Advisory Board Member Agreement (Kenya)

An Advisory Board Member Agreement in Kenya records the obligations the parties accept and the terms governing their arrangement.

Advisory boards are widely used by Kenyan start-ups registered through the BRS eCitizen portal, family-owned businesses, and companies backed by venture capital seeking to bring in sector expertise, investor networks, or regulatory knowledge without the cost and governance complexity of expanding the statutory board of directors. The advisory board member typically provides strategic guidance on specific business areas — market entry, fundraising, technology, legal and regulatory compliance, or public sector engagement — rather than participating in day-to-day management.

Because an advisory board operates outside the statutory framework of the Companies Act No. 17 of 2015, the Advisory Board Member Agreement is the sole source of the adviser's rights and obligations. The High Court of Kenya (Commercial Division) and the Nairobi Centre for International Arbitration (NCIA) have jurisdiction over disputes arising from advisory arrangements, and courts interpret these agreements applying principles of contract law under the Law of Contract Act (Cap. 23). In the absence of a written agreement, an adviser who contributes strategically significant guidance may claim an implied consultancy relationship or, in rare cases involving equity, seek equitable remedies before the High Court.

The Data Protection Act No. 24 of 2019, administered by the Office of the Data Protection Commissioner (ODPC), applies where the advisory board member accesses personal data of the company's customers, employees, or partners. The Advisory Board Member Agreement must confirm that the adviser will process such data only in accordance with the company's data protection policies and Section 25 of the Data Protection Act No. 24 of 2019.

Where advisory board compensation takes the form of share options or equity stakes, the Companies Act No. 17 of 2015 governs the issuance of shares and share options. Section 87 of the Companies Act sets out the requirements for allotting shares, and any share option plan must comply with the company's articles of association. The Capital Markets Authority (CMA) regulations apply if the company is listed on the Nairobi Securities Exchange (NSE). Advisory board equity arrangements for Kenyan start-ups often use a vesting schedule documented in a Share Vesting Agreement alongside the Advisory Board Member Agreement.

An Advisory Board Member Agreement should be clearly distinguished from a Director Service Agreement under Section 200 of the Companies Act No. 17 of 2015, which creates statutory duties of care, skill, and diligence. An advisory board member bears no statutory liability for company decisions, cannot bind the company contractually by virtue of their advisory role alone, and is not required to be registered with BRS or the Registrar of Companies.

An Advisory Board Member Agreement in Kenya is required whenever a company formally appoints an individual to an advisory capacity, and several specific scenarios make a written agreement particularly important.

An Advisory Board Member Agreement is needed when a Kenyan start-up or early-stage company registered under the Companies Act No. 17 of 2015 wishes to appoint sector experts — experienced entrepreneurs, former government officials, technology specialists, or financial sector professionals — to guide strategy without creating full board directorships. Formalising the arrangement in writing confirms the adviser's time commitment, compensation, and the boundaries of their role.

An Advisory Board Member Agreement is required when the advisory relationship involves sharing confidential business information — investor pitch materials, financial projections, product development roadmaps, or client strategies — that the company needs to protect under the Data Protection Act No. 24 of 2019 and the Law of Contract Act (Cap. 23). Without a signed agreement, the company cannot enforce confidentiality obligations against the adviser.

An Advisory Board Member Agreement is needed when advisory compensation includes equity, share options, or a vesting arrangement. The agreement documents the equity terms, the vesting schedule, and the cliff period, alongside the Advisory Board Member Agreement itself or by cross-reference to an Employee Share Option Plan under Section 87 of the Companies Act No. 17 of 2015.

An Advisory Board Member Agreement is required when the company needs to confirm that any intellectual property developed by the adviser in the course of providing strategic guidance — including product concepts, business models, or technical ideas — vests in the company under Section 42 of the Industrial Property Act No. 3 of 2001. Without a written assignment clause, IP created by an independent adviser remains with the adviser under Kenyan copyright and industrial property law.

An Advisory Board Member Agreement is necessary when the company wishes to restrict the adviser from simultaneously advising or investing in competitor businesses. A non-compete or exclusivity clause in the Advisory Board Member Agreement is the only mechanism to impose such restrictions, as the Companies Act No. 17 of 2015 does not impose non-compete duties on non-executive advisers.

