Privatisation Act

This Act may be cited as the Privatisation Act, 2023.

Section 2 provides definitions and interpretations of terms used in the Act.

Provides for the establishment of the Privatisation Authority.

Defines "sale of shares in the secondary market" as "a financial market in which previously issued financial instruments such as shares and other marketable securities are traded".

The Act incorporates the national values and principles of governance set out in Article 10 of the Constitution.

Purpose: encourage more participation of the private sector in the economy by shifting the production and delivery of products and services from the public sector to the private sector.

Section 10 sets out the composition of the Authority's Board, the appointment authorities for members (including the President, Principal Secretaries, Attorney General, secretary to the State Corporations Advisory Committee, Cabinet Secretary-appointed persons, and the Managing Director as an ex-officio non-voting member), and that members appointed under subsection (1)(f) serve three-year terms and may be reappointed for one further three-year term; it also requires the appointing authority to ensure membership reflects gender and regional balance and an appropriate mix of skills and competencies.

Section 11 lists the Board’s functions: ensure the Authority performs effectively; set mission, vision, purpose and core values; set and oversee strategy and policies; ensure adequate resources; subject to Cabinet Secretary approval, invest unrequired funds; monitor performance; open and operate the Authority’s bank accounts in accordance with the Public Finance Management Act (No. 18 of 2012); receive grants, gifts, donations or endowments; and, in consultation with relevant agencies, determine staff appointment terms and emoluments.

When a vacancy occurs on the Board, the appointing authority must appoint a new member in accordance with the Act.

The Board must conduct its business and affairs as set out in the First Schedule.

The Board may, by resolution, delegate any of its powers or functions to a subcommittee or to a member, officer, employee or agent of the Authority.

The chairperson and members of the Board, other than the Managing Director, must be paid allowances or other remuneration from the Authority's funds as determined by the Cabinet Secretary on the advice of the Salaries and Remuneration Commission.

Creates a Managing Director of the Privatisation Authority who is to be competitively recruited and appointed by the Board; sets duties, qualification and appointment term with possible reappointment.

Establishes a Corporation Secretary appointed by the Board, and sets duties including providing secretariat services, recording minutes, informing Board members of relevant laws, performing functions assigned by the Board or Managing Director, and reporting to the Managing Director.

The Authority must have the staff it requires to discharge its functions; the Board may determine the staff terms and conditions.

Provides policy direction on matters related to privatisation, defined as "a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;"

Establishes the Privatisation Authority and lists its powers including suing and being sued; acquiring, charging and disposing of movable and immovable property; entering into contracts; and performing other acts necessary for discharge of its functions.

The Authority must advise the government on all aspects of privatisation of public entities.

Section 19 establishes a privatisation programme.

During formulation of the privatisation programme, the Cabinet Secretary must consult persons likely to be affected by the privatisation of a public entity.

The Cabinet Secretary must identify and determine which entities will be included in the privatisation programme, taking into account a set of listed considerations.

The Cabinet Secretary must submit the approved privatisation programme to the National Assembly for ratification before implementation; the National Assembly must consider and may ratify or refuse (and must notify the Cabinet Secretary), and the Cabinet Secretary may resubmit after refusal.

The privatisation programme ratified under section 22 must be published in the Kenya Gazette.

The Cabinet Secretary may extend a privatisation programme's validity; affected entities may be included in a subsequent programme if implementation is incomplete.

The Cabinet Secretary may amend the privatisation programme.

The Authority must implement the privatisation programme in accordance with this Act.

Generically, any person (Kenyan or non-Kenyan) is eligible to participate in a privatisation; national government-owned entities are not eligible; certain government-controlled funds may purchase shares despite that rule; other laws may restrict non‑Kenyan participation.

For each privatisation there shall be a steering committee to implement the privatisation on behalf of the Privatisation Authority, subject to any directions of the Authority; the section also specifies who are members of that committee.

Section title: Methods ofprivatisation

The Authority must prepare a privatisation proposal when an entity is identified for privatisation.

The Privatisation Authority must make a specific privatisation proposal for each privatisation in the privatisation programme, and the Cabinet Secretary must present that proposal to the Cabinet for approval.

After approval of a privatisation proposal, the approved method of privatisation must be carried out as specified; the method identified in section 29(d) must be carried out in the manner determined by the Cabinet.

The Privatisation Authority must carry out a business and assets valuation for each privatisation, and the valuation must be performed by a qualified person appointed by the Authority.

The restrictions set out under this Part shall begin to apply upon publication of privatisation programme under section 23.

General restriction: do not allow the assets of the public entity to be dissipated.

A public entity undergoing privatisation shall not undertake any new capital investment or disposal unless approved by the Cabinet and ratified by the National Assembly.

