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Kenya Act or statute

Parliament of Kenya

Capital Markets Act

This Act may be cited as the Capital Markets Act. This section provides definitions of terms used in the Act (for example: “agent”, “Authority”, “beneficial owner”, and “collective investment scheme”).…

Jurisdiction
Kenya
Structure
118 provisions
Citation
Cap. 485A
Dates
As at 11 Dec 2023
More statute details
Dates
As at 11 Dec 2023

Source attribution: Source: Kenya Law

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01

Purpose and legislative effect

“This Act may be cited as the Capital Markets Act.”

This Act may be cited as the Capital Markets Act. This section provides definitions of terms used in the Act (for example: “agent”, “Authority”, “beneficial owner”, and “collective investment scheme”). Defines who counts as an "associate" of an individual (family members, certain companies, employees, and companies with 20%+ control) and of a company (another company with not less than 20% control). Defines when a person is deemed to have an interest in securities, listing specific situations (trust holdings, control of a body corporate, contractual rights, options, joint holding, prescribed classes, and specified exclusions). Members, officers and servants of the Authority are not personally liable for acts done in good faith on the Authority's direction or in carrying out duties or powers under the Act; if a court finds the act was in good faith, the Authority must pay related legal expenses from its general fund unless recovered in the proceedings.

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Showing 118 of 118 provisions

Provision 79Offence 26Interpretation 4Commencement 3

Part I

PRELIMINARY

§ 1PRELIMINARY - 1. Short titleShort title

This Act may be cited as the Capital Markets Act.

Section 1. Short title Section This Act may be cited as the Capital Markets Act. [Act No. 3 of 2000 , s. 3.]
Section 1Verify source
§ 2PRELIMINARY - 2. InterpretationInterpretation

This section provides definitions of terms used in the Act (for example: “agent”, “Authority”, “beneficial owner”, and “collective investment scheme”).

Section 2. Interpretation Section In this Act, unless the context otherwise requires— “agent” means any person appointed in writing by a licensed person , except in a derivatives market , to perform any of the functions ordinarily performed by the licensed person on behalf of that licensed person ; “authorised securities dealer” means a person authorized to deal in securities and operate in a specific market segment as may be prescribed by the Authority ; “Authority” means the Capital Markets Authority established by section 5; “beneficial owner” means a natural person who, whether alone or with associates, is the ultimate owner or controller of a legal person or arrangement, or, if there is no legal person or arrangement, the person on whose behalf a transaction is being conducted; “Board” means the Board of the Authority constituted under section 5; “capital market instrument” means any long-term financial instrument whether in the form of debt or equity developed or traded on a securities exchange or directly between two or more parties for the purpose of raising funds for investment; “collective investment scheme” includes an investment company , a unit trust , a mutual fund or other scheme whether or not established or organized in Kenya which— (a) collects and pools funds from the public or a section of the public for the purpose of investment; (b) is managed by or on behalf of the scheme by the promoter of the scheme; and includes an umbrella scheme whose shares as herein defined are split into a number of different class schemes or sub-schemes, each of which is managed by or on behalf of a common promoter , but does not include— (i) a body corporate incorporated under any law in Kenya relating to building societies, co-operative societies, retirement benefit schemes, credit unions or friendly societies; (ii) an arrangement where each of the holders of the shares is a body corporate in the same group as the promoter ; (iii) an arrangement where each of the holders of the share is a bona fide employee, former employee, wife, husband, widow, widower, child, stepchild of the employee or former employee of the directors or shareholders of a body corporate in the same group as the promoter ; (iv) arrangements where the receipt of contributions from the holders of shares in the collective investment scheme constitutes the acceptance of deposits in the course of a business which is a deposit-taking business for the purpose of the Banking Act (Cap. 488); (v) contracts of insurance; (vi) retirement benefits scheme; "commodity" means— (a) agricultural, livestock, fishery, forestry, mining or energy goods or any product that is manufactured or processed from any such goods; (b) financial instruments; (c) an index, right, or interest in any such commodity; (d) such other thing as the Cabinet Secretary may, by notice in the Gazette , determine to be the subject of a commodity contract ; "commodity contract" includes— (a) spot commodity contract; (b) commodity futures contract ; and (c) such other contract or class of contracts as the Authority may, by regulations prescribe; "commodity market" means a market or facility licensed by the Authority or a facility, whether electronic or otherwise at which, offers or invitations to sell, purchase or exchange commodity contracts are regularly made on a centralized basis, being offers or invitations that are intended or may reasonably be expected to result directly or indirectly in the acceptance or making, respectively of offers to sell, purchase or exchange of commodity contracts but does not include— (a) the office or facilities of a commodity dealer or broker; (b) the office or facilities of a clearing house; “company” means a company formed and registered under the Companies Act (Cap. 486); “Compensation Fund” means the Investor Compensation Fund established by section 18; “credit rating agency” means an organisation which provides the service of evaluating the relative creditworthiness of issuers of securities and assigns ratings to such securities ; “dealer” means a person who carries on the business of buying, selling, dealing, trading, underwriting or retailing of securities except exchange-traded derivatives contracts whether or not he or she carries on any other business; “dealer’s representative” deleted by ActNo. 3 of 2000, s. 4 ; “dealing in securities” means making or offering to make with any person, or inducing or attempting to induce any person to enter into or to offer to enter into— (a) any agreement for or with a view to acquiring, disposing of, subscribing for or underwriting securities except in exchange-traded derivatives contracts; or (b) any agreement the purpose or intended purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the price of securities except in exchange-traded derivatives contracts; "derivatives exchange" means a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder; “derivatives dealer” deleted by ActNo. 48 of 2013, s. 2(e) ; "derivatives market” means a place at which, or a facility, whether electronic or otherwise, by means of which offers or invitations to sell, purchase or exchange-traded derivative contracts are regularly made on a centralised basis, being offers or invitations that are intended or may reasonably be expected to result, directly or indirectly, in the acceptance or making, respectively, of offers to sell, purchase or exchange-traded derivative contracts , whether through that place, facility or otherwise, but does not include— (a) the office or facilities of a derivatives broker; or (b) the facilities of a clearinghouse; “director” has the meaning assigned to it in the Companies Act (Cap. 486); “exchange-traded derivative contracts” means standardized type of securities or financial instruments which derive their value from the value of underlying assets, indices, or interest rates that are transacted on a licensed derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") ; "expert” in respect of a matter or an opinion, means a person whose profession, occupation, religious standing, expertise or reputation gives authority to a statement made by that person in relation to that matter or opinion; “financial instrument” includes securities , mortgage contracts, property contracts, pension contracts, insurance contracts, leasehold contracts, certificates of interest and any variations or derivatives thereof; “fund manager” means a manager of a collective investment scheme , registered venture capital company or an investment adviser who manages a portfolio of securities in excess of an amount prescribed by the Authority from time to time; "futures broker" means a body corporate admitted into the membership of a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") and duly licensed by the Authority to engage in the business of trading in exchange-traded derivatives contracts as an agent for investors in return for a commission and on its own account; “futures contract” deleted by ActNo. 48 of 2013, s. 2(f) ; "futures member” means a person admitted to the membership of a futures exchange in accordance with the Regulations made under the Act and rules of that derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") but does not denote a shareholder or an equity holder of that derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") ; “incorporation documents” means the principal documents governing the formation of a collective scheme and includes the trust deed, memorandum and the articles of association and all material agreements as the case may be; “information memorandum” means any prospectus or document, notice, circular, advertisement or other invitation, in print or electronic form, containing information on a company or other legal person authorized to issue securities or a collective investment scheme calculated to invite offers from the public or a section of the public and includes a short-form prospectus, a shelf prospectus, information notice, an offering memorandum in respect of asset backed securities and a supplementary prospectus; “insider” means any person who is or was connected with a company , or is deemed to have been connected with a company and who is reasonably expected to have access, by virtue of such connection, to unpublished information which, if made generally available, would be likely to materially affect the price or value of the securities of the company , or who has received or has had access to such unpublished information; “investment adviser” means any person (other than a bona fide officer, director , trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") , member of an advisory board or employee of a company as such) who, for remuneration— (a) carries on the business of advising others concerning securities ; or (b) as part of a regular business, issues or promulgates analyses or reports concerning securities ; or (c) deleted by Act No. 22 of 2022, s. 53; (d) deals with long term financing equity and debt and acts as adviser or under writer in relation to a public issue of securities ; or (e) such other persons as the Authority may, prescribe to be within the intent of this definition, but the expression does not include— (i) a bank as defined in section 2 of the Banking Act (Cap. 488); (A) insofar as the newspaper is distributed generally to the public, it is distributed only to subscribers to, and purchasers of, the newspaper for value; (B) the advice is given or the analyses or reports are issued or promulgated only through that newspaper; (C) that person receives no commission or other consideration for giving the advice or for issuing or promulgating the analyses or reports; (D) the advice is given and the analyses and reports are issued or promulgated solely as incidental to the conduct of that person’s business as a newspaper proprietor; (ii) a company or association registered under Part III of the Insurance Act (Cap. 487); (iii) an advocate, accountant or certified public secretary in practice whose carrying on of that business is solely incidental to the practice of his profession; (iv) a trust corporation within the meaning of the Trustee Act (Cap. 167); (v) a dealer or his employee whose carrying on of that business is solely incidental to the conduct of his business of dealing in securities ; or (vi) a person who is the proprietor of a newspaper and holder of a permit issued under the Books and Newspapers Act (Cap. 111), where— “investment bank” means a non-deposit taking institution licensed by the Authority to advise on offers of securities to the public or a section of the public, takeovers, mergers, acquisitions, corporate restructuring involving companies listed or quoted on a securities exchange , privatisation of companies listed or to be listed on a securities exchange or underwriting of securities issued or to be issued to the public and to engage in the business of a stockbroker or dealer ; “investment company” means a collective investment scheme organised as a limited liability company under the Companies Act (Cap. 486) in which the rights of the participants are represented by shares of the company ; “key personnel” means a person who manages or controls the activities of a licensed or a regulated person and includes— (a) the chief executive officer, chief financial officer, chief compliance officer, secretary to the Board , chief internal auditor, or any manager of licensed persons; and (b) any person who holds a position or discharges responsibilities of any person referred to in paragraph (a); “licence” deleted by ActNo. 3 of 2000, s. 4 ; “licensed person” means a person or body corporate who has been issued with a licence or approved by the Authority ; “member” deleted by ActNo. 10 of 2010, s. 45 ; “mutual fund” means a collective investment scheme set up as a body corporate under section 30(5) whereby— (a) the assets of the scheme belong beneficially to and are managed by or on behalf of the body corporate; (b) the investments of the participants are represented by shares of that body corporate; (c) the body corporate is authorised by its articles of association to redeem or repurchase its shares otherwise than in accordance with section 68 of the Companies Act (Cap. 486); “online forex broker” means a body corporate duly licensed by the Authority to engage in the business of online trading in foreign exchange as an agent of investors in return for a commission and on its own account; “options contract” means a contract that gives its holder the right and not the obligation to buy or sell a fixed number of securities or any other instrument at a fixed price on or before a given date; “over the counter” means the trading of securities except in exchange-traded derivatives contracts otherwise than at an approved securities exchange ; “promoter” means a person acting alone or in conjunction with others directly or indirectly who takes the initiative in forming or organising the business of a collective investment scheme but does not include an underwriter commission without taking any part in the founding or organising of the collective investment scheme business; “quotation” , in relation to securities and in relation to a securities exchange , or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") includes the displaying or providing, on a securities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , of information concerning— (a) in a case where offers to sell, purchase or exchange the securities at particular prices, or for particular consideration, are made or accepted on that securities market or a derivatives market , those prices or that consideration; (b) in a case where offers or invitations are made on that securities market or a derivatives market , being offers or invitations that are intended, or may reasonably be expected, to result, whether directly or indirectly, in the making or acceptance of offers to sell, purchase or exchange the securities at particular prices or for particular consideration, those prices or that consideration; or (c) in any other case, the price at which, or the consideration for which particular persons, or particular classes of persons, propose, or may reasonably be expected, to sell, purchase or exchange the securities ; “real estate investment trust” mean an arrangement in respect of real estate or interest in real estate of any description, structured in accordance with the rules prescribed by the Authority to enable a person taking part in the arrangement, whether by becoming an owner of the property or any part of it or otherwise, to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the real estate or interest in the real estate or sums paid out of such profits of income; “registered venture capital company” means a company approved by the Authority and incorporated for purposes of providing risk capital to small and medium sized businesses in Kenya with high growth potential, whereby not less than seventy-five per cent of the funds so invested consist of equity or quasi-equity investment in eligible enterprises; “regulated person” means an operator of an approved person, a licensed person , a listed company or a person approved to offer securities to the public; "REIT manager" means a company incorporated in Kenya and licensed by the Authority to provide real estate management services in respect of a real estate investment trust ; “representative” means a representative of any person licensed by the Authority who is in the employment of the licensed person and plays a critical role in that company , and includes a trader, director , general manager, analyst, or any other person employed by the licensee who plays a critical role; “securities” means— (a) shares in the share capital of a company ("shares"); (b) any instrument creating or acknowledging indebtedness which is issued or proposed to be issued ("debt securities"); (c) loan stock, bonds and other instruments creating or acknowledging indebtedness by or on behalf of the Government, Central Bank, or public authority ("Government and public entities"); (d) rights, options, or interests, whether described as units or otherwise, in, or in respect of such shares, debt securities and Government and public securities; (e) any right, whether conferred by warrant or otherwise, to subscribe for shares or debt securities ("warrants"); (f) any option to acquire or dispose of any other security; (g) futures in respect of securities or other assets or property; (h) securities and collective investment scheme products structured in conformity with Islamic principles for investments; (i) units in a collective investment scheme , including shares in an investment company , or other similar entities whether established in Kenya or not; (j) interests, rights or property, whether in the form of an instrument or otherwise, commonly known as securities; (k) the rights under any depositary receipt in respect of shares, debt securities and warrants ("depositary receipts"); (l) asset backed securities ; and (m) any other instrument prescribed by the Authority to be securities for the purposes of this Act, but does not include— (i) securities of a private company , other than asset backed securities ; (ii) bills of exchange; (iii) promissory notes, other than asset backed securities ; (iv) certificates of deposit issued by a bank; and (v) any other instrument prescribed by the Authority not to be securities for the purposes of this Act; “securities exchange” means a market, derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , securities organization or other place at which securities are offered for sale, purchase or exchange, including any clearing or settlement, with or without novation, or transfer services connected therewith; “self-regulatory organization” means an organization whose object is to regulate the operations of its members or of the users of its services and includes the organizations that may be recognized as such, by the Authority ; “share” means a share in the share capital of a body corporate, a unit in a unit trust or an interest in any collective investment scheme ; "sophisticated investor" means— (a) a person who is licensed under this Act; (b) an authorized scheme or a collective investment scheme ; (c) a bank, a subsidiary of a bank, insurance company , co-operative society, statutory fund, pension or retirement fund; or (d) an individual, company , partnership, association or a trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") on behalf of a trust which, either alone or with any associates on a joint account subscribes for securities with an issue price as the Authority may prescribe from time to time; “spot commodity trading” means the purchase or sale of a commodity at its current market or spot price, where it is intended that such transaction results in the physical delivery of the commodity , and "spot commodity contract " shall be construed accordingly; “stockbroker” means a person who carries on the business of buying or selling of securities as an agent for investors in return for a commission; “stockbroking agent” means a person, not being a salaried employee of a stockbroker , who, in consideration of a commission, solicits or procures stockbroking business on behalf of a stockbroker ; “stock exchange” means a market, exchange or other place at which securities are offered for sale, purchase or exchange, including any clearing, settlement or transfer services connected therewith; “stock market” means a market, or other place at which, or a facility by means of which— (a) offers to sell, purchase or exchange securities are regularly made or accepted; (b) offers or invitations are regularly made, being offers or invitations that are intended or may reasonably be expected to result, whether directly or indirectly, in the making or acceptance of offers to sell, purchase or exchange securities ; or (c) information is regularly provided concerning the prices at which, or the consideration for which, particular persons, or particular classes of persons, propose, or may reasonably be expected, to sell, purchase or exchange securities ; “substantial shareholder” means any person who is the beneficial owner of, or is in a position to exert control over, not less than fifteen per cent of the shares of a body corporate; “trading participant” means a licensed person with rights to trade at an approved securities exchange ; "trustee" in relation to real estate investment trust or a collective investment scheme , means a person appointed under a trust deed of a real estate investment trust or a collective investment scheme , as the case may be, as its trustee; “underwriting” means the purchase or commitment to purchase or distribute by dealers or other persons of issue or offer of securities for immediate or prompt public distribution by or through them; “unit trust” means any scheme or arrangement in the nature of a trust in pursuance whereof members of the public are invited or permitted, as beneficiaries under the trust, to acquire an interest or undivided share (unit of investment) in one or more groups or blocks of specified securities and to participate proportionately in the income or profits derived therefrom. [Act No. 3 of 2000 , s. 4, Act No. 2 of 2002 , Sch., Act No. 8 of 2008 , s. 47, Act No. 10 of 2010 , s. 45, Act No. 37 of 2011 , s. 2, Act No. 4 of 2012 , s. 32, Act No. 48 of 2013 , s. 2, Act No. 38 of 2016 , ss. 48 & 68, Act No. 15 of 2018 , s. 2, Act No. 23 of 2019 , s. 41, Act No. 22 of 2022, s. 53.]
Section 2Verify source
§ 3PRELIMINARY - 3. Meaning of the termassociateProvision

Defines who counts as an "associate" of an individual (family members, certain companies, employees, and companies with 20%+ control) and of a company (another company with not less than 20% control).

Section 3. Meaning of the termassociate Section For the purpose of this Act— "associate" , in relation to— (a) an individual, means— (i) a spouse, son, adopted son, step-son, son-in-law, daughter, adopted daughter, step-daughter, daughter-in-law, father, step-father, father-in-law, mother, step-mother, mother-in-law, brother, step-brother, brother-in-law, sister or step-sister, sister-in-law, grandchild or spouse of a grandchild; of that individual; (ii) any company in which that individual is a director or secretary, has a controlling interest or is the controlling interest; (iii) any company in which that individual, or any of the persons specified in subparagraph (i), has control of twenty per cent or more of the voting power on appointments to the board of directors or entitlement to dividends in the company , whether such control is exercised individually or jointly; (iv) any employee of that individual; or (b) a company , means another company in which the first mentioned company has control of not less than twenty percent of the voting power in that company , and a reference in this Act, regulations, rules, guidelines or notices issued thereunder, to an associated person or associated company shall be construed accordingly. [Act No. 48 of 2013 , s. 3.]
Section 3Verify source
§ 4PRELIMINARY - 4. Definition of “interest insecurities”Interpretation

Defines when a person is deemed to have an interest in securities, listing specific situations (trust holdings, control of a body corporate, contractual rights, options, joint holding, prescribed classes, and specified exclusions).

Section 4. Definition of “interest insecurities” Section 4(1) Where any property held in trust consists of or includes securities in which a person knows, or has reasonable grounds for believing, that he or she has an interest, he or she shall be deemed to have an interest in those securities . Section 4(2)(a) the body corporate is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with directions, instructions or wishes of that person in relation to that security; Section 4(2)(b) that person has a controlling interest in the body corporate; or Section 4(2)(c) that person is, or the associates of that person or that person and his associates are, entitled to exercise or control the exercise of not less than fifteen per cent of the votes attached to the voting shares in the body corporate. Section 4(3)(a) where he or she has entered into a contract to purchase a security; Section 4(3)(b) where he or she has a right, otherwise than by reason of having an interest under a trust, to have a security transferred to himself or to his order, whether the right is exercisable presently or in the future and whether on the fulfillment of a condition or not; Section 4(3)(c) where he or she has the right to acquire a security, or an interest in a security, under an option, whether on the fulfillment of a condition or not; or Section 4(3)(d) where he or she is entitled, otherwise than by reason of his having been appointed a proxy or representative to vote at a meeting of members of a body corporate or of a class of its members, to exercise or control the exercise of a right attached to a security, not being a security of which he or she is the registered holder. Section 4(4) A person shall be deemed to have an interest in a security if that security is held jointly with another person. Section 4(5) For the purpose of determining whether a person has an interest in a security, it is immaterial that the interest cannot be related to a particular security. Section 4(6)(a) an interest in a security if the interest is that of a person who holds the security as bare trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") ; Section 4(6)(b) an interest in a security of a person whose ordinary business includes the lending of money if he or she holds the interest only by way of security for the purposes of a transaction entered into in the ordinary course of business in connection with the lending of money; Section 4(6)(c) an interest of a person in a security being an interest held by him or her by reason of his holding a prescribed office; and Section 4(6)(d) a prescribed interest in a security being an interest of such person, or of the persons included in such class of persons as is prescribed. Section 4(7)(a) its remoteness; Section 4(7)(b) the manner in which it arose; or Section 4(7)(c) the fact that the exercise of a right conferred by the interest is, or is capable of being made, subject to restraint or restriction.
Section 4Verify source

Part II

THE CAPITAL MARKETS AUTHORITY

§ 10THE CAPITAL MARKETS AUTHORITY - 10. Protection from legal actionProvision

Members, officers and servants of the Authority are not personally liable for acts done in good faith on the Authority's direction or in carrying out duties or powers under the Act; if a court finds the act was in good faith, the Authority must pay related legal expenses from its general fund unless recovered in the proceedings.

Section 10. Protection from legal action Section 10(1) Neither the Authority , any of its members, officers nor servants shall be personally liable for any act which is done in good faith or purported to be done by such person, on the direction of the Authority or in the performance or intended performance of any duty or in the exercise of any power under this Act or the regulations guidelines or notices made thereunder. Section 10(2) Any expenses incurred by any person referred to in subsection (1) in any suit or prosecution brought against him or her before any court in respect of any act which is done or purported to be done by him or her under the Act or on the direction of the Authority shall, if the Court holds that such act was done in good faith, be paid out of the general fund of the Authority , unless such expenses are recovered by him or her in such suit or prosecution. [Act No. 48 of 2013 , s. 5.]
Section 10Verify source
§ 11THE CAPITAL MARKETS AUTHORITY - 11. Objectives of theAuthorityOffence

Section 11 lists objectives relating to development of the capital markets, facilitating nationwide securities, protecting investors, providing a compensation fund for investors against broker/dealer failures, and facilitating electronic commerce in capital markets.

