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Parliament of Kenya

Central Depositories Act

The Act's short title is "Central Depositories Act." Section 2(2) defines "writing" to include any mode of representing or reproducing letters, figures or marks in a visible form. If a central dep…

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

Source attribution: Source: Kenya Law

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“The Act's short title is "Central Depositories Act."”

The Act's short title is "Central Depositories Act." Section 2(2) defines "writing" to include any mode of representing or reproducing letters, figures or marks in a visible form. If a central depository agent deposits property as market collateral with a central depository in accordance with its rules, no civil or criminal action, claim or demand about rights in that property may be brought against the central depository or its nominees. Central depository must ensure orderly dealings in immobilised or dematerialised securities; it may direct issuers or central depository agents, who must comply; failure to comply is an offence punishable by a fine up to five million shillings or imprisonment up to five years, or both. Central depository agents, issuers, depositors and users must comply with, enforce, or give effect to the CDS rules as they apply to them.

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Showing 87 of 87 provisions

Provision 57Offence 21Amendment 4Commencement 3

Part I

PRELIMINARY

§ 1PRELIMINARY - 1. Short titleShort title

The Act's short title is "Central Depositories Act."

Section 1. Short title Section This Act may be cited as the Central Depositories Act.
Section 1Verify source
§ 2PRELIMINARY - 2. InterpretationInterpretation

Section 2(2) defines "writing" to include any mode of representing or reproducing letters, figures or marks in a visible form.

Section 2. Interpretation Section 2(1)(a) where securities are deposited and held in custody by, or registered in the name of, the company or its nominee company for depositors and dealings in respect of these securities are effected by means of entries in securities accounts without the physical delivery of certificates; or Section 2(1)(a)(i) where securities are deposited and held in custody by, or registered in the name of, the company or its nominee company for depositors and dealings in respect of these securities are effected by means of entries in securities accounts without the physical delivery of certificates; or Section 2(1)(a)(ii) which permits or facilitates the settlement or registration of securities transactions or dealings in securities without the physical delivery of certificates; and Section 2(1)(b) provides other facilities and services incidental thereto; Section 2(1)(a) the central equipment comprising hardware and software associated with that hardware, located at the premises of the central depository; and Section 2(1)(b) the terminals located at the premises of the users; Section 2(1)(a) any agreement for or with a view to acquiring, disposing of, subscribing for or underwriting securities; or Section 2(1)(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; Section 2(1)(a) a securities exchange, means a person who is recognised as a member of a securities exchange; and Section 2(1)(b) a company, means a person who is recognised as a member of a company under the Companies Act (Cap. 486); Section 2(1)(a) any photograph; Section 2(1)(b) any disc, tape, soundtrack or other device in which sounds or other data (not being visual images) are embodied so as to be capable (with or without the aid of some other instrument) of being reproduced therefrom; and Section 2(1)(c) in the case of a record falling within paragraph (b) but not paragraph (c) of this definition, a transcript of the sounds or other data embodied therein; Section 2(1)(c)(i) in the case of a record falling within paragraph (b) but not paragraph (c) of this definition, a transcript of the sounds or other data embodied therein; Section 2(1)(c)(ii) in the case of a record falling within paragraph (c) but not paragraph (b) of this definition, a still reproduction of the images embodied therein, whether enlarged or not; and Section 2(1)(c)(iii) in the case of a record falling within both paragraph (b) and paragraph (c) of this definition, the transcript of the sounds or other data embodied therein together with the still reproduction of the images embodied therein; Section 2(1)(a) debentures or bonds issued or proposed to be issued by a government; Section 2(1)(b) debentures, shares, bonds commercial paper or notes issued or proposed to be issued by a body corporate; Section 2(1)(c) derivatives including futures and options contracts on securities, indices, interest or other rates, currency, futures or commodities; Section 2(1)(d) any unit, interest or share offered under a collective investment scheme; Section 2(1)(e) bills of exchange; Section 2(1)(e)(i) bills of exchange; Section 2(1)(e)(ii) promissory notes; or Section 2(1)(e)(iii) certificates of deposits issued by a bank or financial institution licensed under the Banking Act ( Cap. 488 ); Section 2(1)(a) offers to sell, purchase or exchange securities are regularly made or accepted; Section 2(1)(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 Section 2(1)(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; Section 2(2) A reference to writing shall be deemed to include any mode of representing or reproducing letters, figures or marks in a visible form. Section 2(3)(a) the certificate; Section 2(3)(b) the instrument of transfer, if any; or Section 2(3)(c) any other document representing the security,
Section 2Verify source

Part II

CENTRAL DEPOSITORY

§ 10CENTRAL DEPOSITORY - 10. Regulation of dealings in securitiesOffence

Central depository must ensure orderly dealings in immobilised or dematerialised securities; it may direct issuers or central depository agents, who must comply; failure to comply is an offence punishable by a fine up to five million shillings or imprisonment up to five years, or both.

Section 10. Regulation of dealings in securities Section 10(1) A central depository shall do all such things as are necessary to ensure orderly dealings in immobilised or dematerialised securities. Section 10(2) A central depository may, in performing its function under subsection (1), give to an issuer of any security or a central depository agent directions to do a particular act or thing or to refrain from doing a particular act or thing and the issuer or central depository agent shall comply with such directions. Section 10(3) An issuer or central depository agent who fails to comply with any direction given by a central depository under subsection (2) commits an offence and shall, on conviction, be liable to a fine not exceeding five million shillings, or to imprisonment for a term not exceeding five years, or to both.
Section 10Verify source
§ 10ACENTRAL DEPOSITORY - 10A. Property deposited with central depositoryCommencement

If a central depository agent deposits property as market collateral with a central depository in accordance with its rules, no civil or criminal action, claim or demand about rights in that property may be brought against the central depository or its nominees.

Section 10A. Property deposited with central depository Section Where a central depository agent deposits any property as a market collateral with a central depository in accordance with its rules, no action, claim or demand, either civil or criminal, in respect of any right, title or interest in such property shall lie, or be commenced or allowed against a central depository or its nominees, notwithstanding any other provision of the law. [Act No. 38 of 2011 , s. 10.]
Section 10AVerify source
§ 11CENTRAL DEPOSITORY - 11. Central depository agents, issuers, etc., to comply with CDS rulesProvision

Central depository agents, issuers, depositors and users must comply with, enforce, or give effect to the CDS rules as they apply to them.

Section 11. Central depository agents, issuers, etc., to comply with CDS rules Section 11(1) Any person who is a central depository agent, an issuer, a depositor, or a user shall comply with, enforce or give effect to the CDS rules to the extent to which those rules apply to such person. Section 11(2) For the purposes of this section, "CDS rules" includes any direction given, from time to time, by a central depository to any person pursuant to any provision of this Act.
Section 11Verify source
§ 12CENTRAL DEPOSITORY - 12. Central depository to provide assistance to the AuthorityProvision

Central depositories must provide the Authority with assistance reasonably required for performance of its functions; the Authority is entitled at all reasonable times to full and free access to any part of a central depository's premises to ensure compliance with the Act.

Section 12. Central depository to provide assistance to the Authority Section 12(1) A central depository shall provide such assistance to the Authority as is reasonably required for the performance by the Authority of its functions and duties under this Act. Section 12(2) The Authority shall be entitled at all reasonable times to full and free access to any part of the premises of a central depository for the purpose of ensuring compliance with this Act.
Section 12Verify source
§ 12ACENTRAL DEPOSITORY - 12A. Disciplinary action and review of a disciplinary actionProvision

Central depository may discipline its agents; must notify the Authority within seven days of such action; the Authority can review and may itself take disciplinary action, giving affected parties an opportunity to be heard.

Section 12A. Disciplinary action and review of a disciplinary action Section 12A(1) A central depository may reprimand, fine, suspend, expel or otherwise take any disciplinary action against a central depository agent in accordance with its rules. Section 12A(2) A central depository shall, within seven days of any action taken under subsection (1), notify the Authority, in writing, giving particulars including the name of the person, the reason and the nature of the action taken. Section 12A(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 of a central depository after giving the central depository and the central depository agent an opportunity to be heard. Section 12A(4) Nothing in this section shall preclude the Authority, in any case where a central depository fails to act against a central depository agent, from suspending, expelling or otherwise taking disciplinary action against a central depository agent: Provided that the Authority shall give the central depository and the central depository agent an opportunity to be heard. Section 12A(5) Any action taken by a central depository under subsection (1), shall not prejudice the power of the Authority to take such further action as it considers necessary against a central depository agent. [Act No. 38 of 2011 , s. 11.]
Section 12AVerify source
§ 2ACENTRAL DEPOSITORY - 2A. Functions of the AuthorityProvision

The Authority must take such measures as are necessary to ensure that the provisions of this Act are complied with.

Section 2A. Functions of the Authority Section take such measures as are necessary to ensure that the provisions of this Act are complied with;
Section 2AVerify source
§ 3CENTRAL DEPOSITORY - 3. Restriction on establishment of central depositoryOffence

Persons are prohibited from establishing, maintaining or representing that they maintain a central depository unless they have the prior written approval of the Authority under section 5; contravention is an offence punishable by a fine up to ten million shillings, imprisonment up to ten years, or both.

Section 3. Restriction on establishment of central depository Section 3(1) No person shall establish, maintain or hold himself out as maintaining a central depository except with the prior written approval of the Authority given in accordance with section 5 . Section 3(2) A person who contravenes any of the provisions of subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding ten million shillings, or to imprisonment for a term not exceeding ten years, or to both.
Section 3Verify source
§ 4CENTRAL DEPOSITORY - 4. Establishment of a central depositoryProvision

Companies proposing to operate a central depository must apply in writing to the Authority to be licensed and submit required CDS rules, the prescribed fee and other prescribed information; the Authority may require further information, must assess fitness and propriety, and central depositories must seek prior approval before altering submitted particulars.

Section 4. Establishment of a central depository Section 4(1) A company incorporated under the Companies Act ( Cap. 486 ) which proposes to operate a central depository shall apply to the Authority in writing to be licensed as such. Section 4(2)(a) the CDS rules made by the applicant in such manner and form as the Authority may prescribe; Section 4(2)(b) the prescribed fee; and Section 4(2)(c) such other information as the Authority may prescribe. Section 4(3) The Authority may require an applicant to provide such further information as it may consider necessary in relation to the application, in such form or verified in such manner as the Authority may direct. Section 4(4) A central depository which proposes to alter any particulars submitted under this section shall seek prior approval of the Authority before making such alterations. Section 4(5) The Authority shall, in considering an application under subsection (1), determine if the applicant is fit and proper for the purposes of this Act. [Act No. 38 of 2011 , s. 4.]
Section 4Verify source
§ 4ACENTRAL DEPOSITORY - 4A. Determination of fit and properProvision

The Authority must give a person an opportunity to be heard before deciding whether that person is fit and proper under this Act.

