmcoadvocates.co.ke
Disclaimer –This Article is in general terms for guidance only and is not intended to substitute professional advice. While due diligence has been undertaken, in ensuring the accuracy of information provided herein, Waithira M. & Co. Advocates is not responsible for any actions , omissions undertaken as a result of the same.