Section 11. Objectives of theAuthority Section 11(1)(a) the development of all aspects of the capital markets with particular emphasis on the removal of impediments to, and the creation of incentives for longer term investments in, productive enterprises; Section 11(1)(b) to facilitate the existence of a nationwide system of securities commodities market and derivatives market and brokerage services so as to enable wider participation of the general public in the securities commodities market and derivatives market ; Section 11(1)(c) the creation, maintenance and regulation of a market in which securities can be issued and traded in an orderly, fair and efficient manner, through the implementation of a system in which the market participants are self-regulatory to the maximum practicable extent; Section 11(1)(d) the protection of investor interests; Section 11(1)(e) the facilitation of a compensation fund to protect investors from financial loss arising from the failure of a licensed broker or dealer to meet his contractual obligations; and Section 11(1)(f) the development of a framework to facilitate the use of electronic commerce for the development of capital markets in Kenya. Section 11(2)(a) the transfer and dissemination of market information to a wider number of users within and between networks; Section 11(2)(b) the offer , distribution or delivery in electronic form of securities or services ordinarily provided by licensed persons; and Section 11(2)(c) the execution of securities transactions without the need for parties to the transaction to be physically present at the same location. Section 11(3)(a) advise the Cabinet Secretary on all aspects of the development and operation of capital markets; Section 11(3)(b) implement policies and programmes of the Government with respect to the capital markets; Section 11(3)(c) employ such officers and servants as may be necessary for the proper discharge of the functions of the Authority ; Section 11(3)(cc) levying of financial penalties, proportional to the gravity or severity of the breach, as may be prescribed: Provided that the financial penalties shall be recoverable summarily by the Authority as civil debts; Section 11(3)(cc)(i) levying of financial penalties, proportional to the gravity or severity of the breach, as may be prescribed: Provided that the financial penalties shall be recoverable summarily by the Authority as civil debts; Section 11(3)(cc)(ii) ordering a person to remedy or mitigate the effect of the breach, make restitution or pay compensation to any person aggrieved by the breach; Section 11(3)(cc)(iii) publishing findings of malfeasance by any person; Section 11(3)(cc)(iv) suspending or cancelling the listing of any securities or exchange-traded derivatives contracts, or the trading of any securities or exchange-traded derivatives contracts, for the protection of investors; Section 11(3)(d) to issue guidelines and notices on all matters within the jurisdiction of the Authority under this Act; Section 11(3)(e) to grant a licence to any person to operate as a stockbroker , derivatives broker, dealer or investment adviser , fund manager , investment bank , central depository or authorised securities dealer , and ensure the proper conduct of that business; Section 11(3)(f) to grant approval to any person to operate as a securities exchange , commodity exchange, derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , credit rating agency , registered venture capital company or to operate in any other capacity which directly contributes to the attainment of the objectives of this Act and to ensure the proper conduct of that business; Section 11(3)(fa) regulate spot commodity markets; Section 11(3)(ff) recognize any person duly licensed by a prescribed foreign authority to carry on any licensed activity in Kenya which requires a license or an approval under this Act; Section 11(3)(g) register, approve and regulate collective investment schemes; Section 11(3)(ga) license, approve and regulate private equity and venture capital companies that have access to public funds; Section 11(3)(h) inquire, either on its own motion or at the request of any other person, into the affairs of any person which the Authority has approved or to which it has granted a licence and any public company the securities of which are publicly offered or traded on an approved securities exchange or on an over the counter market; Section 11(3)(i) give directions to any person which the Authority has approved or to which it has granted a licence and any public company the securities of which are publicly offered or traded on an approved securities exchange or on an over the counter market; Section 11(3)(j) conduct inspection of the activities, books and records of any persons approved or licensed by the Authority ; Section 11(3)(k) deleted by ActNo. 9 of 2007, s. 46(b) ; Section 11(3)(l) deleted by ActNo. 9 of 2007, s. 46(b) ; Section 11(3)(m) appoint an auditor to carry out a specific audit of the financial operations of any collective investment scheme or public company the securities of which are publicly offered or traded on an approved securities exchange or on an over the counter market, if such action is deemed to be in the interest of the investors, at the expense of such collective investment scheme or company ; Section 11(3)(n) grant compensation to any investor who suffers pecuniary loss resulting from the failure of a licensed broker or dealer to meet his contractual obligations; Section 11(3)(o) have recourse against any person whose act or omission has resulted in a payment from the Compensation Fund ; Section 11(3)(p) act as an appellate body in respect of appeals against any self regulatory organization securities or exchange-traded derivatives contracts exchange, derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") or central depository in actions by parties aggrieved thereby; Section 11(3)(q) co-operate or enter into agreements for mutual co-operation with other regulatory authorities for the development and regulation of cross-border activities in capital markets; Section 11(3)(r) regulate and oversee the issue and subsequent trading, both in primary and secondary markets, of capital market instruments; Section 11(3)(s) regulate the use of electronic commerce for dealing in securities or offer services ordinarily carried out by a licensed person ; Section 11(3)(t) trace any assets, including bank accounts, of any person who, upon investigation by the Authority , is found to have engaged in any fraudulent dealings in an issuer and its securities or insider trading; Section 11(3)(u) in writing, order caveats to be placed against the title to such assets or prohibit any such person from operating any such bank accounts as may be directed by the Authority , pending determination of any charges instituted against that person; Section 11(3)(v) prescribe notices or guidelines on corporate governance of a company whose securities have been issued to the public or a section of the public; Section 11(3)(va) ensure processing of personal data in the operations of capital markets is in accordance with principles set out under the Data Protection Act (Cap. 411C); Section 11(3)(w) do all such other acts as may be incidental or conducive to the attainment of the objectives of the Authority or the exercise of its powers under this Act.
Section 11Verify source
§ 11ATHE CAPITAL MARKETS AUTHORITY - 11A. Delegation of functionsProvision

The Authority may delegate functions to (a) a committee of the Board, (b) a recognized self regulatory organization, or (c) an authorized person; the Authority may revoke such delegations at any time; and delegation does not prevent the Authority from performing the delegated function.

Section 11A. Delegation of functions Section 11A(1)(a) a committee of the Board ; Section 11A(1)(b) a recognized self regulatory organization; or Section 11A(1)(c) an authorized person. Section 11A(2) The Authority may, at any time revoke a delegation made under this section. Section 11A(3) A delegation made under this section shall not prevent the Authority from performing the delegated function. [Act No. 37 of 2011 , s. 4.]
Section 11AVerify source
§ 12THE CAPITAL MARKETS AUTHORITY - 12. Power of the Cabinet Secretary to issue rules and regulationsOffence

The Cabinet Secretary has the power to issue rules and regulations covering a wide range of capital market topics listed in Section 12.

Section 12. Power of the Cabinet Secretary to issue rules and regulations Section 12(1)(a) listing and de-listing of securities on a securities exchange ; Section 12(1)(b) stockbrokers, derivatives brokers and dealers; Section 12(1)(b)(i) stockbrokers, derivatives brokers and dealers; Section 12(1)(b)(ii) persons who acquire or dispose of securities or exchange-traded derivatives contracts; and Section 12(1)(b)(iii) a securities exchange ; Section 12(1)(c) the keeping and proper maintenance of books, records, accounts and audits by all persons approved or licensed by the Authority and regular reporting by such persons to the Authority of their affairs; Section 12(1)(d) the operations of any other bodies corporate or persons dealing with capital market instruments; Section 12(1)(e) the procedure for the participation of foreign investors in the securities market; Section 12(1)(f) collective investment schemes; Section 12(1)(g) registered venture capital companies; Section 12(1)(h) credit rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") agencies; Section 12(1)(hh) the issue and subsequent trading in Kenya, of offers approved outside Kenya; Section 12(1)(i) the issue, transfer, clearing and settlement of securities ; Section 12(1)(j) securities clearing and settlement or depository organisations; Section 12(1)(jj) the operations and supervision of online forex trading activities and online forex brokers; Section 12(1)(k) fund managers; Section 12(1)(ka) spot commodity trading and commodity markets; Section 12(1)(l) investment banks; Section 12(1)(m) authorized securities dealers; Section 12(1)(n) self regulatory organizations; Section 12(1)(nn) the use of money raised from the issue of securities , in cases in which the securities are issued to raise money for a specified purpose; Section 12(1)(o) the financial penalties or sanctions for breach of rules, guidelines or notices made or issued by the Authority or non-compliance with the requirements imposed by the Authority ; Section 12(1)(p) the fees payable annually by a securities exchange , derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") or central depository or for securities or exchange-traded derivatives contracts' transactions, licences and approvals required by this Act to be issued or granted on an application to the Authority ; Section 12(1)(q) the disclosure requirements and other terms and conditions on which securities or exchange-traded derivatives contracts may be listed or de-listed from a securities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , respectively, or offered for sale to the public or a section thereof. Section 12(2)(a) take into account and be consistent with the objective of promoting and maintaining an effective and efficient securities market; and Section 12(2)(b) be exposed for comment by stakeholders and the general public for a period of thirty days through notification in at least two daily newspapers of national circulation and the electronic media. Section 12(2)(c) deleted by ActNo. 35 of 2012, s. 3(b)(ii). Section 12(3) For the purposes of this Act, stakeholders shall include listed companies and all persons licensed or approved by the Authority or financial or other institutions whose operations have, in the opinion of the Authority , a bearing on the development and regulation of capital markets in Kenya. [Act No. 10 of 1994 , s. 3, Act No. 3 of 2000 , s. 10, Act No. 15 of 2003 , s. 46, Act No. 4 of 2004 , s. 74, Act No. 8 of 2008 , s. 49, Act No. 37 of 2011 , s. 3, Act No. 35 of 2012 , s. 3, Act No. 57 of 2012 , s. 30, Act No. 48 of 2013 , s. 7, Act No. 38 of 2016 , ss. 49 & 70.]
Section 12Verify source
§ 12ATHE CAPITAL MARKETS AUTHORITY - 12A.Authorityto issue guidelines and noticesProvision

The Authority may publish guidelines and notices on specified matters and those guidelines/notices must be subjected to a 30‑day public comment period with notification by advertisement in at least two national newspapers and electronic media.

Section 12A.Authorityto issue guidelines and notices Section 12A(1)(a) efficient, orderly and fair operation of the segment, product or intermediaries; Section 12A(1)(a)(i) efficient, orderly and fair operation of the segment, product or intermediaries; Section 12A(1)(a)(ii) adequate provisions for risk management and controls on market misfeasance; Section 12A(1)(a)(iii) the proper protection of investor interests and appropriate level of disclosure; and Section 12A(1)(a)(iv) a facilitative environment for transparent operations; Section 12A(1)(b) the standards to be adhered to by regulated persons in the conduct of their business; Section 12A(1)(c) the attainment of any objectives of the Authority ; Section 12A(1)(d) any matter relating to any power, duty or function conferred or imposed on the Authority under this Act or any other legislation administered by the Authority ; Section 12A(1)(e) the supervision of persons licensed by a prescribed foreign regulatory authority; and Section 12A(1)(f) the operation of any provision of this Act or any other legislation vesting responsibility in the Authority . Section 12A(2) The Authority may publish guidelines and notices issued under subsection (1) in such manner as the Authority may consider appropriate. Section 12A(3) The guidelines and notices issued under subsection (1) shall be subjected to comment by stakeholders and the general public for a period of thirty days from the date of issue, and notification for that purpose shall be made through advertisement in at least two daily newspapers of national circulation and in the electronic media. [Act No. 48 of 2013 , s. 8.]
Section 12AVerify source
§ 12BTHE CAPITAL MARKETS AUTHORITY - 12B. Powers on anti-money laundering, combating the financing of terrorism and countering proliferation financing mattersProvision

The Authority must regulate, supervise and enforce anti-money laundering, terrorist financing and proliferation-financing compliance for reporting institutions; it also has specific supervisory powers (vetting, inspections, surveillance, consolidated supervision, compelling documents, imposing sanctions, issuing rules, sharing information, and taking necessary enforcement action).

Section 12B. Powers on anti-money laundering, combating the financing of terrorism and countering proliferation financing matters Section 12B(1) Pursuant to sections 2A, 36A, 36B and 36C of the Proceeds of Crime and Anti-Money Laundering Act ( Cap 59A ), the Authority shall regulate, supervise and enforce compliance for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes by all reporting institutions regulated and supervised by the Authority and whom the provisions of the Proceeds of crime apply. Section 12B(2)(a) vet proposed significant shareholders, proposed beneficial owners, proposed directors and senior officers of a reporting institution; Section 12B(2)(b) conduct onsite inspection; Section 12B(2)(c) conduct offsite surveillance; Section 12B(2)(d) undertake consolidated supervision of a reporting institution and its group; Section 12B(2)(e) compel the production of any document or information the Authority may require for the purpose of discharging its supervisory mandate under the Proceeds of Crime and Anti-Money Laundering Act ( Cap 59A ); Section 12B(2)(f) impose monetary, civil or administrative sanctions for violations related to anti-money laundering, combating the financing of terrorism countering proliferation financing purposes; Section 12B(2)(g) issue regulations, guidelines, directions, rules or instructions for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes; Section 12B(2)(h) cooperate and share information for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes; and Section 12B(2)(i) take such action as is necessary to supervise and enforce compliance by reporting institutions in line with the provisions of the Proceeds of Crime and Anti-Money Laundering Act ( Cap 59A ) and any regulations, guidelines, rules, instruction or direction made or issued thereunder. Section 12B(3) For purposes of this section, "reporting institution" has the meaning assigned to it under section 2 of the Proceeds of Crime and Anti-Money Laundering Act ( Cap 59A ). [Act No. 10 of 2023 , Sch.]
Section 12BVerify source
§ 13THE CAPITAL MARKETS AUTHORITY - 13. Furnishing of information to theAuthorityOffence

The Authority (or an authorized person) may serve written notice requiring any person to furnish specified returns or information within a stated period; the Authority and its staff must not disclose or use such information except to achieve the Authority's objectives or when required by a court. The Act treats certain contraventions as offences and provides for mutual assistance with other regulatory bodies, including payment of costs and reciprocity.

Section 13. Furnishing of information to theAuthority Section 13(1) The Authority or any person officially authorized in that behalf by the Authority may, by notice in writing, require any person to furnish to the Authority or to the authorized person, within such period as is specified in the notice, all such returns or information as specified in such notice. Section 13(2) The Authority or any member thereof, or any officer or servant of the Authority , shall not disclose to any person or use any return or information acquired under subsection (1) except for the purpose of achieving the objectives of the Authority unless required to do so by a court of law. Section 13(3)(a) are enforced or administers by that regulatory body; or Section 13(3)(b) relate to securities transactions regulated by that regulatory body, Section 13(4) For the purposes of subsection (3), the provisions of this Act shall, with such modifications as may be necessary, apply and have effect as if the contravention of the legal or regulatory requirement referred to in subsection (3) were an offence under this Act. Section 13(5)(a) it is desirable or expedient that the assistance requested should be provided in the interest of the public; or Section 13(5)(b) the assistance shall assist the regulatory body in the discharge and performance of its functions. Section 13(6)(a) pay the Authority any of the costs and expenses incurred in providing the assistance; and Section 13(6)(b) be able and willing to provide reciprocal assistance within its jurisdiction in response to a similar request for assistance from Kenya. Section 13(7) Nothing in this section shall be construed to limit the powers of the Authority to cooperate or coordinate with any other regulatory body in the exercise of its powers under this Act, in so far any such cooperation or coordination is not contrary to the objectives of this Act. [Act No. 10 of 2010 , s. 46, Act No. 35 of 2012 , s. 4.]
Section 13Verify source
§ 13ATHE CAPITAL MARKETS AUTHORITY - 13A. Power of entry and searchOffence

The chief executive officer may authorise senior officers to inquire into affairs; an authorised officer may apply for a magistrate's warrant to search premises when satisfied or reasonably suspecting an offence; bank documents may only be copied or extracted.

Section 13A. Power of entry and search Section 13A(1) The chief executive officer may authorise an officer of the rank of Senior Officer or above to inquire into the affairs of a person under this Act. Section 13A(2) An officer authorised under subsection (1) may, where he or she is satisfied that a person has committed or is reasonably suspected of committing an offence under this Act in Kenya or elsewhere, apply to a magistrate for a warrant to search the premises of that person. Section 13A(3)(a) to enter any premises between sunrise and sunset to search for money, documents or other assets relevant to the inquiry; Section 13A(3)(b) to seize money, documents or assets which may be necessary for the inquiry or for which the purpose of civil or criminal proceedings and to retain them for as long as they are so required; and Section 13A(3)(c) to direct any person who has control over such assets to take any action with respect to such assets as the Authority may reasonably require with a view to protecting the assets until the court determines the appropriate course of action. Section 13A(4) In the interest of bank confidentiality, the powers of the officer in respect of any documents held by a banker shall be limited to making copies or extracts therefrom. [Act No. 8 of 2008 , s. 50.]
Section 13AVerify source
§ 13BTHE CAPITAL MARKETS AUTHORITY - 13B.Authoritymay investigateOffence

The Authority may investigate specified grounds and may depute an investigator; persons must produce documents, explain, attend under oath and assist; contravention of these requirements is an offence; the Authority may impose an interim measure for not more than three months when satisfied irreparable damage may occur.

Section 13B.Authoritymay investigate Section 13B(1)(a) an offence has been committed under this Act; or Section 13B(1)(b) a director , manager or employee of a licensee, approved person or an issuer or any other person, may have engaged in embezzlement, fraud, misfeasance or other misconduct in an issuer, licensee or approved person in connection with its regulated activity; or Section 13B(1)(c) the manner in which a licensed or approved person has engaged or is engaging in the regulated activity is not in the interest of the person's clients or in the public interest, the Authority may in writing depute a suitably qualified person to conduct investigations into the matter on behalf of the Authority . Section 13B(2)(a) to produce to the investigator, within such time and at such place as the investigator may require in writing, any record or document specified by the investigator which is, or may be, relevant to the investigation, and which is in the possession or under the control of that person; Section 13B(2)(b) to give an explanation or further particulars in respect of any record or document produced under paragraph (a); Section 13B(2)(c) to attend before the investigator at the time and place specified in writing by the investigator, and to the best of his ability under oath or affirmation answer any question relating to the matters under investigation as the investigator may put to him or her; and Section 13B(2)(d) to assist the investigator with the investigation to the best of the person's ability. Section 13B(3) A person who contravenes the provisions of subsection (2) commits an offence. Section 13B(4) The Authority may, where satisfied that the capital markets or an investor shall suffer irreparable damage as a result of an activity under subsection (1), impose an interim measure for not more than three months to prevent further damage pending completion of an of inquiry. [Act No. 35 of 2012 , s. 5, Act No. 15 of 2018 , s. 4.]
Section 13BVerify source
§ 13CTHE CAPITAL MARKETS AUTHORITY - 13C. Data protection principlesProvision

The Authority and any person authorized by it must apply the Data Protection Act's personal data protection principles when collecting and processing personal data.

Section 13C. Data protection principles Section The principles of personal data protection as set out in the Data Protection Act (Cap. 411C) shall apply to the collection and processing of personal data by the Authority or any person authorized by the Authority . [Act No. 24 of 2019 , Sch.]
Section 13CVerify source
§ 14THE CAPITAL MARKETS AUTHORITY - 14. CommitteesProvision

The Authority may appoint committees (including committees of its members or others) to perform specified functions and may delegate powers to those committees; examples of such committees include ones to hear shareholder complaints and to recommend compensation decisions under Authority rules.

Section 14. Committees Section 14(1) The Authority may appoint committees, whether of its own members or otherwise, to carry out such general or special functions as may be specified by the Authority , and may delegate to any such committee such of its powers as the Authority may deem appropriate. Section 14(2)(a) a committee to hear and determine complaints of shareholders of any public company listed on an authorized securities exchange , relating to the professional conduct or activities of such securities exchange or such public company , or any other person under the jurisdiction of the Authority and recommend actions to be taken, in accordance with rules established by the Authority for that purpose; and Section 14(2)(b) a committee to make recommendations with respect to assessing and awarding compensation in respect of any application made in accordance with rules established by the Authority for that purpose.
Section 14Verify source
§ 15THE CAPITAL MARKETS AUTHORITY - 15. General fundProvision

The Authority must have its own general fund; the fund may include fees under the Act and sums received from other sources approved by the Cabinet Secretary.

Section 15. General fund Section 15(1) The Authority shall have its own general fund. Section 15(2)(a) all such sums of money as may be paid as fees under this Act; and Section 15(2)(b) all such sums of money as may be received by the Authority for its operations from any other source approved by the Cabinet Secretary. Section 15(3) There shall be paid out of the fund all such sums of money required to defray the expenditure incurred by the Authority in the exercise, discharge and performance of its objectives, functions and duties.
Section 15Verify source
§ 16THE CAPITAL MARKETS AUTHORITY - 16. Financial year ofAuthorityProvision

The Authority's financial year is the 12-month period starting on 1 July each year.

Section 16. Financial year ofAuthority Section The financial year of the Authority shall be the period of twelve months commencing on the first day of July in each year.
Section 16Verify source
§ 17THE CAPITAL MARKETS AUTHORITY - 17. AccountsProvision

The Authority must cause proper books of accounts to be kept of its income and expenditures, assets and liabilities and all other transactions of the Authority.

Section 17. Accounts Section The Authority shall cause proper books of accounts to be kept of its income and expenditures, assets and liabilities and all other transactions of the Authority .
Section 17Verify source
§ 18THE CAPITAL MARKETS AUTHORITY - 18. Establishment of the InvestorCompensation FundOffence

Section establishes an Investor Compensation Fund, lists sources of its moneys, sets a reward formula and cap for recoveries, gives the Cabinet Secretary power to make regulations under subsection (2A), and allows the Authority to invest accumulated Fund moneys.

