Partnership registration in Kenya offers three vehicles, and the difference between them is liability. A general partnership exposes the partners personally; a limited liability partnership does not. This guide explains the general partnership, the limited partnership and the LLP, how to register each, and which one fits.
This guide is for people going into business together, professional firms, and joint-venture partners deciding how to structure the relationship. If you want a company rather than a partnership, see our guide to company registration in Kenya. If you are setting the terms between owners, read this alongside our guide to shareholders and partnership agreements.
Kenyan law offers three ways for two or more people to carry on business together, and the practical difference between them is who bears the risk if the business fails. A general partnership offers no protection, an LLP offers a great deal, and a limited partnership sits between the two. Choosing the wrong one is expensive to unwind, so the decision belongs at the start.
A general partnership is the default when two or more people carry on business together without forming a company or an LLP. It is governed by the Partnership Act, 2012 and is registered as a business name. It is not a separate legal person, so the partners own the assets and, more importantly, carry the liabilities directly. Each partner is generally liable for the debts of the firm, including those created by the others. It is simple and cheap to set up, but the personal exposure is the reason many partners move to an LLP.
A limited partnership, also under the Partnership Act, 2012, has two kinds of partner: general partners who manage the business and carry unlimited liability, and limited partners whose liability is capped at their contribution provided they do not take part in management. It suits arrangements where some partners invest but do not run the business.
An LLP is the modern vehicle and, for most firms and ventures, the sensible default. Registered under the Limited Liability Partnership Act, 2011, it is a separate legal person with perpetual succession, and the partners are not personally liable for the LLP’s debts beyond their agreed contribution. It combines the internal flexibility of a partnership with the liability shield of a company, which is why professional practices and joint ventures increasingly choose it.
| Feature | General partnership | Limited partnership | LLP |
|---|---|---|---|
| Governing law | Partnership Act, 2012 | Partnership Act, 2012 | Limited Liability Partnership Act, 2011 |
| Separate legal person? | No | No | Yes |
| Partners personally liable? | Yes, for firm debts | General partners yes; limited partners capped | No, limited to contribution |
| Registered as | A business name | With the Registrar | With the Registrar of LLPs |
| Typical registration fee | KES 950 | Confirm current fee | KES 25,000 |
| Suits | Small, low-risk ventures | Investors who do not manage | Professional firms and joint ventures |
An LLP is registered with the Registrar of Limited Liability Partnerships, through the Business Registration Service on eCitizen. In outline it requires:
The registration fee is KES 25,000. Confirm it against the current Business Registration Service schedule before you budget, as the figure is revised from time to time.
Two points are easy to miss. First, tax: an LLP is generally taxed on a partnership basis, with the partners taxed on their shares of the profit rather than the LLP being taxed as a company. Take tax advice on your specific structure before you assume the treatment, as the position can turn on the detail. Second, the LLP agreement: registration creates the vehicle, but it is the agreement between the partners that governs how profits are shared, how decisions are made, how a partner joins or leaves, and how disputes are resolved. An LLP without a proper agreement runs on statutory defaults that rarely match what the partners actually intended.
The partnership-versus-company decision is really one question asked twice. An LLP and a private company both give limited liability and a separate legal person, so the choice between them turns on tax, on how you want to share profits and control, and on what investors or a future buyer will expect. Many ventures that start as a partnership convert to a company when they raise outside investment. Planning that path early, in the agreement, saves cost later.
What is the difference between a partnership and an LLP? A general partnership is not a separate legal person and the partners are personally liable. An LLP is a separate legal person and the partners’ liability is limited to their contribution.
How many partners does an LLP need? At least two. There is no upper limit, and partners may be individuals or companies.
Does an LLP need a Kenyan resident? It needs at least one manager who is a natural person resident in Kenya.
Is a partnership taxed as a company? An LLP is generally taxed on a partnership basis, with partners taxed on their shares. Confirm the treatment for your structure with tax advice.
Do we need a written agreement? Strongly yes. Without one, statutory defaults govern the relationship, and they rarely fit what the partners intended.
Our corporate team advises on the choice between a partnership, an LLP and a company, registers the vehicle, and drafts the partnership or LLP agreement that governs the relationship between the owners. We also handle later conversions when a venture takes on investment. To discuss the right structure, contact John Maina, Partner, at OLM Law Advocates LLP.
This article is a general guide only and is not legal advice. Please seek advice on your specific circumstances.
OLM Law Advocates LLP advises on choosing, registering and governing partnerships and LLPs in Kenya.
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