SPECIAL ISSUE

Kenya Gazette Supplement No.89
(

1437

lSth June,20tr3

I* gislative Supplemeit No. 45 )

LECALNOTICENO. I02

THE PROVISIONAL COLLECTION OF TAXES

t4

o

&

AND DUTIES ACI

(Cap.4t5)
THE PROVISIONAL COLLECTION OFTAXES AND DUTIES ORDER,2OI3 WHEREAS a Bill entitlpd "An Act of Parliament tq amend the law relating to various taxes and duties and for matters incidenral thereto", the short title of which is "The Finance Bill,20l3", has been
published in the Gazette on the l8th June, 2013:

zb>
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395

of the powers conferred by Taxes and Duties Act, the Provisional Collection of section 2 of the
NOW THEREFORE, in exercise
Cabinet Secretary for National Treasury orders that all the provisions of the Bill relating to tlxes or duties shall have effect as though the Bill were passed into law.

This Order shall come into effect on the l8th June,20l3.
Dated the l8th June,20l3.

HENRY ROTICH,
Cabinet Secretary for the NationalTreasury.

LEGALNoTICENo. I03

THE CUSTOMS AND EXCISE ACT
(Cap. a7))

IN EXERCISE of the powers conferred by section 139 of the Customs and Excise Act, the Cabinet Secretary for the National Treasury makes the following Regulations:THE CUSTOMS AND EXCISE (REMISSION OF EXCISE DUTY) REGULATIONS, 20I3 (Remission

L.These Regulations may be cited as the Customs and Excise of Excise Duty) Regulations, 2013 and shall come into

effect on the I st October, 20 I 3.

{ \
1438
Kenya Subsidiary

l*gislation, 2013

2. The Cabinet Secretary may, on the application

by

a

manufacturer, grant remission of excise duty at frfty per centum wilh respeict to beer made from sorghum, millet or cassava grown in Kenya.

3.

A

manufacturer applying

for remission under

paragraph 2

shall-

(a) (b)

be tax compliapt;

have a valid excise licenc" to

pridr." b."r;

(c)
(d)

have been producing beer in the last three years preceding
the application; have a minimum monthly yield of excise duty of at least ten

million shillings;

(e) ensure that the

beer has at least seventy five per cenlum content of sorghum, millet or cassava excluding sugar; pack the beer in a pressurized container of at least thirty litres or such other container and quantity as the Cabinet
Secretary may approve;

(f)
(g)

sell the beer at not more than one hundred and sixty shillings per litre; and
as the Commissioner may

(h), comply with such other conditions
impose.

4. Subject to all other provisions

relating to returns under the Act

to the

a manufdcturer granted remission under these Regulations shall submit

Commissioner,

a

detailed return

of

quantities

oJ

beer

manufactured and sold on a monthly basis or at such interval as the Commissioner may require.

5. A

based on false Regulations.

manufacturer who is granted a remission under paragraph 2 or misleading information shall, upon demand by the

Commissioner, refund

the excise duty remitted under

these

6.

Legal Notice No. 8 of 2005 is revoked.

Made on the l8th June, 2013.

HENRY ROTICH,
Cabinel Secretqryfor the National Treasury.

(

-l

I

Kenya Subsidiary Lcgislation, 20 I t

1439

LEGALNOTICENO. I04

THE CAPITAL MARKETS ACT

(Cap.485A)

IN EXERCISE of ihe po*ers conferred by section 12 of the Capital Markets Act, the Cabinet Secretary to the National Treasury,
makes the following Regulations:-

THE CAPITAL MARKETS (DEMUTUALIZATION OFTHE NAIROBI SECURITIES EXCHANGE) (AMENDMENT) REGULATIONS, 20I3

l. These Regulations may be cited as the Capital Markets (Demutualization of the Nairobi Securities Exchange) (Amendment)
Regulations, 2013.

citation'

,

2. Regulation4 of the'Capital Markets (Demutualization of the Nairobi Securities Exchange) Regulations,20l2 is amended in paragraph (2Xd) by deleting(a) the lvords "the Government of Kenya and"; and

(b) the lvoid "twenty" and substituting therefor the rvord "ten".
Made on the l8th June,20l3.

HENRY ROTICH,
Cabinet Secretary for the National Treasury.
LEGAL NOTICENO. I05

THE CAPITAL MARKETS ACT

(Cap.485A)

IN EXERCISE of the polvers conferred by section 12 of the Capital Markets Act, the Cabinet Secretary to the National Treasury.
makes the following Regulations:-

CAPITAL MARKETS (CONDUST OF BUSINESS) (MARKE'T INTERMEDIARIES) (AMENDMENT) REGULATIONS, 20I 3

l. This Regulations may be cited as the Capital Markets (Conduct of Business) (Market Intermediaries) (Amendment)
Regulations, 20 I 3.

citation'

2. Regulation 27 of the Capital Markets (Conduct of Business) (Market Intermediaries) Regulations (hereinafter referred to as "the
principal Regulations" is amended in paragraph 4-

Subt'cg'

(a) in

subparagraph

(c), by inserting the word

"internal"

immediately after the word "new"; and

G)

bV deleting subparagraph (e).

{
Kenya Subsidiary lzgislation, 2013

3. Regulation 30 of the principal Regulations is amended
paragraph

by deleting subparagraph (b) and inserting therefor the following new subparagraph-

(l)

in

(b) the amount of clients fundd standing to the credit of each client can be ascertained, at all times, by the Authority or any other
party;

4. Regulation 39 of the principal Regulations is amended by-

(a) deleting the word "and" appearing immediately
subparagraph (b); and

after

(b)

inserting the following new subparagraphs immediately after subparagraph (b) (c) a statement of changes in owners' equity; (d) a statement of cash flows; (e) a dEscription of the accounting policies which the market intermediary has applied and adopted while preparing
the financial statements; and

(f) notes on financial stratements explaining the various items that appe4r in the financial statements under this
Regulation. 5. Regulation 42of theprincipal Regulations is amendeJ
(a)

by-

deleting subparagraph (3) and substituting therefor the following nelv paragraph *(3) A market intermediary shall not appoint or remove an auditor except rvith prior approval of the Authority at
least one month prior to such appointment or removal."

(b) deleting

subparagraph

(4) and substituting rherefor

rhe

follorving nerv subparagraph-

"(4) A person appointed as an auditor under this Regulation shall serve for a maximum period of four
consecutive years."

6. The principal Regulations are amended by deleting regulation
46. Made on the l8th June, 201 3.

HENRY ROTICH,
Cabinet Secretary

for the National Treasury.

Katr.w Strbtttltttrt' l,a,qttlutrorr. )0 I .l
Lt r;,.rt- N(x I('ti No. 106

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'l'lll: l'tllll-l(' PR(X'tlltEMIlN'l' ANI) I)tSt,osn
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o/2005)

lN t'.XER('l.Sll ol'thc l)()\\crs cttnl'crrctl bt Scctiotr l-10 ol'thc l)uhlic l)rocrrrcrncrrt and I)isposal Act. thc (-atrinct sccrctar\ Iilr the
Nittional 'l rcasrrr\ ntakcs thc lirllou irrg Rcgrrlltions.
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(' l'R(X-t I RllM t.N-l' n N I) t)tS I ()SA RH(;til.n't'toNS.20I3

I_(

A Mt-..N DM

[rNt')

C'rlill ron

l. 'l'hesc Rcgulations rnar hc citcd as thc puhlic l)rocurcrncnI antl l)is;tosaI (Arncnclnrcnt) Rcgulations. 20 I3. "lhc principal Rcgultrions". is arncntlcd b1
subparagraph (tr)
su [rparag ra ph

\ub l cs

2. Rcgulrtion 8(-l ) ol' tlrc I)ublic l)rocurcrncnt ancl I)isposal Rcgulations.2(X)(r. in thcsc Rcgulatrttns rcl'crrccl to as
tlclcting

illl(l sullstitutlrrg thcrclilr tlrc lolloning nov

(a)

nrarntlin urrtl u;tdatc hi-annuall1,, stnncling lists iil' rcgistcrcd tcn(lcrcrs rcquirccl b1 thc procuring cntity through a prc-qualil'ication proccss ancl subrnit thc rcsults to tlrc Authority, lbr consolidatitx, rvithin
I'ourtcclt clal s l'rorn dalc of notit'ication.

arncndccl

.substitutine thcrclitr thc lbllorving

.1. Rcgulatitu l0 ol' thc principal Rcgulations is in paragraph {2) h1 dclering ltaragraph (d) and
nur
ltaragraph-

(d) approvc thc cornrncnce menl. ol'the procurement process rrpon lhc approval ol lhc annual procurcment plan by thc accounting ol'licer ancl rvhcrc applicablc the bclard

ol' ilircctors or a sirnilar body. and upon satisl'action that sul'l'icient l'uncls are availahlc to lnect the ohligations ol' thc cntitl' arising I'rorn any contract as sct out in thc buclgetarl, cstimatcs or such clocurncntation cvidcncing the availabilitl, of the
I'uncls, beli'lrc rnaking :ut arvard is provided;

+.
atncndccl-

Rcgulation

l2 ol'the

principal Regulations

is

(a) in paragraph (8) by' deleting the rvorb "fitty"' and substituting therefor the rvord "one
(b) adding thc follow,ing nc\!,
immediatell, after paragraph ( l0)(

hundred";

paragraph

I

l)

-l-hc

observers shall be to-

(a) rnonitor the procurement process and prepare a reporl on rvhether the process has been

\
kgislation,20l3
1

carried out in accordance rvith Section 2 of the Act; and

i I

(b)

submitto the accounting officer and the Authority, rvithin fourteen days from date of notification of the arvard, the report
prePared under subParagraPh (a)'

i

'Ihe principal Regulations are amended by deleting regulation l6 and substituting therefor the follorving nelv

5.

regulationEvaluattorr, Negotrattons, Inspectton and Acceptance Commtttee.

processing committee

16.(l) A procuring entity shall establish a tender in relation to each procurement or
proposals,negotiations

process for the purposes of carrying out the evaluation of

the ten(ers
(2)

or inspection and

acceptance of goods, rvorks or services.

committee established under paragraph (l) shall consist of a chairperson and at least three other

A

members
head

all appointed by the accounting officer or the of the procuring entity upon recommendation by the

procurement unit. (3) Aperson shall be appointed as a member of the committee under paragraph (2) if he or she is a member o[ the tender committee of the procuring entity.