Section 18. Establishment of the InvestorCompensation Fund Section 18(1) There shall be established a Fund to be known as the Investor Compensation Fund for the purposes of granting compensation to investors who suffer pecuniary loss resulting from the failure of a licensed stockbroker or dealer to meet his contractual obligations. Section 18(2)(a) such moneys as are required to be paid into the Compensation Fund by licensed persons; Section 18(2)(b) such sums of money as are paid under this Act as fines or penalties or under section 34 as ill-gotten gains where those harmed are not specifically identifiable; Section 18(2)(c) such sums of money as accrue from interest and profits from investing Compensation Fund moneys; Section 18(2)(d) such sums of money recovered by or on behalf of the Authority from entities whose failure to meet their obligations to investors result in payments from the Compensation Fund ; Section 18(2)(e) interest deemed to accrue on the proceeds of a public issue or offer for sale of shares of a company listed or to be listed on an approved securities exchange , between the closing date and the date of dispatch of refund cheques, or, where there is no refund, the date of dispatch of share certificates or crediting of securities accounts, to be determined at the rate prescribed by the Authority ; Section 18(2)(ee) deleted by ActNo. 48 of 2013, s. 9(a) ; Section 18(2)(f) such sums of money as are received for purposes of the Compensation Fund from any other source approved by the Cabinet Secretary. Section 18(2A)(a) this provision shall not apply to any officer of the Authority ; Section 18(2A)(b) the reward payable under this subsection shall be three per cent of the amount recovered subject to a maximum of five million shillings; and Section 18(2A)(c) the reward referred to in paragraph (a) shall be paid before the recovered sums of money are transferred to the Fund. Section 18(2B) The Cabinet Secretary shall make regulations to give effect to the provisions of subsection (2A). Section 18(2C)(a) colludes with an officer of the Authority for the purpose of collecting the reward under subsection (2A); Section 18(2C)(b) while working at the Authority aids another person to get and provide information under subsection (2A); Section 18(2C)(c) provides false information under subsection (2A), Section 18(3) Moneys which have accumulated in the Compensation Fund may be invested by the Authority . [Act No. 3 of 2000 , s. 12, Act No. 10 of 2006 , s. 39, Act No. 9 of 2007 , s. 47, Act No. 8 of 2008 , s. 51, Act No. 48 of 2013 , s. 9, Act No. 15 of 2018 , s. 5, Act No. 8 of 2020 , s. 31.]
Section 18Verify source
§ 18ATHE CAPITAL MARKETS AUTHORITY - 18A.[Repealed by ActNo. 15 of 2018, s. 6.]Repeal

Section 18A was repealed by ActNo. 15 of 2018, s. 6.

Section 18A.[Repealed by ActNo. 15 of 2018, s. 6.]
Section 18AVerify source
§ 5THE CAPITAL MARKETS AUTHORITY - 5. Establishment and membership of theAuthorityOffence

Establishes the Capital Markets Authority, lists its corporate powers, sets membership composition and appointment powers (President and Cabinet Secretary), prescribes three-year terms for certain members, lists grounds for vacation of office, allows appointment of replacements and acting members, and provides that members shall be paid remuneration determined by the Cabinet Secretary.

Section 5. Establishment and membership of theAuthority Section 5(1) There is hereby established an authority to be known as the Capital Markets Authority . Section 5(2)(a) suing and being sued; Section 5(2)(b) taking, purchasing or otherwise acquiring, holding, charging and disposing of both movable and immovable property; Section 5(2)(c) borrowing and lending money; Section 5(2)(d) entering into contracts; and Section 5(2)(e) doing or performing all such other things or acts necessary for the proper performance of its functions under this Act which may lawfully be done by a body corporate. Section 5(3)(a) a Chairperson to be appointed by the President on the recommendation of the Cabinet Secretary; Section 5(3)(b) six other members appointed by the Cabinet Secretary; Section 5(3)(c) the Principal Secretary to the National Treasury or a person deputed by him or her in writing for the purposes of this Act; Section 5(3)(d) the Governor of the Central Bank of Kenya or a person deputed by him or her in writing for the purposes of this Act; Section 5(3)(e) the Attorney-General or a person deputed by him or her in writing for the purposes of this Act; Section 5(3)(f) the chief executive of the Authority . Section 5(4) The Chairperson and every member appointed under paragraph (b) of subsection (3) shall be appointed from amongst persons who have experience and expertise in legal, financial, banking, accounting, economics or insurance matters. Section 5(4A) The Chairperson and every member appointed under paragraph (b) of subsection (3) shall hold office for a period of three years and shall be eligible for re-appointment for a further term of three years. Section 5(4B) The members of the Authority shall be appointed at different times so that the respective expiry dates of their terms of office shall fall at different times. Section 5(5)(a) he or she delivers to the Cabinet Secretary a written resignation of his appointment; Section 5(5)(b) on the advice of the Authority , the Cabinet Secretary removes him or her from office on the grounds that he or she is incapacitated by mental or physical illness or is otherwise unable or unfit to discharge the functions of a member or is unable to continue as a member ; Section 5(5)(c) he or she has been absent from three consecutive meetings of the Authority without leave or good cause; Section 5(5)(d) he or she is adjudged bankrupt or enters into a composition scheme or arrangement with his creditors; Section 5(5)(e) he or she is sentenced by a court to imprisonment for a term of six months or more; or Section 5(5)(f) he or she is convicted of an offence involving dishonesty, fraud or moral turpitude. Section 5(6) In the event of vacation of office by any member appointed under subsection (3)(b) the Cabinet Secretary may appoint another person to hold office for the unexpired period of the term of office of the member in whose place he or she is appointed. Section 5(7) If any member of the Authority appointed under paragraph (b) of subsection (3) is temporarily unable to perform his duties, the Cabinet Secretary may appoint another person to act in his place during the period of his absence. Section 5(8) The members of the Authority shall be paid such remuneration and allowances out of the general fund of the Authority as may be determined by the Cabinet Secretary. [Act No. 3 of 2000 , s. 5.]
Section 5Verify source
§ 6THE CAPITAL MARKETS AUTHORITY - 6. Meetings and procedures of theAuthorityProvision

Sets meeting frequency and procedures for the Authority: the Board must meet at least six times per financial year with no more than two months between meetings; quorum is six members including the chief executive; the Chairperson presides when present and may resign; voting is by majority with a Chairperson casting vote in ties; conflicted members must disclose interests and not participate unless a majority permit; the President appoints an acting member if the Chairperson is temporarily unable to act.

Section 6. Meetings and procedures of theAuthority Section 6(1) The Board shall meet not less than six times in every financial year and not more than two months shall elapse between the date of one meeting and the date of the next meeting. Section 6(2) The quorum for the conduct of the business of the Board shall be six members including the chief executive. Section 6(3) The Chairperson shall preside at every meeting of the Board at which he or she is present but in his absence, the members present shall elect one of their number who shall, with respect to that meeting and the business transacted thereat, have all the powers of the Chairperson. Section 6(4) All questions for decisions at any meeting of the Authority shall be decided by the vote of the majority of the members present and in case of an equality of votes the Chairperson shall have a casting vote. Section 6(5) If the Chairperson of the Authority , by reason of extended illness or absence is temporarily unable to perform the duties of his office, the President, on the recommendation of the Cabinet Secretary, shall appoint another member of the Authority to act in his place during the period of absence. Section 6(6) The Chairperson may at any time resign by a letter addressed to the President and the resignation shall take effect upon being accepted by the President. Section 6(7) Any member who has a direct or indirect interest in any decision that is to be taken on any specific non-rule making matter by the Authority , shall disclose the nature of such interest at the meeting of the Authority where such decision is being taken and the disclosure shall be recorded in the minutes of the meeting, and if either the member or majority of the members of the Authority believe that such member ’s interest in the matter is such as to influence his judgment, he or she shall not participate in the deliberation or the decision of the Authority on such matter: Provided, that if a majority of the members in attendance at a meeting where such matter is considered determine that the experience or expertise of the interested member is necessary for the deliberation on the matter, they may permit such member to participate as they deem appropriate. [Act No. 3 of 2000 , s. 6.]
Section 6Verify source
§ 7THE CAPITAL MARKETS AUTHORITY - 7. Seal and execution of documentsProvision

Rules for custody, authentication and signing of the Authority's common seal and for signing documents or decisions: specific officers must authenticate the seal; the Chairperson or presiding officer may sign documents and decisions.

Section 7. Seal and execution of documents Section 7(1) The common seal of the Authority shall be kept in the custody of the Authority and shall not be affixed to any instrument or document except as authorized by the Authority . Section 7(2) The common seal of the Authority shall be authenticated by the signature of the chief executive and the Chairperson or of one other member authorised by the Board in that behalf. Section 7(3) All documents, other than those required by law to be under seal, made by, and all decisions of, the Authority may be signified under the hand of the Chairperson, or, in the case of a decision taken at a meeting at which the Chairperson is not present, under the hand of the person presiding at such meeting. [Act No. 3 of 2000 , s. 7.]
Section 7Verify source
§ 8THE CAPITAL MARKETS AUTHORITY - 8. Appointment of chief executive of theAuthorityProvision

The Cabinet Secretary appoints the Chief Executive of the Authority, who must meet the section's qualification requirements and serves a four-year term, eligible for one reappointment, with a maximum of two terms.

Section 8. Appointment of chief executive of theAuthority Section 8(1) There shall be a Chief Executive of the Authority who shall be appointed by the Cabinet Secretary and who shall, subject to this section, hold office on such terms and conditions of service as may be specified in the instrument of appointment, or otherwise from time to time. Section 8(2)(a) has at least ten years’ experience at a senior management level in matters relating to law, finance, accounting, economics, banking or insurance; and Section 8(2)(b) has expertise in matters relating to money or capital markets or finance. Section 8(3) The Cabinet Secretary, in consultation with the Board , shall appoint a person qualified in terms of this section as the chief executive. Section 8(4) The chief executive shall hold office for a period of four years but shall be eligible for reappointment for a further term of four years: Provided that no person shall serve as the chief executive for more than two terms. Section 8(5) The chief executive shall, subject to the general direction and control of the Authority , be charged with the direction of the affairs and transactions of the Authority , the exercise, discharge and performance of its objectives, functions and duties, and the administration and control of the servants of the Authority . [Act No. 3 of 2000 , s. 8, Act No. 2 of 2002 , Sch., Act No. 35 of 2012 , s. 2, Act No. 48 of 2013 , s. 4.]
Section 8Verify source
§ 9THE CAPITAL MARKETS AUTHORITY - 9. Appointment and remuneration of staffProvision

The Authority may appoint officers and servants; those appointed shall be remunerated as the Authority determines; and officers must perform powers and duties assigned by the chief executive, subject to the Act.

Section 9. Appointment and remuneration of staff Section 9(1) The Authority may appoint such other officers and servants as it considers necessary for the efficient discharge of its responsibilities and functions. Section 9(2) The officers and servants appointed under subsection (1) shall be remunerated in such manner and at such rates, and shall be subject to such conditions of service, as may be determined by the Authority . Section 9(3) Every officer or servant appointed under subsection (1) shall, subject to this Act, exercise such powers and functions and perform the duties assigned to him or her from time to time by the chief executive.
Section 9Verify source

Part IIA

RECOGNITION OF SELF-REGULATORY ORGANIZATIONS

§ 18BRECOGNITION OF SELF-REGULATORY ORGANIZATIONS - 18B. Recognition ofself-regulatory organizationOffence

Organizations that intend to operate as self-regulatory organizations must apply to the Authority in the prescribed form for recognition and meet specified criteria; operating without recognition is an offence; the Authority may delegate powers to recognized self-regulatory organizations and may require periodical reports.

Section 18B. Recognition ofself-regulatory organization Section 18B(1) An organization which intends to operate as a self-regulatory organization shall apply to the Authority , in the prescribed form, for recognition as such. Section 18B(2) An application made under subsection (1) shall specify the functions and powers that the organization is seeking to exercise upon recognition. Section 18B(3)(a) has a constitution and internal rules and policies which are consistent with this Act or related legislation; Section 18B(3)(b) has the capacity and financial and administrative resources necessary or desirable to carry out its functions as a self-regulatory organization , including dealing with a breach of the law or of any other applicable standards or guidelines; Section 18B(3)(c) is a fit and proper person; Section 18B(3)(d) has competent personnel for the carrying out of its functions; and Section 18B(3)(e) satisfies such other criteria as may be specified by the Authority . Section 18B(4) A person who operates or purports to operate as a self-regulatory organization without being recognized as such by the Authority commits an offence. Section 18B(5) The Authority may, in writing, delegate any of its powers or functions to a self-regulatory organization . Section 18B(6)(a) the function or power delegated to the self-regulatory organization ; Section 18B(6)(b) the extent of disciplinary powers delegated and the scope of sanctions which may be imposed; Section 18B(6)(c) the terms and conditions upon which the power or function has been delegated and may be exercised; Section 18B(6)(d) the persons authorized to exercise the delegated powers or functions on behalf of the self-regulatory organization ; Section 18B(6)(e) the manner in which a self-regulatory organization shall submit periodical reports to the Authority in respect of the exercise of a delegated power or function; and Section 18B(6)(f) any other matter which the Authority may prescribe.
Section 18BVerify source
§ 18CRECOGNITION OF SELF-REGULATORY ORGANIZATIONS - 18C. Rules of self-regulatory organizationsCommencement

Self-regulatory organizations must make rules for their regulatory or supervisory functions (including sanctions and disciplinary powers); those rules cannot be implemented unless approved by the Authority, and amendments to the constitution must be submitted to the Authority for approval before coming into operation.

Section 18C. Rules of self-regulatory organizations Section 18C(1) A self-regulatory organization shall make rules relating to the matters for which it has regulatory or supervisory functions, including any sanction and disciplinary powers to be exercised in connection with the functions delegated to it. Section 18C(2)(a) management structures and shareholding rights of the self-regulatory organization taking into consideration the interests, rights and liabilities of its members, consumers, investors and users of their services; Section 18C(2)(b) rules of membership and conditions for approval and admission of members; Section 18C(2)(c) the procedure for dispute resolution between members, users, investors and their clients and the right of appeal to the Authority or other relevant primary regulator; Section 18C(2)(d) the rules and procedures of the self-regulatory organization relating to reporting and accountability to any primary regulator other than the Authority ; and Section 18C(2)(e) mechanisms of protecting personal data of the data subjects in compliance with the Data Protection Act (Cap. 411C). Section 18C(3) The rules made under subsection (1) shall not be implemented unless they have been approved by the Authority . Section 18C(4) A self-regulatory organization shall submit any amendments to its constitution to the Authority for approval before the amendments come into operation. [Act No. 37 of 2011 , s. 6, Act No. 24 of 2019 , Sch.]
Section 18CVerify source
§ 18DRECOGNITION OF SELF-REGULATORY ORGANIZATIONS - 18D. Restriction on decision by aself-regulatory organizationProvision

Restriction on decision by a self-regulatory organization where the section requires that person be given an opportunity to make representations about the matter.

Section 18D. Restriction on decision by aself-regulatory organization Section has given that person an opportunity to make representations about the matter; or
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§ 18ERECOGNITION OF SELF-REGULATORY ORGANIZATIONS - 18E. Disciplinary action by aself-regulatory organizationProvision

Self-regulatory organisations may discipline their members; if they do so they must immediately inform the Authority in writing (including name, action, reason, any fine amount and suspension period); the Authority may review or take disciplinary action itself (including where an SRO fails to act) but must give affected parties an opportunity to be heard; SRO action does not stop the Authority from taking further action.

Section 18E. Disciplinary action by aself-regulatory organization Section 18E(1) A self-regulatory organization may take disciplinary action against any of its members in accordance with its rules, if the member contravenes any provision of the rules. Section 18E(2) A self-regulatory organization shall, where it has taken disciplinary action under subsection (1), immediately inform the Authority , in writing, of the name of the member , the action taken and the reason therefor, including the amount of any fine and the period of suspension, if any. Section 18E(3) The Authority may, on its own motion or on application by an aggrieved person, review any disciplinary action taken under subsection (1) and may affirm, modify or set aside the decision after giving the aggrieved person and the self-regulatory organization an opportunity to be heard. Section 18E(4) Nothing in this section shall preclude the Authority , in any case where a self-regulatory organization fails to act against its member , from suspending, expelling or otherwise disciplining a member of the self-regulatory organization . Section 18E(5) The Authority shall, before taking any action under subsection (4), give the licensed person and the self-regulatory organization an opportunity to be heard. Section 18E(6) Any action taken by a self-regulatory organization under subsection (1) shall not prejudice the power of the Authority to take any further action that it considers necessary with regard to the licensed person . [Act No. 37 of 2011 , s. 6.]
Section 18EVerify source
§ 18FRECOGNITION OF SELF-REGULATORY ORGANIZATIONS - 18F. Protection from personal liabilityProvision

Protection from personal liability for a self-regulatory organization (text fragment).

Section 18F. Protection from personal liability Section a self-regulatory organization ; or
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§ 18GRECOGNITION OF SELF-REGULATORY ORGANIZATIONS - 18G. Appointment ofkey personnelby aself-regulatory organizationProvision

A self-regulatory organization must not change its key personnel unless it first gives prior written notification to the Authority and receives the Authority's confirmation that it has no objection.

Section 18G. Appointment ofkey personnelby aself-regulatory organization Section A self-regulatory organization shall not change its key personnel except with prior written notification to the Authority of the intention to change and receipt from the Authority of a confirmation that it has no objection to the proposed change. [Act No. 37 of 2011 , s. 6.]
Section 18GVerify source
§ 18HRECOGNITION OF SELF-REGULATORY ORGANIZATIONS - 18H. Directions to aself-regulatory organizationAmendment

The Authority may, after giving a self-regulatory organization a reasonable opportunity to be heard, give a written direction to that self-regulatory organization under this section.

Section 18H. Directions to aself-regulatory organization Section 18H(1) The Authority may, after giving a self-regulatory organization a reasonable opportunity to be heard in respect of any matter, give a direction, in writing, to the self-regulatory organization in terms of this section. Section 18H(2)(a) suspend any provision of the constitution or rules of a self-regulatory organization for a period specified in the direction; Section 18H(2)(b) require a self-regulatory organization , subject to the Companies Act (Cap. 486) or any other law, to amend its constitution in the manner specified in the direction so as to bring it in conformity with this Act, or any other law; Section 18H(2)(c) require a self-regulatory organization to amend its rules; or Section 18H(2)(d) require a self-regulatory organization to implement or enforce its constitution or its rules. [Act No. 37 of 2011 , s. 6.]
Section 18HVerify source
§ 18IRECOGNITION OF SELF-REGULATORY ORGANIZATIONS - 18I. Removal of an officer of theself-regulatory organizationProvision

Provides a ground for removing an officer: if an officer of a self-regulatory organization "is not a fit and proper person to be an officer of the organization."

Section 18I. Removal of an officer of theself-regulatory organization Section an officer of a self-regulatory organization is not a fit and proper person to be an officer of the organization; or
Section 18IVerify source
§ 18JRECOGNITION OF SELF-REGULATORY ORGANIZATIONS - 18J. Annual reportProvision

Section 18J requires certain information in an annual report and lists circumstances triggering a report; it also states that making a report under subsection (2) does not breach an auditor's duties.

Section 18J. Annual report Section 18J(1)(a) a report on the corporate governance policy of the self-regulatory organization ; Section 18J(1)(b) financial statements prepared and audited in accordance with the accounts and audit requirements for regulated persons; and Section 18J(1)(c) such other requirements as may be specified by the Authority . Section 18J(2)(a) there is or has been an adverse change in the risks inherent in the business of a self-regulatory organization with the potential to jeopardize the ability of the self-regulatory organization to continue as a going concern; Section 18J(2)(b) the self-regulatory organization may be in contravention of any provisions of this Act, or directions issued by the Authority ; Section 18J(2)(c) a financial crime has been or is likely to be committed; or Section 18J(2)(d) serious irregularities have occurred, Section 18J(3) A report made under subsection (2) shall not constitute a breach of the duties of the auditor. [Act No. 37 of 2011 , s. 6.]
Section 18JVerify source

Part III

PROVISIONS RELATING TO EXCHANGES

§ 19PROVISIONS RELATING TO EXCHANGES - 19. Approval ofsecurities exchangerequiredProvision

Persons must not operate or hold out a securities, commodities or derivatives exchange unless they have been approved by the Authority.

Section 19. Approval ofsecurities exchangerequired Section Subject to this Act, no person shall carry on a business as a securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") or hold himself out as providing or maintaining a securities market or a derivatives market unless he or she has been approved as a securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") by the Authority in such manner as the Authority may prescribe. [Act No. 3 of 2000 , s. 13, Act No. 37 of 2011 , s. 7, Act No. 48 of 2013 , s. 10, Act No. 38 of 2016 , s. 72.]
Section 19Verify source
§ 19APROVISIONS RELATING TO EXCHANGES - 19A. Restriction on use of the words “stock exchange”, “securities exchange”etc.Provision

A person must not use the words “stock exchange”, “securities exchange”, “commodities exchange”, “derivatives exchange” or “futures exchange” in connection with a business unless they have an exchange licence granted by the Authority.

Section 19A. Restriction on use of the words “stock exchange”, “securities exchange”etc. Section A person shall not use the words “ stock exchange ”, “ securities exchange ”, “commodities exchange”, “ derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") ” or “futures exchange” in connection with a business except in accordance with an exchange licence granted by the Authority . [Act No. 37 of 2011 , s. 8, Act No. 38 of 2016 , s. 73.]
Section 19AVerify source
§ 20PROVISIONS RELATING TO EXCHANGES - 20. Application forsecurities exchange, commodities exchange approvalProvision

Applications for approval of securities, commodities or derivatives exchanges must be made to the Authority in the prescribed form and accompanied by the prescribed fee; approved exchanges must comply with Authority requirements and pay an annual fee at a rate prescribed by the Authority.

Section 20. Application forsecurities exchange, commodities exchange approval Section 20(1) An application for securities exchange , commodities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") approval shall be made to the Authority in the form and manner prescribed by the Authority and shall be accompanied by the prescribed fee. Section 20(2)(a) that the applicant is a limited liability company whose liability is limited by shares, or as may be prescribed by the Authority ; Section 20(2)(b) that the applicant’s board of directors is constituted in a manner prescribed by the Authority ; Section 20(2)(c) the applicant has made and adopted rules in compliance with the Act and any Regulations made thereunder. Section 20(3) Deleted by of ActNo. 10 of 2010, s. 47(b) . Section 20(4) The directors of a securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") other than the chief executive shall elect a Chairperson from amongst themselves. Section 20(5) The function of the board of directors of a securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") shall be the overall administration of the securities exchange . Section 20(6) All fees to be charged by a securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") shall be subject to prior approval by the Authority notwithstanding the constitution of such securities exchange . Section 20(7) An approved securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") shall comply with all requirements of the Authority and pay an annual fee to the Authority at such rate as the Authority may prescribe. Section 20(8) The Authority may require an applicant for a licence as a securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") to lodge an application to be recognized as a self regulatory organization as a condition for obtaining and maintaining its licence . [Act No. 10 of 1994 , s. 4, Act No. 3 of 2000 , s. 14, Act No. 10 of 2010 , s. 47, Act No. 37 of 2011 , s. 9, Act No. 48 of 2013 , s. 11, Act No. 38 of 2016 , s. 74.]
Section 20Verify source
§ 21PROVISIONS RELATING TO EXCHANGES - 21. Changes insecurities exchange, commodities exchange rulesAmendment

The Authority must approve amendments to rules of approved exchanges; exchanges must forward amendments and obtain prior consent for certain changes; the Authority must notify decisions within thirty days and may summarily abrogate rules within thirty days of implementation.

