The Startup Bill, 2022 21— Change of particulars. 22— Obligations of registered startups. PART IV—CERTIFICATION OF INCUBATORS 23— Eligibility for admission into an incubation programme. 24— Certification of incubators. 25— Withdrawal from an incubation programme. 26— Obligations of an incubator. PART V— INCENTIVES FOR STARTUPS 27— Support to startups. 28— Credit Guarantee Scheme. 29— 'Training and capacity building. 30— Application for grant or revocation of patents. 31— Fiscal incentives. 32—Growth objectives. PART VI —-MISCELLANEOUS PROVISIONS 33— Regulations. 34—Amendment of No. 28 of 2013.
The Startup Bill, 2022 No. 28 2013. of No. 19 1990. "innovation" has the meaning assigned to it under section 2 of the Science, Technology and Innovation Act; "non-governmental organization" has the meaning assigned to it under section 2 of the Non-Governmental Organizations Co-ordination Act; "Registrar" means a person appointed as a registrar under section 6(2) of this Act: "startup" includes a technology based innovative entity, legally recognized by the laws of Kenya, with strong growth potential intended to develop and deliver innovative products or services that solve a specific problem or fulfil a market need > "startup incubator" means a company, partnership, non-governmental organization or limited liability partnership, whose principal object is the support of the birth and development of start-ups, innovation, and related activities related to the transfer of technological and research, and development and innovation processes, through the offer of dedicated physical spaces and services advice; and No. 28 2013. "technology" has the meaning assigned to it under section 2 of the Science, Technology and Innovation Act. Object. 3. The object of this Act is to provide a framework— (a) that fosters a culture of innovative thinking and entreprencurship; (b) for the registration of startups and the linkage of such startups with financial institutions, the private sector research institutions and such other institutions at the National and county level of government; (c) to facilitate investments in and the provision of fiscal and non-fiscal support to startups in Kenya; (d) that promotes an enabling environment for the establishment, development, conduct of business and regulation of startups; (ec) for the establishment of incubation facilities at the National and county levels of government and environment that promotes the establishment of startups; and
The Startup Bill, 2022 Role of National and county governments. (f) for the monitoring and evaluation of the legal and regulatory framework and the mechanisms put in place to encourage the development of startups. (g) to ensure that all persons, irrespective of their gender, status or ethnicity, are afforded an equal opportunity to establish and benefit from their innovations. PART IT — ESTABLISHMENT OF INCUBATION PROGRAMMES 4. (1) The National and county governments shall — . . (a) promote innovation; (b) facilitate the transfer of technology innovation between entitics registered under this Act to achieve increased innovation, economic growth and better access to new technologies; (c) create and develop a sustainable, globally competitive technology innovation sector that contributes towards the accelerated growth of the economy; (d) promote the creation of employment and wealth creation; and (c) promote the linkages between universities and research institutions and the business community. (2) The Agency and the county executive committee members shall, for purposes of subsection (1) — (a) put in place a national and county incubation policy framework for the development of the business incubation sector and start-ups system; (b) enter into partnerships with local and international busincss incubators in order to promote the establishment and growth of startups in Kenya; (c) establish programmes for the certification and admission of startups into the incubation programmes;
The Startup Bill, 2022 Establishment cae (d) put in place mechanisms that promote the development of business incubation programmes and create an enabling environment for the promotion of business incubators including fiscal and non-fiscal incentives to incubators and startups; (e wm establish online and other platforms for access to information including the establishment and development of startups, existing incubation programmes, access to fiscal and non-fiscal support and for this purpose, keep and maintain a directory of startups and incubator; () support any research and development activities undertaken by startups; (g) put in place mechanisms for pre-incubation of entities and for this purpose, provide training and capacity building programmes to startups registered under this Act; (h) put in place mechanisms to enable access to incubation programmes by marginalized groups through the use of quotas or mechanisms that match them to unused capacity in existing programmes; and (i) put in place facilitative structures that ensure the protection of the innovations of startups at the national and international level for the protection of the intellectual property. 5. (1) The Agency and the county executive committee members shall, in realising the objectives of this Act and ensuring that the National and county governments fulfil their roles under section 4, establish incubation programmes. (2) The Agency and the county executive committee members shall, for purposes of subsection (1), — (a) develop standards and guidclines to regulate the relationship between an incubator and a startup under this Act; (b) establish an online platform setting out information on existing incubator programmes, incubators and startups and the process of registration and admission into the programmes; and (c) prescribe a criteria for the evaluation of startups, incubation programmes and structures set up for the purposes of implementing this Act.