Section 4A. Determination of fit and proper Section 4A(1)(a) financial status or solvency of that person; Section 4A(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 4A(1)(c) status of any other regulatory licence or approval granted to the person by any other financial services regulator; Section 4A(1)(d) ability of the person to carry on the regulated activity competently, honestly and fairly; and Section 4A(1)(e) in case of a natural person, that individual person; or Section 4A(1)(e)(i) in case of a natural person, that individual person; or Section 4A(1)(e)(ii) in case of a company, the company, its directors, chief executive, management and any substantial shareholder of the company. Section 4A(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 or incompetence, or malpractice by persons engaged in transacting with marketable securities; Section 4A(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 or incompetence, or malpractice by persons engaged in transacting with marketable securities; Section 4A(2)(a)(ii) was a director of a licensed person which has been liquidated or is under liquidation or statutory management; Section 4A(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 or would otherwise discredit the methods of conducting business; Section 4A(2)(a)(iv) has taken part or has been associated with any business practice which casts doubt on his competence or soundness of judgment; or Section 4A(2)(a)(v) has conducted himself in a manner likely to cast doubt on his competency and soundness of judgment; Section 4A(2)(b) any person who is to be employed by, associated with, or who will be acting for or on behalf of, the applicant in a licensed activity; Section 4A(2)(b)(i) any person who is to be employed by, associated with, or who will be acting for or on behalf of, the applicant in a licensed activity; Section 4A(2)(b)(ii) any other company in the same group of companies; Section 4A(3) For the purposes of this section, "group of companies" means any two or more companies one of which is the holding company of the other. Section 4A(4) The Authority shall give a person an opportunity to be heard before determining if that person is fit and proper for the purposes of this Act or not. [Act No. 38 of 2011 , s. 5.]
Section 4AVerify source
§ 5CENTRAL DEPOSITORY - 5. Grant of a licenceProvision

The Authority must give a person an opportunity to be heard before declining to grant a licence.

Section 5. Grant of a licence Section 5(1)(a) has and maintains at all times, such minimum paid-up capital as may be prescribed by the Authority from time to time; Section 5(1)(b) has a board of directors constituted in accordance with such criteria as the Authority may prescribe; Section 5(1)(c) shall provide, as far as is reasonably practical, fair, transparent and efficient arrangements for the deposit, registration and transfer of securities; Section 5(1)(d) shall manage any risks associated with its business and operations prudently; Section 5(1)(e) shall ensure the compliance of its rules by its agents; Section 5(1)(f) has made sufficient central depository rules to address the matters prescribed in section 5A ; Section 5(1)(g) to establish and operate a fair, transparent and efficient clearing facility; Section 5(1)(g)(i) to establish and operate a fair, transparent and efficient clearing facility; Section 5(1)(g)(ii) to meet contingencies, including events such as technical complications occurring with an automated system or disasters and its integration with any connected trading systems; and Section 5(1)(g)(iii) has provided adequate security arrangements. Section 5(2) The Authority shall give a person an opportunity to be heard before declining to grant a licence. Section 5(3) Subject to the provisions of this Act, a central depository licence shall, until it is revoked or suspended by the Authority, be valid. [Act No. 38 of 2011 , s. 6.]
Section 5Verify source
§ 5ACENTRAL DEPOSITORY - 5A. Rules of a central depositoryAmendment

Central depositories must submit their rules to the Authority for approval; licensed central depositories must not change rules without prior Authority approval; the Authority may direct other matters.

Section 5A. Rules of a central depository Section 5A(1)(a) deposit, registration and transfer of securities; Section 5A(1)(b) settlement of transactions involving securities; Section 5A(1)(c) the proper regulation and efficient operation of the clearing facility which it operates; Section 5A(1)(d) its default process; Section 5A(1)(e) the establishment of a settlement guarantee fund; Section 5A(1)(f) the qualifications for appointment of central depository agents; Section 5A(1)(g) the proper regulation and supervision of its agents; Section 5A(1)(h) the exclusion from participation as central depository agents of persons who are not fit and proper; Section 5A(1)(i) the expulsion, suspension or disciplining of a central depository agent; Section 5A(1)(j) the carrying on of the business of a central depository, having regard to the interests and protection of the investing public; and Section 5A(1)(k) such other matters as the Authority may direct. Section 5A(2) A central depository shall submit the rules made under subsection (1) to the Authority for approval. Section 5A(3) A licensed central depository shall not amend, vary or rescind its rules without prior approval of the Authority. [Act No. 38 of 2011 , s. 7.]
Section 5AVerify source
§ 5BCENTRAL DEPOSITORY - 5B. Default process rulesCommencement

If a central depository starts a default process, all subsequent actions taken under its rules for settling the defaulter's market contracts shall be treated as taken under the default rules.

Section 5B. Default process rules Section 5B(1)(a) enable the settlement of all the defaulter’s contracts; Section 5B(1)(b) provide, for the purpose of paragraph (a), such sum of money payable by or to the defaulter, in relation to each contract, if this is required after taking into account all the rights and liabilities of the defaulter under or in respect of the contracts in question; Section 5B(1)(c) enable all sums of money payable by or to the defaulter as determined in accordance with paragraph (b) to be aggregated or set-off to produce a net sum, if any, payable by or to the defaulter; Section 5B(1)(d) provide, if any, the net sum referred to in paragraph (c), is payable to the defaulter, that all property of the defaulter which is either subject to a market charge or which has been provided as market collateral shall cease to be subject to the market charge, without prejudice to any other form of charge to which it may be subject, or to be market collateral, without prejudice to its provision as any other form of collateral, as the case may be; and Section 5B(1)(e) provide for the certification by the central depository, of any net sum referred to in paragraph (c) payable to the defaulter, or of any further net sum referred to in paragraph (d) payable by or to the defaulter, as the case may be, or if there is no such sum, the certification by the central depository of that fact. Section 5B(2) Where a central depository commences a default process, all subsequent action taken under its rules for settlement of market contracts to which the defaulter is party, shall be treated as taken under the default rules. [Act No. 38 of 2011 , s. 7.]
Section 5BVerify source
§ 5CCENTRAL DEPOSITORY - 5C. Net sum payable on completion of default measuresProvision

A certificate from the central depository stating the net sum payable is sufficient proof of that net sum for the purposes of subsection (2).

Section 5C. Net sum payable on completion of default measures Section 5C(1) This section shall apply to any net sum certified by a central depository as payable by or to a defaulter, upon the completion of default measures. Section 5C(2)(a) provable in bankruptcy or winding up proceedings; and Section 5C(2)(b) taken into account for the purpose of any rule of law relating to set-off. Section 5C(3) For the purposes of subsection (2), a certificate of a central depository on the amount of the net sum payable, shall be sufficient proof of the net sum payable. [Act No. 38 of 2011 , s. 7.]
Section 5CVerify source
§ 5DCENTRAL DEPOSITORY - 5D. Central depository to prepare and submit reportProvision

The Authority may publish the contents of a report received under subsection (2) for the attention of creditors, in any manner it considers appropriate.

Section 5D. Central depository to prepare and submit report Section 5D(1)(a) action taken against the defaulter; and Section 5D(1)(b) net sum, if any, certified by the central depository to be payable by or to the defaulter. Section 5D(2)(a) Authority; Section 5D(2)(b) any relevant securities exchange; and Section 5D(2)(c) defaulter to whom the report relates. Section 5D(3) The Authority may publish, in such manner as it may consider appropriate, the contents of a report received under subsection (2) for the attention of creditors. Section 5D(4)(a) avail the report to the creditor for inspection within two days from the receipt of such request; or Section 5D(4)(b) supply to the creditor, on payment of a prescribed fee, all or any part of the report as requested.
Section 5DVerify source
§ 6CENTRAL DEPOSITORY - 6. Amendment of CDS rulesAmendment

Boards of approved central depositories must send proposed rule amendments to the Authority for approval; the Authority must notify its decision within thirty days; central depositories must seek prior approval before altering particulars in their application.

Section 6. Amendment of CDS rules Section 6(1) The rules of an approved central depository, in so far as they have been approved by the Authority, shall not be amended, varied or rescinded without prior approval of the Authority. Section 6(2) Where the board of directors of an approved central depository intends to amend its rules, it shall forward the proposed amendments to the Authority for approval. Section 6(3) The Authority shall, within thirty days of receipt of a notice under subsection (2), notify the central depository of its decision regarding the proposed amendments, and where it does not approve the same, shall specify the reason for such decision. Section 6(4) A central depository which proposes to alter any particulars already furnished to the Authority, or to make any change in its state as specified in its application under section 4 , shall seek the prior approval of the Authority.
Section 6Verify source
§ 7CENTRAL DEPOSITORY - 7. Power of Authority to amend CDS rulesCommencement

The Authority may, after consulting the central depository, amend the CDS rules by written notice specifying amendments and their commencement dates, notwithstanding any other written law.

Section 7. Power of Authority to amend CDS rules Section Notwithstanding the provisions of any other written law, the Authority may from time to time, after consultation with the central depository, amend the CDS rules by written notice, specifying the amendments and the dates on which such amendments shall come into force.
Section 7Verify source
§ 8CENTRAL DEPOSITORY - 8. Duties of a central depositoryProvision

Section 8 lists duties of a central depository, including establishing and operating centralised securities facilities; ensuring fair, transparent and efficient depository, clearing and settlement arrangements; safe custody and anti-falsification measures; tracing and recording systems; seeking approval for fees; prudent risk management; acting in investors' and public interest; following Authority-approved rules; ensuring agent compliance; maintaining adequate premises, personnel and approved automated systems; preserving confidentiality subject to specified disclosures.

Section 8. Duties of a central depository Section 8(1)(a) establish and operate facilities for the handling of securities centrally; Section 8(1)(b) ensure that facilities under paragraph (a) provide fair, transparent and efficient depository, clearing and settlement arrangements for securities deposited and any transactions relating to securities cleared or settled through its facilities; Section 8(1)(c) ensure safe custody of certificates and other documents deposited with the central depository; Section 8(1)(c)(i) ensure safe custody of certificates and other documents deposited with the central depository; Section 8(1)(c)(ii) guard against falsification of the records or accounts required to be kept or maintained under the Act; and Section 8(1)(c)(iii) ensure a proper and efficient system for the tracing, verification, inspection, identification and recording of all transactions with the central depository; Section 8(1)(c)(iv) seek approval for any fees proposed to be levied in respect of the services it renders; and Section 8(1)(c)(v) ensure that the risks associated with its business and operations are managed prudently. Section 8(2) A central depository shall, in discharging its duty under subsection (1), act in the interest of the investors and the public. Section 8(3) A central depository shall operate its facilities and perform its duties in accordance with the rules approved by the Authority under section 5A . Section 8(4) A central depository shall formulate and implement appropriate procedures to ensure that the agents it appoints under section 9 comply with its rules. Section 8(5)(a) adequate and properly equipped premises; Section 8(5)(b) competent personnel; and Section 8(5)(c) automated systems with adequate capacity and facilities, security arrangements and technical support to meet contingencies or disasters, approved by the Authority. Section 8(6) A central depository shall preserve confidentiality with regard to the information in its possession concerning its central depository agents and their customers: Provided that such information may be disclosed to the Authority when requested to do so in writing, or upon written request of a securities exchange, for which it is a central depository, or is required to do so by any law. Section 8(7)(a) of the inability of any of its central depository agents, to comply with any rule of the central depository; Section 8(7)(b) of a financial irregularity or other matter which, in the opinion of the central depository, may indicate that the financial standing or integrity of a central depository agent is questionable; or Section 8(7)(c) of the likelihood of a central depository agent not being able to meet its legal obligations. Section 8(8) A central depository shall be entitled to charge such fees for its services and facilities as may be approved by the Authority. Section 8(9) The Authority may, from time to time, prescribe such other duties to be performed by a central depository as it considers appropriate. [Act No. 38 of 2011 , s. 8.]
Section 8Verify source
§ 9CENTRAL DEPOSITORY - 9. Central depository agentsProvision

No person may act or hold themselves out as a central depository agent unless duly appointed; appointed agents must perform approved CDS functions and, when required, provide information or documents to the central depository or the Authority; the Authority may make rules regulating agents and impose duties or sanctions.