Section 21. Changes insecurities exchange, commodities exchange rules Section 21(1) The rules of an approved securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , in so far as they have been approved by the Authority , shall not be amended, varied or rescinded without the prior approval of the Authority . Section 21(2) Where the board of directors of an approved securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") wishes to amend its rules, it shall forward the amendments to the Authority for approval. Section 21(3) The Authority shall, after hearing from the securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , and within thirty days of receipt of a notice under subsection (2) give written notice to the securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") stating whether such amendments to the rules are allowed or disallowed and in the event of the rules being disallowed, the Authority shall give reasons for such disallowance. Section 21(4)(a) a stated policy, practice or interpretation with respect to the meaning, administration or enforcement of an existing rule; Section 21(4)(b) a proposal establishing or changing a fee or other charge; or Section 21(4)(c) a proposal dealing solely with the administration of the exchange or other matters which the Authority may specify. Section 21(5) In addition to the provisions of subsection (4), the Authority may add other items which it determines to be appropriate in fulfilling its objective under this Act: Provided that the Authority may summarily abrogate such exchange rules within thirty days of their implementation and require that the rules undergo the procedure prescribed in subsection (3) except that the summary abrogation shall not effect the validity of the rules while in force nor shall it be subject to appeal. Section 21(6) Where an approved securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") proposes to alter any particulars already furnished or undergoes or intends to undergo a change from its state specified in the application for approval it shall inform the Authority and obtain its prior consent before such alteration or change is effected. [Act No. 48 of 2013 , s. 12, Act No. 38 of 2016 , s. 75.]
Section 21Verify source
§ 21APROVISIONS RELATING TO EXCHANGES - 21A. Securities exchange to make rulesProvision

An approved securities exchange may make rules to carry out its functions, including regulating its activities, products, systems and fees.

Section 21A. Securities exchange to make rules Section An approved securities exchange may make rules for the carrying out of its functions and, in particular, for the regulation of its activities, products, systems and fees. [Act No. 48 of 2013 , s. 13.]
Section 21AVerify source
§ 21BPROVISIONS RELATING TO EXCHANGES - 21B. Submission of rules toAuthorityProvision

An approved securities exchange must submit rules made under section 21A to the Authority for review at least thirty days before their proposed introduction.

Section 21B. Submission of rules toAuthority Section Not less than thirty days prior to the proposed date of introduction of the rules made under section 21A, an approved securities exchange shall submit the rules to the Authority for review and consideration to determine if there exists risks that have not been adequately mitigated in the proposed rules. [Act No. 48 of 2013 , s. 13.]
Section 21BVerify source
§ 21CPROVISIONS RELATING TO EXCHANGES - 21C.Authoritymay abrogate rulesProvision

The Authority may abrogate rules made under section 21A, subject to section 21B and where risks remain unmitigated.

Section 21C.Authoritymay abrogate rules Section Subject to section 21B, the Authority may abrogate any rules made under section 21A if there exists risks that have not been adequately mitigated in the rules. [Act No. 48 of 2013 , s. 13.]
Section 21CVerify source
§ 22PROVISIONS RELATING TO EXCHANGES - 22. Disciplinary action bysecurities exchangeProvision

If a securities or derivatives exchange disciplines a trading participant or a listed company it must notify the Authority in writing within seven days with particulars (name, reason and nature of action).

Section 22. Disciplinary action bysecurities exchange Section 22(1) Where a securities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") reprimands, fines, suspends or expels, or otherwise takes disciplinary action against a trading participant or a listed company , it shall within seven days give notice to the Authority in writing, giving particulars including the name of the person, the reason for and nature of the action taken. Section 22(2) The Authority may review any disciplinary action taken by a securities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") under subsection (1) and, on its own motion, or in response to the appeal of an aggrieved person, may affirm or set aside a securities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") decision after giving the trading participant or the company and the securities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") an opportunity to be heard. Section 22(3) Nothing in this section shall preclude the Authority , in any case where a securities exchange fails to act against a trading participant or a listed company or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") fails to act against a futures member , from itself, suspending, expelling or otherwise disciplining the subject person, but before doing so the Authority shall give such persons and the exchange an opportunity to be heard. [Act No. 10 of 2010 , s. 48, Act No. 48 of 2013 , s. 14.]
Section 22Verify source
§ 22APROVISIONS RELATING TO EXCHANGES - 22A. Directions to asecurities exchange, commodities exchange and a futures exchangeProvision

The Authority has power to give directions to securities exchanges, commodities exchanges and derivatives exchanges for specified purposes such as market integrity, clearing and settlement, governance, the public interest and investor protection.

Section 22A. Directions to asecurities exchange, commodities exchange and a futures exchange Section 22A(1)(a) the fair, transparent and efficient operation of a securities market, commodities markets or derivatives market ; Section 22A(1)(a)(i) the fair, transparent and efficient operation of a securities market, commodities markets or derivatives market ; Section 22A(1)(a)(ii) the fair, transparent and effective clearing and settlement of transactions in exchange-traded derivatives contracts or securities transactions; Section 22A(1)(a)(iii) the integrity and proper management of systemic risks in securities markets, commodities markets or derivatives market ; or Section 22A(1)(a)(iv) a fair and proper governance structure of the securities exchange , commodities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") ; Section 22A(1)(b) in the interest of the public; or Section 22A(1)(c) for the protection of the interests of investors. Section 22A(2)(a) the clearing or settlement of securities or exchange-traded derivatives contracts and the making of adjustments to contractual obligations arising out of those securities transactions or exchange-traded derivatives contracts; Section 22A(2)(b) the trading or the termination of trading on or through the facilities of that securities exchange , commodities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") ; Section 22A(2)(c) the manner in which a securities exchange , commodities exchange carries on its business, including the reporting of off-market trades by trading participants of the securities exchange ; or Section 22A(2)(d) any other matter that the Authority may consider necessary for the effective administration of this Act.
Section 22AVerify source
§ 22BPROVISIONS RELATING TO EXCHANGES - 22B. Powers of theAuthorityto intervene in the operations ofsecuritiesand futures exchangesProvision

The Authority has specified powers to intervene in securities and derivatives exchanges, including suspending or terminating trading, ordering liquidation, fixing settlement prices, requiring margins, modifying exchange rules, and setting emergency measures.

Section 22B. Powers of theAuthorityto intervene in the operations ofsecuritiesand futures exchanges Section 22B(1)(a) there is in place, an act of Government affecting securities or commodities; Section 22B(1)(b) there is a major market disturbance which prevents the market from accurately reflecting the forces of supply and demand for such securities or commodities; Section 22B(1)(c) there is a threatened or actual manipulation of the market; Section 22B(1)(d) the Authority considers it necessary or expedient in the interest of the public or for the protection of the interests of the investors, Section 22B(1)(i) maintain or restore the fair, efficient and transparent trading in securities or any class of securities or exchange-traded derivatives contracts or any class of exchange-traded derivatives contracts; or Section 22B(1)(ii) liquidate any position in respect of any securities or any class of securities or exchange-traded derivatives contracts or any class of exchange-traded derivatives contracts. Section 22B(2)(a) terminating trading on a securities market or a derivatives market or trading of a specific security or a exchange-traded derivatives contract; Section 22B(2)(b) suspending trading on a securities market or derivatives market or trading of a specific security; Section 22B(2)(c) confining trading to liquidation of securities or exchange-traded derivatives contracts' positions; Section 22B(2)(d) ordering the liquidation of all positions or part thereof or the reduction in such positions; Section 22B(2)(e) limiting trading to a specific price range; Section 22B(2)(f) modifying the trading days or hours; Section 22B(2)(g) altering the conditions of delivery; Section 22B(2)(h) fixing the settlement price at which exchange-traded derivatives contracts' positions are to be liquidated; Section 22B(2)(i) requiring any person to act in a specified manner in relation to trading in securities or any class of securities or exchange-traded derivatives contracts or any class of exchange-traded derivatives contracts; Section 22B(2)(j) requiring margins or additional margins for any securities or exchange-traded derivatives contracts; and Section 22B(2)(k) modifying or suspending any of the rules of a securities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") . Section 22B(3) Where the Authority suspends trading under subsection (2)(b), the suspension shall not exceed a period of three months: Provided that the Authority may, if it considers it necessary, extend the suspension for one further period not exceeding three months at the expiry of which the Authority shall either notify the securities exchange or the derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") in writing that the suspension has expired, or proceed to cancel the securities exchange or the derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") license, as the Authority considers appropriate. Section 22B(4)(a) set emergency margin levels in any securities or class of securities or any exchange-traded derivatives contracts or class of exchange-traded derivatives contracts; Section 22B(4)(b) set limits that may apply to market positions acquired in good faith prior to the date of the direction of the Authority ; or Section 22B(4)(c) take such other action as the Authority may consider necessary to maintain or restore fair, efficient and transparent trading in any securities or class of securities or exchange-traded derivatives contracts or class of exchange-traded derivatives contracts, or liquidation of any position in respect of exchange-traded derivatives contracts or class of exchange-traded derivatives contracts.
Section 22BVerify source
§ 22CPROVISIONS RELATING TO EXCHANGES - 22C. Futures contract to be approved by theAuthorityProvision

Derivatives exchanges must not allow trading of an exchange-traded derivatives contract on their derivatives market without the written approval of the Authority; the Authority may grant approval subject to conditions or restrictions, may withdraw approval on specified grounds, and must give the exchange an opportunity to be heard before withdrawal.

Section 22C. Futures contract to be approved by theAuthority Section 22C(1) A derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") shall not permit the trading of an exchange-traded derivatives contract on the derivatives market established or operated by the derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") without the written approval of the Authority to trade in such exchange-traded derivatives contracts. Section 22C(2) The Authority may grant approval for the trading of an exchange-traded derivatives contract on the derivatives market established or operated by the derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") subject to such conditions or restrictions as the Authority may impose. Section 22C(3)(a) the derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") fails to comply with a condition or restriction imposed under subsection (2); or Section 22C(3)(b) the Authority considers that it would be contrary to the interests of the investing public to permit the trading in that exchange-traded derivatives contract to continue. Section 22C(4) The Authority shall not withdraw its approval under subsection (3) without first giving the derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") an opportunity to be heard. Section 22C(5) An exchange-traded derivative contract approved to trade on a derivatives market of a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") by the Authority under this Act shall be lawful for all purposes and shall not constitute a gaming or wagering contract under the Betting, Lotteries and Gaming Act (Cap. 131). [Act No. 48 of 2013 , s. 15.]
Section 22CVerify source
§ 22DPROVISIONS RELATING TO EXCHANGES - 22D. Fixing of position and trading limits in futures contractsProvision

The Authority may, by written notice, set limits on trading and positions in exchange-traded derivatives to prevent or reduce excessive speculation; those limits apply to aggregated positions and trading by persons acting together as if they were one person.

Section 22D. Fixing of position and trading limits in futures contracts Section 22D(1) The Authority may, for the purpose of preventing, diminishing or eliminating excessive speculation in any commodity under an exchange-traded derivatives contract, by notice in writing, from time to time, fix such limits as the Authority considers necessary on the amount of trading which may be done or exchange-traded derivatives contracts' positions which may be held by any person, generally or specifically, under an exchange-traded derivatives contract traded on the derivatives market of or subject to the rules of a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") . Section 22D(2) The limits upon exchange-traded derivatives contracts' positions and trading fixed by the Authority under subsection (1) shall apply to positions held by, and trading done by two or more persons acting in accordance with an express or implied agreement or understanding, as if the positions were held by, or the trading done by a single person. Section 22D(3)(a) buy or sell or agree to buy or sell, under an exchange-traded derivatives contract traded on the derivatives market of or subject to the rules of a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , any number of contracts in excess of the trading limits fixed for one business day or any other stated period set by the Authority ; or Section 22D(3)(b) hold or control a gross buy or sell position under an exchange-traded derivatives contract traded on the derivatives market of or subject to the rules of a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") in excess of any position limit fixed by the Authority . Section 22D(4)(a) fixing different trading or position limits for different exchange-traded derivatives contracts, different delivery months or for different days remaining until the last day of trading in an exchange-traded derivatives contract; or Section 22D(4)(b) exempting transactions under this section.
Section 22DVerify source
§ 22EPROVISIONS RELATING TO EXCHANGES - 22E. Default process of a clearing house to take precedence over laws of insolvencyProvision

Default-process provisions that override insolvency laws for a central depository also apply to a clearing house of a securities or derivatives exchange.

Section 22E. Default process of a clearing house to take precedence over laws of insolvency Section The provisions in respect of a default process and the precedence of the default process over the laws of insolvency in relation to a central depository under the Central Depositories Act (Cap. 485C) shall apply to a clearing house of a securities or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") . [Act No. 48 of 2013 , s. 15.]
Section 22EVerify source

Part IV

SECURITIES INDUSTRY LICENCES

§ 23SECURITIES INDUSTRY LICENCES - 23. Licences requiredProvision

Persons must hold a valid licence or approval from the Authority to carry on the listed securities-related businesses; approved persons must comply with Authority requirements and pay an annual fee; the Authority may approve or license other persons impacting the Act's objectives.

Section 23. Licences required Section 23(1) No person shall carry on business as a stockbroker , derivatives broker, REIT manager ("a company incorporated in Kenya and licensed by the Authority to provide real estate management services in respect of a real estate investment trust;") , trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") , dealer , investment adviser , fund manager , investment bank , central depository, authorised securities dealer , authorized depository, online forex broker , commodity dealer , commodity broker or hold himself out as carrying on such a business unless he or she holds a valid licence issued under this Act or under the authority of this Act. Section 23(2) No person shall carry on or hold himself out as carrying on business as a securities exchange , commodities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , registered venture capital company , collective investment scheme or credit rating agency unless he or she is approved as such by the Authority . Section 23(3) A person approved by the Authority to carry out any business required by this Act to be approved shall comply with all requirements of the Authority and pay an annual fee to the Authority at such rate as the Authority may prescribe. Section 23(4) Nothing in this section shall be construed as limiting the powers of the Authority to approve or license any other person operating in any other capacity which has a direct impact on the attainment of the objectives of this Act. [Act No. 3 of 2000 , s. 15, Act No. 2 of 2002 , Sch., Act No. 8 of 2008 , s. 53, Act No. 37 of 2011 , s. 10, Act No. 48 of 2013 , s. 16, Act No. 38 of 2016 , ss. 50 & 77.]
Section 23Verify source
§ 24SECURITIES INDUSTRY LICENCES - 24. Application forlicenceProvision

Applications for (or renewals of) licences must be made to the Authority in the prescribed form with the prescribed fee; renewals may be made within three months but not later than one month before expiry. The Authority may require further information, may grant licences subject to conditions and vary them, must give an opportunity to be heard before refusing, and may suspend or revoke licences. Licensed persons must not change key control persons without prior written confirmation from the Authority.

Section 24. Application forlicence Section 24(1) An application for a licence or for the renewal of a licence shall be made to the Authority in the prescribed form and shall be accompanied by the prescribed fee and in the case of an application for the renewal of a licence , may be made within three months but not later than one month prior to the expiry of the licence . Section 24(2) The Authority may require an applicant to supply such further information as it considers necessary in relation to the application. Section 24(3) A licence shall only be granted if the applicant meets and continues to meet such minimum financial and other requirements as may be prescribed by the Authority . Section 24(4) The Authority may grant a licence subject to such conditions or restrictions as it thinks fit and the Authority may, at any time by written notice to a licence holder, vary any condition or restriction or impose further conditions or restrictions. Section 24(5) The Authority shall not refuse to grant a licence without first giving the applicant or holder of a licence an opportunity of being heard. Section 24(6) Deleted by ActNo. 48 of 2013, s. 17(b) . Section 24(7) A license granted under this Act shall remain valid unless suspended or revoked by the Authority in accordance with this Act. Section 24(8) Any person licensed by the Authority shall not change its shareholders, directors, chief executives or key personnel except with the prior confirmation in writing, by the Authority that it has no objection to the proposed change and subject to compliance with any conditions imposed by the Authority . [Act No. 3 of 2000 , s. 16, Act No. 9 of 2007 , s. 49, Act No. 8 of 2008 , s. 54, Act No. 48 of 2013 , s. 17.]
Section 24Verify source
§ 24ASECURITIES INDUSTRY LICENCES - 24A. Criteria for suitabilityProvision

The Authority must give a person an opportunity to be heard before deciding whether that person is fit and proper under this Act; the section sets out suitability criteria and defines "group of companies".

Section 24A. Criteria for suitability Section 24A(1)(a) financial status or solvency of the person; Section 24A(1)(b) educational or other qualifications or experience of the person, having regard to the nature of the functions which, if the application is granted, the person shall perform; Section 24A(1)(c) status of any other licence or approval granted to the person by any financial sector regulator; Section 24A(1)(d) ability of the person to carry on the regulated activity competently, honestly and fairly; and Section 24A(1)(e) in the case of a natural person, of that individual; or Section 24A(1)(e)(i) in the case of a natural person, of that individual; or Section 24A(1)(e)(ii) in the case of a company , of the company chairperson, directors, chief executive, management and all other personnel including all duly appointed agents, and any substantial shareholder of the company . Section 24A(2)(a) has contravened the provision of any law, in Kenya or elsewhere, designed for the protection of members of the public against financial loss due to dishonesty, incompetence, or malpractice by persons engaged in transacting with marketable securities ; Section 24A(2)(a)(i) has contravened the provision of any law, in Kenya or elsewhere, designed for the protection of members of the public against financial loss due to dishonesty, incompetence, or malpractice by persons engaged in transacting with marketable securities ; Section 24A(2)(a)(ii) was a director of a licensed person who has been liquidated or is under liquidation or statutory management; Section 24A(2)(a)(iii) has taken part in any business practice which, in the opinion of the Authority , was fraudulent prejudicial to the market or public interest, or was otherwise improper, which would otherwise discredit the person's methods of conducting business; or Section 24A(2)(a)(iv) has taken part or has been associated with any business practice which casts doubt on the competence or soundness of judgment of that person; or Section 24A(2)(a)(v) has acted in such a manner as to cast doubt on the person's competence and soundness of judgment; Section 24A(2)(b) any person who is to be employed by, associated with, or who shall be acting for or on behalf of, the applicant for the purposes of a regulated activity, including an agent ; Section 24A(2)(b)(i) any person who is to be employed by, associated with, or who shall be acting for or on behalf of, the applicant for the purposes of a regulated activity, including an agent ; Section 24A(2)(b)(ii) any other company in the same group of companies; or Section 24A(2)(c) take into account whether the applicant has established effective internal control procedures and risk management systems to ensure its compliance with all applicable regulatory requirements; and Section 24A(2)(d) have regard to the state of affairs of any other business which the person carries on or purports to carry on. Section 24A(3) The Authority shall give a person an opportunity to be heard before determining whether the person is fit and proper for the purposes of this Act. Section 24A(4) For the purposes of this section, "group of companies" means any two or more companies one of which is the holding company of the others. [Act No. 35 of 2012 , s. 6.]
Section 24AVerify source
§ 25SECURITIES INDUSTRY LICENCES - 25.[Repealed by ActNo. 48 of 2013, s. 18.]Repeal

Section 25.[Repealed by ActNo. 48 of 2013, s. 18.]

Section 25.[Repealed by ActNo. 48 of 2013, s. 18.]
Section 25Verify source
§ 25ASECURITIES INDUSTRY LICENCES - 25A. Imposition of additional sanctions and penaltiesOffence

Section 25A lists additional sanctions and penalties that the Authority may impose (including public reprimand, trading suspensions, licence restrictions or revocation, monetary recoveries and penalties), requires the Authority to publish names in its annual report, and sets specified monetary limits and multiplier-based recoveries.

Section 25A. Imposition of additional sanctions and penalties Section 25A(1)(a) a public reprimand; Section 25A(1)(a)(i) a public reprimand; Section 25A(1)(a)(ii) suspension in the trading of an issuer’s securities , commodities or derivatives for a specified period; Section 25A(1)(a)(iii) suspension of a licensed person from trading for a specified period; Section 25A(1)(a)(iv) restriction on the use of a licence ; Section 25A(1)(a)(v) recovery from such person of the benefit accrued from the breach and an amount equivalent to two times the amount of the benefit accruing to such person by virtue of the breach; Section 25A(1)(a)(vi) the levying of financial penalties not exceeding ten million shillings; Section 25A(1)(a)(vii) revocation of the licence of such person; Section 25A(1)(b) require the licensed or approved person to take disciplinary action against the employee; Section 25A(1)(b)(i) require the licensed or approved person to take disciplinary action against the employee; Section 25A(1)(b)(ii) disqualification of such employee from employment in any capacity by any licensed or approved person or employee issuer for a specified period; Section 25A(1)(b)(iii) recovery from the employee the benefit accrued from the breach of a licensed or approved person an amount double the benefit accruing to such person be reason of the breach; Section 25A(1)(b)(iv) the levying of financial penalties not exceeding five million shillings; Section 25A(1)(c) disqualification of such person from appointment as a director of an issuer or licensed or approved person including, a securities , commodities or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") ; Section 25A(1)(c)(i) disqualification of such person from appointment as a director of an issuer or licensed or approved person including, a securities , commodities or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") ; Section 25A(1)(c)(ii) the recovery from such person of the benefit accrued from the breach an amount equivalent to two times the amount of the benefit accruing to the person by reason of the breach; Section 25A(1)(c)(iii) the levying of financial penalties in such amounts as may be prescribed. Section 25A(1A) The financial penalties and recoveries set out under paragraphs (1)(a)(v) and (vii), (1)(b)(iii) and (iv), (1)(c)(ii) and (iii), (2) and (6) shall be recoverable summarily by the Authority as civil debts. Section 25A(2) In addition to any other sanction or penalty that may be imposed under this section, the Authority may make orders for restitution, subject to the provisions of subsection (3). Section 25A(3)(a) that the amount of the loss is quantified and proved to the Authority by the person making the claim; and Section 25A(3)(b) that notice is served by the Authority on the person expected to make the restitution, containing details of the amount claimed and informing them of their right to be heard. Section 25A(4) The Authority shall, in its annual report, publish the names of persons against whom actions has been taken by the Authority under this Part. Section 25A(5) For the purposes of this Act, an act, omission or failure of an agent , employee or any other person acting on behalf of a licensed person shall be considered to be the act, omission or failure of the licensed person as well as of the agent , employee or any other person acting as such. Section 25A(6)(a) a breach of trading rules of a securities exchange by a licensed person shall be double the brokerage commission payable to the licensed person on the relevant trade, or double the annual fees, whichever is higher; Section 25A(6)(b) failure to comply with a reporting requirement by an issuer or a licensed person shall be double the applicable prescribed annual listing fee or license fee, whichever is higher, for every calendar quarter during which the reporting requirement remains outstanding; and Section 25A(6)(c) failure on the part of the securities exchange to enforce and ensure compliance with this Act and the rules of the exchange as approved by the Authority , shall be equal to the annual license fee of the securities exchange .
Section 25AVerify source
§ 26SECURITIES INDUSTRY LICENCES - 26. Suspension or revocation of alicenceProvision

The Authority may suspend, extend, lift or revoke licences for specified reasons; it must publish suspended or revoked licences and must give affected persons an opportunity to be heard. Suspensions are limited to three months, extendable once for up to a further three months.