(4)

The committee shall-

(a)

adhere to the bompliance and evaluation criteria set out ln the tender documents in undertaking in carryout the technical and

financial evaluation

of the tenders

or

proposals received by the procuring entity;

(b) (c)
(5)

evaluate the tenders rvithin a period of fifteen days after the opening of the tenders;
and

carry outthe tender evaluation rvith all due
diligence.

Each member of the committee shall evaluate the tenders or proposals received by the

procuring entity independently from the other members prior to sharing his or her analysis, questions and evaluation including his or her

rating with the other members of

the

committee.

(6) A member of the committee shall not communicate with a tenderer who has

I
Kenya Subsidiary lzgislation, 2013 t4r'.3

(7)

submitted a tender or proposal that is under the consideration of the evaluation. A tender processing committee shall preparo

an evaluation report on the analysis of the tenders receive, and final ratings assigned to
each tender and submit the repdrt to the tender committee.

(8) The report prepared under pafagraph (7) shall
include-

(a) the results of the preliminary evaluation, with reasons why any tender or proposal lvas
rejected;

(b) the scores arVarded by each evaluator for each (c) a summary of the relative strengths and (d) the rordl score for each tender or proposal; and (e) a recommendation to arvard the tender to the
lorvest evaluated tenderer or to the person who submitted the proposal rvith the highest total
score. rveaknesses of each tender or proposal;

tender or proposal;

6.
regulation-

regulation l Tand substituting therefor the follorvitlg nelv
17. The committee establishecl under regulation l6 shall imnlediately atier the delivery of the goods, rvorks
Inspection and
acceptance

The principal RegulatiOns are amended by deleting

or services-

(a) (b)

inspect and rvhere necessary, test the goods
received; inspect and revielv the goods, rvorks or services in order to ensure compliance lvith the terms and specifications of the contract;

(c)
(d) (e)

accept

or reject, on behalf of the procuring entity, the delivered loods, works or services;
of goods
have
been received;

ensure that the correct quantity

ensure that the goods, rvorks or services meet the technical standards specifiedin the contract; ensure that the goods, lvorks or services have been delivered or completed on time, or that any delay has been noted; documentation in relation to the goods, lvorks or services have been received; and

(0

G) ensure that all required manuals or

l++-+

Kattwt Srthtttlturv l,a,qtsltrtt()tt.

2() I -l

I

(h)

enstlrc thc issttance

tll ttitcrtt.tt or complction or ccrtitlcatcs .qoods recclvcd llotcs. as apprttpriate and in accordallcc rvith thc
c0ntracl
is

7. Rcgulatiort 2() ol thc prrrrcipal rcgttlatirlns
atncn(lcd

-

(a)

rn l)irrirgraph

(.5

t h1 ilrscrting thc

rr

ords "tcndcr
rvrlrcls

corllnuttcc." itrtmctltatcll
"irppro\ ccl b1 thc".

Irl'tcr thc

(b) br addrrrg thc litlkrtt
r

ing

nc\\'

paragraph

rlrrtcrliutclr

itl

tcr 1>aragrirllh (.5) appr()\ al tll it plan tllldcr b1 thc lctrdcr comtnittcc shall bc

(6) 'l hc
llilragraph
1-5)

ilccmccl to incltrdc thc apllrtlval ol' all altcrnativc Proctlrclnclll proccclttrcs ttnclcr scctitltt 29( 3) ol'thc Act

tt. l{cgtrlation 21 ol thc prirlcrpal Rcgttlatiotrs
arne nclccl

is

in pitra-uraph

(-11 b1'

clclctirlg Lhc \\ ord "lottrtccn" itncl

suhstitutirrg thcrelor thc rrrlrd "scr en".

9. ltcgtrlirtiort 3l tll thc principal Rcg.ulatiotts is atncttdccl b1 aclcling thc lirll<lrr'ing paragraph irnmcclialcll itl'tcr parasraph (+)(c) lhc cutnulatir c valuc ol' all cottlrttct t itritlti<ltts clo ttot

rcsult itt an itrcrcmcnt tll' thc t()tal- colltrttct pricc b1 tnorc thatr t$cntl live pcrccnt ol thc original cttntritct
\ u tT].

arncndccl b1 de lcting thc uord "thirtl'" and \uhstittlting thcrclilr tlrc rr ords "t\\ cnl) ()rlc".
I

l0

I{cgtrlation

36 ol thc principal

Rcgtrlations

is

cc lor lcndcr
u

doc

nrcn ls

'l'hc principal Rcgulations arc atnendcd hy dcleting rcgulation 39 and substituting thcrclbr thc lilllorving nc\\'
I

l.

rcg

u

lation-

(l) A procuring cntitl'ma1', Pursuant to scction 56(2) ol thc Act, chargc a fcc not cxcccding onc thousand shillings for
hard cilpics ol' tcnde r documcnts.

In dctcrmining thc f'cc payablc undcr paragraph ( l). a procuring cntit)'shall onll'have rcgard to thc costs rclatcd to

(2)

printing, copy'ing, and distributing
documcnts into clectronic lbrm.

or ol'converting

thc

i
i
I

, (l)
llirftruraPh

Kctt t tt .\ trlt t

rt!

t

u rt.

I

t

g ts

ltt t r r trt, 2 ( ) I -)

I-l-+.5

A
( I ) rr

procrrrrrru cntil_\ shall rrot churge hcrc lhc tcnde r (loct,uncnt\ ilrc

l lce urrclcr

I

(a) (b) (c)
tlclrr
l'Cc

olttutrrctl elcctr-onicirllr:
irrr tllrlirrns lor<.1nrar-,,,n

nl\ ililti()n\ lor llrc_rpralil'tcation.

rll trttercst: rtr

I

(1) \\'hcrc rr l)r()cuntrr.l cntit\ chilrgcs a l.cc lbr rhc crr ,r rcrrtlc. rr.crrrrrc,ts. thc pr,ri'urirrg i'ntit1 shail pcrnit Ix)tc.lr.rl te rrtlcrcrs t. i11''1v"., trrc rlticurnc,ti, prioito par ing thc
Irrt llrt'
rlr

rr'ttiltcnl

t

ll llrc plrnciptal
rcgrrl.rtirrrr
rcgrrl.rtirln

J() irntl substttuting thcrclilr the

Iicgulations arc arncnclcd hr dclcting
lbl lorr in-u nc\\

-10 I hc r,rrrirnur. pcri.d ftrr thc pre pararirl, o| nati,nar ()pcn tcn(lcr\ !or. 1l1g l)url)()scs ol'scction -5.5 ( i) ol' the Act shall bc lirttrlccrr tllrr r
I

I rntc

lbr prepanns

Iatrotlal lendcrs

rtrncrrdcd

lirllol ing ncrr paratraph

-1. Rcsrriutton + I ol' thc principal Rcgularions is br r!clcting paragralth (3) and suhstituring rhcrclbr thc
-

bc prrtvidccl irr the litllorr in.s lbrrn-

(.1)'l'lrc lcndcr sccurit\ undcr sccrion

-57

ol-the Acr shall

(a) cash:
(b)
a hank guarantec:

(c) such insurance c()tnpan) guaranlce as approvcd hl the Authorir_r,;
(cl) a Icttcr ol'credit; ur

ma\

be

(c) guaralltcc b1 a cieposit taking rnicrofinance institution, Sacco socicty,, thc youth Entcrprise
l)cvcloprncnt Fund or the Wornen Enterprise Fund.

l-1. Rcgulation -16 ol'
arncrrdecl by -

the the

principal

Regulations

IS

(a)

renumbcring
paragraph ( I );

existing

provision

ils

(b) deleting tlrc rvord "thirtl'" appcaring irr rhc ncrv paragraph ( l) and subsrituring the relbre thc word "fifteen"; (c) inserting the lbllou.ing lrc\\, partgraph imrnediately after the ne\\' paragraph (l) _-

IM

Kenya Subsidiary Legislation, 20I3

\
I

Where a tender is comPlex or has attracted a high number of tenderers, the accounting officer or head of the procuring

(2)

(

entity may extend the period for tender evaluation under paragraph (l) for a further

I

period within the tender validity period not
exceeding thirty more days from date of expiry of initial Period.

I
I

Regulation 54 of 'the principal Regulations is amended in paragraph (5) by deleting the word "fourteen" and

15.

\

substltuting therefor the rvord "seven".

16.
amended

Regulation

55 of the principal

Regulations is

(a) in paragraph (2) by deleting the
"seven"; word

"fourteen" and substituting therefor the word
paragraph

(b) by adding the following new
immediatelY after ParagraPh (2) -

in

17.

Regulation 64 of the principal Regulations is amended

paragraph

(l) by

adding the following new paragraph

immediately after oaragraPh (c) -

(d) 18.

wliere competitive negotiations are critical for achieving value for money in the procurement of
specialized goods, works or services.

Regulation 65 of the principal Regulations is amended

by-

(a) renuribering the existing provision
ParagraPh

as

(l);'and

(b) adding

immediatelY after Paragraph

the following new paragraph (l) (2) The period of tender award shall not
exceed
tender opening.

thirty days from the date of

19. Regulation 66 of the principal Regulations is amended by deleting paragraph (2) and substituting therefor the following
new pardgraph
tender award notify an unsuccessful tenderer in writing and shall in the same letter provide reasons as to why

(2) A procuring entity shall immediately

-

after

the tender, proposal or application to be pre-qualified
was unsuccessful.