Section 9. Central depository agents Section 9(1) No person shall act or hold himself out as a central depository agent unless such person is duly appointed as such in accordance with this section. Section 9(2)(a) any trading participant of a securities exchange for which it is its central depository; or Section 9(2)(b) a non-bank subsidiary of any bank or financial institution licensed under the Banking Act ( Cap. 488 ); or Section 9(2)(c) any institutional investor; or Section 9(2)(d) any body corporate of a type prescribed by the Authority, to be its central depository agent. Section 9(3) A central depository agent appointed under this section shall perform all or any functions approved by the central depository under the CDS rules. Section 9(4) In the performance of its functions under this Act, a central depository agent shall, when so required, produce or make available to the central depository or to the Authority, any information or document relating to a securities account. Section 9(5) Subject to this Act, the Authority may make such rules as may be necessary to regulate the appointment of a central depository agent and the imposition of duties, obligations and sanctions on such agent. [Act No. 38 of 2011 , s. 9.]
Section 9Verify source

Part III

PROVISIONS RELATING TO IMMOBILISED SECURITIES

§ 13PROVISIONS RELATING TO IMMOBILISED SECURITIES - 13. Prescription of securities for immobilisationProvision

A securities exchange may prescribe immobilisation of listed or proposed securities after consulting the central depository, and must give public notice (per CDS rules) of eligible immobilised securities; deposits with an agent are deemed deposits with the central depository.

Section 13. Prescription of securities for immobilisation Section 13(1) Subject to subsection (2), a securities exchange may, from time to time, after consultation with a central depository, prescribe that any security listed or quoted or proposed to be listed or quoted on the securities exchange be immobilised by depositing such security with the central depository. Section 13(2) A securities exchange shall, in respect of securities listed or quoted on the securities exchange, give notice to the public in the manner prescribed in the CDS rules of all eligible securities prescribed by it to be immobilised with a central depository. Section 13(3) For the purposes of this Act, the deposit by a person of any eligible security with an agent of a central depository shall be deemed to be a deposit of such security with that central depository.
Section 13Verify source
§ 14PROVISIONS RELATING TO IMMOBILISED SECURITIES - 14. Verification of certificates and transfer to a central depository or nominee companyProvision

Central depositories (or their agents) must lodge deposited certificates and instruments with the issuer; the issuer must register transfers in the depository's name unless exceptions in subsection (3) apply; within two market days the issuer must notify and deliver the certificate; the section does not apply to bearer securities.

Section 14. Verification of certificates and transfer to a central depository or nominee company Section 14(1) After the deposit by any person of a certificate representing an eligible security and the instrument of transfer in respect of that security, if any, a central depository or its agent, as the case may be, shall lodge the certificate and instrument with the issuer within the period prescribed in the CDS rules. Section 14(2) Subject to subsection (3), the issuer shall, on receipt of the certificate and instrument, forthwith do all such acts as are necessary to register the transfer of the security in respect of such certificate in the name of the central depository or its nominee company. Section 14(3)(a) the certificate is not a genuine certificate or is a certificate that was reported lost or destroyed; or Section 14(3)(b) there has been a duplication in the issuance of the certificate representing that security; or Section 14(3)(b)(i) there has been a duplication in the issuance of the certificate representing that security; or Section 14(3)(b)(ii) such certificate is a certificate issued in excess of the issued share capital of the issuer; or Section 14(3)(c) it has been served with an order of a court of competent jurisdiction prohibiting any dealing in respect of the security underlying such certificate; or Section 14(3)(d) any lawful order exists to the knowledge of the issuer preventing the person who deposited the certificate from dealing with any of his monies, properties or assets. Section 14(4) Within two market days after a transfer is lodged with an issuer or within such period as may be allowed in writing by the central depository, the issuer shall, in any case other than a case referred to in subsection (3), notify the central depository agent, complete and deliver the appropriate certificate to the central depository. Section 14(5) Section 508 of the Companies Act (Cap. 486) does not apply to a transfer that is required to be registered by an issuer under this section and section 15 (4), but if an issuer refuses registration of such a transfer, it shall serve on the transferor and the central depository (being the transferee) a notice giving the reasons for the refusal. Section 14(6) An instrument of transfer lodged with an issuer under subsection (1) can be registered in the name of a central depository or its nominee company if it has been certified by a central depository agent instead of being executed by the central depository or its nominee company. This subsection applies despite section 512 of the Companies Act (Cap. 486). Section 14(7) For the purposes of this section, an eligible security shall be immobilised if it is no longer in suspense. Section 14(8) The provisions of this section shall not apply to bearer securities. [Act No. 19 of 2015 , s. 126.]
Section 14Verify source
§ 15PROVISIONS RELATING TO IMMOBILISED SECURITIES - 15. Transitional provisions relating to trading of eligible securitiesProvision

During the transitional period central depositories or their agents must accept certificates for immobilisation to settle trades under the CDS rules, no person may trade eligible securities on an exchange without a securities account, and certain agents and issuers must comply with sections 14(2)–14(8).

Section 15. Transitional provisions relating to trading of eligible securities Section 15(1) This section shall apply to all trading in eligible securities during the period beginning on the day immediately following the notification date and ending on the immobilisation date (in this section and in section 16 referred to as "the transitional period"). Section 15(2) A central depository or a central depository agent, as the case may be, shall accept any certificate representing an eligible security to be immobilised for the purpose of settlement of any trade on the securities exchange during the transitional period in accordance with the CDS rules. Section 15(3) No person shall trade in any eligible security on a securities exchange without having a securities account. Section 15(4) The provisions of sections 14 (2) to 14(8) shall apply to all central depository agents and the issuers with whom the documents referred to in subsection (2) of this section have been lodged.
Section 15Verify source
§ 16PROVISIONS RELATING TO IMMOBILISED SECURITIES - 16. Dealer in eligible securities to hold securities accountProvision

After the transitional period, no person may trade or transfer any eligible security on a securities exchange unless they hold a securities account.

Section 16. Dealer in eligible securities to hold securities account Section No person shall, after the transitional period, trade or transfer any eligible security on a securities exchange unless such person holds a securities account.
Section 16Verify source
§ 17PROVISIONS RELATING TO IMMOBILISED SECURITIES - 17. Restriction of trade in eligible securitiesProvision

After the immobilisation date, no person may trade an eligible security on an exchange unless it has been deposited with a central depository; an eligible security may be deposited by a depositor with the central depository (subject to fees under the CDS rules).

Section 17. Restriction of trade in eligible securities Section 17(1) No person shall, after the immobilisation date, trade any eligible security on a securities exchange unless such security has been deposited with a central depository. Section 17(2) Notwithstanding subsection (1), an eligible security may, at any time after the immobilisation date, be deposited by a depositor with the central depository subject to such additional fees, if any, as may be imposed under the CDS rules.
Section 17Verify source
§ 18PROVISIONS RELATING TO IMMOBILISED SECURITIES - 18. Receipt of certificates of eligible securities for safe custodyProvision

A central depository may set a date after which exchange members cannot receive certificates for safe custody, and must notify the public of that date.

Section 18. Receipt of certificates of eligible securities for safe custody Section 18(1) A central depository may, by notice, prescribe a date following which no member of a securities exchange may receive a certificate representing an eligible security merely for safe custody. Section 18(2) A central depository shall give notice to the public of the date prescribed in subsection (1).
Section 18Verify source
§ 19PROVISIONS RELATING TO IMMOBILISED SECURITIES - 19. Liability of central depository for loss, damage, etc., of certificatesProvision

A central depository and its agent are liable to a depositor for loss, damage or liability from disappearance, loss or destruction of deposited certificates caused by their wilful act, omission, neglect or default; but a central depository agent is not liable for certificates whose transfers are not registrable under section 14, except where exchange rules oblige the agent to effect a buying in after a refusal to register.

Section 19. Liability of central depository for loss, damage, etc., of certificates Section 19(1) A central depository and its agent shall be liable to a depositor for any loss, damage or liability suffered or incurred by a depositor in respect of any disappearance, loss or destruction of any certificate deposited by the depositor with the central depository or such agent due to any wilful act, omission, neglect or default on the part of the central depository or its central depository agent. Section 19(2) Notwithstanding subsection (1), a central depository agent shall not be liable for any loss, damage or liability suffered or incurred by any person in respect of any certificate the transfer of which is not capable of registration under section 14 : Provided that the provisions of this subsection shall not operate to relieve a central depository agent from any obligation imposed on it by the rules of a securities exchange in its capacity as a member of such securities exchange to effect any buying in, whether directly or otherwise, following a refusal to register a transfer under that section.
Section 19Verify source
§ 20PROVISIONS RELATING TO IMMOBILISED SECURITIES - 20. Deeming provisionsProvision

Deeming provisions

Section 20. Deeming provisions
Section 20Verify source
§ 21PROVISIONS RELATING TO IMMOBILISED SECURITIES - 21. Withdrawal of immobilised securityProvision

A depositor may apply to the central depository to withdraw an immobilised security standing to the credit of their securities account, subject to section 22 and this section; a central depository or its agent remains subject to any obligation (under written law or exchange rules) to notify the securities exchange of such transfer.

Section 21. Withdrawal of immobilised security Section 21(1) Subject to section 22 and the provisions of this section, a depositor may, on application to the central depository, withdraw an immobilised security standing to the credit of his securities account. Section 21(2)(a) the certificate representing the security; and Section 21(2)(b) the instrument of transfer duly executed by the central depository or its nominee company, as the case may be, Section 21(3)(a) complete and hold ready for delivery to the depositor, the appropriate certificate registered in the name of such depositor and any other document in connection with the security, if any; and Section 21(3)(b) unless otherwise instructed by the depositor, send or deliver the completed certificate and such other documents, if any, to the depositor. Section 21(4) Nothing in subsection (3) shall operate to relieve a central depository or its central depository agent from any obligation imposed under any written law or under the rules of a securities exchange to notify the securities exchange of such transfer. [Act No. 19 of 2015 , s. 127.]
Section 21Verify source
§ 22PROVISIONS RELATING TO IMMOBILISED SECURITIES - 22. Trading of securities withdrawn from central depositoryProvision

No person may trade a security withdrawn from a central depository on a securities exchange unless that security is redeposited in a central depository.

