The Legal Notice No. 43 enacted the Public Benefits Organizations Regulations, 2024 and operationalized the Public Benefits Organization (PBO) Act of 2013, effectively transitioning organizations from the old NGO Coordination Act of 1990 to a more modern regime. Key changes and what they practically mean for PBOs and NGOs:
1. Transition from the NGO Regime: Under the new regulations, any organization previously registered as an NGO must transition to being a PBO by submitting prescribed information and documentation to the PBO Authority for purposes of issuance of a certificate or permit (as applicable) confirming their status as PBOs under the PBO Act. This isn’t just a name change. Organizations must align their constitutions/trust deeds with the PBO Act’s requirements, specifically regarding Public Benefit objectives. Non-compliance triggers a default notice; failure to comply within 30 days of that notice will result in the loss of your organization’s PBO status. Organizations must submit the prescribed documentation and information to the Public Benefit Organizations Regulatory Authority (PBORA) well before this deadline. The Regulations do not prescribe a specific timeline. Accordingly, the transition period of 13 May 2026 (under the PBO Act as extended by Gazette Notice No. 6255 of 16 May 2025) applies. Non-compliance triggers a notice, after which failure to comply within 30 days results in the loss of PBO status.
2. Registration Framework and Public Benefit Test: The Regulations operationalise the bestowment of PBO status for entities already incorporated under other legal regimes e.g. companies limited by guarantee, trusts or societies. Such entities may be recognized as PBOs subject to meeting curtained prescribed conditions, and may be deemed as PBOs upon application through a registration process that includes name reservation, submission of constitutive documents, and evidence of governance structures. Applicants must demonstrate that their activities meet the public benefit test, meaning that they fall within recognized public benefit categories and do not confer private benefit on directors, members, or related persons. Importantly, where a PBO has more than one charitable purpose, one activity cannot be used to justify the absence of public benefit in another. Each purpose must independently satisfy the test. The PBO Authority is required to determine registration applications within sixty days.
3. Governance and Compliance Obligations: Registered PBOs must maintain robust governance and financial reporting standards including: localisation requirements (at least one-third Kenyan resident directors); formal governance processes and approvals; preparation of audited accounts and annual reporting; and maintenance of up-to-date records, including asset registers. Organizations are also required to notify the Authority of material changes such as amendments to constitutions, changes in directors, banking arrangements, or registered addresses within prescribed timelines. The Regulations also introduce enhanced regulatory oversight, including inquiry powers, mandatory disclosures on funding sources and electronic filings.
4. Suspension now has immediate operational consequences: While the PBO Act empowers the PBO Authority to order an organisation to halt its operations, the Regulations prescribe, operationalise and expand the practical consequences of suspension. A suspended organisation is restricted from, among other things, withdrawing funds (save for statutory obligations), undertaking activities, projects or investments, engaging on new investments including purchasing assets, borrowing or lending funds, disposing of assets, or effecting governance changes.
5. Regulation of International PBOs: The Regulations establish clear rules for international PBOs operating in Kenya. To register or maintain status as an international PBO, at least one-third (1/3) of the organization’s directors must be Kenyan citizens resident in Kenya. Furthermore, the organization must maintain a physical office in the country and appoint an authorized Kenyan agent to receive official summons and notices. Whereas the organizations that do not directly implement activities in Kenya but work through local partners by providing grants, technical assistance, or policy guidance may apply for exemption from registration and operate under permits.
6. Procedural safeguards and dispute resolution: To protect PBOs from arbitrary administrative actions, the Regulations establish clear procedural safeguards. The Authority must provide at least 30 days’ prior notice before suspending or cancelling a PBO’s registration under the PBO Act, detailing the nature of the breach and allowing the organization time to make representations. Additionally, the Regulations outline timelines (generally 30 days) for appealing decisions made by the Authority to the PBO Disputes Tribunal. However, the PBO Act contemplates a shorter timeline of only 21 days. The PBOs should not assume a guaranteed grace period, as a strict application of the PBO Act could support earlier enforcement action. To the extent of any inconsistency, the PBO Act will prevail.
7. Dissolution, Deregistration, and Asset Protection: The regulations provide detailed rules on how PBOs exit the register. A PBO may dissolve voluntarily by resolution signed by at least two-thirds of its members, with PBORA notified within 14 days. PBORA may also deregister a PBO that has failed to comply with the Act, has not undertaken its registered purpose for three years, is involved in money laundering or economic crimes, or has contravened any other written law. All PBO assets must be held in the PBO’s registered name, with a detailed inventory maintained. Upon dissolution or deregistration, assets must be transferred to another PBO in good standing, not to individuals or non-PBO entities. Disposal of assets by a deregistered PBO requires PBORA approval.