20. Regulation 73 of the principal Regulations is amended
in paragraph (2) by

-

t
Kenya Subsidiary Izgislation, 201 3

t47

(a) deleting the rvord "forfiteen" appearing in
subparagraph (c) and substituting therefor the rvord "seven";

(b) deleting the rvord "three" appearing paragraph (d) and substituting therefor
rvord "fifteen"l

ln
the

(c) inserting the

word ..non-refundable', immediately after the words ..by the" appearing in paragraph (e).

21. Regulation 74 of the principal Regulations is amended by deleting paragraph (3) and substituting rherefore the follow,ing
nerv paragraph

-

(3) Upon being served rvith a notificarion of a request,
the procuring entity shall-

(a) (b)

notify the Secretary of the names and contacr details of all parties to the revierv; and

rvithin five days or such lesser period as may be specified by the Secretary in a particular case, submit to the Secretary a rvritten memorandum of
response to the reasons for the request together rvith such documents as the Secretary may specify.

22, The principal Regulations are amended by inserting _ Ihe follorving nerv regulations immediately after regulation 94- Reporting Public

on 95. For purposes of section 46(l), each contract procuring -entity shall submit to the Authority, on a quarterly basis, information of all public
contract arvards as directed by the Authority.

23. The principal Regulations are amended by deleting the First Schedule and substituting therefor the follorving nerv
Schedule.

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Kenya Subsidia4' Legislattott, 20 I 3
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E

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t,E trr

ol,

DO

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c

E

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c.)

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ao
3q F<c E

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rl=

e)

o OC CE O. FU
O^ FO

o (,

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tE

E

EAEEE

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6lq'

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Ei= E E E.E a00 k i;9.= ao r: e e.E

cE tr HbE. oqo :tr30
> Y 9co * -4 ao., h

oE

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-i

tr J

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EE*E€g'EE

E
tr
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o q

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?

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E..o >y^Eo
o = cE =r i E E€Hu's = " -O 't

ii ruf E f
.=O
o
F

E!.E:7ErH

5E:-3"E

e

3

6a
= '=F irE

OP

Bt
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q .ll

5*iEEE-seX giEse*EEi

E 5E:i"E r
E-q

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6lo

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E =.=EE E..:2EB h E

o

E :q E 5E:€"E H-F--.2#iiE EFiE5fi-&,EH =t-EciEE=.9 SiE+e*EEi 3i rgf s ra
a

e

c\r

5io

!i LZ

.9rqo E, ro tr O-=

g '-<

i€€s

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d
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ttrt

l-.,: ;'ltttrrttt.

2() l -l

l+5

I

EE
c

.:=
!! : ! = r'

;=
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q I
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cl

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J U,:= C.!

I
I

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E rE 5 g *tr E oiiEac
\o
g

!

= a! !.=

I il . E'. i rn'
-<.v

at

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I
E

Fc

tr .=

-(3a'>iiu ,,. EEIN\12"N
!/^A>::Xr

sY!

3= == E
o
a!

E!a 2-..=e O- a:

E;?
c)

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a-

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€.::
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ot
c,

o
g

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L

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vE

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6)

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5
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c '

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5 :=: ?: F=i=-2a
a i= z::
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CJ

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zE6sa8€E =EcEi€t
^2O-44c--.

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t=

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tc A J;

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e o=v

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XE

og Va
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AE !o trct o

E€ -€

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z E a = tr=

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a9atu

=

E
c6

E

=

ZE6=85:F
=:
^Q

S:EE5. Z o Et+
=

Etr.
o E 'i3 6lO o

:E -'El,^o
E

E: Eo

-6

zi (,
()

zE6=E559
E
L.

E=:;5=t :E E.= E b:8 b.e EEtp st
O G, += o o Y o

EE5=EEeH

E . ET

E

Eq -=
FL

fr
:z

EE.g.e=
a o!;x C:v.
6

o 6 += zE6;E5=g
a6{E -^
O

a o o Y o

*E 9^ .= J X OEX

d E€p5.

Z o = EN

o

ct
frz

?E=

il, d.c<

i &u'^ u 9r- 6

i be AEEEX
r.r

9tG trF- O 9 o^

-EO

;.9< 9tso

o '6'-

q oO

r9=

1152

i.-r,,tn S,,brirltart Legislcittrtrt,

2(t I 3

:i -:
E
'/

*'-

.ir. >zr.
1i
.l

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i

a ? L7
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1i

;

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=t

?

aa.=2 -r. al Z?
-i

^.a,/

tt

,,=
L=

/a'a--= == azL-' j1,.a=?
F

2=--- - t E .'r 't=-'J=.t, ;f.lF/

.J._

i2 =F
--!

/u

7t'

/.i

" E__
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=!

?.4

i,7-zz ?viE

!?.'

7-

:-)-?

a = !--':J
'

=-=,J

=

=

!===i
a

aL'!-

't-=,

| ==..:;,= = == - / t -2 - lL

=

it=

't
!r a; eE a

-= I I

t,='="'. -' ;-=..r,
4JJZ"

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=

= = ='= ':=3.'/=?!a

i=7!'t

'rt

AZ =e
,=?

I

2

7t /- L z-. 74La=^ ? " " 4 ='-*'.2

L

,
tE i-'a,

EiiiiZz
2 a a E tr, L--

c.2
-t

'= / 2 Ei, 2t---1rc 2 0 c, tr, c.,= =

?ZEoii

'2,

z

c a, ! = 7E at9 'rtrFZl )z i'= y +u L u=,= * - iiL

2c Ea) a .tr3 Cs E

!e Ir EIE

7z u - fr a)
1t?Aa1)

L
=
E

E9.2.2 y

ts Ar

O)( i

E5
II a)

zo=trf,e.=

={EE1E*

T-.u n !. Lt 7t\ -xE EE z,t Et t.?Ee E '= ar i7, --u s q< E8

A UA * - X E ii! E YO Y a) 2 0 a tr f,, o..:

iE i= E=*NE F E
Pc_c29 'Jl,

o a c, 9€ a,
g

E

Et
Btr tz

6l oE =Ea,

s

>9o

Kert,tu Srrlr.trtl turt Leqt slatton, 20 I -l

I

+.i.1

E ?,4,? A !.. ? c:

c.= uu.!.^ o

,. a.== L !! '===== '=--===
,/,

r=-l) a,==

=-^-

)!

>E &;3
c^
t= ^r

= t?,'?=l=

?

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3oc

E.o

iLL!V

='a'i" F -a a ::,o
0^C;

l, i-

i, =s =!

F

>o.e E i:
Eg tro a0v s= E
i.r
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q,

a.=a t 9-

? t
-

z 3l z
f

E E€

i

!a

(,
U

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qlrO

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q

I,; u.E
9.E

a a J
ll.

o o

sL

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^=
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1! ^!-

U

z >-ca
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v-e-D') .

2

3

X


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6t

F
U)

t

U)

a)E q tr o-ttt=

L

-J:

z. DE

* 76 (;:3 ==
=-

E:€ E =,: ;5 h+ oo.=
J ?

E

o-

U J o

a lrl
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o o 'I I >E adotr

o

*3 E i7-49€
^ -A -

o

o
C)

F

6' E

J :Lq.4

E

o E o

trE E c- = V .=trFoY,o= o X P;llrijJ= e € 2 aE <-o k c-o-

'
^ ol9 oE I c H !s .".:a=8fr E.E.E F E I E.E A.e
--FX,

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o= 19

HE ^O EE L>J

e
CE

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- tr'! dlpE

E

x o G 6l o 2 o

E

=€E€;EE E*tE:si
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Z

.9

6a

9i:
,L EF Er oa

jE

F 6-oa EOE O?

E

o

9r-(

d o. c o OqE

1.1.5.+

Kenva Subsrcl rart Le54tslalton. 2() I 3

e)

EZE.?J

c3.= 9o.9.LL^--

0

a== '===

i7-

?L !!

--=

zZ '=

ia
6l
q,

s,I

i

Z:,4-:r.= ..!-=!a

= =.= =.= E a,'*--?
dt = a.J ca 2 at= E !'-

i:t

-.!7=oO c.= c 6 u = =

3oa

-J)

EF. d0
o

g€€- ='J' <a
o
2 D
E

E E ,

=

=o c! !t=

-<o
2 ! 'Je

s€ EO0

o-=u

E.EE

E€ E T ,ua

-

6.'-)

9E
o!
L
a0
L

D=

t)
G

^- 9-o =

;E h iir

o9o

;E 9.=

qE a,Ll !,t2

L=

.3
-ro') 't
')

E

==c

o
,,.IU

e

L

i=EE? zZ -!r'ie4;,i
-'t

E za '!2 =
{

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Y

!_

i_.r=
P

, o
63

t,

I

;ZE
E
d.,h,

.i t).2 i.._

--- ? c ..i. a'. 9 1P= U i
.n

,=i

o?
:) A

o-

.;'el ,a
c3

!; EEE
E

c d - = =a f:: 'A ii L = dt.= E

=?13EE
eY ie
DE

-2)-.7G 2 , a,;3

o.

)

L! oo -E PE !

a)

E=E;E

.c.,-E.=--.6 _ .a -!-

'a= t '' +- >.= " = i'='t i^= \4t:.O-=r'r=U>

!,

'i i4E

E

E

^')-

E

-*

f,e z'E e
EE E E EzE o E! E E a E ,= F a, Y,.a a
E A*frE!'E 2 ap (=.o O-O

6E
tal

7

o

* E'.'Cl 5z, A
OIJ
,

iEEZz,^EE
=.E E E' iEYtri)
-

EE EE -o oo
=6 .= .9 ! EL

.a E
!u
o o

2o

iE

Z=EEfifEiie E€ E!iT

ei?E'i

qO

a

)

*

E= >E 8€ E.E: 'oq6.g,fi:-

g.= 6 olr=;
E
O-

EEEA=AZ;
E

TT;3

E€

EE

E 2

!+T;f E'E
aS =.==

E qr.
!=
.L I E= o2 ,:iLL^o

;€€sr< P55rE

Kenva Subsidiarv Legislation, 20 I 3

I

455

o o

EHgPr ! &*r'3 O.E g'i i { ts.E E H E 3

cE.=

q

o

ir

'.=='= 5:E

sE= Ig !E
o!

