A fundamental aspect of ensuring business compliance and demonstrating professionalism is the meticulous maintenance of accurate and organized documentation. Every company must establish and sustain a comprehensive repository of records that can be readily accessed when necessary.
Proper documentation provides numerous benefits to an organization:
- It facilitates the effective functioning and accurate recording of business data.
- It aids in performance management and evaluation.
- It guides the enforcement of internal policies and standards.
- It ensures statutory and regulatory compliance with Kenyan laws.
- It helps a company defend itself effectively when legal issues arise.
- It demonstrates to employees, customers, and prospective investors that the company is serious about safeguarding critical information and providing detailed records of its operations.
Ideally, every company should have a defined list of documents mandatory for its operations. This guide explores the essential information, books, and records a company must maintain.
1. Foundational Registration and Governance Documents
These records establish the legal existence and internal operating framework of the company.
Registration Documents
- Certificate of Incorporation: This certificate is issued by the Registrar of Companies and serves as legal evidence that the company is formally recognized and registered under the Companies Act, 2015 to conduct business in Kenya.
- Company By-laws: These documents, often captured in the Memorandum of Association and Articles of Association in Kenya, are the documented sets of internal rules and regulations that govern the company’s operations. They define the rights and privileges of members and shareholders, outline acceptable conduct, and establish the managerial structure and governance issues.
Corporate Governance and Management
- Board Charter: This policy document clearly defines the respective roles, responsibilities, and authorities of the board of directors (both individually and collectively) and management in setting the direction, overseeing the control, and managing the organization.
- Board Resolutions: All decisions made by the company’s board during its meetings must be formally recorded as board resolutions and preserved for future reference and evidence of corporate actions.
2. Core Business and Transactional Records
These documents detail the company’s internal and external operational dealings.
- Business License: Depending on a company’s sector or geographical location, it may be required to obtain one or more permits issued by government agencies to legally operate. It is crucial to ensure these licenses are obtained, renewed, and properly kept.
- Business Plan: Often the foundational document, the business plan outlines what the company aims to achieve, the timelines for its objectives, and the strategy for their achievement.
- Transactional Documents: This category includes all documents executed and issued as a result of business transactions, such as executed agreements, invoices, receipts, and payment orders.
3. Financial and Capital Raising Documentation
Managing the budget and tracking financial health are critical for long term success, necessitating comprehensive financial records.
Financial Accounting Documents
Financial records such as balance sheets, income statements, bank statements, receipt records, and payroll reports assist management in monitoring all income and expenditures, thereby ensuring the company’s financial stability.
Capital Raising Documents
When seeking sustainable financing options, maintaining detailed records of deliberations and executed agreements is vital. Key documents include:
- Duly Executed Loan Agreements: Formal contracts detailing the terms of borrowed funds.
- Term Sheets: Documents containing the key commercial terms of investment deals, such as investment amounts, control provisions, and accruing rights, ensuring both parties are aligned on the agreed terms.
- Share Subscription Agreements: These prescribe the issue of shares based on pre agreed conditions.
- Shareholders Agreements: These clearly set out the rights, obligations, and powers of the company’s shareholders.
4. Data Protection and Intellectual Property
Safeguarding sensitive information and company assets requires dedicated record keeping.
Data Protection Records
Companies interact daily with data from employees and clients. Proper handling of personal data and sensitive data requires that consent is obtained beforehand and that the company maintains a data protection policy. This policy should ensure data is treated with confidentiality, not disclosed to unauthorized persons, and detail how data is recorded, maintained, and eventually deleted.
Intellectual Property Records
As a business develops inventions, designs, artistic works, names, and symbols, protection may be sought through patents, copyrights, industrial designs, and trademarks.
The company must retain proper records of all its registered Intellectual Property rights and any licenses obtained to use the IP rights of others. These records are essential for monitoring public use, preventing infringement, and ensuring ongoing compliance, such as the timely renewal of rights or licenses.
5. Employment and Human Resources Documents
Maintaining organized and accurate documentation of workplace events and agreements is crucial for human resources management.
- Employment and Related Agreements: Signed contracts cover the employee’s duties, role, and the company’s obligations. This category includes executed employment agreements, Confidentiality and Non Disclosure Agreements, and the HR manual.
- Contractor Agreements: Used for services rendered by independent parties, these contracts should detail the terms of engagement, including ownership of the completed work, timelines, agreed consideration, and quality standards.
- HR Documentation: Human resources professionals must maintain organized records of workplace events, including:
- Onboarding paperwork
- Performance evaluation documents
- Medical information
- Termination records
- Company Policy Document: This document outlines all internal policies on various subjects, such as health and safety, employee conduct, salary structures, behavioral guidelines, and disciplinary measures. Its primary function is to serve as a point of reference for employees seeking guidance on specific situations.
6. Tax Related and Insurance Documents
Proof of statutory compliance and risk management records are non negotiable.
Tax Related Documents
Documentation retained to demonstrate tax compliance includes:
- KRA Pin Certificate
- Tax Compliance Certificate
- Records of filing annual returns
- Records of VAT assessments, notices, and objections
Insurance
Business insurance provides protection against various risks, including major losses, natural disasters, accidents, and theft. A company must maintain a dedicated file or document repository where information on all business insurance policies covering various risks is securely stored.