A public entity undergoing privatisation shall not extend credit or provide financing for the purchase of the shares.

Keep up-to-date business records and books of accounts.

The Authority must prepare and submit to the Cabinet Secretary an annual report for the preceding financial year within three months after the end of each financial year.

The Authority (the Privatisation Authority) must maintain updated records of each privatisation undertaken under this Act.

Members of the Board and officers, employees or agents of the Authority are not personally liable for acts done in good faith in executing the Authority's functions; subsection (1) does not relieve the Authority itself from liability to pay compensation or damages for injury or damage caused by exercise of powers or failure of works.

Public entities to which the Act applies must provide the Privatisation Authority with necessary information to implement privatisation.

Information given to or obtained by the Authority is confidential; persons carrying out duties under the Act must not disclose confidential information except with the Authority's approval.

Offence: falsifies or omits material information from the privatisation proposal.

The Cabinet Secretary to the National Treasury may make regulations to better carry out this Act.

An agreement to implement a privatisation is not binding unless it is executed by the registered owner of the shares and countersigned by the Cabinet Secretary.

Section 40(1) says an agreement to give effect to a privatisation "shall not be signed until the period for filing an objection has lapsed." Section 40(2) lists two conditions that relate to signing: (a) a determination on the objection or appeal has been made; and (b) the time for filing a notice of appeal has expired without such a notice being filed.

An agreement to implement a privatisation must provide for regulation of the monopoly.

When a privatisation agreement becomes binding on a public entity, the Privatisation Authority must promptly publish a notice of the privatisation in the Kenya Gazette.

Proceeds from the sale of a direct National Government shareholding shall be paid into the Consolidated Fund.

Proceeds from the sale of a public entity’s shareholding must be deposited in a special interest‑bearing account established for that privatisation and the proceeds must be credited into the Consolidated Fund Account within ninety days.

Any person aggrieved by the Authority's determination under the Act or by the implementation of the privatisation programme may lodge an objection; objections are to be lodged and determined in accordance with the Procedures in the Third Schedule.

Persons aggrieved by the Authority's determination under section 45 may appeal to the Privatisation Review Board; a person aggrieved by the Review Board's decision in such an appeal may further appeal to the High Court. Appeals are to be lodged and determined in accordance with the Procedures in the Third Schedule.

Establishes the Privatisation Review Board to determine disputes and appeals under this Act or any other written law.

Section 48 specifies membership, qualifications and term lengths for the Review Board, including a chairperson who must be an accredited arbitrator with at least ten years’ commercial dispute resolution experience and other members with relevant privatisation experience; terms of appointment differ for chairperson and other members and members must meet citizenship, education, professional standing and leadership/integrity requirements.

States that a vacancy in the Review Board occurs at the expiration of the term of office of the chairperson or a member.

The Cabinet Secretary shall designate a public officer to serve as secretary to the Privatisation Review Board.

Unless otherwise provided, the Review Board shall regulate its own procedures.

The chairperson and members of the Review Board are entitled to be paid remuneration or allowances determined by the Cabinet Secretary in consultation with the Salaries and Remuneration Commission.

If the chairperson or a member of the Review Board has a direct or indirect interest in a matter before the Board, they must declare that interest and must not participate in the Board's proceedings on that matter.

Monies appropriated by the National Assembly for the purposes of the Authority are funds of the Authority.

The Authority's financial year is the twelve-month period ending on 30 June each year.

The Board must cause the Authority's annual estimates of revenue and expenditure to be prepared at least three months before each financial year, in accordance with the Public Finance Management Act (No. 18 of 2012).

The Board must ensure proper books of account are kept for the Authority's income, expenditure, assets, liabilities, undertakings, activities, transactions and other business.

Defines terms "Commission", "repealed Act" and "Tribunal", and states that the Authority is the successor to the Commission that existed immediately before commencement of the Act.

Repeals The Privatization Act (No. 2 of 2005).

Rights, obligations, assets and liabilities of the Commission vest in or are to be treated as references to the Authority (the Privatisation Authority).

Upon commencement, the privatisations of entities published under Gazette Notice No. 8739 of 14th August, 2009 shall lapse; notwithstanding that, any ongoing privatisation under the repealed Act shall be determined and finalised in accordance with this Act.

Section 69. Members of theCommission Section Any person who was a member of the Commission immediately before the commencement of this Act shall be deemed to be a member of the Board ("the Board of the Authority constituted under;") of the

Persons who were officers or employees of the Commission immediately before this Act commenced are deemed to be staff of the Authority.

People who were Tribunal members immediately before this Act started are treated as members of the Review Board for the remainder of their tenure.