,;

'5=.= 5 = Xo*o S= 6 3.E E
ho

5.E:

Ys !tr
o_E

i?. E=9
=aoH

H

E
H

H

3

E

8

; s3;
ooo qE

c,G9

9oo

EE t= cr
i0 =o 1!1, :s
o!t
eE

EE;o E :6lo^ d E€€(j F<C
!oD .E >,oE s A^OL!i

't aa) oo 'J Al: E 9q

,o u co ot= E 9L

9rE

-<c
o o
OC

c 'E o.30v () oL= d o o a _c oq

F<o=f

s5

o
o o

oo d Ee e I FU

"E tt

E E i: OE
E =E

trE -o
o: =c)

9.: -.: otr=Eo flL-LL

888
3

.oO

- 5a- 5

.EE3E9

otr tro OL
90
cr

sE
i

&9 c? Eo 3:
a=
c!

h ii1 g€ 9.=

o= =o 9.9 oi E.E '6u6 .goq

a.E

oho IJIJ

'oL(, cdoq aaa

oE
oc =

=c)

!ucd cooO oao

oE

Q

o
o

IF -AU c qP .9
tt)
q)

e9?s I
F L ^ J.i

a--

oq)

I
O -s"! - ()v

E!9 LE9LA
^
^ oE o-1i

c
6.= O;i

E

o

! s

a)

t

d =';3 ='o .=E5EE '= .i -x;;^ F at-td

E

5

E

IHE

i

5 Ee H E o- 6 I c .= E'= €'=
F

I

eo

Ee?

6l

o

Z. e, = da

5*tBta
E oi'i-

s

L.=

E

.= E 9v oE=

E 5.s= d€p5^

b

s *E4 4 a ELA

.:
q) CL

; -8,s 5 9v€ oo>q
r. o

L!

x o

oo

-E

iE
=a) EE
EL

.EE=i'E =EfEc
'cae^: F om!E
C)

t

E*=E3 X
ao - oX

E i.= EE:E s .= E'5 =

: TiEE
"
r eEtQ €
L(U

rE>4 )io

o -':9! EE;=

Eg.EEEH o O 9.9 o.9 zE6€5€

cE .: c oe trA' Y o -=

s z 3:5" o=6
aO

tr6 -o oo
.= .9
6L

5E
E

=n

E'

c trhE-== '=

EE.E E==q-=o

A E

rF z.a 0

o o

9-::9;.E Ei,n2'U9S p +o I o;i: trts=rE E 3

:=EEEE€E

E=

E;s;
s!^-

rEv >=6

o b rr.l

o -'- OE

EE€= d€ 65

;EFEaEE s $EA
:.'K6< =_ pE t;3

9t
.L E= A1 oa

;o

(J

a .9!c

9e 33e

i E;d

ll.i6
^'.',,
CvL

r',,

.51t1r r ic/tctt't'

/.t' (

r r /r i

t/r r/1, -)/./

i.l
1

E

!{.c: ti tE ) c atd

U!.!.-

a =

! cg
Ei=, 6t
ILL-V

=l

/^
!' = ?,!a

!! oE'-

^t
-l

^- I

at^q -rLO^

-;-:= /'/
I -,r - a ./ ar
.JZJ

-l I

- 7 I. i -'. =r

8.,

I

:--=
t
U

a: = aE ge e I

- E E?

!ot a-=u

'?J:J
s!

-=,J=

:

:

: -,(' = =.r -r--t-.=--l--')/'-r. a
!=i==;=,!t.: ;

!

/

DI

0{

a

== u.s h iiu 9.= 9.o: tr ^I

5= a;

q9)=

l

=a')

t, l-'Jl'J

--

=1,=')'.1 =
-

- -=.

'' ir

a)

-r=

=)2-l/E=;=Z

F--:L

-i-'!z= l= -- L 1::-'! -J:s lz't4^ l-

=
a

t/
't-,-

-!= 't =?

L

\
='= ^!= ! =

t=1t==
) t=

-

2
a

- r-j 71

,
'!

-=r,,L _ i l4i /-r=

u

'/.

=ztt.i - ') c-'r1
=
t') ! '= = 2a

!"aa=

.,

u,

F'2 )= ! .=a-=== 4L2---,2

a, u=-a-rt

C-

-= =! ! = -

'_
,r i*
-=t,,9

r.
'!

L

-= 4t

.===ti.=_i a La, I I q = i aE "-?E i.
1- ? trlr=

-;-r= ?'. a=
.; .L tr=

= =z | ? -z=1=
?.

AL,,-.o lE a t tr .J
a !-- = t,

f

C-,=

F.t*z

=r EL O2

^:=:..-

ia-::i

i!o i /

\ =J ?.Q9,t

l

Ke n va Su

bs

id

iart,

Le g is

lation, 20 I 3

1157

oe

L .o
-

o I
o L

e o

3{.!! = .bi r f; F
3oo trr--^

G-= I o

ln o

a o oo; t a
EcS q\O tE cr e6 !C ;'i

E< EO

EHsle ;'5 !? ; ir aI i "t $TE g
LLA.L

ov G.=

L o

9.= '5 =.=

SE.

!?u Y ? !i =
tr E

o; ^ILb!V
-^0

d 2'a : I iir oX 9 o-Er:
o

!q

o

r=N iU
U)
::0

re EE'

tr^

9oo
4cE=^

oo
!E

ILh:V ^-

d ='a I iir o :! 9J o-cr:
o

5 =o ol= o oo oq E

F<o

€E
=o

.o00
6 i,

o
E

Ti

oy :e

E O^OL>E

>or;

i E€ A 8
v

c!:

i:

oX !t ai

F F
E]

riE =o

z

O -o o0 o E o=: >.ot c: Y i oc t5 q-

d e€ e 3
^OL!E

CF o= FO

tro oL
13I)

OE

io o ^ 9.= =E 9.= -u.o o liil ttz i E€ a.=

gE _-o e? oo

Ee qtr E.9

z 4
= O
U

vE 600 ooo a

Eo. E o E:E ^ 9.= 90 c) h i;9.: o= ^-9rlc
o
= €)

Otr tro oL c9 qDv

€-

L

.,:: o

oo

''=

Ep

F<o
-c

=o oL= o oo oq

o
I
(J

U)

io
o
.o
q)

o

'-! r o c.:
!: oE -oo
E

^ ot tr.5 0

'
o
tr

(t)

o

L

& I* X &

'=oo x >-o cgoc
o
U)

=

^=


!o

i-

i

t o

C!

IEo *E: '-'= r't, o.: c o o ts XE F; FOotr19

i

I o-

o

.E

tr,! LC
^o!

r€o

a a -l
U)

q)

o

X=
&

c.2 o= .=oo = x >'o €oe
^EO o tr.ts o.= c o ^L c oE

o
o
€l

ri

.:l

=
o

Fo=

E

8.;
9'o

F

9tr .ii u
EO .=0

B

o

F - 79 FOoE
oll
oC

€E
^oL

EE
r)5

OL -6

ac
E
cl

o E c:

2
tr

E:E
FEO=

&;

XG G^ 2c

o (J

^ ol? E)a, =E E.E.E E E EE E I il.E L.e tr E E 6€

;

i

9! yeo

E=

EO 9E =4) Oa e.E

.9

s Fa ao. E E v< E cro 9
go:ij c= 6!

1

458

Kenya Subsidiary kBislation, 20

l3

EI ql ^t .: el

ovL 'E:

e(l

c 01

3€.:; 9,F!.Pr E E aO7troO c,= d >E;oE !u
E
9oo
o0

cl.= 90.0.-

o
0

d cEo.9= 'u=,=

!2o =t h=

f d o
E

'.= :.= 3?X
tlJ

{8"
c .=

8s : E
O-E
(d cd o

E&FoBE acDtcao
o0

EO E^ (!€,

.E

EE' tE 6l

EES
6 q;

E

CL

3 P"EEE
o.=9 e Oi >,oE

=o 9l: o oo o! = F<o
o o

=o o9 o oL= E oq

F<o
o o

E3
=o EE
OY :e '(! s

E'3

sE -o
€-

q)

o0

ro o:- c

d E€
-eE

E

O= cE

i:

()c

8 -o

oc qE 9^ l-6

otr trru .9: a!9 a0v
u1

ca Foo
o o

= i

;E;E giE

o: qF =o

oE
Guq uo9

9E oE EbE. oo0)
E
9)

€ *3 o- 9 tr
B?.49.3
-o-:Y-A

ts

c69

.9 .=

o99

>\i

E

.o

!o

.9
ta

o

'
I

o
6t c)

t (h

.=trFo:,o

! +gEg'E Z aj15(tr_O A
a-o

EEEsEr trE E 6 x
.i9

f:=EEEq€ Pi e€X!: 'a$a1=€.;EE E EE , E 6 gYSE E
=n=Y!->i;

I

=

5;:

o-

9 c

!

tr

9
E

o .oE
OE .ji

o=-E'i

B?-agg

EEE!EE E:! E €:?
.= F tsg

iE f:EEEEE: pi e€=!: '=€,e.!Q€;.^
.E6gv5EE

E8

tr() 5E
EL .=e trL rQ OL -G

o

S 2

*E EE E up (E-o o.