Section 26. Suspension or revocation of alicence Section 26(1)(a) goes into liquidation or an order is issued for the winding up of the licensed person ; Section 26(1)(b) carries out any activity outside the scope of the licensed or approved activities; Section 26(1)(c) has a receiver or a manager appointed on all or a substantial part of the property of the company ; Section 26(1)(d) ceases to carry on the licensed business for a period of more than thirty days unless it has obtained the approval of the Authority to do so; Section 26(1)(e) any of its directors or key employees has not, in the opinion of the Authority , performed their duties honestly and fairly; Section 26(1)(f) has contravened or failed to comply with any condition applicable in respect of the licence ; Section 26(1)(g) fails to comply with a direction of the Authority ; Section 26(1)(h) fails to provide the Authority with such information as it may require; Section 26(1)(i) provides false or misleading information; Section 26(1)(j) for any other reason, is no longer fit and proper person to hold a license; or Section 26(1)(k) is in breach of any other provision under this Act. Section 26(2) A suspension of a license under this section shall not exceed a period of three months: Provided that the Authority may, if the Authority considers necessary, extend the suspension for a further period not exceeding three months. Section 26(3) The Authority shall, at the expiry of the suspension period specified under subsection (2), lift the suspension or revoke the license, as the Authority considers appropriate. Section 26(4) Where a licensed person fails to pay the prescribed annual fee, the license held by such licensee shall be considered suspended. Section 26(5) Where a licence is suspended under subsection (4), and the licensee has not paid the prescribed fee within thirty days after the day on which the suspension takes effect or such further period as the Authority may specify, the licence shall stand revoked. Section 26(6) The Authority may revoke or suspend a license at the request of a licensed person . Section 26(7) The Authority shall publish, in the Gazette , all the licences suspended or revoked under this section. Section 26(8) The Authority shall, in all cases where the Authority takes action under sections 25 and 26, give the person affected by such action an opportunity to be heard. [Act No. 3 of 2000 , s. 18, Act No. 2 of 2002 , Sch, Act No. 48 of 2013 , s. 20.]
Section 26Verify source
§ 26ASECURITIES INDUSTRY LICENCES - 26A. Effect of revocation of alicenceProvision

Licensed persons must transfer client records as the Authority specifies; during restriction or suspension they must carry on essential operations to protect clients; in revocation they must carry on operations to close down the business connected with the revocation.

Section 26A. Effect of revocation of alicence Section 26A(1)(a) void or affect an agreement, transaction or arrangement entered into by a licensed person on the securities market of a securities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") before the revocation or suspension; or Section 26A(1)(b) affect the right, obligation or liability of any person arising under the agreement, transaction or arrangement. Section 26A(2)(a) require the licensed person to transfer to its client, records relating to client property or the affairs of the client held at any time for the client, in such manner, as the Authority may specify in the notice; or Section 26A(2)(b) in case of a restriction or suspension, carry on the essential business operations for the protection of the interests of clients during the period of restriction or suspension; or Section 26A(2)(b)(i) in case of a restriction or suspension, carry on the essential business operations for the protection of the interests of clients during the period of restriction or suspension; or Section 26A(2)(b)(ii) in case of a revocation, carry on business operations for the purpose of closing down the business connected with the revocation.
Section 26AVerify source
§ 27SECURITIES INDUSTRY LICENCES - 27. Register oflicenceholdersProvision

Requires publication in the Gazette of (a) names and addresses of licensed or approved persons before the thirtieth day of April each year and (b) names of persons whose licence is suspended or revoked within thirty days of suspension or revocation; and lists items of license-holder information in subsection (2).

Section 27. Register oflicenceholders Section 27(1)(a) before the thirtieth day of April in each year, cause the names and addresses of all persons licensed or approved to be published in the Gazette ; and Section 27(1)(b) within thirty days of suspension or revocation of a licence , cause the names of any persons whose licence is suspended or revoked to be published in the Gazette . Section 27(2)(a) his name; Section 27(2)(b) the address of the principal place at which he or she carries on the licensed business; and Section 27(2)(c) the name or style under which the business is carried on if different from the name of the holder of the licence .
Section 27Verify source
§ 28SECURITIES INDUSTRY LICENCES - 28. Obligation to report changesProvision

The holder of a licence must report changes when they cease to carry on the business to which the licence relates.

Section 28. Obligation to report changes Section the holder of a licence ceases to carry on the business to which the licence relates; or
Section 28Verify source
§ 29SECURITIES INDUSTRY LICENCES - 29. Licensing requirementsProvision

Section 29 lists licensing requirements and limits for securities industry licences, including prescribed applicant forms, minimum qualifications for key persons, administrative capacity, business-type specific conditions, admission fees, and ownership/control thresholds.

Section 29. Licensing requirements Section 29(1)(a) that the applicant is such legal entity as may be prescribed in the Regulations as the Authority may prescribe or is duly constituted as a collective investment scheme ; Section 29(1)(b) deleted by ActNo. 35 of 2012, s. 7 ; Section 29(1)(c) that at least one the director , chief executive officer or such other person who directs, conducts, manages or supervises the business of the applicant has satisfied such minimum qualification requirements as may be prescribed; Section 29(1)(d) in the case of a stockbroker , dealer or other person prescribed by the Authority that the applicant company has lodged security in such sum as may be determined by the Authority or an equivalent bank guarantee or bond with the securities exchange in which it is a trading participant or with the Authority or other person approved by the Authority as the case may be; Section 29(1)(e) that the applicant company has the necessary administrative capacity to carry on business for which the licence is required; Section 29(1)(f) in the case of an application for a stockbroker ’s licence , that the applicant shall carry on business solely on behalf of clients; Section 29(1)(g) in the case of an application for a dealer ’s licence , that the applicant shall carry on business solely on the applicant’s own behalf; Section 29(1)(gg) in the case of an application for a derivatives broker licences, that the applicant may carry on business either on behalf of clients or on the applicant’s own behalf, or both; Section 29(1)(h) deleted by ActNo. 35 of 2012, s. 7 . Section 29(2)(a) fulfils all the requirements imposed by the Authority and the relevant securities exchange , derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") or any self-regulatory organization ; and Section 29(2)(b) pays an admission fee which has been approved by the Authority . Section 29(3) A securities broker, a derivatives broker or a dealer whose license is revoked under section 26, shall cease to be a trading participant of the securities exchange . Section 29(4)(a) control or be beneficially entitled, directly or indirectly, to more than thirty three and a third percent of the issued share capital or voting rights in a company ; Section 29(4)(b) appoint more than one-third of the members of the Board of directors; or Section 29(4)(c) receive more than thirty-three and a third percent of the aggregate dividends and interest on shareholders loans to be paid in any given financial year: Section 29(4)(i) to a corporate entity which is licensed by a banking, insurance, pensions or securities regulator in Kenya or elsewhere in so far as such licence imposes restrictions on the entity in relation to the majority shareholding; or Section 29(4)(ii) where the ownership structure of that corporate shareholder is diverse and no person holds or controls more than twenty-five percent of its shares, votes, directorship appointments, dividends or interest on shareholder loans. Section 29(5)(a) to more than twenty-five percent of the listed share capital or voting right; Section 29(5)(b) to appoint more than one quarter of the members of the Board of Directors; or Section 29(5)(c) to receive more than twenty-five percent of the aggregate dividends and interest on shareholders loans to be paid in any given financial year, Section 29(6) The Authority shall, in determining whether a person has direct or indirect control or beneficial entitlement for the purposes of subsection (4) and (5), have regard to whether that person is an associate or party to any contract, arrangement or understanding between persons that may allow for control to be exercised directly or indirectly in relation to the company . Section 29(7)(a) a stockbrokerage; Section 29(7)(b) an investment bank ; Section 29(7)(c) a fund manager ; or Section 29(7)(d) derivatives broker; Section 29(7)(e) such other class of licensee as may be prescribed by the Authority by notice in the Gazette .
Section 29Verify source
§ 30SECURITIES INDUSTRY LICENCES - 30. Procedure for collective investment schemesCommencement

Collective investment schemes must be registered to operate in or from Kenya; promoters may apply for registration; the Authority registers schemes and issues certificates when requirements are met; pre-existing investment companies may operate without registration for six months; registered schemes cannot offer shares to the public unless they publish and file an information memorandum; information memoranda must meet Authority-prescribed requirements.

Section 30. Procedure for collective investment schemes Section 30(1) No person shall carry on any business or engage in any activity as a collective investment scheme , in or from within Kenya, unless such person is registered under this Act. Section 30(2) The promoters of a collective investment scheme that is proposed to be formed, may apply to the Authority for consent to register a collective investment scheme upon complying with the requirements prescribed under this Act. Section 30(3)(a) in the case of a unit trust or investment company , satisfactory proof that the proposed collective investment scheme is lawfully constituted in Kenya; Section 30(3)(b) in the case of a mutual fund , proposed incorporation documents and such other information or documents as may be stipulated by the Authority ; and Section 30(3)(c) an application in the prescribed form for registration as a collective investment scheme accompanied by the prescribed fee. Section 30(4) If the Authority is satisfied that the applicant has complied with all the requirements, it shall register the collective investment scheme and issue to the applicant a certificate of registration in the prescribed form. Section 30(5) In the case of a collective investment scheme to be set up as a mutual fund , upon the issue of a certificate of registration under subsection (4), a body corporate shall be deemed to have been incorporated as a collective investment scheme with variable capital, notwithstanding the provisions of the Companies Act (Cap. 486). Section 30(6) Notwithstanding the requirements of subsection (1), any person whom immediately before the commencement of this Act was carrying on business as an investment company within the meaning of this Act shall be entitled to carry on such business without registration for a period of six months from such commencement: Provided that such person shall apply for and obtain registration under this Act prior to the expiration of such period. Section 30(7) During the period referred to in subsection (6), the investment company shall be subject to all the provisions of this Act except the requirement as to registration. Section 30(8) No registered collective investment scheme shall, in or outside Kenya, offer its shares to the public unless prior to such offer , it publishes in writing an information memorandum signed by or on behalf of its officers and files a copy thereof with the Authority . Section 30(9) Every information memorandum under subsection (8) shall comply with such requirements as may be prescribed by the Authority . Section 30(10) Subject to the provisions of this Act, any regulations, rules, guidelines or notices issued thereunder, or anything contained in the articles of association or information memorandum , a mutual fund shall be a body corporate with perpetual succession and a common seal and shall be capable, in its corporate name, of doing and performing all things and acts which may lawfully be done by a body corporate. [Act No. 3 of 2000 , s. 22, Act No. 48 of 2013 , s. 23.]
Section 30Verify source

Part IVA

PUBLIC OFFERS OF SECURITIES

§ 30APUBLIC OFFERS OF SECURITIES - 30A. Offers ofsecuritiesOffence

An issuer or offeror must not make a public offer of securities unless they have submitted a prospectus to the Authority for approval; the Authority may exempt offers or impose different disclosure/prospectus requirements for restricted or structured offers; contravention is an offence.

Section 30A. Offers ofsecurities Section 30A(1)(a) invites another person to enter into an agreement for, or with a view to subscribing for or otherwise acquiring or underwriting any securities ; or Section 30A(1)(b) invites another person to make an offer under paragraph (a). Section 30A(2) An offer of securities to the public (a "public offer ") includes an offer to any section of the public in Kenya, however selected. Section 30A(3)(a) the offer is not calculated to result, directly or indirectly, in the securities of the company being available to persons other than those receiving the offer ; or Section 30A(3)(b) otherwise being a private concern of the person receiving the offer and the person making the offer . Section 30A(4) Subject to the provisions of this Act, an issuer or an offeror shall not make a public offer of securities unless that issuer or offeror ("an originator or seller of assets to a securitisation trust, any securitisation arranger and transaction adviser but not does not include a trustee;") has submitted a prospectus in respect of that offer to the Authority for approval. Section 30A(5) The Authority may, from time to time, exempt an offer from the requirements of this section. Section 30A(6) The Authority may impose different requirements in relation to a prospectus and ongoing disclosure in respect of a restricted public offer of securities , asset backed securities or other forms and structures of securities offering. Section 30A(7) A person who contravenes the provisions of this section commits an offence. [Act No. 48 of 2013 , s. 24.]
Section 30AVerify source
§ 30BPUBLIC OFFERS OF SECURITIES - 30B. Restricted public offersProvision

Public offers restricted to sophisticated investors.

Section 30B. Restricted public offers Section restricted to sophisticated investors; or
Section 30BVerify source
§ 30CPUBLIC OFFERS OF SECURITIES - 30C. Filing of information noticeProvision

The Authority may prescribe the minimum amount that may be paid under the offer of securities from time to time.

Section 30C. Filing of information notice Section where the minimum amount which may be paid under the offer of securities is not less than such amount as the Authority may prescribe from time to time; or
Section 30CVerify source
§ 30DPUBLIC OFFERS OF SECURITIES - 30D. Criminal liability for a defective prospectusOffence

Criminal liability for a defective prospectus covering false or misleading statements or omissions and penalties for individuals and companies.

Section 30D. Criminal liability for a defective prospectus Section 30D(1)(a) makes a false, misleading or deceptive statement in a prospectus; or Section 30D(1)(b) omits information or a statement from a prospectus which is required under this Act to be included, Section 30D(1)(i) in the case of an individual, to a fine not exceeding ten million shillings or to imprisonment for a term not exceeding seven years or to both; and Section 30D(1)(ii) in the case of a company , to a fine not exceeding thirty million shillings. Section 30D(2)(a) the statement was immaterial; or Section 30D(2)(b) he or she had reasonable grounds to believe and did, up to the time of the issue of the prospectus, that the statement was true.
Section 30DVerify source
§ 30EPUBLIC OFFERS OF SECURITIES - 30E. Compensation for false or misleading prospectusProvision

Persons listed in subsection (1) are jointly and severally liable to pay compensation to anyone who acquires securities in reliance on the prospectus and suffers loss from untrue or misleading statements or omissions.

Section 30E. Compensation for false or misleading prospectus Section 30E(1)(a) an issuer of securities to which a prospectus relates; Section 30E(1)(b) each person who is a director of that body corporate at the time when the prospectus is published; and Section 30E(1)(b)(i) each person who is a director of that body corporate at the time when the prospectus is published; and Section 30E(1)(b)(ii) each person who has given his consent to be named and is so named in the prospectus as a director or has agreed to become a director of that body corporate either immediately or at a future time; Section 30E(1)(c) each person who accepts, and is stated in the prospectus or supplementary prospectus as accepting, responsibility for, or for any part of, the prospectus or supplementary prospectus; Section 30E(1)(d) the offeror of the securities , where the offer or is not the issuer; Section 30E(1)(e) where the offeror is a body corporate, but is not the issuer and is not making the offer in association with the issuer, each person who is a director of that body corporate at the time when the prospectus or supplementary prospectus is published; and Section 30E(1)(f) each person not falling within paragraphs (a) to (e) who has authorized the contents of, or of any part of, the prospectus or supplementary prospectus. Section 30E(2) Any person to whom subsection (1) applies shall be jointly and severally liable to pay compensation to any person who acquires any of the securities , in reliance upon the prospectus, including acquisition in the secondary market, to which the prospectus relates and, suffers loss as a result of any untrue or misleading statement in the prospectus or the omission from it of any matter required by this Act to be included. Section 30E(3)(a) under subsection (1)(a) or (b), unless the issuer has made or authorized the offer in relation to which the prospectus or supplementary prospectus is published; or Section 30E(3)(b) under subsection (1)(b), (c), (e) or (f), if such prospectus or supplementary prospectus is published without his or her knowledge or consent and on becoming aware of its publication, he or she gives reasonable notice to the public and to the Authority that the prospectus or supplementary prospectus was published without his knowledge or consent. Section 30E(4) A person shall, where he or she has accepted responsibility for, or authorized only part of the contents of a prospectus, be liable under paragraph (1)(d) or (g) only for that part if it is included or substantially included in the form and context in which that person has agreed. [Act No. 48 of 2013 , s. 24.]
Section 30EVerify source
§ 30FPUBLIC OFFERS OF SECURITIES - 30F. Disclosure obligationsOffence

An issuer must comply with any other requirements that the Authority prescribes, in addition to subsection (1).

Section 30F. Disclosure obligations Section 30F(1)(a) is necessary to enable them appraise the financial position and the state of corporate governance of the issuer and its subsidiaries; Section 30F(1)(b) is necessary to avoid the establishment of a false market in its securities ; or Section 30F(1)(c) might be reasonably be expected to materially affect market activity in the price of its securities . Section 30F(2) An issuer shall, in addition to the obligations imposed under subsection (1) comply with such other requirements as the Authority may prescribe. Section 30F(3) A person who contravenes this section commits an offence. [Act No. 48 of 2013 , s. 24.]
Section 30FVerify source
§ 30GPUBLIC OFFERS OF SECURITIES - 30G. Power of theAuthorityto issue directions to issuersProvision

TheAuthority has the power to issue directions to issuers.

Section 30G. Power of theAuthorityto issue directions to issuers Section it is desirable to protect members, other than holders of securities or investors in asset backed securities or other listed securities ;
Section 30GVerify source
§ 30GAPUBLIC OFFERS OF SECURITIES - 30GA. Form of report books, records and internal accounting directivesProvision

Issuers of securities and licensed/approved persons must maintain internal accounting controls to ensure IFRS-compliant financial statements; they must not falsify accounts or mislead auditors.

Section 30GA. Form of report books, records and internal accounting directives Section 30GA(1) Every issuer of securities , licensed and approved persons shall devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in conformity with the International Financial Reporting Standards. Section 30GA(2) An issuer of securities , a licensed or an approved person shall not falsify its books or record of accounts or financial statements or report financial statements not in line with the International Financial Reporting Standards. Section 30GA(3) An officer or director of an issuer, a licensed or an approved person or any other person acting under the direction thereof, shall not take any action to mislead an auditor engaged in the performance of an audit or review of the financial statements of that issuer, licensed or approved person that such action would render the issuer's financial statements materially misleading as to their completeness and correctness. [Act No. 15 of 2018 , s. 8.]
Section 30GAVerify source

Part IVB

ASSET BACKED SECURITIES

§ 30HASSET BACKED SECURITIES - 30H. InterpretationInterpretation

This section provides definitions for terms used in the Part on asset backed securities (for example: "asset backed securities", "asset", "issuer or offeror", "originator", "trustee", and related terms).