An Advisory Board Member Agreement is needed when a company is preparing for a Series A or later funding round and investors — including private equity firms regulated by the Capital Markets Authority (CMA) — conduct due diligence on the company's governance arrangements. Documented advisory board agreements demonstrate governance maturity and prevent disputes about adviser equity claims during transaction due diligence.

A Kenya Advisory Board Member Agreement under the Companies Act No. 17 of 2015 and the Law of Contract Act (Cap. 23) must include the following essential elements to be effective.

Parties and Appointment: Full legal names, NIC numbers or passport numbers, and addresses of the company and the adviser. The company's BRS Registration Number issued via the eCitizen portal. The date of appointment and the title of the advisory role (e.g., Advisory Board Member, Senior Adviser, Industry Expert). The agreement should confirm that the adviser does not hold a director appointment under Section 130 of the Companies Act No. 17 of 2015 and has no authority to bind the company.

Scope of Advisory Services: A description of the areas in which the adviser will provide guidance — industry expertise, investor introductions, regulatory strategy, technology, or market development. The expected time commitment per month (typically 2 to 8 hours), the mode of engagement (board meetings, one-on-one calls, written input), and the frequency of formal advisory sessions. A clear scope prevents disputes about the extent of the adviser's obligations.

Compensation and Equity: The adviser's compensation — whether a monthly retainer in Kenya Shillings (KES), a success fee tied to fundraising or revenue milestones, equity in the form of share options vesting over a defined schedule, or a combination. If equity is involved, the vesting schedule (typically 2 years with a 6-month cliff), the exercise price, and the treatment of unvested equity on early termination must be documented. All cash compensation is subject to withholding tax at 5% on management fees under the Income Tax Act (Cap. 470), and the company must remit withholding tax to the Kenya Revenue Authority (KRA) via iTax.

Confidentiality: The adviser's obligation to protect the company's confidential information — business plans, financial data, client lists, product roadmaps, and investor materials — from disclosure to third parties during and after the advisory engagement. The obligation should extend for a minimum of 2 years post-termination and should align with the Data Protection Act No. 24 of 2019 for any personal data accessed.

Intellectual Property Assignment: Confirmation that all ideas, inventions, improvements, and creative works developed by the adviser in the course of providing advisory services vest in the company upon creation, under Section 42 of the Industrial Property Act No. 3 of 2001 and Section 30 of the Copyright Act No. 12 of 2001. The adviser should sign a present-tense assignment rather than a mere covenant to assign.

Conflict of Interest and Non-Compete: The adviser's disclosure obligations for any existing or potential conflicts of interest — including directorships, shareholdings, or advisory roles with competing businesses. An express non-compete restriction during the advisory period, preventing the adviser from simultaneously advising direct competitors of the company, is enforceable under the Law of Contract Act (Cap. 23) if it is reasonable in scope, duration, and geographic reach.

Term and Termination: The initial term of the advisory engagement (typically 1 to 2 years, renewable by mutual written agreement), the notice period required for either party to terminate (typically 30 days), and the consequences of termination for vesting, equity, and ongoing confidentiality obligations.

The forms-legal.com Advisory Board Member Agreement template provides a starting point for Kenyan companies to document advisory arrangements with the clarity required for governance, tax compliance, and investor due diligence.

Additional compliance elements for a Advisory Board Member Agreement (Kenya) used in Kenya include: Under the Companies Act No. 17 of 2015, the Registrar of Companies at the Office of the Attorney General maintains the register of Kenyan companies. Section 3 of the Law of Contract Act (Cap. 23) governs contractual obligations. The Competition Authority of Kenya (CAK) enforces the Competition Act No. 12 of 2010. The Kenya Revenue Authority (KRA) administers corporate tax under the Income Tax Act (Cap. 470). The High Court of Kenya has unlimited original jurisdiction under Article 165 of the Constitution of Kenya 2010. Forms-legal.com provides this template as a starting point for Kenya-compliant documentation.