Section 22. Trading of securities withdrawn from central depository Section 22(1) No person shall trade any security withdrawn from a central depository on a securities exchange unless such security is redeposited in a central depository. Section 22(2) A security which is redeposited with a central depository shall not be capable of being utilised to settle a transaction which took place on a securities exchange prior to the redeposit of that security. Section 22(3) The provisions of section 14 relating to eligible securities shall apply in respect of a redeposited security.
Section 22Verify source
§ 23PROVISIONS RELATING TO IMMOBILISED SECURITIES - 23. Withdrawal of prescribed securities prohibitedProvision

No person may withdraw a security prescribed as a dematerialised security from a central depository; a securities exchange may, after consulting the Authority, restrict or prohibit withdrawal of listed or quoted immobilised securities for such period and in such manner as it considers appropriate.

Section 23. Withdrawal of prescribed securities prohibited Section 23(1) No person shall withdraw any security which is prescribed as a dematerialised security under this Act from a central depository. Section 23(2) A securities exchange may, from time to time, after consultation with the Authority, restrict or prohibit the withdrawal of any immobilised security or class of immobilised securities which is listed or quoted for such period and in such manner as it considers appropriate. Section 23(3)(a) inform the central depository of such decision; and Section 23(3)(b) the book-entry securities the withdrawal of which is restricted or prohibited; and Section 23(3)(b)(i) the book-entry securities the withdrawal of which is restricted or prohibited; and Section 23(3)(b)(ii) the period of such restriction or prohibition.
Section 23Verify source
§ 24PROVISIONS RELATING TO IMMOBILISED SECURITIES - 24. Prescription of dematerialised securitiesAmendment

Central depository may prescribe certain immobilised or proposed-listed securities as dematerialised; a notice must identify the security and specify a dematerialisation date.

Section 24. Prescription of dematerialised securities Section 24(1) A central depository may, from time to time, after consultation with an issuer, prescribe an immobilised security, or class of securities, as a dematerialised security in accordance with the selection process laid down under the CDS rules. Section 24(2) Notwithstanding subsection (1), a central depository may, from time to time, after consultation with an issuer, prescribe any security proposed to be listed or quoted on a securities exchange, as a dematerialised security. Section 24(3)(a) give notice to the public that such security shall, on the dematerialisation date, become a dematerialised security; and Section 24(3)(b) do all such things as are necessary to amend its deed of establishment, trust deed, constitution or articles of association, as the case may be, to give effect and comply with this Act and CDS rules within one hundred and twenty days of the notice. Section 24(4) A notice under subsection (3) shall identify the security to be dematerialised and shall specify a dematerialisation date, not being less than one month from the date of publication of the notice, on or before which that security shall become dematerialised.
Section 24Verify source
§ 25PROVISIONS RELATING TO IMMOBILISED SECURITIES - 25. Central depository to maintain official record of depositorsProvision

Section 25 requires surrendering physical registers and providing holder information to the central depository, specifies required record content for immobilised securities, exempts bearer securities, and states the central depository is not the issuer's agent for registration services.

Section 25. Central depository to maintain official record of depositors Section 25(1)(a) surrender the physical register of members or debenture holders, as the case may be, to the central depository; and Section 25(1)(b) provide information to the central depository of any member or debenture holder who appears in the appropriate register as a holder of a certificate not already immobilised by the central depository. Section 25(2)(a) every depositor with an immobilised security credited to a securities account held by such depositor; and Section 25(2)(b) where the prescribed security is issued by a listed company, every member or debenture holder whose name would, save for this section, Section 25(3)(a) contains information in computerised record form; Section 25(3)(b) is not distinguished by means of a share number; and Section 25(3)(c) contains such other information as may be required under the CDS rules. Section 25(4) The provisions of this section shall not apply to any bearer security. Section 25(5) Nothing in this section shall be construed as making the central depository an agent of the issuer for the purposes of providing registration services. [Act No. 19 of 2015 , s. 128.]
Section 25Verify source
§ 26PROVISIONS RELATING TO IMMOBILISED SECURITIES - 26. Issuer not to issue certificates in respect of dematerialised securitiesProvision

Issuers must not issue certificates for dematerialised securities after the dematerialisation date.

Section 26. Issuer not to issue certificates in respect of dematerialised securities Section No issuer shall, after the dematerialisation date issue any certificate in respect of a dematerialised security.
Section 26Verify source
§ 27PROVISIONS RELATING TO IMMOBILISED SECURITIES - 27. References to the Companies Act (Cap. 486)Provision

Section 27 maps certain Companies Act references to central depository records for dematerialised securities and excludes Section 505 for dematerialised securities.

Section 27. References to the Companies Act (Cap. 486) Section 27(1)(a) a register of members, or of debenture holders, (including branch registers) kept by a company under the Companies Act (Cap. 486) is taken to be a reference to the record of depositors maintained by the central depository; Section 27(1)(b) a transfer of shares or debentures from a transferee under the Companies Act (Cap. 486) is taken to be a reference to a book-entry transfer performed by the central depository; and Section 27(1)(c) any certificate, instrument of transfer or any movable property representing any security that is used as evidence of ownership of the security is taken to be a reference to a statement of account issued by the central depository. Section 27(2) Section 505 of the Companies Act (Cap. 486) does not apply to a dematerialised security. [Act No. 19 of 2015 , s. 129.]
Section 27Verify source
§ 28PROVISIONS RELATING TO IMMOBILISED SECURITIES - 28. Application to collective investment schemesProvision

The register of any collective investment scheme means the record of depositors maintained by the central depository.

Section 28. Application to collective investment schemes Section a register of any collective investment scheme, shall be deemed to be a reference to the record of depositors maintained by the central depository;
Section 28Verify source
§ 29PROVISIONS RELATING TO IMMOBILISED SECURITIES - 29. CMA rules in respect of dematerialised securitiesProvision

The CMA has the power to make rules for dematerialised securities to replace physical registers with book-entry records in specified cases.

Section 29. CMA rules in respect of dematerialised securities Section to effect the replacement of physical registers with book-entry records where the dematerialised security to be prescribed is a security other than a share or debenture under the Companies Act (Cap. 486) or an interest in a collective investment scheme; and
Section 29Verify source

Part IV

SECURITIES ACCOUNTS AND RECORDS

§ 30SECURITIES ACCOUNTS AND RECORDS - 30. Dealer in book-entry securities to hold securities accountOffence

No person shall deal in book-entry securities unless such person holds a securities account.

Section 30. Dealer in book-entry securities to hold securities account Section 30(1) No person shall deal in book-entry securities unless such person holds a securities account. Section 30(2) A central depository may establish different types of securities accounts for different classes of persons or securities. Section 30(3) A securities account opened with a central depository shall be in the name of the beneficial owner, legal owner or authorized nominee. Section 30(4) A person who opens a securities account shall declare in the manner prescribed in the CDS rules whether the person is the beneficial owner of the deposited securities or the legal owner. Section 30(5) A person who contravenes the provisions of this section commits an offence and shall, on conviction, be liable to a fine not exceeding ten million shillings or to imprisonment for a term not exceeding ten years or both. [Act No. 8 of 2021 , s. 74.]
Section 30Verify source
§ 30ASECURITIES ACCOUNTS AND RECORDS - 30A. Appointment of authorized nomineesOffence

Allows beneficial or legal owners to appoint an authorized nominee in writing to open securities or omnibus accounts; authorized nominees may deposit securities and must declare the beneficial or legal owner; contravention is an offence with fines or imprisonment.

Section 30A. Appointment of authorized nominees Section 30A(1) A beneficial owner or legal owner may appoint, in writing, a person to be the authorized nominee for the purpose of opening a securities account or, in the case of more than one beneficial or legal owner, an omnibus account in the name of the beneficial or legal owner or owners, as the case may be. Section 30A(2) An authorized nominee appointed under subsection (1) may deposit securities in the securities account or omnibus account on behalf of the beneficial or legal owners, as the case may be. Section 30A(3) The authorized nominee shall declare in the manner prescribed in the CDS rules the beneficial or legal owner of the securities deposited under subsection (2). Section 30A(4) A person who contravenes the provisions of this section commits an offence and shall, on conviction, be liable to a fine not exceeding ten million shillings or to imprisonment for a term not exceeding ten years or both. [Act No. 8 of 2021 , s. 75.]
Section 30AVerify source
§ 30BSECURITIES ACCOUNTS AND RECORDS - 30B. Duties of authorized nomineesOffence

Authorized nominees must keep and maintain records of beneficial and legal owners and related securities accounts as prescribed; authorized owners must furnish the central depository with required information on request; contravention is an offence with fines or imprisonment on conviction.

Section 30B. Duties of authorized nominees Section 30B(1) An authorized nominee shall keep and maintain records on beneficial owners, legal owners, securities accounts or omnibus accounts in respect of the securities deposited in the securities or omnibus account in the manner prescribed in the CDS rules. Section 30B(2) An authorized owner shall, on request, furnish the central depository with such information as may be required on the beneficial owners, legal owners, securities accounts or omnibus accounts in respect of the securities deposited in the securities or omnibus account. Section 30B(3) A person who contravenes the provisions of this section commits an offence and shall, on conviction, be liable to a fine not exceeding ten million shillings or to imprisonment for a term not exceeding ten years or both. [Act No. 8 of 2021 , s. 75.]
Section 30BVerify source
§ 31SECURITIES ACCOUNTS AND RECORDS - 31. Issuance of statements of accountsProvision

The central depository must issue statements of account for book-entry securities to depositors; depositors may request statements by written notice; on notice and payment of charges the central depository must issue the requested statement; such statements are prima facie evidence of the matters they specify.

Section 31. Issuance of statements of accounts Section 31(1) A central depository shall issue to all depositors statements of account in respect of all book-entry securities held in custody by, or registered in the name of, the central depository or its nominee company for the depositors at such time and in such manner as may be prescribed under this Act. Section 31(2) Notwithstanding the provisions of subsection (1), a depositor may, at any time, by written notice, require the central depository to issue to him a statement of account in respect of all or any of the book-entry securities for the time being held in custody by, or registered in the name of, the central depository or its nominee company on behalf of the depositor. Section 31(3) A central depository shall, on receipt of a written notice under subsection (2) and upon payment of any charges which may be imposed under the CDS rules, issue to the depositor the statement of account so required. Section 31(4) A statement of account issued under this section shall be prima facie evidence of the truth of the matters specified in the statement of account.
Section 31Verify source
§ 32SECURITIES ACCOUNTS AND RECORDS - 32. Duty of central depository to keep recordsProvision

The central depository has a duty to keep records of all transfers of book-entry securities to and from a securities account.

Section 32. Duty of central depository to keep records Section all transfer of book-entry securities to and from a securities account;
Section 32Verify source
§ 33SECURITIES ACCOUNTS AND RECORDS - 33. Audit of records and accountsProvision

Central depositories must have their operations independently audited each financial year, appoint an independent auditor, and inform the Authority; the auditor has specified access and reporting entitlements including submitting a report within ninety days of appointment.