The Startup Bill, 2022 Appointment and functions of Registrar and other officers. Functions of the registrars. PART TI — REGISTRAR OF STARTUPS AND ADMISSION INTO AN INCUBATION PROGRAMME 6. (1) The Agency shall be responsible for the registration of startups under this Act. (2) There shall, for purposes of subsection (1), be a Registrar who shall be competitively recruited by the Public Service Commission and appointed by the Agency on such terms and conditions as the Agency may, in consultation with the Salaries and Remuneration Commission, determine. (3) The Agency may, in consultation with the Public Service Commission, appoint a Deputy Registrar and such number of county registrars in the counties as shall be necessary for the performance of the functions of the Registrar and who shall be subject to the directions of the Registrar. 7. (1) The Registrar shall — (a) keep an updated database of all registered startups and startups under review indicating- (i) business development stage; (ii) ownership; (iii)description of the innovative aspects of the company, including intellectual property rights; (iv) products and services offered; (v) investment support received; (vi) financial needs; and (vii) target market; (b) register, inspect, regulate, monitor, investigate and supervise startups registered under this Act to ensure compliance with the provisions of this Act;
The Startup Bill, 2022 (c) issue, renew and cancel, with the approval of the Board of the Agency, certificates of registrations issued under this Act; (d) maintain a register of all registered startups in the country; (c) keep all documents and records of registered startups; (f) enforce the decisions of the Board of the Agency with respect to the registration, regulation and supervision of startups under this Act; (g) co-ordinate the functions of county registrars under this Act; (h) perform such other functions as may be necessary for the implementation of this Act or as may be specified under any other law. (2) The Deputy Registrar shall deputise the Registrar and shall perform such duties as may be assigned to him or her by the Registrar. (3) The county registrars and assistant registrars shall — (a) facilitate the registration and development of startups under this Act; (b) receive applications for registration, vet and process applications of startups; (c) monitor and evaluate startup projects; and (d carry out such duties as may be delegated from time to time. Eligibility for admission into incubation programme. 8. (1) An entity shall be eligible to be registered as a startup and for soars : . sp 7 admission into an incubation programme if the entity — (a) is registered in Kenya as a— is 7 of (i) private limited company under the Companies Act; or No. 16 of 2012. (ii) partnership firm under the Partnership Act; or No. 42. of 2011, (iii) limited liability partnership under the Limited Liability Partnership Act; or
The Startup Bill, 2022 No. 1990. 19 of (b) is newly registered or has been in existence for a period of not more than five years from the date of its incorporation or registration; (©) has as its objects the innovation, development, production or improvement and commercialisation of innovative products, processes or services or if it is a scalable business model; (d) has human resources, total assets, and annual turnover number shall not exceed an amount prescribed by the Cabinet Sceretary; (c) has its headquarters is in Kenya; (p does not distribute profits; (g) has at least ninety percent of its shares owned by one or more citizens of Kenya; (h) at least fifteen percent the entity’s expenses can be attributed to rescarch and development activities; and (iv) non-governmental organization under the Non-Governmental Organizations Co-ordination Act; (2) This Act shall not apply to an entity which is — (a) established or formed as a result of the split, reconstruction, merger or reconstitution of an existing business; or (b) a holding company or subsidiary of an existing entity which is not registered as a startup. (3) The registrar or county executive committee member, as the case may be, may waive the requirement for registration under subsection (1)(a) where — (a) that person has an innovative product or service; (b) that person exhibits that they do not have the financial capability to register an entity in compliance with subsection (1)(a); and (c) the registrar is satisfied that the innovation is suitable for 10
