Susan Maina is a content writer at Mugo and Company, where she simplifies Accounting, Auditing, and Forensic Audit services with her finance expertise.
LinkedIn >>Table of Contents
1. Introduction – Why IFRS 12 Matters in Kenya
2. What is IFRS 12 in Simple Terms?
3. History of IFRS 12 in Kenya – When Was It Issued?
4. Guidance of IFRS 12 – Your Disclosure Roadmap
5. Key Provisions of IFRS 12 in Kenya
6. Who Must Comply with IFRS 12 in Kenya?
7. Who is Exempted from IFRS 12 in Kenya?
8. Quick Snapshot – IFRS 12 at a Glance
10. Why IFRS 12 Matters for Corporates, NGOs, Regulators & Investors
12. Conclusion – Your Next Step with Mugo & Company
13. Disclaimer
14. Sources
If your business, NGO, or financial institution in Kenya owns subsidiaries, has joint ventures, or invests in associates, then IFRS 12 in Kenya is directly about you.
Think about it – investors, regulators, and even donors don’t just want to see your financial numbers.
They want the story behind those numbers. Who are you connected to? How much control do you have? What risks are you exposed to?
That’s exactly why IFRS 12 – Disclosure of Interests in Other Entities exists.
It forces you to be transparent about your relationships with other entities, so stakeholders clearly understand your group structure, your risks, and your rewards.
IFRS 12 works alongside IFRS 10 in Kenya – Consolidated Financial Statements Guide (consolidation rules) and IFRS 11 in Kenya – Joint Arrangements Explained (joint ventures and operations). IFRS 12 focuses on the disclosure side of things.
Get clarity on your IFRS 12 disclosures today
Book your First Consultation For FreeThink of IFRS 12 as the “family tree” disclosure rule.
It requires companies to show all their important relationships with other entities – whether you fully control them (subsidiaries), share control (joint ventures), or just have influence (associates, structured entities).
In plain words: “Don’t just show your own house; show the whole estate you’re connected to.”
| Brief History of IFRS 12 | |
|---|---|
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Issued by IASB
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May 2011 |
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Effective Globally
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Annual periods beginning on or after 1 January 2013
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IFRS 12 Adoption in Kenya |
IFRS 12 in Kenya was adopted Through ICPAK in 2013, making it mandatory for listed companies, banks, insurers, and other full-IFRS users. |
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Why it matters: |
IFRS 12 replaced older, scattered disclosure rules that were spread across IAS 27, IAS 28, and IAS 31. |
Think of IFRS 12 in Kenya as your disclosure “roadmap.”
Instead of flipping between several standards, everything you need is in one place. The guidance tells you to explain three things about your interests in subsidiaries, joint ventures, associates, or structured entities:
Step 1: Show the Nature of Your Interest
Tell your stakeholders what exactly you own or control.
Example: If you’re a Kenyan bank holding 60% in a subsidiary in Uganda, you need to explain the ownership, voting rights, and contracts that give you control.
Step 2: Explain the Risks Involved
It’s not enough to just show your connections — you must also explain the risks.
Example: An NGO in Nairobi that co-funds a joint program with an international donor must disclose the risks of being responsible for part of the funding.
Step 3: Highlight the Financial Impact
Finally, you must show how these interests affect your financials:
Example: A manufacturing company in Kenya with a 30% stake in an associate must disclose how much of that associate’s profits or losses appear in its own books.
In short: the guidance of IFRS 12 in Kenya is simple – show what you own, explain the risks, and reveal the financial impact. That’s the full story investors, donors, and regulators want to hear.
Let us simplify your IFRS 12 reporting in Kenya
Book your First Consultation For FreeHere’s what you need to disclose:
| Disclosure | Definition | Example |
|---|---|---|
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Significant Judgements
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– You have to tell people how you decided whether another company is your subsidiary, joint venture, or associate. – Did you use voting rights? Contracts? – Control over key decisions? – Stakeholders want to know the logic behind your calls. |
A Kenyan bank may hold 40% of another financial institution. Is that just “influence” or does it amount to control? IFRS 12 requires the bank to explain the judgement behind its conclusion. |
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Subsidiaries
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– If you own other companies, you must disclose the details. – This includes your ownership percentage, any restrictions on using their assets or cash, and the rights of minority shareholders (those who own smaller stakes). – In other words, you’re showing who you control and how. |
A listed company like Safaricom must show its ownership in subsidiaries such as Safaricom Telecommunications Ethiopia PLC, including details of any restrictions or minority interests.