Section 33. Audit of records and accounts Section 33(1)(a) a verification of the accuracy of the details shown in such records or accounts; and Section 33(1)(b) a stock count of all certificates held by the central depository. Section 33(2)(a) a copy of the report of the audit conducted under subsection (1), duly certified by the auditors; Section 33(2)(b) a description of the activities undertaken by the central depository in that financial year; Section 33(2)(c) the resources, including financial, technological and human resources which the central depository had available, and used, in order to ensure compliance with its obligations; and Section 33(2)(d) an analysis of the extent to which the central depository considers that the activities undertaken, and resources used, have resulted in full compliance of its obligations. Section 33(3) A central depository shall, at the end of each financial year, subject its operations to an independent audit. Section 33(4) A central depository shall appoint an independent auditor for the purposes of subsection (3). Section 33(5) A central depository shall inform the Authority of the appointment of an auditor under subsection (4). Section 33(6)(a) have a right of access, at all reasonable times, to all operational records and systems of the central depository and is entitled to require from officers of the central depository such information and explanations as the auditor considers necessary for the performance of his duties; Section 33(6)(b) have a right of access at all reasonable times, to the offices, operation records and systems of all the central depository agents of that central depository; Section 33(6)(c) prepare a report on the operational capabilities of the central depository system and a statement on whether, in the opinion of the auditor, the central depository system operates and performs its functions satisfactorily with regard to the duties of the central depository; Section 33(6)(d) submit the report prepared under paragraph (c) to the central depository and a copy to the Authority within ninety days of his appointment.
Section 33Verify source

Part IX

GENERAL

§ 61GENERAL - 61. Preservation of records and accountsProvision

A central depository and its agents must preserve all records and accounts for seven years, even if they stop business before the seventh year ends.

Section 61. Preservation of records and accounts Section A central depository and its central depository agents shall preserve all records and accounts for a period of seven years, whether or not they cease to carry on their business before the end of the seventh year.
Section 61Verify source
§ 62GENERAL - 62. Power of Authority to compound offencesOffence

If a person pays the specified amount to the Authority within fourteen days after the order, proceedings will not be taken against them for the offence.

Section 62. Power of Authority to compound offences Section if such person pays such amount to the Authority within fourteen days after the order, proceedings shall not be taken against him in relation to the offence; or
Section 62Verify source
§ 63GENERAL - 63. ProsecutionOffence

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

Section 63. Prosecution 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 prosecutor in respect of any offence under this Act. [Act No. 2 of 2002 , Sch., Act No. 19 of 2023, Sch.]
Section 63Verify source
§ 63AGENERAL - 63A. InsuranceProvision

Central depositories must maintain insurance policies (including specific coverage determined by the depository) and notify the Authority and agents of any reduction; the Authority or its agents may inspect policies.

Section 63A. Insurance Section 63A(1) A central depository shall, at all times, maintain an insurance policy to cover loss or damage arising from such occurrences as may be prescribed from time to time by the Authority. Section 63A(2) A central depository shall obtain and maintain, at a reasonable and competitive cost, one or more insurance policies for such amounts and coverage as may be determined by the central depository in its interests and in the interest of its depositors. Section 63A(3) The Authority or a central depository agent may inspect the insurance policies maintained under subsection (2) during business hours. Section 63A(4) A central depository shall notify the Authority and the central depository agents of any reduction in the coverage or amount of any policy of insurance it maintains. [Act No. 38 of 2011 , s. 16.]
Section 63AVerify source
§ 64GENERAL - 64. IndemnityProvision

Officers, employees and agents of the central depository are exempt from being sued in court for acts or omissions done in good faith in the intended exercise of powers or duties under the Act.

Section 64. Indemnity Section No officer, employee or agent of the central depository shall be sued in any court for any act or matter done, or ordered to be done, or omitted to be done, by him in good faith and in the intended exercise of any power or performance of any duty, conferred or imposed on him by or under this Act.
Section 64Verify source
§ 65GENERAL - 65. CMA rulesProvision

The Authority may, from time to time, make CMA rules necessary or expedient to carry out the objects and purposes of the Act.

Section 65. CMA rules Section 65(1) The Authority may, from time to time, make such CMA rules as may be necessary or expedient for carrying out or achieving the objects and purposes of this Act. Section 65(2)(a) prescribing fees to be paid in respect of any matter or thing required for the purposes of this Act; Section 65(2)(b) prescribing the circumstances when a book-entry security in a securities account may be specified by a central depository as being in suspense under section 43 ; Section 65(2)(c) regulating the appointment of central depository agents and nominee companies and the imposition of duties, obligations and sanctions on such agents and companies; Section 65(2)(d) regulating the setting-up and operation of the computer system including computer terminals which form part of such system; Section 65(2)(e) regulating the manner in which immobilised book-entry securities shall be kept for safe custody by a central depository; Section 65(2)(f) regulating the manner in which book-entry securities shall be immobilised or dematerialised by a central depository; Section 65(2)(g) regulating the replacement of physical registers with book-entry records where the dematerialised security to be prescribed is a security other than a share or debenture under the Companies Act ( Cap. 486 ) or an interest in a collective investment scheme; Section 65(2)(h) prescribing other purposes for which a central depository may appoint central depository agents under section 9 (2); Section 65(2)(i) prescribing the types of bodies corporate which may be appointed to act as central depository and its central depository agents; Section 65(2)(j) regulating the activities of, and the standards to be maintained by, a central depository and its central depository agents; Section 65(2)(k) prescribing the manner in which records shall be kept and maintained by a central depository, its central depository agents and its nominee companies under this Act; Section 65(2)(l) prescribing all matters relating to the maintenance of insurance, and the establishment and maintenance of compensation funds, by a central depository, its nominee companies and central depository agents for the purpose of settling claims by depositors against them; Section 65(2)(m) prescribing such other persons who may have access to the computer system of a central depository; Section 65(2)(n) prescribing the extent to which any user or class of users may have access to the computer system of a central depository; Section 65(2)(o) matters relating to linkages between a central depository and other securities depositories established outside Kenya; and Section 65(2)(p) all matters or things which by this Act are required or permitted to be prescribed or which are necessary or expedient to give effect to this Act. Section 65(3)(a) take into account and be consistent with the objective of promoting and maintaining an effective and efficient securities market; Section 65(3)(b) be exposed to comment by stakeholders and the general public for a period of thirty days through notifications in at least two daily newspapers of national circulation and the electronic media; and Section 65(3)(c) be signed by the Chairperson and chief executive and published in the Gazette . Section 65(4) For the purposes of subsection (3)(b) stakeholders shall include listed companies, all persons licensed or approved by the Authority or financial or other institutions whose operations in the opinion of the Authority have a bearing on the development or regulation of capital markets in Kenya.
Section 65Verify source
§ 66GENERAL - 66. Reference to allottee in the Companies Act (Cap. 486)Provision

When applying the Companies Act to a book-entry security, the term "allottee" in that Act means a depositor who is deemed under section 37 of this Act to be a member or debenture holder of the company making the allotment.

Section 66. Reference to allottee in the Companies Act (Cap. 486) Section For purposes of the application of the Companies Act (Cap. 486) in relation to any book-entry security, a reference to an allottee in that Act shall be construed as a reference to a depositor who, by virtue of section 37 of this Act, is deemed to be a member or debenture holder of the company which makes the allotment. [Act No. 19 of 2015 , s. 132.]
Section 66Verify source
§ 67GENERAL - 67. Publication of noticeProvision

When a notice is required under Part III, it must be published in at least three national daily newspapers (one in Kiswahili and two in English), once a week for three consecutive weeks.

Section 67. Publication of notice Section Where notice is required under Part III of this Act, it shall be given in not less than three daily newspapers of national circulation, one of which shall be in Kiswahili and two in the English language, once a week for three consecutive weeks.
Section 67Verify source

Part V

SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS

§ 34SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 34. Evidence of book-entry security transactionsProvision

A depositor's book-entry security transaction must be evidenced or effected by an entry in the depositor's securities account.

Section 34. Evidence of book-entry security transactions Section 34(1) Notwithstanding the provisions of any other written law, a transaction of a book-entry security by a depositor, whether accompanied by an instrument or not shall be evidenced or effected by means of an entry in the securities account of the depositor. Section 34(2) For the purposes of this section, a transaction of a book-entry security shall include a deposit of an eligible security under section 13 and a trade or transfer of a book-entry security from a securities account to another securities account maintained by the central depository. Section 34(3) Notwithstanding anything in the Capital Markets Authority Act ( Cap. 485A ), or the Stamp Duty Act ( Cap. 480 ) or any regulations made thereunder, a transaction of a book-entry security by a depositor pursuant to subsection (1) shall be deemed to be a transaction or trade within the securities exchange.
Section 34Verify source
§ 35SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 35. Entries in securities accountsProvision

Entries in securities accounts made directly by a central depository are deemed made by or with its authority; entries made through a central depository agent are deemed made by or with the agent's authority. A record of such an entry in respect of a transaction in book-entry securities is prima facie evidence of the matters recorded.

Section 35. Entries in securities accounts Section 35(1)(a) in the case of a securities account established and maintained directly by a central depository, be deemed to have been made by, or with the authority of, such central depository; and Section 35(1)(b) in the case of a securities account established through, and maintained by a central depository agent on behalf of a central depository, be deemed to have been made by, or with the authority of, the central depository agent. Section 35(2) A record of an entry in a securities account in respect of a transaction in book-entry securities shall be prima facie evidence of the truth of the matters so recorded.
Section 35Verify source
§ 36SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 36. Provision of record of depositors to issuerProvision

Issuers may request from the central depository a record of depositors by written notice; the central depository must provide and maintain that record (including specified depositor details) under CDS rules and data protection principles; members may inspect for free while others may inspect on payment; copies may be requested and must be supplied by the issuer within 21 days or a longer reasonable period.

Section 36. Provision of record of depositors to issuer Section 36(1) An issuer of any book-entry security may, by written notice, require a central depository to furnish it with a record of the depositors in whose securities accounts such securities are credited as at the date of the notice or at such other date as may be specified in the notice. Section 36(2) A record of depositors required by an issuer under subsection (1) shall be issued by the central depository within the period prescribed under the CDS rules. Section 36(3) A record of depositors issued under this section shall contain the name, identity card, passport number or company number as the case may be, nationality and such other information and particulars of the depositors as may be requested by the issuer, and a statement as to the number of the book-entry securities acquired by each depositor. Section 36(4) The record of depositors obtained by an issuer under this section shall be available for inspection by any member of the issuer (including a depositor) without charge and by any other person on payment of such sum as may be prescribed from time to time by the central depository, in respect of each inspection. Section 36(5) Any member of an issuer or any other person may require the issuer to furnish him with a copy of the record of depositors, or of any part thereof, but only so far as it relates to the names, addresses, and the number of securities held, on payment of such sum as may be prescribed from time to time by the central depository, in respect of every hundred words or fractional part thereof required to be copied. Section 36(6) The copy of the record of depository, or any part thereof, required under subsection (5) shall be supplied to the person who required such copy within a period of twenty-one days or within such longer period as the Authority considers reasonable in the circumstances, commencing from the day after the date of receipt of the request by the issuer. Section 36(7) A record of depositors required by an issuer under sub-section (1) shall be issued and maintained in accordance with the principles of data protection set out in the Data Protection Act (Cap. 411C) [Act No. 24 of 2019 , 2nd Sch.]
Section 36Verify source
§ 37SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 37. Depositor to be treated as member or debenture holderProvision

A depositor whose name appears in the record of depositors for a book-entry security is entitled to the same rights and privileges and is subject to the same liabilities and obligations as if they were a registered member or debenture holder.

