LAWS OF KENYA

THE CAPITAL MARKETS ACT

CHAPTER 485A

[Rev. 2023]

Published by the National Council for Law Reporting with the Authority of the Attorney-General www.kenyalaw.org

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ARRANGEMENT OF SECTIONS

PART I – PRELIMINARY

1. Short title
2. Interpretation
3. Meaning of the term associate
4. Definition of “interest in securities”

PART II – THE CAPITAL MARKETS AUTHORITY 5. Establishment and membership of the Authority 6. Meetings and procedures of the Authority 7. Seal and execution of documents 8. Appointment of chief executive of the Authority 9. Appointment and remuneration of staff 10. Protection from legal action 11. Objectives of the Authority 11A. Delegation of functions 12. Power of the Cabinet Secretary to issue rules and regulations 12A. Authority to issue guidelines and notices 12B. Powers on anti-money laundering, combating the financing of terrorism and countering proliferation financing matters 13. Furnishing of information to the Authority 13A. Power of entry and search 13B. Authority may investigate 13C. Data protection principles 14. Committees 15. General fund 16. Financial year of Authority 17. Accounts 18. Establishment of the Investor Compensation Fund 18A. [Repealed by Act No. 15 of 2018, s. 6.]

PART IIA – RECOGNITION OF SELF-REGULATORY ORGANIZATIONS 18B. Recognition of self-regulatory organization 18C. Rules of self-regulatory organizations 18D. Restriction on decision by a self-regulatory organization 18E. Disciplinary action by a self-regulatory organization 18F. Protection from personal liability 18G. Appointment of key personnel by a self-regulatory organization 18H. Directions to a self-regulatory organization 18I. Removal of an officer of the self-regulatory organization 18J. Annual report

PART III – PROVISIONS RELATING TO EXCHANGES 19. Approval of securities exchange required 19A. Restriction on use of the words “stock exchange”, “securities exchange” etc. 20. Application for securities exchange, commodities exchange approval 21. Changes in securities exchange, commodities exchange rules 21A. Securities exchange to make rules 21B. Submission of rules to Authority 21C. Authority may abrogate rules 22. Disciplinary action by securities exchange 22A. Directions to a securities exchange, commodities exchange and a futures exchange 22B. Powers of the Authority to intervene in the operations of securities and futures exchanges 22C. Futures contract to be approved by the Authority 22D. Fixing of position and trading limits in futures contracts 22E. Default process of a clearing house to take precedence over laws of insolvency

PART IV – SECURITIES INDUSTRY LICENCES 23. Licences required 24. Application for licence 24A. Criteria for suitability 25. [Repealed by Act No. 48 of 2013, s. 18.] 25A. Imposition of additional sanctions and penalties 26. Suspension or revocation of a licence 26A. Effect of revocation of a licence 27. Register of licence holders 28. Obligation to report changes 29. Licensing requirements 30. Procedure for collective investment schemes

PART IVA – PUBLIC OFFERS OF SECURITIES 30A. Offers of securities 30B. Restricted public offers 30C. Filing of information notice 30D. Criminal liability for a defective prospectus 30E. Compensation for false or misleading prospectus 30F. Disclosure obligations 30G. Power of the Authority to issue directions to issuers 30GA. Form of report books, records and internal accounting directives

PART IVB – ASSET BACKED SECURITIES 30H. Interpretation 30I. Restrictions on issues, offers etc. of asset backed securities 30J. Form of asset backed securities to be offered 30K. Nature of assets that may be sold, transferred or assigned 30L. Origination of assets for sale, transfer or assignment 30M. Trustees 30N. Appointment and liability of securitisation manager 30O. Securitisation arranger 30P. Servicers, alternative servicers and successor servicers 30Q. Classification of issues or offers of asset backed securities 30R. Conversion of restricted or unrestricted offers 30S. Content of the prospectus, offering memorandum or information notice 30T. Secondary sales or transfer of asset backed securities 30U. Obligations applicable to restricted offers 30V. Obligation to conduct due diligence 30W. Rating requirement and obligations of credit rating agencies 30X. General disclosure obligations 30Y. Trustee to file a summary of transferred assets 30Z. Securitisation requirements

PART V – SECURITIES TRANSACTIONS AND REGISTERS 31. Transactions in securities 32. Register of interest in securities

PART VI – INSIDER TRADING AND OTHER MARKET ABUSES 32A. Application 32B. Insider trading 32C. Inside information 32D. Information made public 32E. Penalty for insider trading 32F. Market manipulation 32G. False trading and market rigging 32H. Fraudulently inducing trading in securities 32I. Use of manipulative devices 32J. False or misleading statements inducing securities transactions 32JA. Front-running 32K. Liability to pay damages 32KA. Obtaining gain by fraud 32L. Penalty for insider trading and market abuse

PART VII – MISCELLANEOUS PROVISIONS 33A. Powers of the Authority to intervene in management of a licence 33B. Prohibited conduct to be reported 33C. Remedy for unfair prejudice 33D. Powers of the Authority to demand for production of records and documents 33E. Winding up 34. Other offences 34A. Offences and penalties 34B. Compounding of offences 35. Appeals from action by Authority 35A. Establishment of the Capital Markets Tribunal 35A. Rights and fundamental freedoms 35B. Limitation of right to privacy 36. Directions and submission of reports 36A. Exemption of existing securities exchange 37. Supercession 38. Prosecution of offences 39. Exemption from Cap. 446