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Joint Arrangements & Associates
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– Maybe you don’t fully control a company, but you share control (joint venture) or you just influence it (associate). – In that case, you must share summarised financial information and explain the risks involved. – Think of it as: “Here’s what we’re involved in, here’s how it affects us, and here’s what could go wrong.” |
Kenya Power has joint ventures in rural electrification projects. It must disclose its shareholding, the financial results it influences, and risks such as funding commitments.
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Structured Entities
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– These are special-purpose vehicles (SPVs), trusts, or other setups created for a specific purpose – often financing or risk management. – Under IFRS 12, you need to describe what they are, why they exist, how you’re connected to them, and the risks they expose you to. |
An NGO in Kenya may use a structured trust to channel donor funds for a project. IFRS 12 requires the NGO to disclose how the trust operates, what risks it takes on, and how it impacts financial reporting.
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Non-controlling Interests (NCI)
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– If you don’t own 100% of a subsidiary, you must show the share of profits, losses, and net assets that belong to the minority shareholders. – This makes sure everyone can see how value is shared across your group. |
Equity Group Holdings discloses the profit and net assets attributable to minority shareholders in its regional subsidiaries like Equity Bank Tanzania or Equity Bank Uganda.
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In short: IFRS 12 in Kenya is all about telling the story behind your numbers — not just who you own, but how you made those calls, the risks you’re carrying, and who else has a claim on your business.
We’ll help you strike the right balance of compliance and clarity
Book your First Consultation For FreeSo, do you actually need to worry about IFRS 12 – Disclosure of Interests in Other Entities?
The answer depends on how your organisation is structured.
You must comply with IFRS 12 in Kenya if:
| Type of Entity | Explanation |
|---|---|
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You prepare consolidated financial statements under full IFRS.
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If you control one or more subsidiaries, IFRS 12 applies to you.
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You’re a listed company on the Nairobi Securities Exchange (NSE).
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Every NSE-listed company has to meet IFRS 12 disclosure requirements to give investors a full picture of group structures and risks.
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You’re a bank, insurer, pension fund, or other regulated entity.
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Regulators like the CBK, IRA, and RBA expect detailed disclosures, and IFRS 12 is part of that.
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You’re a corporate or NGO with significant subsidiaries, joint ventures, or structured entities.
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You’re a corporate or NGO with significant subsidiaries, joint ventures, or structured entities.
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Schedule a quick consultation with our IFRS experts.
Book your First Consultation For FreeYou may be exempt if you are:
Not every organisation in Kenya has to worry about IFRS 12 disclosures. If your setup is simple, you might fall under the exemption category. Here’s when you’re off the hook
| Type of Entity | Explanation |
|---|---|
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You’re using the IFRS for SMEs framework.
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SMEs follow a simplified reporting standard with lighter disclosure requirements, so full IFRS 12 doesn’t apply.
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You’re a standalone company.
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If you don’t have subsidiaries, associates, or joint ventures, then IFRS 12 has nothing to ask of you — because there are no “other entities” to disclose.
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You’re a certain type of investment entity.
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Some investment entities (like funds that only measure subsidiaries at fair value) may have modified disclosure rules instead of full IFRS 12 requirements.
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In short: if your business is small, standalone, or falls under the SME framework, you’re exempt from IFRS 12 in Kenya. But if you have complex relationships with other entities, you’ll need to comply.