Section 37. Depositor to be treated as member or debenture holder Section 37(1) Notwithstanding the provisions of the Companies Act (Cap. 486) or any other written law governing the issuer, a depositor of any book-entry security whose name appears in the record of depositors shall be entitled to all rights, benefits, powers and privileges and be subject to all liabilities, duties and obligations in respect of, or arising from such security (whether conferred or imposed by the Companies Act (Cap. 486) or such other written law or the deed of establishment or the memorandum or articles of association of the issuer, or otherwise) as if he were a member or debenture holder registered in the appropriate register, as the case may be, maintained by the issuer of such security, pursuant to the said Act or any other written law. Section 37(2) For the purposes of this section, "book-entry security" does not include a security specified in the securities account as being in suspense pursuant to section 43 or to any CMA rules made thereunder. [Act No. 19 of 2015 , s. 131.]
Section 37Verify source
§ 38SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 38. Prohibition of dealings in book-entry securitiesProvision

Central depositories are prohibited from, as principal, purchasing, acquiring or otherwise dealing in book-entry securities except as permitted by the Authority under CMA rules made under this Act.

Section 38. Prohibition of dealings in book-entry securities Section No central depository shall purchase, acquire, or otherwise deal in, book-entry securities as principal other than for such purpose and in such manner as may be permitted by the Authority under CMA rules made under this Act.
Section 38Verify source
§ 39SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 39. Public offer of securitiesProvision

Issuers or offerors must state in the prospectus when a security is prescribed to be immobilised or dematerialised; after allotment they must confirm successful applicants with and deliver certificates to the central depository; the central depository must open accounts for successful applicants without accounts.

Section 39. Public offer of securities Section 39(1) Where, pursuant to section 13 or section 24 , a securities exchange or a central depository, as the case may be, prescribes any security proposed to be listed or quoted on a securities exchange to be immobilised or dematerialised with a central depository, the issuer of such security or the offeror, as the case may be, shall in the prospectus issued by such issuer or offeror in respect thereof, notify the public that the security is so prescribed. Section 39(2) Upon completion of the allotment or allocation of such security, the issuer or offeror, as the case may be, shall forthwith confirm with the central depository the record of the successful applicants together with such particulars as may be required by the central depository for the purpose of making appropriate entries in the securities accounts of the respective applicants and shall deliver to the central depository the certificates, if any, (in such denominations as may be specified by the central depository) registered in the name of the central depository or its nominee company. Section 39(3) For the purposes of this section, "offeror", in relation to any security, means the person offering the security for sale. Section 39(4) A reference to a security proposed to be listed on a securities exchange in this section shall be construed as a reference to a security which has been approved by the Authority to be listed on the securities exchange. Section 39(5) A central depository shall open a securities account in the name of every successful applicant who does not hold such account.
Section 39Verify source
§ 40SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 40. Capitalisation, rights issues, etcAmendment

A prospective allottee must open a securities account in his name before acquiring any securities under subsection (1).

Section 40. Capitalisation, rights issues, etc Section 40(1)(a) makes a bonus issue by way of an increase in the total issued capital, or issues securities pursuant to a rights issue or the conversion of any debt securities; or Section 40(1)(b) a confirmed list of the names of the allottees for purposes of amendment of the securities accounts held by such allottees; and Section 40(1)(b)(i) a confirmed list of the names of the allottees for purposes of amendment of the securities accounts held by such allottees; and Section 40(1)(b)(ii) the appropriate certificates, if any, in such denominations as may be specified by the central depository registered in the name of the central depository or its nominee company. Section 40(2) A prospective allottee shall, before acquiring any of the securities referred to in subsection (1), open a securities account in his name.
Section 40Verify source
§ 41SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 41. Underwriters to open securities accountsProvision

A person who intends to underwrite a security proposed for listing on a securities exchange or to underwrite a rights issue for a book-entry security must open a securities account.

Section 41. Underwriters to open securities accounts Section A person intending to underwrite any security proposed to be listed on a securities exchange, or any rights issue in respect of any book-entry security, shall open a securities account.
Section 41Verify source
§ 42SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 42. Charging or mortgaging of securitiesProvision

Section 42 sets rules for creating, registering and releasing security interests in book-entry securities: the chargee must create the security interest; the central depository agent must register the instrument; on receipt of written notice from the chargee the central depository or its agent must transfer the security back to the chargor; floating charges are excluded.

Section 42. Charging or mortgaging of securities Section 42(1) Where a book-entry security is charged by a depositor (in this section referred to as "the chargor") in favour of any person (in this section referred to as "the chargee") the chargee or his nominee shall create a security interest or cause to be created such security interest in the security which is the subject of the charge, as the case may be, in accordance with this section. Section 42(2) Except as provided in this Act or the CMA rules, no security interest may be created in book-entry securities. Section 42(3) A security interest in book-entry securities to secure the payment of a debt or liability may be created in favour of any chargee by an instrument of charge in the form prescribed under the CDS rules executed by the chargor: Provided that any security interest in a book-entry security subsequent to any charge, created by the chargor in favour of any other person shall be void. Section 42(4) Upon receipt of the instrument of charge, the central depository agent shall forthwith register the instrument in a register of charges maintained by the central depository. Section 42(5) Where a charge over a deposited security has been discharged or released, the central depository or the central depository agent, as the case may be, shall, upon receipt of a notice in writing from the chargee confirming the same, transfer the deposited security into the securities account of the chargor. Section 42(6) This section shall not apply to floating charges: Provided that nothing in this section shall affect the validity and operation of floating charges on book-entries created under common law. Section 42(7) Nothing in this section shall be construed in law to require the central depository to monitor, protect, enforce or give effect to any agreement or memorandum made between the chargor and the chargee in respect of the charge, but the central depository or its central depository agent, as the case may be, may require the chargor or chargee to provide such supporting documents evidencing the charge upon creation of the security interest by way of the charge.
Section 42Verify source
§ 43SECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 43. Securities in or under suspenseProvision

The central depository may restrict transfers, charges or mortgages of securities in suspense and may restrict book-entry transfers when prescribed circumstances or instructions under the CDS rules arise.

Section 43. Securities in or under suspense Section 43(1)(a) where the transfer of such security in the name of the central depository or its nominee company is not registered, or is not registrable by the issuer under section 14 ; Section 43(1)(b) where an application under section 21 for withdrawal of such security has been made by a depositor; or Section 43(1)(c) in such other circumstances as may be prescribed by the central depository under the CDS rules. Section 43(2)(a) where, pursuant to an objection or investigation made in accordance with the CDS rules, there is a need for the central depository to restrict the transfer, charge or mortgage of such security; and Section 43(2)(b) where, the central depository has been instructed to restrict the movement of any book-entry transfers, whether partially or otherwise, under such circumstances in accordance with the CDS rules.
Section 43Verify source
§ 43ASECURITIES TRANSACTIONS, ENTRIES AND MISCELLANEOUS - 43A. Default process of a central depository to take precedence over laws of insolvencyProvision

The default process of a central depository takes precedence over laws of insolvency.

Section 43A. Default process of a central depository to take precedence over laws of insolvency Section a market contract;
Section 43AVerify source

Part VI

SECRECY PROVISIONS

§ 44SECRECY PROVISIONS - 44. Security measuresProvision

Central depositories and their agents must take reasonable measures to protect depositor information and documents relating to securities accounts from unauthorised access.

Section 44. Security measures Section Every central depository and central depository agent shall take all reasonable measures to protect information and documents relating to the affairs of the depositors, and in particular, relating to their securities accounts, against any unauthorised access thereto by unauthorised persons.
Section 44Verify source
§ 45SECRECY PROVISIONS - 45. Duty to maintain secrecyOffence

Directors, officers, employees, agents of a central depository (and others with access to depositor information) must not disclose depositor information; anyone who receives information disclosed in breach of that rule must not further disclose it; contravention is an offence punishable by a fine not exceeding five million shillings or imprisonment for up to five years, or both.

Section 45. Duty to maintain secrecy Section 45(1) Except as provided in this Act, no director, officer, employee or agent of a central depository or a central depository agent, whether during his tenure of office or during his employment or thereafter, and no other person who has access by any means to any information or document whatsoever relating to the affairs of any of the depositors, and in particular, relating to their securities accounts, shall give, divulge, reveal or otherwise disclose such information or document to any person. Section 45(2) No person who has any information or document which to his knowledge has been disclosed in contravention of subsection (1) shall in any manner howsoever disclose the same to any other person. Section 45(3) A person who contravenes this section commits an offence and shall, on conviction, be liable to a fine not exceeding five million shillings, or to imprisonment for a term not exceeding five years, or to both.
Section 45Verify source
§ 46SECRECY PROVISIONS - 46. Restrictions on disclosure of information by central depository agentsProvision

A central depository agent that is a bank or financial institution must not reveal or disclose any information or document to any person in contravention of the Banking Act, except as provided in section 9(4) of this Act.

Section 46. Restrictions on disclosure of information by central depository agents Section Except as provided in section 9 (4) of this Act, nothing shall authorise a central depository agent which is a bank or a financial institution within the meaning of the Banking Act ( Cap. 488 ) to reveal, or disclose any information or document to any person in contravention of that Act.
Section 46Verify source
§ 47SECRECY PROVISIONS - 47. Permitted disclosuresOffence

Permitted disclosures of depositor information are enumerated (various specific cases listed).

