. THE CONCEPT OF JOINT VENTURES UNDER KENYAN LAW
2.1 Kenyan law does not recognise “joint venture” as a distinct and separate legal entity in the manner that a company or partnership is recognised. Instead, a joint venture in Kenya is a commercial arrangement by which two or more parties agree to collaborate on a specific project or business activity while sharing resources, risks, and rewards. The JV may take any one of the following principal forms:
(a) Incorporated Joint Venture (Joint Venture Company): The parties incorporate a new company under the Companies Act, 2015 (Cap. 486) with both parties as shareholders. This is the most structured and preferred form for long-term commercial arrangements as it creates a separate legal entity with its own rights and obligations distinct from those of its shareholders.
(b) Unincorporated Joint Venture (Contractual JV): The parties operate on the basis of a Joint Venture Agreement without forming a separate legal entity. Each party retains its separate legal identity and the arrangement is governed entirely by the contractual terms agreed between them. This form is less complex and more flexible, but offers less certainty and protection for the parties.
(c) Partnership: Governed by the Partnership Act (Cap. 29), a partnership involves two or more persons carrying on business in common with a view to profit. This form is less commonly adopted for large commercial ventures of the nature contemplated due to the unlimited joint and several liability of partners.
2.2 For the supply and maintenance of oil pipelines and storage tanks in Kenya, we recommend the Incorporated Joint Venture structure. This is because the activities contemplated involve significant capital investment, long-term operational commitments, engagement with regulatory bodies such as the Energy and Petroleum Regulatory Authority (“EPRA”), and the likelihood of entering into contracts with state agencies, which are best managed through a duly constituted legal entity with clear governance structures.