Here’s a quick way to think about IFRS 12 in Kenya. If you’re preparing disclosures, these are the main areas you’ll need to cover:
| Area | Disclosure Required |
|---|---|
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Subsidiaries
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You’ll need to show: – who you control – how much you own, – the judgments you made about control, – any restrictions on using their assets, – and what non-controlling interests (NCI) are entitled to. |
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Joint Arrangements
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– Are you in a joint venture or joint operation? – You must explain the type of arrangement – your shareholding – give a summary of financial information, – and highlight any risks involved. |
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Associates
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Where you don’t control but have significant influence: – you need to disclose your share of results, – commitments you’ve made, – and how you exercise that influence. |
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Structured Entities
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If you’re involved in special purpose vehicles (SPVs), trusts, or other structured setups: – you should explain their purpose, – how they work, – your exposure to risk, – and the financial impact on your statements. |
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Judgements
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Finally, you must be transparent about the big calls you made – – how you decided whether an entity is a subsidiary, associate, or joint venture, – and why you concluded that way. |
In short: IFRS 12 wants you to tell the full story of your relationships with other entities — not just the numbers, but the nature, risks, and impact behind them.
IFRS 12 in Kenya: Who’s In, Who’s Out? Quick Summary Table
| Who Must Comply | Who Is Exempt |
|---|---|
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Entities preparing consolidated financial statements under full IFRS
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Entities using the IFRS for SMEs framework
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Listed companies on the Nairobi Securities Exchange (NSE)
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Standalone companies with no subsidiaries, associates, or joint ventures
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Banks, insurers, pension funds, and other regulated entities
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Certain investment entities (with modified disclosure requirements)
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Corporates and NGOs with subsidiaries, joint ventures, or structured entities
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Entities with no significant interests in other entities
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Quick rule of thumb:
If your organisation in Kenya has links with other entities that affect your financial statements, you’re in.
If you’re small, standalone, or reporting under IFRS for SMEs, you’re out.
| Event | Brief Description |
|---|---|
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2013 was the starting point.
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IFRS 12 was formally adopted in Kenya in 2013 under the mandate of ICPAK (Institute of Certified Public Accountants of Kenya) to keep the country aligned with global IFRS standards.
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Mandatory for listed and regulated entities.
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From then on, all companies listed on the Nairobi Securities Exchange (NSE) and regulated financial institutions — like banks, insurers, and pension funds — had to comply with IFRS 12.
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A lighter path for SMEs.
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Small and medium enterprises don’t have to apply full IFRS 12. Instead, they can use the IFRS for SMEs framework, which has reduced disclosure requirements.
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In short: since 2013, IFRS 12 has been the standard in Kenya for transparency about subsidiaries, associates, and other interests – with full application for large and regulated entities, and simplified rules for SMEs.
Q1. What is IFRS 12 in simple terms?
Think of IFRS 12 as the transparency rule. It requires you to disclose your interests in subsidiaries, associates, joint ventures, and structured entities. In short, it makes you show not just your own financial house, but the entire estate you’re connected to.
Q2. What is the difference between IFRS 10 and IFRS 12?
This is a common area of confusion:
See our IFRS 10 in Kenya – Consolidated Financial Statements Guide for the full explanation.
Q3. When did Kenya adopt IFRS 12?
Kenya has been on the full IFRS journey since 1999, under the guidance of ICPAK. Specifically, IFRS 12 became effective in Kenya in 2013 and has been mandatory for listed companies, banks, insurers, and other regulated entities ever since.
Q4. Is IFRS 12 compulsory in Kenya?
Yes – if your organisation applies full IFRS. That means listed companies, financial institutions, and Corporates with subsidiaries, joint ventures, or structured entities must comply.
However, if you’re an SME using the IFRS for SMEs framework, you’re exempt from the heavy disclosures.
If you don’t get IFRS 12 in Kenya right, you risk incomplete disclosures, investor mistrust, or even audit findings.
At Mugo & Company, we help corporates, SMEs, and NGOs in Kenya:
Contact us today for tailored IFRS 12 advisory and disclosure support in Kenya.
Work with Mugo & Company for clear, compliant disclosures in Kenya
Book your First Consultation For FreeThis guide is for general educational purposes and does not replace professional advice. For tailored guidance, consult a qualified accountant or advisory firm such as Mugo & Company.
IFRS 12 — Disclosure of Interests in Other Entities
IFRS 12 Disclosure of Interests in Other Entities
IFRS 12 Disclosure of Interest in Other Entities
IFRS 12 Disclosure of Interests in Other Entities
IFRS 12 Disclosure of Interests in Other Entities | ICAEW
IFRS 11 in Kenya – Joint Arrangements Guide (2025 Update)
IFRS 10 in Kenya – Consolidated Financial Statements Guide (2025 Update)
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