Section 47. Permitted disclosures Section 47(1)(a) which the depositor, his authorised agent or his personal representative, has given permission in writing to disclose; Section 47(1)(b) in a case where the depositor is declared bankrupt, or, if the depositor is a corporation, the corporation is being or has been wound up, in Kenya or in any country, territory or place outside Kenya; Section 47(1)(c) between a central depository or a central depository agent and a depositor relating to the securities account of the depositor; or Section 47(1)(c)(i) between a central depository or a central depository agent and a depositor relating to the securities account of the depositor; or Section 47(1)(c)(ii) between a central depository or a central depository agent and two or more parties making adverse claims to securities or monies in the securities account of the depositor, where the central depository or central depository agent seeks relief by way of interpleader; Section 47(1)(d) to any person duly authorised to investigate into any offence under any law, such disclosure being, in any case, limited to the securities account and affairs of the depositor suspected of the offence; Section 47(1)(e) to a central depository for purposes of the compilation of the record of depositors, or any part thereof, under section 36 of this Act; Section 47(1)(f) to an issuer in respect of a record of depositors issued under section 36 of this Act; Section 47(1)(g) to any member of an issuer or any person in respect of a record of depositors issued under section 36 ; Section 47(1)(h) for the purpose of enabling or assisting the Authority to exercise any power conferred on it by this Act or by any other written law; Section 47(1)(i) for the purpose of enabling or assisting the Authority and the Registrar to discharge their functions under this Act; Section 47(1)(j) for the purpose of enabling or assisting a securities exchange or clearing house of a securities exchange to discharge their functions; Section 47(1)(k) for the purpose of enabling or assisting auditors of a central depository and central depository agents to discharge their functions; Section 47(1)(l) in a summary or collection of information or statistics, framed in such a way so as not to enable the identity of any depositor, to whom the information or statistics relates, to be ascertained. Section 47(2) The disclosure of information under this Act shall be done according to the data principles set out in the Data Protection Act (Cap. 411C). [Act No. 24 of 2019 , 2nd Sch.]
Section 47Verify source
§ 48SECRECY PROVISIONS - 48. Regulation of access to the computer systemOffence

Regulates who may access a central depository's computer system; allows the central depository to give access to specified parties; authorises the Authority to set access rules; makes unlawful access or interference an offence punishable by a fine up to ten million shillings or imprisonment up to ten years, or both.

Section 48. Regulation of access to the computer system Section 48(1) A central depository may give access to its computer system to its central depository agents, a securities exchange (on which the book-entry securities are listed), a clearing house of such securities exchange, issuers and any other person as may be prescribed by the Authority in CMA rules. Section 48(2) The Authority may, for the purpose of regulating access to the computer system, prescribe by CMA rules, the extent to which any user or class of users may have, or should be prohibited from having, access to such system. Section 48(3)(a) being a user, unlawfully gains access, or attempts to gain access, to a computer system of a central depository, whether by means of any device or apparatus forming part of the computer system or by any other means, beyond the extent to which he is authorised to have access by the central depository under subsection (1); or Section 48(3)(b) unlawfully gains access, or attempts to gain access, to a computer system of a central depository, whether by means of any device or apparatus forming part of the computer system or by any other means; or Section 48(3)(c) unlawfully interferes with, or impedes, or attempts to interfere with or impede, the operation of a computer system of a central depository, Section 48(4) A person who is guilty of an offence under this section shall, on conviction, be liable to a fine not exceeding ten million shillings or to imprisonment for a term not exceeding ten years, or to both.
Section 48Verify source

Part VII

OFFENCES AND PENALTIES

§ 49OFFENCES AND PENALTIES - 49. Falsification of records or accountsOffence

Relates to falsification of records or accounts.

Section 49. Falsification of records or accounts Section records or stores, by means of that device, information that he knows or ought to know to be false or misleading in a material particular;
Section 49Verify source
§ 50OFFENCES AND PENALTIES - 50. Destruction, concealment, mutilation and alteration of recordsOffence

Destroys, conceals, mutilates or alters any record or account required to be kept or maintained under any of the provisions of this Act.

Section 50. Destruction, concealment, mutilation and alteration of records Section destroys, conceals, mutilates or alters any record or account required to be kept or maintained under any of the provisions of this Act; or
Section 50Verify source
§ 51OFFENCES AND PENALTIES - 51. Furnishing false or misleading informationOffence

Anyone convicted under this section is liable to a fine not exceeding five million shillings, or to imprisonment for up to five years, or both.

Section 51. Furnishing false or misleading information Section 51(1)(a) for the purpose of, or in connection with, any application under this Act; or Section 51(1)(b) in purported compliance with any requirement imposed on him by or under this Act, Section 51(2) Any person convicted of an offence under this section shall be liable to a fine not exceeding five million shillings, or to imprisonment for a term not exceeding five years, or to both.
Section 51Verify source
§ 52OFFENCES AND PENALTIES - 52. Offences by bodies corporateOffence

Directors, executive officers and the secretary of a body corporate are to be treated as having committed any offence by the body corporate unless they prove lack of consent/connivance and that they exercised all due diligence to prevent it.

Section 52. Offences by bodies corporate Section Where an offence against this Act has been committed by a body corporate, any person who at the time of the commission of the offence was a director, an executive officer or the secretary of the body corporate or was purporting to act in such capacity, shall be deemed to have committed that offence unless he proves that the offence was committed without his consent or connivance and that he exercised all due diligence to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances.
Section 52Verify source
§ 53OFFENCES AND PENALTIES - 53. General penaltyOffence

Persons who contravene or fail to comply with this Act commit an offence and, if convicted where no penalty is specified, may face a fine not exceeding five million shillings, imprisonment for up to five years, or both; persons convicted are also liable to pay compensation to victims, with market-wide losses attracting payment equal to the profit made into the Compensation Fund.

Section 53. General penalty Section 53(1) A person who contravenes or fails to comply with any of the provisions of this Act or of any rules made thereunder commits an offence under this Act and, where no penalty is expressly provided, shall, on conviction, be liable to a fine not exceeding five million shillings, or to imprisonment for a term not exceeding five years, or to both. Section 53(2) In addition to the penalties provided in this Act, any person found guilty of an offence under this Act, shall be liable to pay compensation to any person who suffers loss as a consequence of the offence committed by the first named person. Section 53(3)(a) the amount of the loss sustained by the person claiming the compensation; or Section 53(3)(b) where the loss has been occasioned on the market as a whole, an amount equal to the profit made by such person, which shall be paid into the Compensation Fund established under the Capital Markets Authority Act ( Cap. 485A ).
Section 53Verify source

Part VIII

INVESTIGATION

§ 54INVESTIGATION - 54. Application of PartProvision

Unless the Part specifically provides otherwise, no provision authorises the Authority to investigate the business of a licensed person or its representatives under the Capital Markets Authority Act (Cap. 485A).

Section 54. Application of Part Section Nothing, unless specifically provided for in this Part, shall authorise any investigation by the Authority into the business of a licensed person or its representatives under the Capital Markets Authority Act ( Cap. 485A ).
Section 54Verify source
§ 55INVESTIGATION - 55. Power of Authority to require production of recordsOffence

The Authority may require production of records or accounts from specified persons and may take possession, copy, require explanations, retain, and permit access to such records; persons must comply or face fines.

Section 55. Power of Authority to require production of records Section 55(1)(a) a central depository; Section 55(1)(a)(i) a central depository; Section 55(1)(a)(ii) a nominee company of a central depository; Section 55(1)(a)(iii) a central depository agent; Section 55(1)(a)(iv) a user; or Section 55(1)(a)(v) a person who is or has been an officer or employee of, or an agent, or advocate and solicitor, auditor, or other person acting in any capacity for or on behalf of, a central depository, or its nominee company, or a central depository agent, or a user, requiring the production, to the Authority, of such records or accounts as are so specified, being records and accounts relating to the business or affairs of a central depository or its nominee company, or a central depository agent, or a user or any record or account required to be kept pursuant to section 32 ; or Section 55(1)(b) give a direction to any person requiring the production, to the Authority, of any record or account relating to the persons mentioned in subsection (1)(a)(iv) or (1)(a)(v) that are in the custody or under the control of such person: Section 55(2) A reference in subsection (1) to a business carried on by a person shall be deemed to include a reference to a business carried on by a person as trustee. Section 55(3) Where the Authority requires the production of any record or account under this section and a person has a lien on the record or account, the production of such record or account shall not prejudice the lien. Section 55(4)(a) may take possession of the records or accounts and make copies of, or take extracts from, the records or accounts; Section 55(4)(a)(i) may take possession of the records or accounts and make copies of, or take extracts from, the records or accounts; Section 55(4)(a)(ii) may require the other person or any other person who was party to the compilation of the records or accounts to make a statement providing an explanation of any of the records or accounts; Section 55(4)(a)(iii) may retain possession of the records or accounts for as long as the Authority may consider necessary; and Section 55(4)(a)(iv) shall permit the other person, upon giving a reasonable notice and description of the records or accounts, to have access to the records or accounts which are in the possession of the Authority; or Section 55(4)(b) to state, to the best of his knowledge and belief, where the records or accounts may be found; and Section 55(4)(b)(i) to state, to the best of his knowledge and belief, where the records or accounts may be found; and Section 55(4)(b)(ii) to identify the person who, to the best of his knowledge and belief, last had custody of the records or accounts and to state, to the best of his knowledge and belief, where that last-mentioned person may be found. Section 55(5) A power conferred by this section to make a requirement of a person extends, if the person is a body corporate, to making the requirement of any person who is or has been an officer of the body corporate. Section 55(6) A person who, without lawful excuse, refuses or fails to comply with a requirement made under this section within the time stated by the Authority in writing shall be liable to a penalty of one million shillings in the first instance and in the case of a continuing offence, shall, in addition, be liable to be punished with a daily fine of one hundred thousand shillings for every day during which the offence continues after the fourteenth day from the date such person is required to comply with such requirement.
Section 55Verify source
§ 56INVESTIGATION - 56. Power of Authority to enter and search premises,etc.Offence

Gives the Authority power to enter certain premises to inspect, operate or search computer systems and other receptacles and to seize or secure records and material as evidence.

Section 56. Power of Authority to enter and search premises,etc. Section 56(1)(a) in the case of premises occupied by a central depository or a user, inspect, examine and operate the whole or any part of the computer system; and Section 56(1)(a)(i) in the case of premises occupied by a central depository or a user, inspect, examine and operate the whole or any part of the computer system; and Section 56(1)(a)(ii) in the case of premises occupied by any other person, break open and search any cupboard, drawer, safe, box or other receptacle, and where a computer system (not being a computer system as defined in section 2 of this Act) is installed in such premises, inspect, examine and operate the whole or any part of such system; and Section 56(1)(b) inspect and take possession of, or secure against interference, any records, documents or other material found in such premises which may be evidence of such offence. Section 56(2) The powers conferred under subsection (1) are in addition to, and not in derogation of, any other powers conferred under this Act or by any other written law.
Section 56Verify source
§ 57INVESTIGATION - 57. ObstructionProvision

Obstructs or hinders the Authority in the exercise of its powers under section 55 or section 56.

Section 57. Obstruction Section intentionally obstructs or hinders the Authority in the exercise of its powers under section 55 or section 56 ; or
Section 57Verify source
§ 58INVESTIGATION - 58. Disclosure to AuthorityOffence

The Authority may require disclosure of information from central depositories, agents or depositors about acquisitions or disposals of book-entry securities; failure without reasonable excuse is an offence punishable by fine up to ten million shillings or up to ten years' imprisonment or both.