The Startup Bill, 2022 (A) innovation aspects; (B) factors differentiating the factors of realization of the strong potential of economic development; (C) scientific and technical qualifications and the experience of the project team; (D) a prize or reward obtained and any patent for invention filed; (c) the certificate of incorporation or registration of the entity; (d) a brief description of the innovative nature of the product or service; and (c) such other information concerning the proposed startup as the Cabinet Secretary or county executive committee member may prescribe. (3) A person eligible for admission into an incubation programme pursuant to section 8(3) shall not be required to provide the information under subsection (2)(a)(iv), (v), (vi) and (vii) and (2)(c). (4) The Registrar or county executive committee member, as the case may be, may require the applicant to submit to the registrar such further information as may be considered necessary for the purpose of determining the application for admission. (5) The Agency and the county executive committee members shall put in place mechanisms to ensure that the admission process of an entity under this section is simple, efficient, accurate and transparent and shall, for this purpose — (a) establish an online platform for the submission of the documents and information specified under subsection (1); and (b) devolve and decentralize the registration process to the lowest devolved unit and may establish such registration desks as may be necessary to enable access to registration. pana 10. (1) The Registrar or the county executive committee member, as the or ww ration case may be shall, within thirty days upon receipt of an application under section registration. 9 — (a) examine the application together with the documents; and 12
Bill, 2022 Certificate of Registration. Effect of admission into incubation programme. Refusal to admit an entity into an incubation programme. (b) if the Registrar considers it necessary, call for such further information or carry out such inspections as he or she may consider necessary for the determination of the application. (2) Where the Registrar or the county executive committee member is satisfied that an applicant meets the requirements for registration under this Act, the Registrar or the county executive committee member shall, subject to the provisions of this Act, enter the name and particulars of the applicant in the register of startups kept for that purpose. 11. The Registrar or county executive committee member, as the case may be, shall, upon entering the name of the applicant in the register, issue to the entity a certificate in the prescribed form. 12. The certificate of registration issued by the Registrar or county executive committee member under section 11 shall be conclusive evidence that the startup— (a) has met all the requirements for registration specified under this Act; and (b) has been duly registered in accordance with this Act unless it is proved that the registration of the startup has been cancelled. 13. (1) The Registrar or county executive committee member may reject an application for the admission of an entity where— (a) the entity has submitted false or misleading information in its application; (b) the application does not comply with the provisions of this Act; (c) the entity does not mect the criteria specified under this Act for the registration of a startup; or (d) the objects of the entity are likely to be pursued for a purpose contrary to any written law.
The Startup Bill, 2022 Grounds — for deregistration. (2) The Registrar or county executive committee member, as the case may be, shall notify the applicant, in writing, of the decision to reject an application for admission within fourteen days of such rejection. 14. (1) The Registrar or county executive committee member, as the case 5 a % -. may be, may, subject to the provisions of section 15, de-register a startup registered . under this Act where — (a) the Registrar or county executive committee member has reasonable cause to believe that the startup has among its objects the pursuit of an unlawful cause or purpose prejudicial to public interest; (b) the startup fails to comply with any directive issued by the registrar to ensure compliance with the provisions of this Act; (c) the members of the startup fail to comply with the provisions of their constitution or rules or the provisions of this Act; (d) the startup fails to submit any information required under this Act or requested by the Registrar in order to ensure compliance with this Act; or (c) the Registrar determines that the startup submitted false information or statements at the time of registration of the startup. (2) The Registrar shall de-register a startup which has ceased to be a startup under this Act. Notice of non15. (1) The Registrar shall, before de-registering a startup under section 14 compliance. : : i ice i i compliance: issue to the entity a compliance notice in the prescribed form. (2) A compliance notice specified under subsection (1) shall— (a) be in writing; (b) notify the startup of the noncompliance and the steps it is required to take in order to ensure compliance; and (c) inform the entity of the period within which it is required to comply with the notice.