= &).9

;EEg;iEE
.E> >, E E g E8. qO a " )
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Kenya Subsidiarv Lrt,t1or,on, 20 I 3

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1462

Kettya Subsidiarv Legislation, 20 I -l Part II

FIrtlS FOR RITVIEWS I. Administrative
f'ec

KES.5,(XX)

2.Upon l'iling a rcquest lor ro icrr', thc f'ccs pa1'ablc shall bc as lollorvsArnount ol'l'cndcr l. Tendcrs of'Asccrtainable Value (a) Docs not cxcccd KES. 2,000,000 (b) Exceeds KHS. 2,000,000/- but not
ov

ljccs

-l'hc fecs lbr KI:S. 2000,000 plus
additional l'cc
<il' 0.2501

l% subicct to a minimum ol'KI-.S. 20,000/an

cr

K I-.S. -50,000,000/-

on thc amount abovc

KHS. 2,000,000

(c) Ercccds KhS. 50,000,000/-

'l'hc l'ccs lor tcndcr sum ol' KHS. -50,(X)0,(X)0 plus an additional l'cc ol 0.O25(/( on tltc
amount ahovc Kl-.S.-50,000,(XX)/- suh.lcct to maximum I'cc ol'KhS. 2U).0001a

2.
"

l)rc-qualil'icationand othcr [Jnquantil icd'l'cndcrs
cndcrs

KI-.:S. -10, (XX)/-

(l.t

Ani other'l

Sub.jcct to a minimum ol' KHS. 20,(XX)/- and
a maxirnum

ol'KlrS.

-+0.000/-

3. Up<ln rcqucst ol' an adjournmcnt to
a part)' b1 thc Board
-1.

Kl-.s.10, (x)0/-

5. 6.

filins nrcliminarr ohicction Fcc to accompan)' thc rcr icrv
(3))

Kr.,s..5:000/
KIrS.-10,0(X)/

of I)ircctor (icncral's rlrdcr (s. | 06

Filing Iccs on cach rcqucst lirr a rcv icrv on dcbartnctt L ordcr t :.
I I7(3))
-l'hc

KIrS.40, 000/

7.

Secrcurr) ma)' dcmand additional I'cc than that asccrtaincd to bc chargcable. Madc on thc ltlth Junc, 20
I3

il

thc f'cc paid at thc timc of

liling is lcss

HENRY RO'I'I(]H,
C ub
t t r

e

t

Se

c'

ra

tar

y'

Jo r lta N at rc na I Tr e asu r v-.
t

Kenya Subsidiarv kgislarion, 201 3
LEGAL NO'IICE NO. I 07

t463

.THE

CEN'IRA L DEPOSITORIES ACf , 2OOO

(No.1 of2000)

IN EXERCISE ol the powers conferred .by section 65 of Central Depositories Act, the Capital Markets Authority rnakes
fbllow'ing Rules:THE CENTRA L DEPOSI'TORIES ( REG TI LATION OF CENTRAL DEPOSITORI ES) (A M ENDMENT)
RULES2OI 3

the the

l. These Rules may

(Regulation ol' Central Depositories) (Amendmenr) Rules, 20 L3.

be cited as the central Depositories

citarion.

alter

is- amcnded by paragra ph

Depositories) Rules (hereinafter referred to as ,.the principal Rules',)

2. Rulcl I of

theCentral Depositories (Regulation'

of Central

Sub. Leg

2-

adding the follorving new paragraph immediately

appointed as a central depository agent under sectio.n 9 (2) (d) ol the Act, if that body corporare meers the

(2A). A body corporare shall qualify ro

be

criteria. sct
Regulations.

orlt in the 'l-hird

Schedulc

to

these

3. l'he principal Rules are arnended by adding the follorving
rrerv Schcdule immediately after the Second Schedulel-

.I-HIRD

SCHEDTJI-E

(r.ll

(2A)).

CRII'ERIA FOR APPOINl'MEN'T AS CENI'RAL DEPOSITORY
AGEN'I'

l. A body corporate rvhich intends to apply tbr an approval as a ccntral depositorl agent shall submit to tlre central depository(a) an ovcrviov of the current or proposed business ol'thc body corporarc cstablishing the need for the appointment as a
central clcpository agent;

(b) specific (c)

dctails on the fr.rnctions ol'a ccntral depository age nt as stipulated under the Act, the Principal Rules and the rules of the central dcpository rvhich it intends to carry out; evidence that the directors and the management of the body corporate arc fit and proper persons;

(d) evidence of adequate systems, procedures, facilities and technical capacity that will cnable the body corporate fulfill its <lbligations and operational requirernents in accordance rvith the rules of the central depository as rvell as the terms and conditions of the agenc), agreement entered rvith the central depository,;
(e) an assessment msasures; and

of all potential risks and proposed mitigation

(r) evidence of arrangements in place for the proper supervision of its compliance rvith the rules of the central depository.

1464 2.

Ken r-a Subsidiarv Legislation, 20I 3

The central depository shall, in considering an application b1' a body corporate to operate as a central depository agent' have
regard to rvhether

(l)

the-

(a) (b) (c)

proposed functions of .the applicant fall rvithin the approved functions of central depository agents under its rtlles;

applicant can meet any requirements or conditions to be imposed, if an1', prior to the appointment; applicant has capacity to and has committed to comply rvilh ail the continuing obligations imposed on cential depository
agents under the central depositories rules; and

1d) applicant demonstrates capacity and commitment to comply ,ui-ttr Capital Markets (Conduct of Business) (Market
lntermediaries) Regulations, 201 I as far as they are relevant to the activities of the central depository agent:
rvhen

(2) A central depository shall consult the Authority
determining compliance under paragraph 3( I )(d).
3.

depository agent and is subsequently appointed as such, shall comply rviih the i:entrat Depoiitories Act, the principal Rules and all rules of the central depository rvhich it is appointed to act as an agent.
Made on the l8th June, 2013.

A body corporate w'hich qualifies for apfointment

as a central

KUNG'U GATABAKI,
Chairman, Capital Markets Authoritv'

PAUL MUTHAURA,
Acting Chief Executive, Capital Markets Authoritv'

LEGAL NortcE

No.

108

THE CAPITAL MARKETS ACT Qap. a85A) THE CAPITAL MARKETS (FUTURES EXCHANGES) (LICENSING REQUIREMENTS) REGULATIONS' 201 3 ARRANGEMENT OF REGULATIONS
Regulations

PART I-PRELIMINARY

l-Citation.
2-lnterpretation.
PART II-OBLIGATION TO SEEK A LICENCE AND LICENSING OF A FUTURES EXCHANGE

3--Obligation to obtain

a license.

4-Appl ication for

I

icensing.

5-Consideration for grant of license.

6-Rules of the Exchange.

Kenya Subsidiary I* gislation,

20 I

3

t46.5

7-Trading system. 8--Crant of provisional approval.

9-

Power to make inquiries and call for information.

lO--Grant of license. I l- Period oflicense.

l2l3l4I
I

Regulatory fee. Revocation of license. Effect of revocation.

PART III-NETWORTH AND OWNERSHIP OFA EUTURES EXCHANGE

S-Networth

requ irements.

6-

General conditions.

l7-Shareholding in a licensed future exchange., l8- Eligibility for acquirin! or holding shares.

l92l-

Disclosure of shareholding.
Record keeplrrg.

20-

PART IV-GOVERNANCE OF FUTURES EXCHANGE
Composition of the board.

22- Conditions of appointment of directors. 23- A.ppointment of chief executive officer. 24- Code ofcohduct for directors and key personnel.
25-Compensation and tenure of key personnel. 26-Segregation of regul'atory deparfinents. 27--Oversight comm ittees.

28-Advisory Committee. 29;-R isk management comm ittee. 30-Appointment of compliance offi cer. -Transfer 32Disclosure
3I

of penhlties.
and corporate governance norrns.

PART V-DUTIES OF A FUTURES EXCHANGE

3334-

Disclosure and corporate governance norrns. Facilities to be maintained by a futures exchange.
assist Authority. PART VI-SELF-REGULATORY ORGANIZATION

3S-Futures exchange to

36-Self-Regulation. 37-Futures Exchange to oversee its trading participants. PART VII-SELF-REGULATORY ORGANIZATION 38-Accounts and audit.

39-The Authority may appoint an auditor.
4G-Annual report.

t466

Kenya Subsidiary Legislation, 20 I 3

FIRST SCHEDULE--APPLICATION FOR A LICENSE TO CONDUCT THE BUSINESS OF A FUTURES EXCHANGE SECOND SCHEDULE-LICENSINC AND ANNUAL FEES FOR FUTURES EXCHANGES

THIRD SCHEDULE-CODE OF CONDUCT FOR THE DIRECTORS AND KEY PERSONNEL

THE CAPITAL MARKETS ACT

(Cap.485A)
the powers confcrred by section l2(l) of the 'l'rcasury Capital Markets Act, the Cabinet Secretary of thc National

lN EXER('ISE of

makes the follorving Rcgulations:

PRIll,l MINA RY

THE CAPII'AL MARKE-IS (F tll'tlRI:S I1X(IHANGIlS) (LICENSING REQL,IRIlMF-N'[S) RITGULAI'IONS, 201 3
I'}ARlCttatton
|

I . 'l'hcse Rcgulations may bc citcd as thc Capital Markets (Futures Exchanges) (l-icensing Requircmcnts) Rcgulations, 201 3.

