Capital Markets (Investment-Based Crowdfunding) Regulations, 2022

These regulations establish a mandatory licensing and operational framework for entities providing investment-based crowdfunding platforms in Kenya, requiring operators to meet specific financial, human resource, and security criteria under the oversight of the Capital Markets Authority. Eligible issuers are restricted to micro, small, and medium enterprises or start-ups with documented track records, subject to an aggregate fundraising limit of 100 million Kenya shillings per twelve-month period. Crowdfunding platform operators are strictly prohibited from raising their own funds or providing investment advice and must ensure investor protection through mandated risk disclosures, custodial arrangements, and the implementation of standardized offering documents.

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THE CAPITAL MARKETS (INVESTMENT-BASED CROWDFUNDING) REGULATIONS, 2022

[Full text extracted from PDF pages 3–39. Note: As the source document is in English, this reflects the official text.]

PART I – PRELIMINARY

These Regulations may be cited as the Capital Markets (Investment Based Crowding) Regulations, 2022.
Interpretation: Defines key terms including "crowdfunding," "crowdfunding platform operator," "custodian," "issuer," and "investor."
Application: These Regulations shall apply to an investment-based crowdfunding platform established, maintained or operated in Kenya.

PART II – THE CROWDFUNDING PLATFORM OPERATOR

Licensing requirement: No person shall operate a platform without being duly licensed by the Authority.
Application for licence: Details required documentation, including incorporation certificates, financial evidence, business plans, and organization structure.
Eligibility: Applicants must be companies limited by shares with at least 5 million KSh paid-up capital and 10 million KSh liquid capital (or 8% of liabilities).
Criteria for licensing: Authority assesses business conduct, fit and proper status of leadership, and risk management capacity.
8-12. Operational rules, grant/denial of license, suspension/revocation, and cessation of business.

PART III – CROWDFUNDING PARTICIPANTS

Eligible issuers: Micro, small, or medium enterprises and start-ups with at least a two-year track record.
Fundraising limits: Maximum 100 million KSh within a 12-month period.
Prohibited issuers: Includes public listed companies and entities with poor governance records.
Eligible investors: Sophisticated investors and retail investors (up to 100,000 KSh).

PART IV – THE CROWDFUNDING TRANSACTION

17-24. Rules governing permitted instruments (shares, debt), standardized offering documents, cooling-off periods, use of funds, and trading facilities.

PART V – DUTIES OF A CROWDFUNDING PLATFORM OPERATOR

25-35. Mandates regarding general obligations, risk disclosures, cautionary statements, risk acknowledgment forms, due diligence on issuers, operation of trust accounts by custodians, and data protection compliance.

PART VI – GENERAL PROVISIONS

36-39. Provisions for inspections, offences for non-compliance, adherence to capital markets laws, and a 12-month transition window for existing operators.

SCHEDULES

First Schedule: Application Form.
Second Schedule: Fit and Proper Form.
Third Schedule: Applicable Fees (10,000 KSh application, 100,000 KSh license/annual fee, 0.15% transaction fee).
Fourth Schedule: Minimum Disclosure requirements for the Offering Document.

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