The Startup Bill, 2022 Eligibility for admission into an incubation programme. records and annual financial budgets to the Agency no later than thirty first day of March in each financial year; and (c) inform the Agency of a change in its structure, composition or object within a period of one month from the date of the change. PART IV—CERTIFICATION OF INCUBATORS 23. Ancentity may be certified as an incubator, if the entity— (a) is registered as a public limited company, a non-governmental organization, a private limited company, a limited liability partnership or a partnership; (b) has as its principal object the delivery of services to support establishment and development of innovative start-ups; (c) has in place (i) physical and virtual facilities, suitable to accommodate innovative startups, such as reserved spaces to be able to install test, test, verification or research equipment; and (ii) adequate equipment for startup activitics innovation, such as ultrawideband network access systems internet, mecting rooms, machinery for testing, testing or prototyping; (d) is administered or directed by persons of recognised competence on business and innovation and has a structure at its disposal for permanent technical and managerial consulting; (c) has regular collaborative relationships with universities, centres of research, public institutions and financial partners that carry out activities and projects related to innovative startups; ()) has experience in supporting innovative start-ups with such indicators as may be prescribed by the Agency in consultation with county executive committee members including— (i) number of applications for establishment or incubation projects innovative start-ups received and evaluated during the year; 17
The Startup Bill, 2022 (ii) number of innovative start-ups launched and hosted during the year; (iii) number of innovative start-ups that exited during the year; (iv) total number of collaborators and hosted staff; (v) percentage of variation in the total number of employees compared to the previous year; (vi) average growth rate of the production valuc of start-ups innovative incubated; (vii) venture capital or financing received for innovative incubated start-ups; and (viii) the number of patents registered by incubated innovative startups, taking into account the relevant product sector; (g) mects the prescribed occupational safety conditions under the Occupational Safety and Health Act; and (h) has no history of violation of human rights. (a) in the case of an incubator programme managed by the Agency, to the registrar; and (b) in the case of a programme managed by the county government, to the county executive committee member. (2) A statement complies with this subsection if it contains the following information relating to the incubator— (a) address of the incubator; (b) principal object; (c) brief description of the projects carried out; > Certification 24. (1) An entity that meets the criteria specified under section 23 may oFincubators. apply for admission as an incubator by submitting an application together with a Pply y & Pp g statement setting out information under subsection (2) — 18
The Startup Bill, 2022 —_e hae on "" programme. Obligations of an incubator. (d) expenditure on research and development; (c) list of sharcholders; (D list of investor companies; (g) educational qualifications and professional experiences of members and staff; (h) the existence of professional relationships, of collaboration or commercial with other incubators, investors institutional and professional, universities and research centres; (i) last financial statements filed; and (j) list of industrial property rights and intellectual property rights owned by the incubator and the startups admitted to its incubation programme. 25. (1) The Agency shall, in consultation with the county executive committee members, prescribe standards and guidelines to be adhered to by a Startup or an incubator that intends to withdraw from an incubation programme established pursuant to this Act. (2) The Agency or a county executive committee member may, where an incubator fails to adhere to or mect the requirements under this Act, revoke the admission of the incubator in accordance with the guidelines prescribed by the Agency under subsection (1). 26. An incubator registered under this Act shall— (a) support startups that are developing or delivering innovative products or services that solve a specific problem or fulfil a market need; (b) have a defined minimum and maximum technological innovation projects it can handle simultancously; (c) facilitate technological innovators to implement their ideas and form new business ventures; (d) determine the technological and marketing applicability of a technological innovation idea; 19
The Startup Bill, 2022 (c) have a viable research and development plan and expertise; (f) equip startups with skills in raising capital and marketing their products; (g) provide secretarial and administrative services to startups; (h) create investment opportunities for the private sector, including for venture capitalists; (i) support and facilitate the transfer of technology from research institutions and to the relevant startups; (j) provide remote support services to startups; (k) enhance entrepreneurship in Kenya. PART V—INCENTIVES FOR STARTUPS Support to 27. (1) The Agency and the county executive committee members shall put startups. . : eee in place measures to support the establishment and development of startups and shall, for this purpose — (a) subsidise the formalisation of startups; (b) facilitate the protection of the intellectual property of innovations by startups in Kenya and with international organisations; (c) provide fiscal and non-fiscal support to startups admitted into incubation programmes under this Act; (d) provide support in the form of research and development activities; (ec) provide such other support to enable the development and growth of startups registered under this Act; (f) Implement fiscal and non-fiscal incentives that target women, persons with disability and marginalised groups. (2) The Cabinet Secretary responsible for finance shall, in consultation with the Cabinet Secretary, prescribe a mechanism for the provision and administration of fiscal and non-fiscal incentives under subsection (1) within one year from the commencement of this Act. 20