Section 30H. Interpretation Section For the purposes of the Part— "asset backed securities" means— (a) any securities including promissory notes but does not include shares or entitlements under a collective investment scheme ; (b) any rights or interests, debentures or certificates evidencing the legal, equitable or beneficial interest or entitlement of its holder to a share of the assets of a special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") or to entitlement to payment from such assets where payments or distributions of capital, income, principal or interest to investors accrue principally from the assets of the special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") as a consequence of the establishment or operation of a securitization transaction; and (c) any other right, interest, instrument of security or class of securities prescribed to be asset backed securities; "asset” means any asset or property whether moveable or immoveable, tangible or intangible, financial, or non-financial, including any rights, benefits or entitlements sold, transferred or to be transferred or assigned by an originator or seller to special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") or originated into an special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") , including where permitted under any written law future assets, and includes any or all other assets, rights, benefits and entitlements in law or in equity of the special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") supporting the asset backed securities or the payment of any obligations or expenses in respect thereof or in respect of the special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") or the securitisation transaction and anything else prescribed to be an asset; "issuer or offeror" means an originator or seller of assets to a securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") , any securitisation arranger and transaction adviser but not does not include a trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") ; "limited investor" means any qualified investor which is not— (a) a retirement benefit fund or pension fund formed or established under the laws of Kenya; (b) an insurance company formed or established under the laws of Kenya; (c) a collective investment scheme formed or established under the laws of Kenya; (d) any other investor as the Authority may prescribe. "limited restricted offer" means an issue or offer made only to a limited investor ; "obligor" means any person having an obligation to make payment in relation to or in connection with the assets sold, transferred or assigned to a special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") and may, where permitted by law, include persons having a future payment obligation; "offer" in relation to asset backed securities , except where the context otherwise requires, includes sales or transfers of asset backed securities by the originator but shall not include the issue of asset backed securities to an originator or seller in exchange for or consideration for the sale, transfer or assignment of assets to the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") for the purpose of establishing or maintaining the operation of the securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") or in accordance with the transaction documents; "offering memorandum” means any a notice, circular, material, advertisement, publication or other invitation offering for subscription or purchase of any asset backed securities in restricted or limited restricted offers; "originator” means a person who directly or indirectly originates assets into a special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") or arranges for the acquisition, sale, transfer or assignment of the assets previously owned by that person to the special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") and may, where the context permits, include a seller of the assets; "qualified investor” in relation to asset backed securities , means— (a) any originator or seller of the assets of the securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") ; (b) any professional investor; (c) a bank; (d) an insurance company ; (e) a pension fund or a retirement benefit fund; (f) a corporation or authority which meets the asset tests for a professional investor; (g) the Central Bank; (h) the Government; and (i) any other person prescribed to be a qualified investor; "rating" means a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification; "restricted offer" means an issue or offer made only to a qualified investor ; "securitisation arranger” means a person, who is appointed by the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") under section 30O from amongst persons who are not employees of the originator or seller or who are acting solely in the capacity of a legal adviser or the auditor of the originator or the seller or who sponsor or assist in— (a) the formation of a securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") ; (b) the preparation of the structure of a securitisation transaction ; (c) its financial or cash flow models; or (d) a prospectus or an offering memorandum in asset backed securities ; "securitisation manager” means any person appointed by a trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") under section 30N to assist in the administration of assets, the management or operation of the securitisation transaction ; "securitisation transaction” means a transaction which involves offer or issue of asset backed securities to any investor other than a seller or originator and includes all the ancillary, incidental or related arrangements which are entered into, in relation to, or in connection with the— (a) sale; (b) transfer or assignment of assets; (c) appointment of a trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") ; (d) establishment of a trust; (e) appointment of a servicer ; or (f) entering into all or any arrangements, necessary or desirable to provide any structural or credit support or manage risks or other arrangements to operate or give effect to the securitisation transaction or issue or offer of asset backed securities ; "securitisation trust" means a trust settled, formed or established to act as a special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") for a securitisation transaction ; "seller” means a person who sells, assigns or transfers any assets into a special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") and who may be the originator of the assets; "servicer" means a person appointed by the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") under section 30P to be primarily responsible for— (a) the day to day administration functions of the cash flow of the securitised assets; (b) the ongoing relationship with any obligor ("any person having an obligation to make payment in relation to or in connection with the assets sold, transferred or assigned to a special purpose vehicle and may, where permitted by law, include persons having a future payment obligation;") ; (c) the provision of service to obligors; (d) cash management; (e) collection and remission of funds to the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") ; or (f) the conduct such other activities as are specified in the transaction documents, and includes any successor or alternative servicer from the time that such alternative servicer becomes primarily responsible as servicer and trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") if that alternative servicer undertakes those functions and may include a securitisation manager ; "special purpose vehicle" means a securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") established in accordance with a trust deed subject to the laws under which asset backed securities are issued; "transaction document” means a trust deed and any other documents prescribed to be transaction documents; "trustee" means a person appointed under the trust deed as a trustee of the securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") and any successor; "unrestricted offer" means an issue or offer to the public or which is not a restricted offer ("an issue or offer made only to a qualified investor;") or a limited restricted offer ("an issue or offer made only to a limited investor;") . [Act No. 48 of 2013 , s. 24.]
Section 30HVerify source
§ 30IASSET BACKED SECURITIES - 30I. Restrictions on issues, offers etc. ofasset backed securitiesOffence

Section 30I prohibits persons from issuing, offering, or acting in certain securitisation roles for asset backed securities except as allowed by the Act; it requires issuers in limited restricted offers to file an information notice and empowers the Authority to prescribe prospectus or offering memorandum contents.

Section 30I. Restrictions on issues, offers etc. ofasset backed securities Section 30I(1) A person shall not issue, offer for subscription purchase, or invite the subscription or purchase of asset backed securities to the public or to restricted investors, except in accordance with this Act. Section 30I(2) A person shall not act as an originator , seller , issuer, securitisation arranger , transaction adviser, trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") , securitisation manager or servicer of asset backed securities except in accordance with this Act. Section 30I(3) A person shall not act as an agent in the sale or purchase of asset backed securities unless that person is a regulated person and complies with the requirements of this Act. Section 30I(4) A person shall not issue or offer any asset backed security other than to a seller or an originator of the asset backed security. Section 30I(5) A person shall not issue an asset backed security unless it is made in accordance with a prospectus or an offering memorandum . Section 30I(6) The Authority may prescribe the contents of a prospectus or offering memorandum taking into consideration on the classification of the issue or offer and the nature of the assets backing the securities or such other factors that the Authority may consider appropriate. Section 30I(7) Where a limited restricted offer ("an issue or offer made only to a limited investor;") is made, the issuer shall file an information notice with the Authority . Section 30I(8) For the purposes of this Act, a person offers asset backed securities if that person invites another person to enter into an agreement for or with the view to subscribing for or otherwise acquiring or underwriting any asset backed securities , or if he or she invites another person to make such an offer . Section 30I(9) A person who contravenes any provisions of this section commits an offence. [Act No. 48 of 2013 , s. 24.]
Section 30IVerify source
§ 30JASSET BACKED SECURITIES - 30J. Form ofasset backed securitiesto be offeredProvision

A person may issue or offer different classes or tranches of asset-backed securities that reflect differing beneficial entitlements and rights.

Section 30J. Form ofasset backed securitiesto be offered Section 30J(1) Asset backed securities issued or offered under this Act shall consist of beneficial entitlements to a unit, participation, share of or interest in the assets of the trust established as a special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") for undertaking a securitisation transaction and issuing asset backed securities to investors who shall be beneficiaries of the trust. Section 30J(2) A person may issue or offer different classes or tranches of asset -backed securities reflecting beneficial entitlements with differing rights including priorities of payments from the income or capital of the trust or distribution of assets or voting entitlements and provision may be made for a beneficiary to be entitled to a residual interest. [Act No. 48 of 2013 , s. 24.]
Section 30JVerify source
§ 30KASSET BACKED SECURITIES - 30K. Nature of assets that may be sold, transferred or assignedProvision

Nature of assets that may be sold, transferred or assigned Section generate or result in a cash flow;

Section 30K. Nature of assets that may be sold, transferred or assigned Section generate or result in a cash flow;
Section 30KVerify source
§ 30LASSET BACKED SECURITIES - 30L. Origination of assets for sale, transfer or assignmentProvision

Defines when assets are treated as originating into or transferred to a securitisation trust as a 'true sale', clarifies that accounting off-balance-sheet treatment is not required to achieve true sale status, allows the Authority to impose conditions making a transfer legal rather than equitable, and states that failure to achieve a true sale does not invalidate investor rights.

Section 30L. Origination of assets for sale, transfer or assignment Section 30L(1)(a) the direct origination of the assets into the securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") ; or Section 30L(1)(b) the sale, transfer or assignment of the assets to the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") to be held under the terms of the securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") in a manner which constitutes a true sale according to the laws of Kenya in relation to the particular type of asset , the laws governing the transaction or the jurisdiction or location of the assets. Section 30L(2)(a) the sale, transfer or assignment of the asset is recognized as such by the relevant law or law governing the transaction, and in such case, it shall not be necessary, in order to achieve a true sale and to satisfy the requirements of this Act that off balance sheet treatment is achieved under the accounting rules by the originator or the seller or that capital relief be provided by any other regulator. Section 30L(3) The sale, transfer or assignment in relation to a specific asset or a specific securitisation transaction under subsection (1) shall, subject to such conditions as the Authority may impose, be a legal and not an equitable sale, transfer or assignment of the asset or assets. Section 30L(4) Failure to achieve a true sale shall not as a consequence of the operation of this Act operate to invalidate the sale, transfer or assignment, the issue or offer of asset backed securities or otherwise adversely affect the rights of the investors in asset backed securities . [Act No. 48 of 2013 , s. 24.]
Section 30LVerify source
§ 30MASSET BACKED SECURITIES - 30M. TrusteesProvision

The Authority may prescribe trustee qualifications and trust-deed contents; trustees must hold securitisation trust assets in trust for investors and perform other roles the Authority prescribes.

Section 30M. Trustees Section 30M(1) The Authority may, from time to time, prescribe the qualifications of a person to be appointed as a trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") . Section 30M(2)(a) be the custodian of the assets of a securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") ; Section 30M(2)(b) manage the operation of the securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") and the securitisation transaction in a fiduciary capacity, Section 30M(3) All assets of the securitisation trusts shall be held by the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") in trust for the investors in asset backed securities as the beneficiaries of the securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") may consider appropriate. Section 30M(4)(a) the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") ; Section 30M(4)(b) any creditors of the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") ; Section 30M(4)(c) any other claimants against the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") ; or Section 30M(4)(d) satisfy any liabilities of the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") . Section 30M(5) The assets of a securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") shall not be included in the assets of trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") in the event the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") is declared insolvent, wound up, placed under administration, dissolved, amalgamated or restructured. Section 30M(6) A trust deed shall contain such information, including the roles and duties of a trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") , as the Authority may prescribe. Section 30M(7) A trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") shall, in addition to such other duties and obligations as may be imposed on it under any other written law, perform such other roles and duties as the Authority may prescribe. [Act No. 48 of 2013 , s. 24.]
Section 30MVerify source
§ 30NASSET BACKED SECURITIES - 30N. Appointment and liability ofsecuritisation managerProvision

Trustees may appoint securitisation managers; securitisation managers must assist trustees, must not reduce obligors' or other parties' obligations, and trustees remain liable for managers' actions; the Authority may prescribe manager requirements.

Section 30N. Appointment and liability ofsecuritisation manager Section 30N(1) A trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") may appoint a securitisation manager in such manner as may be provided for in the transaction documentation. Section 30N(2) A securitisation manager shall assist the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") with the operation and management of the securitisation transaction and assets. Section 30N(3) A securitisation manager shall not operate to reduce or alleviate any obligor ("any person having an obligation to make payment in relation to or in connection with the assets sold, transferred or assigned to a special purpose vehicle and may, where permitted by law, include persons having a future payment obligation;") , seller , servicer or trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") of any of its obligations under the trust deed, the transaction documentation, this Act or any other written law. Section 30N(4) A trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") shall, notwithstanding any delegation to a securitisation manager of its duties, be liable for any action or omission by the securitization manager. Section 30N(5) The Authority may prescribe requirements in relation to a securitisation manager . [Act No. 48 of 2013 , s. 24.]
Section 30NVerify source
§ 30OASSET BACKED SECURITIES - 30O. Securitisation arrangerProvision

A trustee may appoint a securitisation arranger in accordance with the transaction documentation.

Section 30O. Securitisation arranger Section 30O(1) A trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") may appoint a securitisation arranger in accordance with the transaction documentation. Section 30O(2)(a) all matters relating to the structure, conduct of due diligence, cash flow and financial modelling; and Section 30O(2)(b) any information in the prospectus or an offering memorandum .
Section 30OVerify source
§ 30PASSET BACKED SECURITIES - 30P. Servicers, alternative servicers and successor servicersProvision

The Authority can set eligibility requirements for servicers; sellers or originators may be appointed as servicers; servicers owe fiduciary duties to the trustee and investors and must provide access to obligor information, files and records required by the trustee or auditors.

Section 30P. Servicers, alternative servicers and successor servicers Section 30P(1) The Authority may prescribe the eligibility requirements for servicers, alternative servicers and successor servicers. Section 30P(2) Subject to the provisions of this Act, a seller or an originator may be appointed to act as a servicer . Section 30P(3)(a) the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") does not appoint a servicer appointed; or Section 30P(3)(b) the servicer retires or has been removed, Section 30P(4)(a) in addition to any contractual obligations which the servicer may have under the transaction documents, in conducting its role, owe a fiduciary duty to the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") and the investors in the asset backed securities as beneficiaries of the securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") ; and Section 30P(4)(b) provide access to obligor ("any person having an obligation to make payment in relation to or in connection with the assets sold, transferred or assigned to a special purpose vehicle and may, where permitted by law, include persons having a future payment obligation;") , files and other documents, records data, systems, software, documentation and personnel information that the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") or any auditor may require to fulfil its obligations under the securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") transaction.
Section 30PVerify source
§ 30QASSET BACKED SECURITIES - 30Q. Classification of issues or offers ofasset backed securitiesProvision

Section 30Q classifies offers of asset backed securities as unrestricted, restricted, or limited restricted, and requires prospectus approval by the Authority (with a binding listing arrangement) for unrestricted offers and submission of offering memoranda for restricted or limited restricted offers.

Section 30Q. Classification of issues or offers ofasset backed securities Section 30Q(1)(a) an unrestricted offer ("an issue or offer to the public or which is not a restricted offer or a limited restricted offer") ; Section 30Q(1)(b) a restricted offer ("an issue or offer made only to a qualified investor;") ; or Section 30Q(1)(c) a limited restricted offer ("an issue or offer made only to a limited investor;") . Section 30Q(2) All offers which are not restricted offers or limited restricted offers shall be classified as unrestricted offers and no issue or offer of asset backed securities shall be made to a person who is not the originator or seller of the assets or a qualified investor or limited investor unless the requirements of this Act in relation to unrestricted offers or the conversion to an unrestricted offer ("an issue or offer to the public or which is not a restricted offer or a limited restricted offer") have been complied with. Section 30Q(3) Subject to the provisions of this Act, a person shall not make an unrestricted offer ("an issue or offer to the public or which is not a restricted offer or a limited restricted offer") of asset backed securities unless the issuer or offeror ("an originator or seller of assets to a securitisation trust, any securitisation arranger and transaction adviser but not does not include a trustee;") has submitted a prospectus to the Authority , and the Authority has approved the prospectus. Section 30Q(4) The Authority shall not approve a prospectus in respect of an unrestricted offer ("an issue or offer to the public or which is not a restricted offer or a limited restricted offer") unless the Authority is satisfied that there is a binding listing arrangement in respect of the offer with a securities exchange . Section 30Q(5) Unrestricted issue or offer of asset backed securities may be made together with a restricted issue or offer or a limited restricted offer ("an issue or offer made only to a limited investor;") of asset backed securities : Provided that where more than one category of offer is made together with an unrestricted issue or offer , the offer , in its entirety, shall be subject to the approval of the Authority as provided for in subsection (3). Section 30Q(6) Subject to the provisions of this Act, a person shall not make a restricted offer ("an issue or offer made only to a qualified investor;") of asset backed securities or a limited restricted offer ("an issue or offer made only to a limited investor;") unless the issuer or an offeror has submitted to the Authority an offering memorandum which complies with the requirements of this Act. Section 30Q(7)(a) any prospectus approved by the Authority ; Section 30Q(7)(b) any offering memorandum submitted to the Authority ; or Section 30Q(7)(c) the issue of or failure to issue a stop order. Section 30Q(8)(a) issues or offers of asset backed securities ; and Section 30Q(8)(b) requirements of the various classifications.
Section 30QVerify source
§ 30RASSET BACKED SECURITIES - 30R. Conversion of restricted or unrestricted offersProvision

Defines “a restricted offer” as "an issue or offer made only to a qualified investor;"

Section 30R. Conversion of restricted or unrestricted offers Section a restricted offer ("an issue or offer made only to a qualified investor;") ;
Section 30RVerify source
§ 30SASSET BACKED SECURITIES - 30S. Content of the prospectus,offering memorandumor information noticeProvision

The provision requires that a prospectus include information investors and their professional advisers need to assess the securitisation transaction, and it allows the Authority to approve prospectuses and to prescribe the form and content of information notices.

Section 30S. Content of the prospectus,offering memorandumor information notice Section 30S(1)(a) contain such information as investors and their professional advisers may reasonably require to make an informed assessment of the securitisation transaction , the cash flow and the risk associated with investing in an asset backed securities ; and Section 30S(1)(b) comply with any other requirements, as the Authority may impose. Section 30S(2) The Authority may approve a prospectus if the prospectus contains the information required under this Act: Provided that the approval of the prospectus shall not operate to waive, relieve or reduce any obligation by any party to make a disclosure or provide any defense to any action under this Act or under any other law. Section 30S(3) The Authority may prescribe the form and content of an information notice under subsection (1). [Act No. 48 of 2013 , s. 24.]
Section 30SVerify source
§ 30TASSET BACKED SECURITIES - 30T. Secondary sales or transfer ofasset backed securitiesProvision

A secondary sale or transfer of an asset backed security must comply with the requirements of this Act and any other requirements the Authority may impose.

Section 30T. Secondary sales or transfer ofasset backed securities Section A secondary sale or transfer of an asset backed security shall comply with the requirements of this Act and such other requirements as the Authority may impose. [Act No. 48 of 2013 , s. 24.]
Section 30TVerify source
§ 30UASSET BACKED SECURITIES - 30U. Obligations applicable to restricted offersProvision

Section 30U imposes obligations applicable to restricted offers.

Section 30U. Obligations applicable to restricted offers Section 30U(1)(a) include any statement made in or any representation or warranty included in any prospectus or offering memorandum , transaction document or made to any credit rating agency in connection with the rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") of any asset backed securities or the review of such a rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") and includes any omission; and Section 30U(1)(b) include any information, statement in, or, omission from, the continuing disclosure obligations under this Act. Section 30U(2) The provisions of section 30D, 30E and 30F shall apply to an application relating to or in connection with a securitization transaction or issue or offer of asset backed securities under this Part. Section 30U(3) The provisions of section 30D, 30E, 30JM, 30K and 33O shall apply to an offering memorandum in relation to an issue or offer involving a restricted offer ("an issue or offer made only to a qualified investor;") , whether it is made in combination with or is a tranche of another issue or offer . Section 30U(4)(c) make an application to court in case of unfair prejudice under section 33C; or Section 30U(4)(d) require production of records and documents under section 33D; Section 30U(4)(e) issue a direction under section 30G,
Section 30UVerify source
§ 30VASSET BACKED SECURITIES - 30V. Obligation to conduct due diligenceProvision

Certain parties involved in asset-backed securities issuance must conduct independent verification and due diligence of the assets, statements in offering documents and transaction warranties.

Section 30V. Obligation to conduct due diligence Section 30V(1) An issuer, an originator , a seller , a securitisation arranger , a transaction adviser or any party involved in or connected with the issue or offer or named as an expert in the prospectus or offering memorandum shall conduct an independent verification and due diligence in respect of the assets, the issue of asset backed securities , all statements included in the prospectus or offering memorandum and the, presentations and warranties included in any transaction document . Section 30V(2)(a) made such inquiries that were reasonable in the circumstances; and Section 30V(2)(b) believed, on reasonable grounds, that the statement, representation, warranty or omission was not misleading, deceptive or material. Section 30V(3) A credit rating agency shall include, prominently in any credit rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") report issued in respect of asset backed securities , details of due diligence or verification of facts, data, assumptions or other information or statements, if any, that the credit rating agency has undertaken. Section 30V(4) Due diligence or verification under this section shall be carried out in such manner as the Authority may prescribe. [Act No. 48 of 2013 , s. 24.]
Section 30VVerify source
§ 30WASSET BACKED SECURITIES - 30W. Rating requirement and obligations of creditratingagenciesOffence

Trustees must obtain and maintain a credit rating when required, provide information to rating agencies when a rating is obtained, third parties must provide necessary information to trustees, and credit rating agencies must comply with Authority requirements; contravention is an offence.

Section 30W. Rating requirement and obligations of creditratingagencies Section 30W(1) A trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") shall, where a rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") under this Act is required, ensure that a rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") is obtained and maintained. Section 30W(2) A trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") shall, if a rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") is obtained, provide the rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") agency with the necessary information for the purposes of maintaining the rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") . Section 30W(3) An auditor, a servicer , a securitisation manager or any other party to the securitisation transaction shall provide information to the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") which is necessary to enable the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") to fulfil its obligations. Section 30W(4) A credit rating agency shall comply with any requirements prescribed by the Authority in relation to asset backed securities . Section 30W(5) A person who contravenes this section commits an offence. [Act No. 48 of 2013 , s. 24.]
Section 30WVerify source
§ 30XASSET BACKED SECURITIES - 30X. General disclosure obligationsProvision

Servicers, trustees and other specified persons in a securitisation trust must comply with the disclosure requirements under section 30F and any further obligations the Authority may prescribe, whether the asset backed securities are listed or not; they are also subject to continuing disclosure obligations and any other obligations imposed by the Authority in addition to transaction-document or listing-entity requirements.

Section 30X. General disclosure obligations Section 30X(1) A servicer and a trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") or any other specified person in a securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") shall, whether the asset backed securities are listed or not, comply with the disclosure requirements under section 30F, and any further obligations and requirements as may be prescribed by the Authority . Section 30X(2) The continuing disclosure obligations imposed under this Part and any other obligations imposed by the Authority shall apply, to the servicer , trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") or any other specified person under subsection (1), in addition to any requirements provided for in the transaction documents or the requirements of any listing entity. [Act No. 48 of 2013 , s. 24.]
Section 30XVerify source
§ 30YASSET BACKED SECURITIES - 30Y. Trustee to file a summary of transferred assetsProvision

The Trustee must file a summary of the transferred assets describing their nature and number and providing specified details about consideration, nature of the transfer and any other information the Authority prescribes.

Section 30Y. Trustee to file a summary of transferred assets Section 30Y(1)(a) a summary of the assets transferred which discloses the nature and the number of assets transferred; Section 30Y(1)(b) details of the consideration for sale, transfer or assignment; Section 30Y(1)(c) details of the nature of the sale, transfer or assignment; and Section 30Y(1)(d) such other information as the Authority may prescribe. Section 30Y(2) A filing made under subsection (1) shall not operate to affect the sale, transfer or assignment of assets. [Act No. 48 of 2013 , s. 24.]
Section 30YVerify source
§ 30ZASSET BACKED SECURITIES - 30Z. Securitisation requirementsInterpretation

The Authority may issue guidelines to implement the securitisation provisions in this Part.