-

lnterpretation

2. In these Regulations, unlcss thc contcxt otherrvise requires-

"Act'i means the Capital Markcts Act;
"associate", in relation
Cap 485A

to-

(a)

an individual, mcans-

(i)

a spousc, a son, an adopted son, a stcP-son, so.n-inlarv, a daughter, an adoptcd. daughtcr, a stepdaughter, daughter-in-larv, a fAther, a stcp-father, father-in-larv, a mother, a step-mother, mothcr-in-

larv,

a

brother,

a

step-brothcr, brothcr-in-larv,

a

(ii) (iii;

sister or a step-sister, sister-in-larv, grand child or spouse of a grandchild, of that individual; any company of rvhich that individual is a director or secretary, has a controlling intcrest ; any company in rvhich that individual, or any of the persons mentioned in subparagraph (i), has control o[ trventy per cent or more of the voting power on appointments to the board of directors or entitlement to dividends in the company, rvhether
such control is exercised individually or jointly; any employee of that individual; or

(iv)

(b) a company, means another

company

in which the
the Act;

first

mentioned company has control of not less than trventy per cent of the voting porver in that company;

"Authority" has the meaning assigned to it under

Ketr ya Su bsid

iarl-

Le g

is

lation,

20 I 3

1467

crchange;

"b.ard" mca,s the board of directors of a

ricensed futures

"chicl' crccutile olliccr"means the chiel executive officer of a futures crchangc appointcd in accordance rvith the articles of that futures erchange arrd approved hy the Authority;
"clearing bank" means a bank, as defined under section 2 or the Banking Act, rvhich is designated or appointed to provide banking and .ther facilities to the Futures Exchange, the Clearing House oi the Exchange and brokers o[ the Exchangelo facilitate segiegated account maintenance, clearing and settlement functions;

subsidiary and includes a place rvhere and the system by rvtrich ttre claims and liabilities of furures brokers and their clients in respect of

"clearing house" means the clearing house of the futures exchange rvhich refers to the settlement system managed and operated by. tl1l futures exchange rvhether as a deparrment or its rvhoily-s1v6s6

dil'f'erent lutures contracts confirmed
received,ad.iusted. settled and paid;

by the exchange are
of
an

eichange from the right to trade on such exchangel

"demutualization' means the separation of orvnership

"demutualized exchange" means a futures exchange
orvnership and rights to trade are separate;

in

rvhich

"futures broker" means a body corporate admitted to the futures exchdnge membership and duly licensed by the Authority to engage in the bus-iness of trading in futures contracts as an agent for inveJtois in return for a commission and on its orvn account;

. "futures contract" has the meaning assigned to it under section 2 of the Act; or
"futures exchange" means a securities exchange rvhich has been granted alicense to Iist futures contracts by the Authority under the Act
Cap 488.

approved

Regulations;

for such purposes and in

accordance

rvith

these

exchange futures contracts are regularly made on a centralised basis, being offers or invitations that are intended or may reasonably be expecte-rl to result, directly or indirectly, in the acceptance or making, respectively, of offers to sell, purchase or exchange futures contracts, but doei not include the office or facilities of a furures broker;

of rvhich, offers or invitations to sell, purchase or

"futures market" means a place at rvhich, or a facility by means

"futures member"means a person admitted to the membership of futures exchange in accordance rvith these Regulations and the rules ofthat futures exchange but does not denote a shareholder or an equitl
a

holder of that futures exchange;

1468

'

Kenya Subsidiary lzgislation, 2013

"investor protection fund" means a fund established by the board of a futures exchange in accordance with its rules and vested in a trust which is separate from the board of the futures exchange, with provisions for contributions by the futures brokers and the futures
exchange which satisfy claims of clients against futures brokers;

the

"key personnel"has the meaning assigned to it under section 2 of Act;

"liquid networth" means the aggregate value of paid-up equity share capital plus free reserves (excluding statutory funds, tenefit

funds, ahd reset"es created out of revaluation) reduced by the investments in businesses, whether related or unrelated, aggregate value of accumulated losses and deferred expenditure not written off,. including miscellaneous expenses not written off;
"margin"means a deposit or payment to create, vary or maintaih andlncludes mark-to-market, regular, a position i-n the futures "onttu.t, such other margins, which may be specified urid udditionul margins or by the futures exchange from time to time; 'netting' means the determination of net payment of delivery obligations by setting off or adjustment of obligations or claims arising out of buying and selling of futures'condracts, discontinuation of business, dissolution, winding-up or insolvency or. such other circumstances as may be specified in the rules of the futures exchange;
-

clearirighouse
eve.ry trade;

"novation" means the act of the futures exchange and its of becoming the legal counterparty to both parties of

"public" includes any member or secti8n of the public but does not include any futures member of a futures exchange or clearing bank or their associates;

"public interest directors" means an independent director, representing the interest of investors in a futures market and who does

not have any association with that futures market, either direct or indirect, which in the opinion of the Authority, is in conflict with the role of that director;
"prescribe" means prescribed by these Regulations;

'

"regulatory department" means a department of a licensed futures exchange which is entrusted with regulaory powers and duties
and such other departments as may be specified by the Authority;

"record" means all documentary and electronic materials created, generated, sent, communicated, received, or stored, regardless of physical form or characteristics;

"risk management" means the method of assessing, measuring and controlling iisk using appropriate methods including statistiral

Kenya

Sub

sidiary

Le gislation, 20 I

3

t46/9

techniques routinely used ih other technicalfields.

"settlement guarantee fund" , means a fund established and 'maintained by a futures exchange .in accordance with its rules, to strengthen the financial integrity of settlement by the futures exchange and used in a manner specilied by the rules of the futures exchangi;
and

"trading in futures contracts" means making or offering to make with any person, or inducing or attempting to induce any -person to enter into or to offer to enter into any agreement for or wiih L view to
the purchase or sale of a futures contract.

PART II_OBLIGATION TO SEEK A LICENSEAND LICENSING

OFA FUTURES EXCHANGE
3.

A

establishing, running, conducting

unless- that person has obtained a license from accordance with the Act and these Regulations:

porson shall not establish,run, conduct, organize or assisi in or organizing a futu.es exchange

Obligation to
obtain a liccnsc.

the Authority In

Provided that- a securities exchange, which has bein licensed of these Regulations and is desirous of running a futures market, shall apply to the Authority for an additional license'for listing futures contraCti under these Regulations and all the provisions of rhese Regulations shalt also appl/to such

under the Act at the commencement

securities exchange.

shall submit an application for licensing to the Authority in Form set out in the First Schedule. (2) An application under paragraph

4. (l) Subject to compliance with the provisions of the Act and these Regulations, a person who intends to establish a futures exchangd

.

Application for liccnsing

I

L

(l)

shall be accompanied by_

(a) copies of

memorandum and articles

rules governing the operations of the exchange,

of association, and which_

(i) is in a form satisfactory to the Authority; and

(ii)

restrics the applicant to the business of operating a futures market and services incidenal thercio;
systems

(b) details of trading, clearing and settlement _ proposed o be adopted by the applicant;

(c) the (d)

prescribed licensingfees set

Schedule;

out in tht

Sccond

satisfactory bank rcfercnces; business fcasibility plan appraiscd by an entity with a

(e)

1470

Kenya Subsdiary Leg,tslatiott, 2(l I -l

proven track recordatld c\Pcrtise in futtlres or dcrivatiycs market dcveloptncnt. cstablishment or management; and

(0
Consideratlon for qranl of I tcense

such adclitirtnal tlocurnents as the Authority may require
see

.

5. An applicant
(a)

king a licensc under regulation 4

shall-

be company limited by shares;
be demutualized:

(b) (c)

have a minimum authorized. issucd and paid up equitysharc capital of one billion shillings;

(d)

satisl')' requiremcnts rclating to orvncrship
governancc structrlrc spccil'icd in thcse Regtrlatitlns;

and

(e)

havc its directors and sharcholdcrs u'ho hold or intend to hold sharcs as l'it and proper persotts as dcscribcd under section 21A ol the Act; satisfy the minimum Iiquidnct-rvorth rcqtriremcnts spccificd in these Regulations;

(r)

(g) have.a minimum of one hundred million shillings in thc settlement guaranLee fund bclbre commencemcnt of trading; (h) satisfy requisite capability including its financial capacity, functional expertise and infrastructure;

(i)

have

in its

employment, sufficient number

of persons

rvith adequate professional and other relevant competence
and experience; and

(j)
Rules of the

comply rvith any other conditions as may be specified by
the Authoriry.

6.

(l) An applicant

seeking an approval

to operate a futures

Exchange

exchange shall establish and adopt futures exchange rules.

(2) The rules provisions on-

adopted under paragraph

(l) shall contain

(a)

clear demarcarion of roles and responsibilities of the board, chief executive officer and the board statutory
committees;

(b) powers

of the chief executive officer including

in

emergency situations;

(c)

granting of trading rights and
memberships of the futures exchange;

non-transferable

Kenl:a Subsid nry' Legislation, 20 I 3

t47

I

(d) (e)

general obligations futures members;

of the

flutures brokers w,ho are its

specifications of the minimum parameters to be disclosed in resptct of futures contracts to be listed w,ith prior approval o.f the Authority;

(0
(g)

clearing and settlement of all trades in futures contracts by the clearing house of the futures exchange;
performance of novation. netting and guarantee settlement

of trades;

(h) complete

segregation of business accounts of brokers from that of their clients and betu,een different clients;

(i) (j) '

trading including validation
exchange;

of

orders on

the

futures

suspension of tlading of any futures contract for the protection of investors or for the conduct of orderly, and fair trading; financial

(k) investigation into trading practices and
transactions of futures brokers and their clients;

(l)

clearing house and designated clearing banks
futures exchange;

of

the

(m) margining regime, daily marking to market of all open
positions and variation margin call to futures brokers and their clients;

(n) methodology for determining the daily and
settlement prices;

final

(o) deliveries through the clearing
the brokers;

ho.rse and obligations of

(p)

closing out of futures contracts in case of non-compliance rvith the rules of the futures exchange;

(q)

mandatory maintenance of a settlement guarantee fund including prov isions for-pay-in, pay-out and toppi n g- up; mandatory maintenance of an investor protection fund including provisions for pay-in, pay-out and topping-up;
defaulter's assets under lien or pledge;

(r)

(s) declaration of an event of default and disposal of

(t)

arbitration of disputes and provision for appeal to the Authority by futures brokers and investors; and
specified by the Authority.

(u) any other provisions

rading system.

7.