The Startup Bill, 2022 creat suarante schene. 28. (1) The Cabinet Secretary may, in consultation with Board of Trustees - of the Fund and where necessary for the development and growth of startups under this Act, establish a credit guarantee scheme. (2) Where the Cabinet Secretary establishes a credit guarantee scheme under subsection (1), it shall have as its objectives — (a) the provision of accessible financial support to startups; (b) availing of financial and credit information to startups; (c) capacity building on financial and risk management to startups; and (d) the prioritisation of women, marginalised groups and rural populations in the provision of financial support. (3) Where a credit guarantee scheme is established pursuant to subsection (1), the Cabinet Secretary shall ensure that there is in place - (a) a strategy and opcrational goals that are aligned to the objectives under subsection (2); (b) a criteria for cligibility and qualification for recipients of funding under the Scheme; (c) criteria for the monitoring and evaluation of projects undertaken under the Scheme and the efficiency of the operations of the Scheme; and (d) mechanism for transparency, accountability and reporting on the activities of the Scheme. Training and 29. The Agency shall put in place a programme for the training and capacity a rere building of startups under this Act and shall, for this purpose establish a platform setting out information at the national and county level of government, on — (a) existing incubators; (b) available training programmes; (c) mentors and resource persons;
The Startup Bill, 2022 Application for grant or revocation of patents. Fiscal incentives. Growth objectives Regulations. (d) projects under existing incubation programmes; (c) available fiscal and non-fiscal support services; (f) business information necessary for the management and development of startups; and (g) such other information as the agency shall, in consultation with the county executive committee member consider necessary. 30. (1) The Agency shall facilitate the startups in the application for grant or revocation of patents and institution of legal action for infringement of any intellectual property rights relating to the startup’s product or service. (2) The Agency shall facilitate the startups to file and register patents at the international level. 31. The Cabinet Secretary shall, in accordance with the appropriate law, and in consultation with the Cabinet Secretary responsible for finance, put in place measures for the granting of fiscal incentives including tax incentives as shall be considered necessary for the development startups in the country. 32. (1) A startup shall, during the period of validity of the registration, cumulatively achieve growth objectives inhcrent to the workforce, the total balance sheet and the annual turnover as set out by the Cabinet Sceretary in resolutions. (2) The annual turnover or the total balance sheet shall be calculated taking into account the financial statements of the startup for the past year and more recent reports, if any. (3) The Cabinet Sceretary shall publish the resolutions under subsection (1) within one year from the date of commencement of the Act. PART VI - MISCELLANEOUS PROVISIONS 33. (1) The Cabinet Secretary may make regulations generally for the better carrying out of the provisions of this Act. (2) Without prejudice to the generality of subsection (1), the Cabinet Secretary may make regulations — (a) to exempt startups from registration fees; 22
The Startup Bill, 2022 Amendment of No. 28 of 2013. (b) on workplace and labour issues with employees, independent contractors, and service providers; (c) on commercial transactions, including product development, production, corporate partnering, advertising, marketing, and sales; (d) onemployee benefits and compensation; (c) on protection of intellectual property rights; (f) on the relationship between founders and employees; (g) for the reporting and accountability by startups under this Act, of the funds utilised by them; (h) to attract foreign startups into the country; (i) to promote national awareness of startups; (j) for advertising and impact assessment of the measures of startups; (k) for incentives to invest in innovative startups; and (1) for registration of entities and admission into incubation programmes. 34. 'The Science, Technology and Innovation Act is amended - (a) in subsection (1) of section 29 by inserting the following new paragraph immediately after paragraph (p)— (pa) provide financial support to technological innovations registered under the Startups Act; (b) in subsection (4) of section 32 by inserting the following new paragraphs immediately after paragraph (¢)— (ca) two people with knowledge and experience in the fields of innovation, technology and entrepreneurship; 23
The Startup Bill, 2022 (cb) one person representing startups in the country nominated by an organisation representing startups; (c) in subsection (2) of section 33 by inserting the following new paragraph immediately after paragraph (b)— (ba) financial support to technological innovations; (d) in subsection (1) of section 36 by inserting the following new paragraph immediately after paragraph (g)— (ga) provide financial support to technological innovations; 24
The Startup Bill, 2022 I certify that this printed impression is a true copy of the Bill as passed by the Senate on 21% February, 2024. Clerk of the Senate Endorsed for presentation to the National Assembly in accordance with the provisions of standing order 161 of the Senate Standing Orders. 25