Section 30Z. Securitisation requirements Section 30Z(1) The Authority may issue guidelines for the better carrying out of the provisions of this Part. Section 30Z(2)(a) the application for approval to issue or offer asset backed securities ; Section 30Z(2)(b) the inclusion or exclusion from the definition of assets; Section 30Z(2)(c) obtaining prior consent of another regulator, if required, in respect of the sale, transfer or assignment of assets or the participation in a securitisation transaction ; Section 30Z(2)(d) the form or structure of a special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") and documentation requirements; Section 30Z(2)(e) the classification of issues or offers with respect to unrestricted, restricted or limited restricted issues or offers and the requirements in respect of each classification; Section 30Z(2)(f) the conversion of issues or offers from one classification to another; Section 30Z(2)(g) the issue of orders to stop a proposed issue or a restricted offer ("an issue or offer made only to a qualified investor;") of asset backed securities ; Section 30Z(2)(h) the nature of assets that may be originated into a securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") or be sold, transferred or assigned to a trust based on the type or characteristics of the asset or the specific transaction; Section 30Z(2)(i) the preparation of reports, accounts and financial statements; Section 30Z(2)(j) rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") requirements; Section 30Z(2)(k) the obligations and liabilities of credit rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") agencies; Section 30Z(2)(l) the registration of details of transfer of assets; Section 30Z(2)(m) the content of the prospectus or offering memorandum as the case may be to be published in connection with the issue or offer of asset backed securities and the requirements for supporting data and verification; Section 30Z(2)(n) the initial, continuing and ongoing disclosure, audit and compliance statements and provision of data on the performance of assets; Section 30Z(2)(o) civil liability regimes for offering memoranda and prospectus; Section 30Z(2)(p) the filing of reports and information; Section 30Z(2)(q) access to reports and information, inspection, copying and fees payable in relation thereto; Section 30Z(2)(r) the appointment, removal, liability and regulation of a securitisation arranger , an originator , a seller , a servicer , a trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") , a securitisation manager , an auditor and any other party involved in or associated with the promotion, management or operation of a securitisation transaction or proposed securitization; Section 30Z(2)(s) the imposition of economic sanctions and the issuing of prohibition orders in respect of parties associated with a securitisation transaction ; Section 30Z(2)(t) the rights of investors in asset backed securities and requirements for trust deeds and transaction documents including the powers and obligations of trustees, the holding of meetings and voting rights and the obligations of other parties; Section 30Z(2)(u) fees payable in respect of making an application, the filing, lodging or inspection of any documents or reports filed or lodged with the Authority and in respect of the provision of copies of such documents and reports; Section 30Z(2)(v) listing on a securities exchange ; Section 30Z(2)(w) the provision of data, including pricing on post issuance trading; Section 30Z(2)(x) takeover offers in respect of listed asset backed securities ; and Section 30Z(2)(y) advertisements.
Section 30ZVerify source

Part V

SECURITIES TRANSACTIONS AND REGISTERS

§ 31SECURITIES TRANSACTIONS AND REGISTERS - 31. Transactions insecuritiesOffence

The section prohibits licensed brokers or dealers and other persons from specified improper transactions and conduct in listed securities, subject to Authority rules and limited exceptions; contravention is an offence.

Section 31. Transactions insecurities Section 31(1) No licensed person , broker or dealer shall transfer listed securities outside the securities exchange in which he or she is a trading participant except as provided for by the Authority in rules or as authorised by the Authority on a case by case basis, and on payment of a prescribed fee. Section 31(1A)(i) the transaction is a private transaction as prescribed by the Authority ; Section 31(1A)(ii) the security trades over the counter and such trade is reported in accordance with the rules prescribed by the Authority ; or Section 31(1A)(iii) it would be in the interest of the holders of ordinary shares of the company having regard to the prevailing conditions and all factors which are relevant in the circumstances to so authorise. Section 31(2) No licensed person , broker or dealer shall trade in listed securities in contravention of such rules as the Authority shall prescribe with respect to the clearance, settlement, payment, transfer or delivery of securities . Section 31(3) No licensed person , broker or dealer shall effect any transaction in a margin account in a manner contrary to requirements adopted by the Authority . Section 31(4) No licensed person , broker or dealer shall lend or arrange for the lending of any securities carried for the account of any customer without the customer’s written consent, or borrow, or arrange to borrow, using the securities , carried for the account of any customer, as collateral, without the customer’s written consent. Section 31(5) No licensed person , broker or dealer shall effect any transaction in, or induce or attempt to induce the purchase or sale of, any listed security by means of any manipulative deception, or other fraudulent device or contrivance. Section 31(6) No person holding shares in a public company listed on an approved securities exchange , shall sell or transfer such shares except in compliance with the trading procedures adopted by such securities exchange . Section 31(7)(a) employ any device, scheme or artifice to defraud; Section 31(7)(b) engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person; Section 31(7)(c) make any untrue statement of a material fact; or Section 31(7)(d) omit to state a material fact necessary in order to make the statements made in light of the circumstances under which they were made, not misleading. Section 31(8) A person who contravenes this section commits an offence. [Act No. 10 of 1994 , s. 6, Act No. 3 of 2000 , s. 24, Act No. 8 of 2009 s. 45, Act No. 10 of 2010 , s. 50, Act No. 37 of 2011 , s. 12, Act No. 48 of 2013 , s. 26.]
Section 31Verify source
§ 32SECURITIES TRANSACTIONS AND REGISTERS - 32. Register of interest insecuritiesProvision

Persons covered by subsection (1) must keep a register of securities interests and enter acquisitions or changes within seven days; the Authority (or its authorized person) may inspect the register and make extracts; “financial journalist” is defined.

Section 32. Register of interest insecurities Section 32(1)(a) any person who is licensed under this Act; and Section 32(1)(b) a financial journalist. Section 32(2) For the purposes of this section, “financial journalist” means a person who contributes advice concerning securities or prepares analyses or reports concerning securities for publication in a newspaper or periodical. Section 32(3) For the purposes of this section, a reference to securities is a reference to securities which are quoted on a securities exchange . Section 32(4) A person to whom section (1) applies shall maintain a register of the securities in which he or she has an interest and such interest or any changes in such interest shall be entered in the register within seven days of the acquisition or change in the interest. Section 32(5) The Authority or any person authorized by it in that behalf may require any person to whom section (1) applies to produce for inspection the register required under subsection (4) and the Authority or any person so authorized may make extracts from the register.
Section 32Verify source

Part VI

INSIDER TRADING AND OTHER MARKET ABUSES

§ 32AINSIDER TRADING AND OTHER MARKET ABUSES - 32A. ApplicationProvision

This Part applies to listed securities, their derivatives and derivatives traded on markets regulated by the Authority; defines "price-affected securities" for inside information and defines "insider" as a person in possession of inside information.

Section 32A. Application Section 32A(1) This Part applies to listed securities , their derivatives and derivatives traded on any market regulated by the Authority . Section 32A(2)(a) securities are "price-affected securities " in relation to inside information if the information is likely to, if made public, materially affect the price of the securities ; Section 32A(2)(b) information shall be treated as relating to an issuer of securities where it may affect the business prospects of the company ; Section 32A(2)(c) " insider " means a person in possession of inside information.
Section 32AVerify source
§ 32BINSIDER TRADING AND OTHER MARKET ABUSES - 32B. Insider tradingOffence

Insider trading: a person who encourages another to trade on insider information or discloses insider information, outside proper performance of duties, engages in insider trading.

Section 32B. Insider trading Section 32B(1)(a) encourages another person, whether or not that other person knows it, to deal in securities or their derivatives which are price-affected securities in relation to the information in the possession of the insider , knowing or having reasonable cause to believe that the trading would take place; or Section 32B(1)(b) discloses the information, otherwise than in the proper performance of the functions of his employment, office or profession, to another person. Section 32B(2) For the purposes of subsections (1) and (2), a person deals in securities or their derivatives if, whether as principal or agent , sells, purchases, exchanges or subscribes for any listed securities or their derivatives or acquires or disposes of, or agrees to acquire or dispose of the right to sell, purchase, exchange or subscribe for any listed securities or their derivatives. Section 32B(3) A contract shall not be void or unenforceable by reason only of the commission of an offence under this section. [Act No. 48 of 2013 , s. 27.]
Section 32BVerify source
§ 32CINSIDER TRADING AND OTHER MARKET ABUSES - 32C. Inside informationProvision

Inside information relates to particular securities or to a particular issuer of securities.

Section 32C. Inside information Section relates to particular securities or to a particular issuer of securities ;
Section 32CVerify source
§ 32DINSIDER TRADING AND OTHER MARKET ABUSES - 32D. Information made publicProvision

Lists circumstances under which information is regarded as "made public" (published by a securities exchange, in public inspection records, derived from public information, or published outside Kenya) and additional acquisition/communication criteria.

Section 32D. Information made public Section 32D(1)(a) it is published in accordance with the rules of a securities exchange for the purpose of informing investors and their professional advisers; Section 32D(1)(b) it is contained in records which by virtue of any law are open to inspection by the public; Section 32D(1)(c) to which the information relates; or Section 32D(1)(c)(i) to which the information relates; or Section 32D(1)(c)(ii) of an issuer to which the information relates; or Section 32D(1)(d) is derived from information which has been made public. Section 32D(2)(a) can be acquired by persons exercising diligence or expertise; Section 32D(2)(b) is communicated to a section of the public; Section 32D(2)(c) can be acquired by observation; Section 32D(2)(d) is communicated on the payment of a fee; or Section 32D(2)(e) is published outside Kenya.
Section 32DVerify source
§ 32EINSIDER TRADING AND OTHER MARKET ABUSES - 32E. Penalty forinsidertradingOffence

An individual committing insider trading is liable to a fine not exceeding two million five hundred thousand shillings, or to imprisonment for a term of two years, and to payment of the amount of any gain made or loss avoided.

Section 32E. Penalty forinsidertrading Section an individual, to a fine not exceeding two million five hundred thousand shillings or to imprisonment for a term of two years and payment of the amount of the gain made or loss avoided; and
Section 32EVerify source
§ 32FINSIDER TRADING AND OTHER MARKET ABUSES - 32F. Market manipulationProvision

Section 32F prohibits market manipulation such as knowingly increasing, reducing or stabilizing prices to induce others to buy, sell, subscribe for, or refrain from transacting in listed securities.

Section 32F. Market manipulation Section 32F(1)(a) increase, or are likely to increase the price with the intention of inducing another person to purchase, or subscribe for, or to refrain from selling securities issued by the same company or a related company , or such other listed securities ; Section 32F(1)(b) reduce, or are likely to reduce, the price with the intention of inducing another person to sell, or to refrain from purchasing, securities issued by the same company or a related company , or such other listed securities ; or Section 32F(1)(c) stabilize, or are likely to stabilize, the price with the intention of inducing another person to sell, purchase, or subscribe for, or to refrain from selling, purchasing or subscribing for, securities issued by the same company or by a related company , or such other listed securities , Section 32F(2) For the purposes of this section, " securities " includes exchange-traded derivatives contracts, and options on futures contracts, in connection with securities . [Act No. 48 of 2013 , s. 27.]
Section 32FVerify source
§ 32GINSIDER TRADING AND OTHER MARKET ABUSES - 32G. False trading and market riggingProvision

Prohibits entering into or carrying out transactions that do not change beneficial ownership and prohibits certain offers to sell or buy securities at substantially the same price (false trading and market rigging).

Section 32G. False trading and market rigging Section 32G(1)(a) of active trading in securities on the securities market of a securities exchange ; or Section 32G(1)(b) with respect to the market for, or the price for dealings in, securities traded on the securities market of a securities exchange ; Section 32G(2)(a) enters into or carries out, directly or indirectly, any transaction for the sale or purchase of securities which does not involve a change in the beneficial ownership of the securities , or offers to do so; or Section 32G(2)(b) offers to sell securities at a price which is substantially the same as the price at which he or she has made or proposes to make, or knows that an associate of his has made or proposes to make an offer to buy the same or substantially the same number of securities .
Section 32GVerify source
§ 32HINSIDER TRADING AND OTHER MARKET ABUSES - 32H. Fraudulently inducing trading insecuritiesProvision

Prohibits making or publishing any statement, promise or forecast that is false, misleading or deceptive.

Section 32H. Fraudulently inducing trading insecurities Section making or publishing any statement, promise or forecast that is false, misleading or deceptive;
Section 32HVerify source
§ 32IINSIDER TRADING AND OTHER MARKET ABUSES - 32I. Use of manipulative devicesProvision

Prohibits using any device, scheme or artifice to defraud another person.

Section 32I. Use of manipulative devices Section uses any device, scheme or artifice to defraud the other person;
Section 32IVerify source
§ 32JINSIDER TRADING AND OTHER MARKET ABUSES - 32J. False or misleading statements inducingsecuritiestransactionsProvision

Prohibits a person from making a statement that is false or misleading about any material fact when the person knows or ought reasonably to know it is false or misleading.

Section 32J. False or misleading statements inducingsecuritiestransactions Section any statement which is, at the time and in light of the circumstances in which it is made, false or misleading with respect to any material fact and which that person knows or reasonably ought to know is false or misleading; or
Section 32JVerify source
§ 32JAINSIDER TRADING AND OTHER MARKET ABUSES - 32JA. Front-runningOffence

Using insider client-order information to trade ahead of the client (front-running) is an offence for persons in a market intermediary; anyone who facilitates that offence also commits an offence.

Section 32JA. Front-running Section 32JA(1) Any person in a market intermediary who has insider information on client orders with a price differential or is aware of such orders and effects an own account transaction in the securities concerned or in any related investments directly or through any other person, to take advantage of the price differential before the client order is executed commits an offence. Section 32JA(2) Any other person who facilitates the commission of the offence referred to in subsection (1) commits an offence. [Act No. 15 of 2018 , s. 9.]
Section 32JAVerify source
§ 32KINSIDER TRADING AND OTHER MARKET ABUSES - 32K. Liability to pay damagesOffence

A person convicted of an offence under this Part must also be liable to pay damages to anyone who suffered pecuniary loss from buying or selling securities at a price affected by the offence.

Section 32K. Liability to pay damages Section 32K(1) A person who is convicted of an offence under this Part shall, in addition to the penalty imposed for committing the offence, be liable to an action by a person who has sustained pecuniary loss as a result of having purchased or sold securities at a price affected by the act or transaction which comprises or is the subject of the offence, to an action for damages in respect of the loss concerned. Section 32K(2) Nothing in subsection (1) shall be construed to limit or diminish any civil liability which any person may incur under any other Act or law. [Act No. 48 of 2013 , s. 27.]
Section 32KVerify source
§ 32KAINSIDER TRADING AND OTHER MARKET ABUSES - 32KA. Obtaining gain by fraudOffence

Anyone who, alone or with others, uses deceit, concealment, omission or other fraudulent means to obtain financial or personal gain from the public, an issuer or a regulated person commits an offence.

Section 32KA. Obtaining gain by fraud Section Any person who on his own action or conspires with another by deceit, intentional concealment, omission or any fraudulent means to obtain financial or personal gain from the public, an issuer or a regulated person commits an offence. [Act No. 15 of 2018 , s. 10.]
Section 32KAVerify source
§ 32LINSIDER TRADING AND OTHER MARKET ABUSES - 32L. Penalty forinsidertrading and market abuseOffence

An individual guilty of insider trading or market abuse faces a fine not exceeding five million shillings, or imprisonment for a term of two years, and payment of twice the amount of the gain made or loss avoided.

Section 32L. Penalty forinsidertrading and market abuse Section an individual, to a fine not exceeding five million shillings or to imprisonment for a term of two years and payment of twice the amount of the gain made or loss avoided;
Section 32LVerify source

Part VII

MISCELLANEOUS PROVISIONS

§ 33AMISCELLANEOUS PROVISIONS - 33A. Powers of theAuthorityto intervene in management of alicenceProvision

Section 33A gives the Authority powers to appoint statutory managers, remove officers, appoint directors, revoke authorities, and requires statutory managers to act diligently and report monthly; appointments are limited to periods not exceeding twelve months unless extended by the High Court.

Section 33A. Powers of theAuthorityto intervene in management of alicence Section 33A(1)(a) if a person’s licence or approval is suspended under section 25 (4)(c)(ii); Section 33A(1)(b) if a petition is filed, or a resolution proposed, for the winding up of a licensed person or if any receiver or receiver manager or similar officer is appointed in respect of the licensed person or in respect of all or any part of its assets; Section 33A(1)(c) if the Authority discovers (whether on an inspection or otherwise) or becomes aware of any fact or circumstance which, in the opinion of the Authority , warrants the exercise of the relevant power in the interests of investors: Section 33A(2)(a) appoint any competent person or persons (in this Act referred to as “a statutory manager”) to assume the management, control and conduct of the affairs and business of a licensed person to exercise all the powers of a licensed person to the exclusion of its board of directors, including the use of its corporate seal; Section 33A(2)(b) remove any officer or employee of the licensed person who, in the opinion of the Authority , has caused or contributed to any contravention of any provision of this Act or any regulations made thereunder or to any deterioration in the financial stability of the licensed person or has been guilty of conduct detrimental to the interests of investors; Section 33A(2)(c) appoint a competent person familiar with the business of the licensed person to its board of directors to hold office as a director who shall not be capable of being removed from office without the approval of the Authority other than by order of the High Court; Section 33A(2)(d) by notice in the Gazette , revoke or cancel any existing power of attorney, mandate, appointment or other authority by the licensed person in favour of any officer or employee or any other person. Section 33A(3) The appointment of a statutory manager shall be for such period, not exceeding twelve months, as the Authority shall specify in the instrument of appointment and may be extended by the High Court upon the application of the Authority if such extension appears to the Court to be justified, and any such extension shall be notified to all interested parties. Section 33A(4) A statutory manager shall, upon assuming the management, control and conduct of the affairs and business of a licensed person , discharge his duties with diligence and in accordance with sound investment and financial principles and in particular, with due regard to the interests of the licensed person ’s customers or investors. Section 33A(5)(i) tracing and preserving all the property and assets of the licensed person or of its customers; Section 33A(5)(ii) recovering all debts and other sums of money due to and owing to the licensed person ; Section 33A(5)(iii) evaluating the capital structure and management of the licensed person and recommending to the Authority any restructuring or reorganisation which he or she considers necessary and which, subject to the provisions of any other written law, may be implemented by him on behalf of the licensed person ; Section 33A(5)(iv) entering into contracts in the ordinary course of the business of the licensed person ; and Section 33A(5)(v) obtaining from any officers or employees of the licensed person , any documents, records, accounts, statements or information relating to its business. Section 33A(5A)(a) be applied equally and without discrimination to all classes of creditors: Provided that the statutory manager may offset the liabilities owed by the licensed person to any creditor against any debts owed by that creditor to the licensed person ; Section 33A(5A)(b) suspend the running of time for the purposes of any law of limitation of actions in respect of any claim by a creditor of the licensed person ; or Section 33A(5B) A moratorium shall cease to apply upon the termination of the statutory manager’s appointment, whereupon the rights and obligations of the licensed person and creditors shall, save to the extent provided in subsection (5A)(b), be the same as if there had been no declaration under the provisions of that subsection: Provided that a moratorium declared by the statutory manager for payment shall not exceed twelve months. Section 33A(6) The statutory manager shall, once every month, furnish the Authority the shareholders of the licensed person which has been placed under statutory management and any other person whom the Authority may direct in writing with a report of his activities during the preceding month, in such form as may be prescribed by the Authority . Section 33A(7) If any officer or employee of the licensed person removed under the provisions of subsection (2)(b) is aggrieved by the decision, he or she may appeal to the Capital Markets Tribunal, and the Tribunal may confirm, reverse or modify the decision and make any other order in the circumstances as it thinks just; and pending the determination of the appeal, the order of removal shall remain in effect. Section 33A(8) Neither the Authority nor any officer or employee thereof nor any manager nor any other person appointed, designated or approved by the Authority under this Act shall be liable in respect of any act or omission done in good faith by such officer, employee, manager or other person in the execution of the duties undertaken by him. Section 33A(9) Where it appears to the statutory manager that it is just and equitable to do so in the interest of all interested parties, the statutory manager may after consultation with the Authority , petition the High Court for the winding-up of the licensed person . Section 33A(10) All costs and expenses properly incurred by the statutory manager shall be payable out of the assets of the licensed person in priority to all other claims. [Act No. 3 of 2000 , s. 29, Act No. 9 of 2007 , s. 52, Act No. 8 of 2008 , s. 57, Act No. 48 of 2013 , s. 28.]
Section 33AVerify source
§ 33BMISCELLANEOUS PROVISIONS - 33B. Prohibited conduct to be reportedOffence

If a person providing services to a licensed person or company listed on a securities exchange comes into possession of information indicating that the licensed person or company is engaged in conduct prohibited by the Act, they must report the matter to the Authority.

Section 33B. Prohibited conduct to be reported Section 33B(1) Any person who, in the course of providing services to a licensed person or company whose securities are listed at a securities exchange , comes into possession of information indicating that such licensed person or company is engaged in any conduct prohibited by this Act, shall report the matter to the Authority . Section 33B(2) A person who contravenes subsection (1) commits an offence. [Act No. 3 of 2000 , s. 29.]
Section 33BVerify source
§ 33CMISCELLANEOUS PROVISIONS - 33C. Remedy for unfair prejudiceProvision

Section 33C gives the Court specific powers to make orders (including restraining acts, directing proceedings, appointing receivers/managers, changing trustees, and other orders to protect investors), and prohibits a company from making constitution changes inconsistent with such a Court order without leave.

Section 33C. Remedy for unfair prejudice Section 33C(1)(a) a listed company or any special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") ; Section 33C(1)(b) any other issuer of listed securities ; or Section 33C(1)(c) issuer of publicly offered securities , Section 33C(2)(b) restraining the carrying out of the act or conduct; Section 33C(2)(c) requiring the company to bring in its name, proceedings against the persons on such terms as the Court may impose; Section 33C(2)(d) appointing a receiver or manager for the whole or part of the property or business of the company and may specify the powers and duties of the receiver or manager; Section 33C(2)(e) imposing such conditions as the Court may consider fit whether for regulating the conduct of the affairs of the company in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company , for the reduction accordingly of the capital of the company or otherwise. Section 33C(3)(a) make an order restraining the carrying out of the act; Section 33C(3)(b) make an order directing the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") to institute such proceedings the as Court may consider appropriate against the person, on terms the Court orders; Section 33C(3)(c) make an order for the change of the trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") , appointment of a receiver or manager of the trust and may specify the powers and duties of the receiver or manager; or Section 33C(3)(d) make such other order the Court may consider appropriate, whether for regulating the conduct of the securitisation transaction or special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") affairs in future, to recover assets or provide for compensation or otherwise to protect the interests of investors in the asset backed securities . Section 33C(4) A company shall not, where an order under this section has the effect of altering its constitution, without the leave of the Court, make any further alteration to the constitution which is inconsistent with the order. [Act No. 4 of 2004 , s. 75, Act No. 48 of 2013 , s. 29.]
Section 33CVerify source
§ 33DMISCELLANEOUS PROVISIONS - 33D. Powers of theAuthorityto demand for production of records and documentsOffence

The Authority may direct companies and related parties to produce records and documents, authorize persons to require production, and take copies or explanations; persons who contravene commit an offence.