(l) A proposed

futures exchange shall'deploy a trading system

which bhall be approved by the Authority before such system is
implemented. (2) The trading system deployed under paragraph
(I

)

shall

-

(a) (b)

have an integrated rading, clearing and settlement systems;

have an online screen-based tlading system for providing direct market access up to the client level via the intemet;

(c)
(d) (e)

have necessary arrangements
with brokers and their clients;

to

establish connectivity

have the necessary infrastructure to ensure timely clearing and settlement of trades;
have an adequate risk management mechanism including a pre-trade check perfornied by the trading system;

(f)

be capable of providing real time risk management and market surveillance tools for moniforing of trading activities'of all brokers dnd their clients oh a real time
basis;

(g)

provide brokers and their clieris a facility for accessing
both the daily transactions and finarrcial reports including
ledgers;

(h) have facility

to disseminate information about trades, quantities arid quotes 'in real ,time to at leqst one information ,"niing network which is access)ble to
investors in Kenya and internationally;
business

(i) have adequate systems' capacity supported by a continuity plan including a dis6ter recovery site;

0)
Grant

(k)
of
provisional rpproval.

be established and maintained in a way as to ensure that

it

have any other features.and functionalities specified by
the Authority.

' 8. (l) The Authority may, if the Authority is satisficd that the applicant has dcmonstrated that it is capable of complying with the requirements under regulations 4, 5, 6 and 7, grant the applicant a
provisional license to operate a futures exchange.

(2) The prbvisional license granted under paragraph valid foi a pcriod of.six months:

(l)

shallbe

Providcd that thc Authority may, upon sufficient

cause

shown by thc applicant, extend thc validity of the provisional license for a furthcr period not exceeding three months.

Kettya Subsidiarv Legislation, 20 I 3

1173
Power to make rnqurrres and call for rnfbrmatron

9. l'he Authoritl ma1,, belore and after granting a provisional to an applicant for a l'utures exchange license, make inquiries and require such lurther information or document to be furnished, as
Iicense
the Authority considers necessar),.

10. (l)'l'hc Authbrir),may, afrer rhe expirl,of the period for rvhich the provisional liccnse had been grantedunder regulation (g) andil the Authoritl, issatisfied that rhe applicant has complied w,ith regulations .1. -5, 6, 7 and an1, other relevant requirements under the Act, these Rcgulations and any other regulations. rules, guiclelines or notices issued under the Act, grant a license to the applicant to operate
a futures exchange.

Grant of lrcense

(2) A

. including conditions

licensed l.utures erchange shall compll, rvith such other conditions the Authoritl, may, impose, from time to l.ime, rvith regard

to-

(a) the nature of lutures contracts to be dealt rvith by that
futures erchange; and

(b) approval by the Authority of all futures contracts to
listed by that futures exchange.

be

ll. A

irccnse granted under regulation

l0

shall remain valid

Perrod

of lrcense

unless suspended or revoked by the Authority in accordance w,ith the Act and these Regulations.
12. A licensed futures exchange shall pay a regulatory fee as set out in the Second Schedule to these Regulations or as may be imposed by the Authority from time to time.
Rcgulatory f'ee.

l.l.

(I

exchange license granted under these Rcgulations

w'ith the Act

) The ALrthority may, by notice in rvriting, rel,oke a furures for non-compliance

Revocatron
I

of

rcense

or

specified in the notice if the futures exchange-

these Regulations and rvith effect from the date
rv'ith the
-5,

(a) ceascs to comply
under Regulations

eligibilitl conditions

specified

6 and 7;

(b) ccases

to operaie a futures market that it has been licensed to operate under regulation l0;

(c) is being u,ound up; (d) fails to comply rvith any requiremenr of the Act; (e) fails to comply rvith a direction of the Authorig;

(0
(g) (h)

lails to provide the Authority rvith information required by
the Authority; provides false or misleading information; '

is operating in a manner detrimental to the public interest; or
requests the Authority ro do so.

(i)

(2) For the purposes of subsection (1), a futures exchange shalt be deemed to have ceased to operate its futures market if the futures exchange has ceased to operate its futures market for more than thirty days unless the futures exchange has obtained prior lvritten approval of the Authority to do so. (3) The Authority may, by notice served under paragraph. (l), allorv the futures exchange to continue, on or after the date on rvhich the revocation is to take effect, to carry on such activities affegted by the revocation as the Authority may specify in the notice for the
purpose

of-

(a) (b)

closing dorvn the operations of the futures exchange; or protecting the interests of the public.

(4) The Authority shall not, except rvhere responding to a request under paragraph (l) (i), revoke a futures exchange license without giving the futures exchange an opportupity to be heard. (5) The Authority shall, rvhere the Atrthority revokes the license of a futures exchange, cause to be published a notice of that revocation in at least trvo netvspapers of nationrvide circulation in Kenya.
Effcct

of'
so as

rcvocation

to-

14.

A revocation of license under regulation l3 shall noloperate
avoid or affect any agreement, transaction or arrangement entered into on the futures market operated by the futures exchange rvhere the agreement, transaction or arrangement rvas entered into before the revocation of the license; or affect any right, qbligation or liability arising under such
agreem'ent, transaction or arrangement.

(a)

(b)

PART III-NETWORTH AND OWNERSHIP OFA FUTURES

EXCHANGE
Networth requirements.

15. (l) A futures exchange snall have and maintain, at all times, liquid netrvorth amounts of a type acceptable to the Authority, rvhich shall be adequate in relation to the nature, size and complexity of

business of that futures exchange to ensure that there is no significant risk that liabilities may not be met as they fall due.

(2) The minimum liquid networrh capital
futures exchange shall be -

rQquirement

for

a

(a) an amount equal to one half of the
operating costs
twelve-month period; or

of the futures exchange for the next

estimated gross

(b)

such other liquid netrvorth amount as may be prescribed by the Authority.

Kenya Subsidiary l*gislation, 201 3

1475

(2).

(3) A licensed futures exchange shall have systems and controls to enable the futures eichange to determine and monitor rvhether its liquid netrvorth is sufficienr for the purposes of paragraph (l) and the minimum liquid netrvorth requirement ior the purpo-ses of'paragraph

(4) A licensed futures exchange shail submit ro the Authority an audited liquid netlvorth certificate from the auditor on a quarterly basis within thirty days after the end of every quarter.
16.

(l)

Save as otherrvise provided

shareholding

or voring rights of any

for in these Regulations, the

person

(2) The shareholding as specified in this pirt shall include any jnstrument orvned or controlled, directly or indirectty, which provides
for entitlement to equity or rights over equity at any future date.
17. ( I )

exchange shall, at all times, not exceed the

in a

licJnsed fuiures

General conditions.

limis specified in this part.

of a licensed futures exchange shall be held

At least fifteen percenr of the paid up equity share capital -by
a Kenyan

intity.

Shareholding in licensed future exchange

a

(D en individual or corporate person shall

not-

(a) control or be beneficially entitled directly or indirectly, to
more than trventy five per cent of the issued share capital or voting righs of a futures exchange;

(b) be entitled to appoint more than trventy_five per cent of the Board of Directors; or (c) be entitled to receive more than tlventy_five percent of the aggregate' dividends to be paid in any given financial
year.

c.omply with the requirementsof this regulation rvithin five years from the date of issue of a license to operate a futures exchange. (4) Paragraph (2) of this regulation shall not apply rvhere rhe ownership structure of a corporate shareholder is sufficiently diverse and no single person holds or controls more than tlventy-five percent of its shares, votes, directorship appointments or dividend.

(3) Where an applicanr under paragraph (2) is an individual who does not meet the requirements of this reguiation, that individual shall

_ 18. (l)A person shall not, directly or indirectly, acquire or hold five per cent or more of theequity shares of a licensed futuies exchange unless that person has been certified by the Authority as fit and prope-r.
(2) A person who, directly or indirectly, either individually or together rvith persons acting in concert, plans to acquire equity shlres such that the shareholding of that person exceeds five percent of the paid up equity share capital of a licensed futures exchange, shall seek

Eligibrlity for
acquiring or
holdrng shares.

approval

of the Authority at

proposed date of acquisition.

least rvithin fifteen days prior

tn

rhs

t476

Kenya Subsidiary l,egislation, 20 I 3

(3) A person rvho holds more than five percent of the paid up equity share capital in a licensed futures exchange, shall file a declaration rvithin fifteen days from the end of every financial )'ear to the licensed futures exchange, as the case may be, that that person complies rvith the fit and proper criteria provided in the Act.
(4) A person

rvho-

(a)
(b)

holds five per cent or more

of the equity shares of

a

licensed futures exchange; and

the Authority has determined that that person does not

fulfillthe
Act,shall-

fit

and proper criteria as set out under

the

(i)

all his voting rights immediately upon the licensed futures cxchange being notified by the Authority, in rvriting, that the shareholder does not fulfill the fit and proper criteria as.set under the Act; and
cease to exercise reduce the holding of equity shares to less than five per cent of the share capital of the licensed futures

(ii)

exchange rvithin trvelve months, or such longer period as the Authority may determine.
Drsclosure of shareholy'ing.

Without.prejudice to the provisions of the Act and these a licensed futures exchange shall disclose to the Authority, in the format specified by the Authority, the ghareholding pattern of the futures exchange on a quarterly basis rvithin fifteen days from the end of each quarter.
19.

(l)

Regulations,

(2) The disclosure under paragraph

(l)

shall include-

(a) (b)

the names of the ten laigest shareholders and the number and percentage of shares held by each of them;
the names of the shareholders falling under regulations

l7

and l8 rvho acquires shares in that quarter.

(3) A
Record keeping.

licensed futures exchange shall monitor and ensure licensed futures exchange shall,

compliance rvith this Part, at all times.

20.'A

in

addition

to

the

requirements under anyother lalvs in force, maintain and preserve all

the books, iegisters, and minutes
PART IV
Compositron the board.

of the board

meetings, other

documents and records for a period of not less than geven years.

-GOVERNANCE OF FUTURES EXCHANGE

of

of-

21.

(l)

The board of a licensed futures exchange shall comprise

Ken r-a Subsidiary Legislation, 20I3

1477

(a) shareholder directors; (b) at least one third public interest directorS; and (c) chief executive officer of the futures exchange.
exchange or an associate or an agent of that futures broker shall not be a member of the board of any licensed futures exchange.

(2) A futures broker rvho is a futures member of a futures

meetings of the board to constitute the quorum.

