Question: I read your recent articles on setting up of office premises. I own an American fintech company and would want to set up a business in Kenya to pursue a short-term engagement on behalf of a partner.
The project requires us to provide proof of a physical location. I am considering setting up physically in Kenya. What is the law on co-working spaces? What should I be looking out for? Darren.
Dear Darren, thank you for your inquiry. There is no stand-alone law regulating co-working spaces in Kenya. However, commercial law and to some extent, land law principles form the guiding principles when getting into a co-working space agreement.
A co-working space is an arrangement where a person or entity is given access to a working space in exchange for payment of some fees. There are many types of co-working spaces.
For more long-term arrangements, there is the possibility of getting a dedicated working space which could either be a furnished office or a desk.
In some other arrangements, the working space is paid for only when needed.
A co-working arrangement is usually made in the form of a licence — an agreement made between a licensor and a licensee giving the licensee access rights to the working space in exchange for a payment known as a licence fee.
A licence agreement does not give the licensee any rights in the property but only grants access rights.
Therefore, Darren, it is good to understand that your interest in the working space is in the form of a licence.
The Licensor may provide rules and regulations as to the use of the premises. Some examples include opening hours, usage of common facilities and so on.
It is good to go through the rules and regulations of the co-working space and see if it meets your needs. If the rules and regulations are not suitable, you can consider negotiating the terms and conditions to suit your needs.
For example, if you require to access the premises after the opening hours, is there a possibility that the licensor can re-negotiate the terms to suit your needs?
In so far as the legal process is concerned, it is first important to do a due diligence of the licensor. Find out if one has the legal capacity to enter into the license agreement.
For example, does one own the premises or have a valid lease from the landlord? If he does have a valid lease from the landlord, does one have consent to issue co-working spaces?
You can ascertain this information by perusing the head lease or doing a property search.
It is important to know exactly what rights you have as a licensee. Other than access rights you may be allowed some other rights.
For example, some co-working spaces also include administrative fees, cleaning and access to office support services.
It is good to know the licensed area. Other than your co-working space, you may be allowed access to common areas like the kitchen, washroom facilities and parking.
Co-working spaces are very ideal for businesses such as yours, which needs office space for a short time.
They are also suitable during the start-up stage when the business is still monitoring its growth. This is because the set-up costs are very low.
The business will not have to purchase office furniture.
Co-working spaces are good for businesses that are downsizing and those with a remote working model.
Ms Mputhia is the founder of C Mputhia Advocates | [email protected]
