Trusts have long occupied a convenient place in Kenya's social and commercial landscape. The Trust Administration Bill, 2025 (the "Bill"), currently open for public comment, aims to modernise Kenya's trust regime by repealing the Trustees Act (Chapter 167) and the Trustees (Perpetual Succession) Act (Chapter 164), introducing a unified, transparent, and enforceable framework. In this article, we highlight the core features of the Bill:
- Consolidation and modernisation: The Bill repeals the old statutes and consolidates the registration, governance, and dissolution of trusts into a single, comprehensive law.
- Minimum number of trustees: The Bill provides that charitable and non-charitable purpose trusts will be required to have a minimum of three trustees. Family trusts will require at least one trustee and, if a corporate trustee or trust corporation is used, at least one of those trustees must be a local Kenyan resident.
- Registration and incorporation: The Bill provides that all trusts must register with the Registrar of Companies (the "Registrar"), receiving a unique ID but not legal personality. Registered trusts can opt for incorporation, gaining body corporate status, perpetual succession, and the ability to own property and sue/be sued in their own name.
- Transparency and beneficial ownership: The Bill provides that trusts must keep a register of beneficial owners and file it with the Registrar. This requirement increases trustees' reporting obligations and strengthens regulators' ability to monitor trusts for compliance with anti-money laundering standards.
- Oversight by the Registrar: The Bill provides that the Registrar maintains a register of all trusts. The Registrar will have wide powers, including but not limited to the power to issue directives, impose penalties, disqualify trustees, and revoke registrations.
- Duties and powers of trustees: The Bill provides that trustees are to exercise care, skill, and diligence and to act within powers, preserve assets, and be impartial. Trustees may delegate, borrow, insure, and manage assets, subject to the trust deed.
- Professional Ttrustees, trust service providers and corporate trustees: The Bill provides for minimum qualifications and annual licensing requirements for professional trustees. Any unlicensed activity attracts heavy fines. The Bill also recognises a trust service provider who is defined under the Bill as a person or a business that provides services to trusts. Trust service providers must be legal/accounting professionals and keep records for seven (7) years. The Bill also recognises a corporate trustee and is defined under the Bill as a limited liability company or a limited liability partnership which is licensed to act as a trustee. This introduces higher entry requirements, stricter compliance duties, and potential liability for non-compliance.
- Trust administration: The Bill provides that trusts must keep detailed records for at least seven (7) years and will be required to file annual returns with the Registrar within thirty (30) days of each anniversary of registration.
- Dispute resolution: The Bill provides that trust deeds can specify the dispute resolution mechanism; otherwise, the High Court will determine disputes.
- Penalties and enforcement: The Bill provides for fines for non-compliance that range from KES 5,000 for late annual returns to KES 5 million for serious breaches such as operating without a licence or fraudulently disposal of trust assets, with higher penalties for body corporates. For breaches without a specific sanction, the Bill sets a maximum fine of KES 1 million.
- Transitional arrangements: The Bill provides that incorporated trusts under the Trustees (Perpetual Succession) Act (Chapter 164) will be deemed as existing trusts and will continue automatically under the new regime. Unincorporated trusts will remain valid for a prescribed period, during which trustees must apply for registration or incorporation; after that period, trustees may not act until registration or incorporation is completed and a certificate issued by the Registrar.
Conclusion
The Bill is foundational to restoring public confidence in Kenya's trust sector. Trustees will need to update their records regularly and identify and maintain accurate beneficial ownership information. Professional advisers face stricter due diligence standards, licensing requirements and record keeping obligations to ensure compliance with the new regime. Additionally, regulators will benefit from improved oversight and data for anti-money laundering compliance. The Bill brings clarity, transparency, and accountability, aligning the country with global standards. Looking ahead, trustees may wish to review existing trust deeds to ensure alignment with the Bill once enacted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
