Tough regulations to cause ripples in NGO sector once they are implemented

Wednesday April 3 2013

By WILLIAM MAEMA

Perhaps owing to the highly charged political atmosphere over the last few months, the enactment and assent of a new NGO law may have passed unnoticed.

The Public Benefit Organisations Act (No 18 of 2013) is bound to send shock waves across the NGO landscape when its implications begin to be felt in a few months.

Although the new law was assented to by the President on January 14, 2013, it is yet to come into force, pending the gazettement of the commencement date by the Cabinet Secretary for Planning and National Development under whose docket public benefit organisations (formerly known as NGOs) will fall.

Apart from introducing a few cosmetic changes such as christening NGOs as Public Benefit Organisations (PBOs), the NGO Coordination Board as the Public Benefit Organisations Regulatory Authority, the NGO Council as the National Federation of Public Benefit Organisations, among other fancy names, the new law also introduces drastic changes to the NGO sector.

Under the transitional provisions contained in the Sixth Schedule to the new Act, all NGOs registered under the old law are required to seek fresh registration under the new law within a year from the commencement date of the Act.

Failure to comply carries grave consequences. An NGO which fails to so register will be stripped of the character of a public benefit organisation or equivalent status within 30 days after the expiration of a formal notice from the PBO Authority.

All NGOs that had been exempted from registration under the repealed law are required to seek registration within three months of the commencement of the Act. This means that their exempt status has been abolished.

PBOs are required to submit to the regulatory authority a detailed inventory of all their assets and such record shall be open to public inspection. Anyone is entitled to obtain a copy at a reasonable cost.

The election of the nine members to the governing board of the PBO Federation will be supervised by the Independent Electoral and Boundaries Commission.

Remuneration for PBO directors has been abolished. The new law provides that directors of PBOs shall serve on a voluntary basis and shall only be reimbursed costs and expenses properly incurred in the service to the organisation. This might make it difficult for PBOs to attract high calibre professionals to their boards.

PBOs are also required to be professionally audited annually and their financial statements filed with the regulatory authority within six months after the end of each financial year.

Except for international organisations which must have one third of their directors as Kenyan citizens who live in Kenya, it is no longer necessary for any of the top officials of a PBO to be a Kenyan who resides in Kenya.

However, PBOs are required to submit to the regulator personal particulars of their officers including their names, office and residential addresses within one month of their appointment or election.

The governing body of a PBO is to be distinct from the management to enhance transparency and accountability.

Upon the dissolution or winding up of a PBO, its assets shall be transferred to another PBO with similar objectives and no officer or member of the PBO shall benefit from such distribution.

The regulator has power to fine, suspend or cancel the registration certificate of a PBO which is found to be operating in violation of the Act or contrary to its own constitution.

The new law also introduces a myriad of other changes that NGO are likely to welcome, namely:

The time for registration has been condensed to two months, from the current four to six and an obligation imposed on the authority to either register a PBO within the stipulated time or give reasons for the refusal;

The benefits to be enjoyed by PBOs are now clearly spelt out in the law including tax exemptions, incentives and access to government training.

There is no personal liability for officers of a PBO in respect of anything done in good faith on behalf of the PBO.

PBOs are now permitted to own and manage real estate for their public benefit objectives.

They are allowed to engage in economic and income-generating activities to support their programmes.

The writer is an advocate of the High Court of Kenya and a partner in the law firm of Iseme, Kamau & Maema Advocates.