Section 58. Disclosure to Authority Section 58(1) The Authority may require a central depository or its central depository agent to disclose to the Authority, in relation to any acquisition or disposal of book-entry securities, any information including the name of the person from or through whom or on whose behalf the securities were disposed of, their securities account numbers and the entries made in such securities accounts and the nature of the instructions given to the central depository or its central depository agent in respect of such acquisition or disposal. Section 58(2) The Authority may require a depositor to disclose to it whether such depositor acquired or disposed of the book-entry securities, as the case may be, as trustee for, or on behalf of, another person and, if he acquired or disposed of those securities as trustee for, or on behalf of, another person, to disclose the name of that other person and the nature of any instructions given to the depositor in respect of the acquisition or disposal. Section 58(3) A person who, without reasonable excuse, fails to comply with the requirement of the Authority under subsection (1) or (2) commits an offence and shall, on conviction, be liable to a fine not exceeding ten million shillings or to imprisonment for a term not exceeding ten years or to both.
Section 58Verify source
§ 59INVESTIGATION - 59. Investigation by the AuthorityOffence

If the Authority has reason to suspect someone has committed or is about to commit an offence under this Act, the Authority may investigate.

Section 59. Investigation by the Authority Section Where the Authority has reason to suspect that a person has committed an offence under a provision of this Act or is about to do an act that, if done, would be an offence under a provision of this Act, the Authority may make such investigation as it thinks expedient for the due administration of this Act.
Section 59Verify source
§ 59AINVESTIGATION - 59A. Emergency powers of the AuthorityProvision

The Authority has emergency powers to alter settlement and delivery conditions, set emergency margins, modify depository rules and take other actions to maintain or restore fair, transparent and efficient clearing and settlement when an emergency exists or to protect investors.

Section 59A. Emergency powers of the Authority Section 59A(1)(a) an emergency exists; Section 59A(1)(b) it is necessary or expedient to protect investors; or Section 59A(1)(c) altering the conditions of delivery of securities; Section 59A(1)(c)(i) altering the conditions of delivery of securities; Section 59A(1)(c)(ii) fixing the settlement price for liquidation of securities; Section 59A(1)(c)(iii) requiring margins or additional margins for any securities; and Section 59A(1)(c)(iv) modifying or suspending any rules of a central depository. Section 59A(2)(a) set an emergency margin level in any securities or class of securities; or Section 59A(2)(b) take such other action, as the Authority considers necessary to maintain or restore fair, transparent and efficient clearing and settlement of transactions in securities. Section 59A(3)(a) any act of the Government affecting securities; Section 59A(3)(b) any other major market disturbance which prevents the market from accurately reflecting the forces of supply and demand of securities; Section 59A(3)(c) a threatened or actual market manipulation; or Section 59A(3)(d) any other situation or practice which, in the opinion of the Authority, constitutes an emergency.
Section 59AVerify source
§ 59BINVESTIGATION - 59B. Authority may issue directions to a central depositoryProvision

The Authority may issue general or specific directions to a central depository for specified purposes including ensuring fair, orderly and expeditious clearing and settlement, managing systemic risk, or protecting the public or investors.

Section 59B. Authority may issue directions to a central depository Section 59B(1)(a) to ensure fair, orderly and expeditious clearing and settlement of transactions in securities; Section 59B(1)(b) to ensure integrity and proper management of systemic risks in securities markets; or Section 59B(1)(c) in the interest of the public or for the protection of investors, issue a general or specific direction to a central depository. Section 59B(2)(a) clearing and settlement of securities contracts and making adjustments of a contractual obligation arising out of a securities contract; Section 59B(2)(b) the manner in which a central depository carries on its business; or Section 59B(2)(c) any other matter that the Authority may consider necessary for the proper discharge of its functions under this Act.
Section 59BVerify source
§ 59CINVESTIGATION - 59C. Authority may appoint an auditorProvision

The Authority may appoint an auditor (in writing) to examine a central depository's books and systems if it is satisfied it is in the public interest; the central depository must pay the auditor's expenses.

Section 59C. Authority may appoint an auditor Section 59C(1) The Authority may, if it is satisfied that it is in the public interest to do so, appoint, in writing, an auditor to examine, audit, and report, either generally or in relation to any matter, on the books, accounts, records and the system of a central depository. Section 59C(2) A central depository shall meet the expenses of an auditor appointed under subsection (1). [Act No. 38 of 2011 , s. 14.]
Section 59CVerify source
§ 59DINVESTIGATION - 59D. Revocation of a licenceProvision

The Authority may revoke a central depository licence for listed grounds, must give the depository an opportunity to be heard before revocation (except when responding to a request under subsection (1)(h)), and must publish any revoked licence in the Gazette; a central depository is considered to have ceased operation if it does not operate its facility for more than thirty days without prior approval.

Section 59D. Revocation of a licence Section 59D(1)(a) ceases to operate the clearing facility that it had been licensed to operate; Section 59D(1)(b) is being wound up; Section 59D(1)(c) fails to comply with any requirement of this Act; Section 59D(1)(d) fails to comply with a direction of the Authority; Section 59D(1)(e) fails to provide the Authority with information when required to do so; Section 59D(1)(f) provides false or misleading information; Section 59D(1)(g) is operating in a manner that is detrimental to the public interest; or Section 59D(1)(h) requests the Authority to do so. Section 59D(2) For the purposes of subsection (1), a central depository shall be considered to have ceased operation if it has not operated its central depository facility for more than thirty days without the prior approval of the Authority. Section 59D(3)(a) winding up its operations; or Section 59D(3)(b) protecting the interest of the public. Section 59D(4) The Authority shall not, except where responding to a request under subsection (1)(h), revoke a central depository licence without first giving the central depository an opportunity to be heard. Section 59D(5) The Authority shall publish in the Gazette any licence revoked under this section. [Act No. 38 of 2011 , s. 14.]
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§ 59EINVESTIGATION - 59E. Effect of a revocationProvision

Addresses the effect of a revocation on agreements, transactions or arrangements entered into before the revocation.

Section 59E. Effect of a revocation Section avoid or affect any agreement, transaction or arrangement which was entered into before the revocation;
Section 59EVerify source
§ 60INVESTIGATION - 60. Power of Court to make certain ordersOffence

The High Court may make various orders (including restraining persons from acting as central depository agents or dealing in specified book-entry securities, directing acts or restraints, and ancillary orders); it may direct notice or publication before making such orders; failure to comply is an offence punishable by a fine not exceeding five million shillings or imprisonment for up to five years or both.

Section 60. Power of Court to make certain orders Section 60(1)(a) has committed an offence under this Act relating to any dealing in book-entry securities; Section 60(1)(b) has contravened the CDS rules; or Section 60(1)(c) in the case of persistent or continuing breaches of this Act, or of the CDS rules, an order restraining a person from acting as a central depository agent or from holding himself out as so acting; Section 60(1)(c)(i) in the case of persistent or continuing breaches of this Act, or of the CDS rules, an order restraining a person from acting as a central depository agent or from holding himself out as so acting; Section 60(1)(c)(ii) an order restraining a person from withdrawing or otherwise dealing with any book-entry securities that are specified in the order; Section 60(1)(c)(iii) for the purpose of securing compliance with any other order made under this section, an order directing a person to do or refrain from doing a specified act; and Section 60(1)(c)(iv) any ancillary order deemed to be desirable in consequence of the making of an order under any of the preceding provisions of this subsection. Section 60(2) The High Court may, before making an order under subsection (1), direct that notice of the application be given to such persons as it thinks fit or direct that notice of the application be published in such manner as it thinks fit, or both. Section 60(3) Any person who fails to comply with an order made under subsection (1) commits an offence and shall, on conviction, be liable to a fine of not exceeding five million shillings, or to imprisonment for a term not exceeding five years or to both. Section 60(4) Subsection (3) shall not affect the powers of the High Court in relation to the punishment for contempt of court. Section 60(5) The High Court may rescind, vary or discharge an order made by it under this section or suspend the operation of such an order, upon application made to that effect.
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Part VIIIA

CENTRAL DEPOSITORY SETTLEMENT GUARANTEE ARRANGEMENTS

§ 60ACENTRAL DEPOSITORY SETTLEMENT GUARANTEE ARRANGEMENTS - 60A. Obligation to have approved settlement guarantee arrangementsProvision

A central depository must, as a condition of its licence and subject to the Authority's approval, establish arrangements guaranteeing settlement of all securities transactions through its system.

Section 60A. Obligation to have approved settlement guarantee arrangements Section A central depository shall, as a condition to its licence, subject to the approval of the Authority, establish adequate arrangements to guarantee the settlement of all transactions relating to securities through its system. [Act No. 38 of 2011 , s. 15.]
Section 60AVerify source
§ 60BCENTRAL DEPOSITORY SETTLEMENT GUARANTEE ARRANGEMENTS - 60B. Establishment of Central Depository Guarantee FundOffence

A central depository may establish a Central Depository Guarantee Fund to settle trades; central depository agents must pay a variable risk-based contribution determined by the central depository in consultation with the Authority.

Section 60B. Establishment of Central Depository Guarantee Fund Section 60B(1) A central depository may, in fulfilment of the requirements of section 60A , establish a Central Depository Guarantee Fund (hereinafter referred to as "the Fund") for the settlement of trade through the central depository. Section 60B(2)(a) a variable risk based contribution, to be determined by the central depository, in consultation with the Authority, and payable by central depository agents who are involved in settlement; Section 60B(2)(b) all penalties and fines imposed by a central depository under this Act; Section 60B(2)(c) such sums of money as may accrue from interest and profits from investing moneys of the Fund; Section 60B(2)(d) such revenue from contributions of a central depository as its Board of Directors may, from time to time, determine; and Section 60B(2)(e) such other funds as the Board of the central depository may, with the approval of the Authority, determine.
Section 60BVerify source
§ 60CCENTRAL DEPOSITORY SETTLEMENT GUARANTEE ARRANGEMENTS - 60C. Management of the FundProvision

A central depository must manage the Fund as a separate fund, disclose it in its annual balance sheet, keep proper accounts and records, prepare an annual statement of accounts showing the Fund's financial position, have those accounts include all sources of income, expenses and investments, have them audited by its appointed auditor, and make rules for the Fund's operation and maintenance.

Section 60C. Management of the Fund Section 60C(1) A central depository shall manage the Fund established under section 60B as a separate fund and disclose it as such in the annual balance sheet of the central depository. Section 60C(2) A central depository shall keep proper accounts and records of the Fund and shall, in each financial year, prepare a statement of accounts showing the financial position of the Fund in its annual report. Section 60C(3) The accounts under subsection (2) shall include all sources of income and contributions to, expenses or disbursements of the Fund and any investments of the Fund. Section 60C(4) The accounts and records of the Fund shall be audited by the auditor appointed by the central depository to audit its annual accounts. Section 60C(5) The central depository shall make rules for the operation and maintenance of the Fund. [Act No. 38 of 2011 , s. 15.]
Section 60CVerify source

Legislative relationships

5 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

5 instruments

  • Authority or an advocate of the High Court to act as a prosecutor for offences under this Act

    Section 63

  • Authority The Authority must take such measures as are necessary to ensure that the provisions of this Act

    Section 2A

  • Banking Act

    Section 46

  • Companies Act

    Sections 14, 27, 37, 66

  • Court to make certain orders Section 60(1)(a) has committed an offence under this Act

    Section 60

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  • 11 Dec 2023 · currentEnglish

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