Section 33D. Powers of theAuthorityto demand for production of records and documents Section 33D(1)(a) a company ; Section 33D(1)(b) a subsidiary of the company ; Section 33D(1)(c) a company which is substantially under the control of the same person as the company ; Section 33D(1)(d) a securitisation arranger , originator , servicer , trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") , securitisation manager , auditor or any other party associated with a securitisation transaction or special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") ; or Section 33D(1)(e) any party associated with the issue, offer or listing of securities ; Section 33D(1)(f) with the intent to defraud its creditors, creditors of another person or creditors of any securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") , special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") or investors in any listed securities for a fraudulent or unlawful purpose; Section 33D(1)(f)(i) with the intent to defraud its creditors, creditors of another person or creditors of any securitisation trust ("a trust settled, formed or established to act as a special purpose vehicle for a securitisation transaction;") , special purpose vehicle ("a securitisation trust established in accordance with a trust deed subject to the laws under which asset backed securities are issued;") or investors in any listed securities for a fraudulent or unlawful purpose; Section 33D(1)(f)(ii) the members of a company or investors in a listed or publicly offered securities have not been given all the information relating to its affairs that they might reasonably expect, Section 33D(2) The Authority may, in issuing a direction under subsection (1), authorize a person, to require a company or other person referred to in subsection (1) to produce records and documents specified by the authorized person. Section 33D(3) The Authority or an authorized person may require a person, who appears to be in possession of any records or documents, to produce the records or documents to the Authority or to the authorized person. Section 33D(4)(a) take copies or extracts; Section 33D(4)(b) demand an explanation from that person, or any other person who is a present or past officer of the company , or is or was at any time employed by the company or other relevant person; or Section 33D(4)(c) require, if the records or documents are not produced, the person who was required to produce them to give an explanation for failing to produce the records or documents. Section 33D(5) The powers in respect of any documents held by a bank shall be limited to the making of copies or extracts. Section 33D(6) A person who contravenes this section commits an offence. [Act No. 48 of 2013 , s. 29.]
Section 33DVerify source
§ 33EMISCELLANEOUS PROVISIONS - 33E. Winding upProvision

The Authority may petition for or start winding-up proceedings against a licensed person (under the Companies Act or relevant constituting document) if it considers this desirable to protect clients or investors and on the ground that it is just and equitable.

Section 33E. Winding up Section The Authority may, if it appears to it that it is desirable, for the protection of clients or investors, that a licensed person should be wound up under the Companies Act (Cap. 486) or relevant constituting document, present a petition for the licensed person to be wound up or institute winding up proceedings under the relevant instrument on the ground that it is just and equitable that the licensed person should be wound up. [Act No. 48 of 2013 , s. 29.]
Section 33EVerify source
§ 34MISCELLANEOUS PROVISIONS - 34. Other offencesOffence

Section 34 lists other offences including contravening provisions of the Act, furnishing or publishing untrue or misleading information in connection with an issuer or collective investment scheme, and wilfully obstructing members or officers of the Authority in performing their duties.

Section 34. Other offences Section 34(1)(a) contravenes any provision of this Act or any requirement imposed under the provision of this Act or any rule or regulation made thereunder; Section 34(1)(b) furnishes or publishes for the purpose of this Act or in connection with an issuer whose securities are listed or quoted to be listed on a securities exchange , or issued or to be issued to the public or a collective investment scheme , any information or any returns the contents of which are to his knowledge untrue or incorrect or misleading because of material omissions; or Section 34(1)(c) wilfully obstructs any member of the Authority or an officer or servant of the Authority in the performance of his duties under the provisions of that Act, Section 34(2) Deleted by ActNo. 48 of 2013, s. 30 . Section 34(3) Deleted by ActNo. 48 of 2013, s. 30 . Section 34(4) Deleted by ActNo. 48 of 2013, s. 30 . Section 34(5) Deleted by ActNo. 48 of 2013, s. 30 . [Act No. 3 of 2000 , s. 30, Act No. 9 of 2007 , s. 53, Act No. 8 of 2008 , s. 58, Act No. 48 of 2013 , s. 30.]
Section 34Verify source
§ 34AMISCELLANEOUS PROVISIONS - 34A. Offences and penaltiesSubstitution

Section 34A sets out offences and penalties including fines, imprisonment terms, orders for payment of multiples of gains or avoided losses, compensation orders, and payments to a Compensation Fund; financial penalties are recoverable by the Authority and paid into the Investor Compensation Fund.

Section 34A. Offences and penalties Section 34A(1)(a) an individual, to a fine not exceeding five million shillings or to imprisonment for a term not exceeding two years and pay two times the amount of any gain made or loss avoided as a result of the contravention; or Section 34A(1)(a)(i) an individual, to a fine not exceeding five million shillings or to imprisonment for a term not exceeding two years and pay two times the amount of any gain made or loss avoided as a result of the contravention; or Section 34A(1)(a)(ii) a company , to a fine not exceeding ten million shillings and pay two times the amount of any gain made or loss avoided as a result of the contravention; Section 34A(1)(b) an individual, to a fine not exceeding ten million shillings or to imprisonment for a term not exceeding five years and pay three times the amount of any gain made or loss avoided as a result of the contravention; or Section 34A(1)(b)(i) an individual, to a fine not exceeding ten million shillings or to imprisonment for a term not exceeding five years and pay three times the amount of any gain made or loss avoided as a result of the contravention; or Section 34A(1)(b)(ii) a company , to a fine not exceeding thirty million shillings and pay three times the amount of any gain made or loss avoided as a result of the contravention. Section 34A(1A) The financial penalties imposed under subsections (1) and (2) shall be recoverable summarily by the Authority as civil debts. Section 34A(2) The court may make an order for the payment by a person convicted for an offence under this Act of compensation to a person who suffers loss by reason of the offence. Section 34A(3) An order for compensation under subsection (2) may be in addition to or in substitution of any other penalty or remedy available to that person. Section 34A(4)(a) the loss sustained or adverse impact of the breach on the person or persons claiming compensation or restitution; Section 34A(4)(b) the profits that have accrued to the person in breach; Section 34A(4)(c) where harm has been done to the market as a whole, the illegal gains received or loss averted as a result of the illegal action as may be determined by the court. Section 34A(5) To the extent that a person convicted of an offence under subsection (1) profited by committing that offence, but those harmed cannot reasonably and practically be determined, the payment under subsection (3) shall be made to the Compensation Fund established under this Act. Section 34A(6) The discretion conferred on the Authority to levy financial penalties or to impose any other sanctions under this Act may be exercised separately or cumulatively, and the imposition of such penalties or sanctions shall not, in any circumstance, prejudice the right to any other legal proceedings that may be vested in the Authority . Section 34A(7) All financial penalties levied under this Act shall be paid into the Investor Compensation Fund . [Act No. 9 of 2007 , s. 54, Act No. 48 of 2013 , s. 31, Act No. 23 of 2019 , s. 44.]
Section 34AVerify source
§ 34BMISCELLANEOUS PROVISIONS - 34B. Compounding of offencesOffence

The Authority may compound an offence with written consent of the person and consent of the Director of Public Prosecutions, ordering payment up to two-thirds of the maximum fine; payment due within fourteen days affects whether proceedings are instituted; sums received go to the Investor Compensation Fund.

Section 34B. Compounding of offences Section 34B(1) The Authority may, with the consent of the Director of Public Prosecutions and with the written consent of the person who commits an offence, compound an offence and make an order for the payment by that person, of a sum not exceeding two-thirds of the maximum fine that would otherwise have been imposed upon conviction. Section 34B(2)(a) make the order in writing and attach a written admission of the person who has committed the offence and the consent of the Director of Public Prosecution to compound the offence; Section 34B(2)(b) give the person who has committed the offence a copy of the order upon the request of that person; and Section 34B(2)(c) specify the offence committed, the sum of money ordered to be paid, and the date to which payment is due. Section 34B(3)(a) is paid to the Authority within fourteen days of the order, the Authority shall not institute any proceedings against that person; or Section 34B(3)(b) is not paid within fourteen days of the order, the Authority may institute proceedings in relation to the offence. Section 34B(4) The Authority shall pay all sums of money received under this section into the Investor Compensation Fund . Section 34B(5) The compounding of an offence under this section shall not prejudice any orders for compensation or restitution that may be imposed by the Authority . [Act No. 48 of 2013 , s. 32.]
Section 34BVerify source
§ 35MISCELLANEOUS PROVISIONS - 35. Appeals from action byAuthorityProvision

The Capital Markets Tribunal may require the Authority or the Investor Compensation Fund Board to show cause for actions or decisions, and may affirm or set aside those actions or decisions after giving them an opportunity to be heard.

Section 35. Appeals from action byAuthority Section 35(1)(a) refusing to grant a licence ; Section 35(1)(b) imposing limitations or restrictions on a licence ; Section 35(1)(c) suspending or revoking a licence ; Section 35(1)(cc) refusing to approve a public offer of securities ; Section 35(1)(d) refusing to admit a security to the official list of a securities exchange ; Section 35(1)(e) suspending trading of a security on a securities exchange ; or Section 35(1)(f) requiring the removal of a security from the official list of a securities exchange ; Section 35(1)(g) refusing to grant compensation to an investor who has suffered pecuniary loss resulting from failure of a licensed stockbroker or dealer , to meet his contractual obligations or pay unclaimed dividends to a beneficiary who resurfaces, Section 35(2) The Capital Markets Tribunal may require the Authority or the Investor Compensation Fund Board to show cause for its action or decision, and may affirm or, after affording the Authority or the Board an opportunity to be heard, set aside such action or decision. [Act No. 3 of 2000 , s. 31, Act No. 8 of 2008 , s. 59, Act No. 37 of 2011 , s. 14.]
Section 35Verify source
§ 35AMISCELLANEOUS PROVISIONS - 35A. Establishment of the Capital Markets TribunalCommencement

Section creates a Capital Markets Tribunal, sets composition and appointment conditions, grants the Tribunal powers to hear appeals from the Authority, and prescribes procedures including timelines, representation, confidentiality exceptions, costs awards, and appeals to the High Court.

Section 35A. Establishment of the Capital Markets Tribunal Section 35A(1)(a) a Chairperson who at the time of his appointment shall be an advocate of not less than seven years standing; Section 35A(1)(b) one lawyer having at least seven years' experience in the commercial and corporate sector; Section 35A(1)(c) one accountant who shall have been in practice for a period of not less than seven years; and Section 35A(1)(d) two persons who have demonstrated competence in the field of securities ; Section 35A(1)(e) the secretary shall be an advocate with at least five years’ experience commercial law. Section 35A(2) All appointments to the Tribunal under subsection (1) shall be by notice in the Gazette issued by the Cabinet Secretary and shall be for a period of three years. Section 35A(3)(a) at the expiration of three years from the date of his appointment; Section 35A(3)(b) if he or she accepts any office the holding of which, if he or she were not a member of the Tribunal, would make him ineligible for appointment to the office of a member of the Tribunal; Section 35A(3)(c) if he or she is removed from membership of the Tribunal by the Cabinet Secretary for failure to attend three consecutive meetings of the Tribunal or is unable to discharge the functions of his office (whether arising from infirmity of body or mind or from any other cause) or for misbehaviour; or Section 35A(3)(d) if he or she resigns from the office of a member of the Tribunal. Section 35A(4) The Tribunal shall, upon an appeal made to it in writing by an aggrieved party following a determination by the Authority on any matter relating to this Act, inquire into the matter and make an award thereon, and every award made shall be notified by the Tribunal to the parties concerned and the Authority as the case may be. Section 35A(5) For the purposes of hearing an appeal, the Tribunal shall have all the powers of the High Court to summon witnesses, to take evidence upon oath or affirmation and to call for the production of books and other documents. Section 35A(6) Where the Tribunal considers it desirable for the purposes of avoiding expenses or delay or any other special reasons so to do, it may receive evidence by affidavit and administer interrogatories within the time specified by the Tribunal. Section 35A(7) In its determination of any matter the Tribunal may take into consideration any evidence which it considers relevant to the subject of an appeal before it, notwithstanding that such evidence would not otherwise be admissible under the law relating to evidence. Section 35A(8) The Tribunal shall have power to award the costs of any proceedings before it and to direct that costs shall be taxed in accordance with any scale prescribed. Section 35A(9) All summonses, notices or other documents issued under the hand of the Chairperson of the Tribunal shall be deemed to be issued by the Tribunal. Section 35A(10) Any interested party may be represented before the Tribunal by an advocate or by any other person whom the Tribunal may admit to be heard on behalf of such party. Section 35A(11) The Tribunal shall sit at such times and in such places as it may appoint. Section 35A(12) The proceedings of the Tribunal shall be open to the public save where the Tribunal, for good cause, otherwise directs. Section 35A(13) Except as expressly provided in this Act or any rules made thereunder, the Tribunal shall regulate its own procedure. Section 35A(14) For the purposes of hearing and determining any cause or matter under this Act, the Chairperson and two members of the Tribunal shall form a quorum. Section 35A(15) A member of the Tribunal who has an interest in any matter which is the subject of the proceedings of the Tribunal shall not take part in those proceedings. Section 35A(16)(a) confirm, set aside or vary the order or decision in question; Section 35A(16)(b) exercise any of the powers which could have been exercised by the Authority or any of its committees in the proceedings in connection with which the appeal is brought; or Section 35A(16)(c) make such other order, including an order, for costs, as it may deem just. Section 35A(17) The Tribunal shall hear and determine an appeal within ninety days from the date of filing of the appeal. Section 35A(18) The Tribunal shall have power to award the costs of any proceedings before it and to direct that costs shall be paid in accordance with any scale prescribed for suits in the High Court or to award a specific sum as costs. Section 35A(19) Where the Tribunal awards costs in an appeal, it shall, on application by the person to whom the costs are awarded, issue to him a certificate stating the amount of the costs. Section 35A(20) Every certificate issued under subsection (19) may be filed in the High Court by the person in whose favour the costs have been awarded and upon being so filed, shall be deemed to be a decree of the High Court and may be executed as such. Section 35A(21) The Chief Justice may make rules governing the making of appeals and providing for the fees to be paid, the scale of costs of any such appeal, the procedure to be followed therein, and the manner of notifying the parties thereto; and until such rules are made, and subject thereto; the provisions of the Civil Procedure Act (Cap. 21) shall apply as if the matter appealed against were a decree of a subordinate court exercising original jurisdiction. Section 35A(22) Any party to proceedings before the Tribunal who is dissatisfied by a decision or order of the Tribunal on a point of law may, within thirty days of the decision or order, appeal against such decision or order to the High Court. Section 35A(23) No decision or order of the Tribunal shall be enforced until the time for lodging an appeal has expired or where the appeal has been commenced until the appeal has been determined. Section 35A(24)(a) confirm, set aside or vary the decision or order in question; Section 35A(24)(b) remit the proceedings to the Tribunal with such instructions for further consideration, report, proceedings or evidence as the court may deem fit to give; Section 35A(24)(c) exercise any of the powers which could have been exercised by the Tribunal in the proceedings in connection with which the appeal is brought; or Section 35A(24)(d) make such other order as it may deem just, including an order as to costs of the appeal of earlier proceedings in the matter before the Tribunal. Section 35A(25) There shall be paid to the Chairperson, secretary and the members of the Tribunal, such remuneration and allowances as the Cabinet Secretary shall, from time to time, determine. Section 35A(26) All expenses of the Capital Markets Tribunal shall be charged to the general fund of the Authority . [Act No. 3 of 2000 , s. 32, Act No. 15 of 2018 , s. 11, Act No. 8 of 2021 , s. 54.]
Section 35AVerify source
§ 35A_2MISCELLANEOUS PROVISIONS - 35A. Rights and fundamental freedomsProvision

All persons subject to this Act are entitled to enjoy all rights and fundamental freedoms enshrined in the Constitution, subject to specified limits.

Section 35A. Rights and fundamental freedoms Section All persons subject to this Act shall enjoy all rights and fundamental freedoms enshrined in the Constitution unless limited to the extent specified in Article 24 of the Constitution, this Act or any other Act. [Act No. 10 of 2023 , Sch.]
Section 35A_2Verify source
§ 35BMISCELLANEOUS PROVISIONS - 35B. Limitation of right to privacyProvision

The Constitutionally guaranteed right to privacy is limited to the nature and extent set out in subsection (2), which lists specific types of searches, seizures, revelation of information and interference with communications.

Section 35B. Limitation of right to privacy Section 35B(1) The right to privacy guaranteed under Article 31 of the Constitution is hereby limited under Article 24 of the Constitution only to the nature and extent contemplated under subsection (2). Section 35B(2)(a) the person’s home or property may, with a warrant, be searched; Section 35B(2)(b) the person’s possessions may be seized; Section 35B(2)(c) information relating to that person’s financial, family or private affairs where required may be revealed; or Section 35B(2)(d) the privacy of a person’s communications may be investigated or otherwise interfered with. Section 35B(3) A limitation of a right under subsection (1) shall apply only for the purpose of the prevention, detection, investigation and prosecution of proceeds of crime, money laundering and financing of terrorism. [Act No. 10 of 2023 , Sch.]
Section 35BVerify source
§ 36MISCELLANEOUS PROVISIONS - 36. Directions and submission of reportsProvision

The Cabinet Secretary can direct the Authority to provide returns, accounts and information; the Authority must submit an annual report with audited accounts within six months after each financial year; and the Cabinet Secretary must table that report in Parliament within three months of submission.

Section 36. Directions and submission of reports Section 36(1) The Cabinet Secretary may, from time to time, direct the Authority to furnish in such form as he or she may require, returns, accounts and any other information with respect to the work of the Authority and the Authority shall comply with such direction. Section 36(2) The Authority shall, within six months after the close of each financial year, submit to the Cabinet Secretary a report of its operations and activities throughout the year together with audited accounts in such form and detail as the Cabinet Secretary shall, from time to time, determine. Section 36(3) The Cabinet Secretary shall table the report submitted under subsection (3) before above to Parliament within three months of its submission. [Act No. 3 of 2000 , s. 33, Act No. 48 of 2013 , s. 33.]
Section 36Verify source
§ 36AMISCELLANEOUS PROVISIONS - 36A. Exemption of existingsecurities exchangeProvision

Section 36A allows an existing securities exchange to operate toward derivatives listing provided it meets specified operational and rule-making conditions; trading participants of such an exchange are entitled to act as derivatives brokers during the transition period, and the Authority may approve the exchange's derivatives rules within thirty days of submission.

Section 36A. Exemption of existingsecurities exchange Section 36A(1)(a) have an issued and paid up share capital of a minimum of five hundred million shillings only; Section 36A(1)(b) make arrangements for the efficient and effective clearing and settlement of transactions effected through the exchange and its clearing house, and for the management of settlement risk; Section 36A(1)(c) implement an effective and reliable infrastructure to facilitate the trading, of derivatives listed on the exchange; Section 36A(1)(d) formulate rules for the listing of derivatives contracts, for trading, clearing and settlement on the exchange and its clearing house, and for dispute resolution and for compensation of investors, and will have submitted these for approval by the Authority . Section 36A(2) At the end of the period referred to in subsection (1), a securities exchange shall be required to comply with all the requirements governing a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") . Section 36A(3) During the period referred to in subsection (1), and notwithstanding any other provisions of this Act and any regulations made thereunder, all trading participants who are or who become trading participants of such exchange shall be entitled to be derivatives brokers subject only to complying with the licensing requirements for a trading participant subsisting on the date this section comes into force. Section 36A(4) The Authority may approve the rules of the exchange aforesaid relating to its derivatives operations within thirty days of submission of the draft rules or of any changes requested thereon by the Authority . [Act No. 48 of 2013 , s. 34.]
Section 36AVerify source
§ 37MISCELLANEOUS PROVISIONS - 37. SupercessionProvision

If this Act conflicts with any other written law about the Authority's powers or functions, the provisions of this Act prevail.

Section 37. Supercession Section Where there is a conflict between the provisions of this Act and the provisions of any other written law with regard to the powers or functions of the Authority under this Act, the provisions of this Act shall prevail. [Act No. 3 of 2000 , s. 34.]
Section 37Verify source
§ 38MISCELLANEOUS PROVISIONS - 38. Prosecution of offencesOffence

The Director of Public Prosecutions may appoint an officer of the Authority or an advocate of the High Court as a public prosecutor on the request of the Authority for offences under this Act.

Section 38. Prosecution of offences Section The Director of Public Prosecutions may, on the request of the Authority , appoint any officer of the Authority or advocate of the High Court to be a public prosecutor for the purposes of offences under the provisions of this Act. [Act No. 3 of 2000 , s. 34, Act No. 19 of 2023 , Sch.]
Section 38Verify source
§ 39MISCELLANEOUS PROVISIONS - 39. Exemption from Cap. 446Provision

The provisions of the State Corporations Act (Cap. 446) shall not apply to the Authority.

Section 39. Exemption from Cap. 446 Section The provisions of the State Corporations Act (Cap. 446) shall not apply to the Authority . [Act No. 3 of 2000 , s. 35.]
Section 39Verify source

Legislative relationships

14 referenced instruments

Names are derived from the stored provision headings and citation-enrichment layer. Treat this as a research index and verify each relationship against the source text.

A–F

9 instruments

  • Authority as provided for in subsection (3). Section 30Q(6) Subject to the provisions of this Act

    Section 30Q

  • Authority in the performance of his duties under the provisions of that Act

    Section 34

  • Authority or in the performance or intended performance of any duty or in the exercise of any power under this Act

    Section 10

  • Authority to cooperate or coordinate with any other regulatory body in the exercise of its powers under this Act

    Section 13

  • Authority under this Act

    Sections 11, 37

  • Banking Act

    Section 2

  • Central Bank of Kenya or a person deputed by him or her in writing for the purposes of this Act

    Section 5

  • Civil Procedure Act

    Section 35A

  • Companies Act

    Section 30

G–M

2 instruments

  • High Court as a public prosecutor on the request of the Authority for offences under this Act

    Section 38

  • its constitution in the manner specified in the direction so as to bring it in conformity with this Act

    Section 18H

N–S

3 instruments

  • Proceeds of Crime and Anti-Money Laundering Act

    Section 12B

  • Senior Officer or above to inquire into the affairs of a person under this Act

    Section 13A

  • State Corporations Act

    Section 39

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Statute information is organised from identified legislative sources for professional research. Corrections can be reported to hello@esheria.ai.