(3) At least one public interest director shall be present in
22.

the

names

of

(l) A

futures exchange thirty da),s prior

futures exchange shall submit proposed directors for appointment

to their appointment and

to the Authority to the Bgard of

the the re-

Conditions of appotntment of drrectors.

appointment for approval by the Authority.

(2) A public interesr direcror appointed under paragraph (l) shall serve for a fixed term of three years and shall be eligible for reappointment for one further term of three years.
23. (l) (l) A licensed futures exchange shall not change its chief executive except rvith the prior confirmation, in rvriting, by the Authority that it has no ob.iection ro the proposed change and subject to compliance rvith any conditions that may be imposed by tJre Authority.
Apporntment of utrve

ch ref exec

ofllcer

issued by the Authority lrom time to tirne, determine the qualification, manner of appoiqtment, terms and conditions of appointment and other

.

(2) A licensed lutures exchange shall, subject to the guidelines

procedural lormalities associated rvith the appointment
executive officer.

of the chief

of a licensed futures exchange shall not be less than three years
shall not exceed fir,'e years:

(3) The tenure under any contract for the chief executive officer
and

Provided that the tenure

licensed futures exchange may be renerved for one further term.

of office of the chief executive of

a

shall

not(a) (b)

(4) The chief executive officei. of a licensed futures exchange
be a shareholder or an associate licensed futures exchange; or

of a shareholder of any

be a shareholder or an associate of a futures broker:

Provided that the chief executive officer of a licensed futures exchange may be appointed on the board, but not ae chief executive officer of a subsidiary of a ticensed futures
exchange.

(5) The board of a licensed futures exchange may, rvith the prior approval of the Authority, remove or terminate the appointment of the chief executive officer of the futures exchange-

\

t478

Kenya Subsidiary

kgislation, 2013

(a) if the chief executive officer fails to comply rvith the
articles of association of the futures exchange; or

(b) to give effect to the directions, guidelines and
orders issued by the Authority, under the Act
Regulations.

or

other
these

(6) The Authority may on its orvn motion, remove or terminate the appointment of a chief executive officer of a licensed futures exchange if the Authority considers it fit in the public interest:
Provided that the Authority shall not remove or terminate the services of a chief executive officer rvithout giving that chief executive officer a reasonable opportunity of being heard.
Code ofconduct for drrectors and key personnel

24. (l) Every director of a licensed futures exchange shall abide by the Code of Conduct as set out in Part A of the Third Schedule.

(2) Every director and key personnel of a licensed futures exchange shall abide by the Code of Ethics as set out in Part B of the
Third Schedule.

(3) Every director and key
exchange and

personnel

its clearing house shall be fit an{ proper persons

of a

Iicensed futures
as

prescribed under section 24A of the Act.

(4) The Authority may, if a director of a futures exchange fails to abide by these Regulations, the Code of Conduct or Code of Ethics or in case of any conflict of interest, either upon a reference from the licensed futures exchange or on its own motion, take appropriate action including removing or terminating the appointment of any director, after providing that director a reasonable opportunity of being heard.
Compensatton and tenure ofkeY personnel.

25. (l) A licensed futures
compensation committee comprising
directors.

exchange shall establish a of a majority of public interest

(l) shall(a)

(2) The compensation committee established a under paragraph
be chaired by a public interest director; and

(b) establish a

compensation policy

of all employees of the
be

futures exchange.

(3) The compensation policy under paragraph (2) (b) shall
approved by the Authority.

(4) The compensation given to the key personnel shall
disclosed in the annual report of the licensed futures exchange.

be

a fixed period, or

(5) The tenure of key personnel, other than a director, shall be for
urs

may be determined by the futures exchange

compensation committee.

Kenya Subsidiary

kgishtion,

2013

1479
Segregation of regulatory departments

26. A licensed futures exchange shall segregate its regulatory departments from other departments in a manner as set out in pirt c of the Third Schedule.
27. (l) A licensed futures exchange shall establish independent oversight committees of the board.

Ovcrsight
committecs.

paragraph

(2) The independent oversight committees (l) shall-

esrablished under

(a)

be chaired by a public inrerest director; and

(b) address the conflicts

of interest in respect

of-

(i) the regulation of futures brokers rvho are futurcs members
of that futures exchange;

(ii) futures contracts' design; and

(iii) trading and surveillance funcrions.

l

(3) A head of department handling the matters referred to in paragraph (2) (b) shall report directly ro the respecrive committee and to the chief executive officer.
(a) Any action of a licensed futures exchange against a head.of a ,. regulatory departmenr specified under paragraph (2) (b) shali be subject to an appeal to the respective committee, within such period as
the board niay determine.

28.

(l)

The board

ofa

licensed futures exchange shall establish

Advisory
Committee.

an advisory committee mandated to advise the.board on non-regulatory

and opeptional matters including product design, technology, chargei
and levies.

(2) The advisory committee established under paragraph (l) shall comprise of the futures brokers who are futures memberi oi a iicensed
futures exchange.

committee.

(3) The chairperson of the board and thechief executive officer shall be permanent invitees to every meeting of the advisory (4) The advisory committee shall meet at least four times a year with a maximum gap of three months between two meetings

placed in the ensuing meeting of the board of the futures exchange for consideration and appropriate decision of the board, and such

(5) The recommendations of the advisory committee shall

be

regommendations along with the decision of the board on the same, shall be disclosed on the website of the futures exchange.
/t

(6) A futures member of a licensed futures exchange shall not be member of any other committee of a licensed futures exchange.

a

I

480

Kenya Subs id rurv

Le

gislation,

20 I -l

Rrsk management commrtlee

29. (l) A licensed l'utures exchangc shall cstablish a risk management committee comprising of direcktrs and indcpendcnt
external experls. (2) Thc risk management committee established under paragraph

(l) shall-

(a) report to the board;

(b)

fbrmulate a detailed risk management polic), rvhich shall
be approved by the board;

(c)

monitor the implementation
policy ; and

of the risk managcment
thc

(d) keep thc'Authoritl' and the board informed on
implementation of policy and any del,iation.

(3) The

head

of the risk management

departme nt shall-

(a) be responsiblc for implementation of the
managemenI policy; and

risk

(b)
Apporntment compliance

report to the risk managcmcnl. committee and to the chicf executive ofl'iccr ol' the futures cxchangc.
exchange shall appoint a compliance

of

30.
officer.

(l) A licensed futures

officer

(2) A compliance officer appointed under paragraph
responsible

for-

(l)

shall

be

(a)

monitoring compliancc by the lutures exchange rvith its articlcs ol association, rulcs, thcse Regulations, thc Act,
any guidelincs or dircctions issucd thercundcr; and

(b) the redress of inl'estors' gricl,ances.
(3) The compliance officer shall, immcdiately and independe ntly, report to the Authority any non-compliance of any provision stated in
paragraph (2).
Transfer
penaltres
o

I

31.

(l)A

licensed lutures exchange may impose pcnalties tbr

breach of its rules under these Regulations.

(2) All penalties imposedunder paragraph (l) shall be credited to the investor protection l'und established by the futures exchange.
Drsclosure and corporate governance norms

32. A licensed futurcs exchange shall comply rvith the disclosure requirements and corporate governance norms applicable to listed companies u,here no specific provisions have been made under these
Regulations.

Ke

rtya Subs id iary

Le g is

lation,

20 I 3

l48l

PART V-DUTITTS OF A FUTURES EXCHANGE
33. ( l) A licensed futures exchange shall ensure_

.

(a) a fair, (b)

Dutres of futures exchange

efficient and transparent market in futures contracts that are traded on its futures market; and

that risks associated *'ith the business and operations of that futures exchange are managed prudently. discharging

paragraph ( I )-

(2) A futures exchange shall, in
(a)

its duty

under

act in the interest of the public; and

(b) ensure that the
lnanagement.

inrerest of the pubric prevairs rvhere it conflicts rvith the intqrest of the futures exchange, futures brokers rvho are its futures members, shareholdirs or the

(3) A lirtures exchange shail operate its facilities in accordance rvith the rules made and approved by' the Authority.
(-l) A futures exchange shall regulate the operations, standar(s of practice and business conduct of futures brokers rvho are its futures members and representatiyes or other employees of those futures brokers in accordance rvith the rules, policies, procedures and practices of the
(-5)

futures erchangc.

procedures

members arnd rcpresentatives or other empkryees of those futures brokers compll, rvith the rules of the futures exchange.

A futures exchange shall fbrmulate and implement appropriate fbr ensuring thar the futures brokers rvho are iii rutures

futurcs members and their clients, except that suph information may be disclosed by the futures e.rchange when required.in lvriting to oo so by the Authority or il' the futures exchange is ordered to do so by a court of
larv.

(6) A futurcs excha.ge shall presen'e confidentiarity rvith regard to all infbrmatiolr in its possession concerning futures brokers rvho-are its

(7) A lutures exchange shail immediatery notify the Authority the futures erchangc becomes aware-

if

(a) that any I'utures broker rv'ho is a futures

exchangc is unable to comply rvith any rules of the futures exchange or of any financial resources requirements; or

member of the futures

(b) of a fina,cial

standing or integrity of a futures broker, rvho is its futures member, is in question, or that a futures broker, rvho is its futures member, may not be able to meet itslegal obligations.

of the futures exchange, may indicate that the financial

irregularity or other matter rvhich, in the opinion

1482
Facilrtres to marntained by fututes

Kenya Subsidiary lzgislcttion, 20 I 3 34. A futures exchange shall at all tirnes provide and maintain-

be a exchang"

(a)

adequate and properly equipped premises;

(b) competent personnel

duties they perform and
applicable legislation; and

rvho are appropriately trained for the in the requirements of all

(c)

automated trading system rvhich meet the requirements under regulation 7 and pre-approved by the Authority for
the conduct of its business.

Futurescxchange
to

assrst

35.

(l) A licensed futures exchange

shall provide such assistance

Aulhontv

to the Authority as the Authority may require for the performance of the functions and duties of the Authority.
(2) Any assistance provided under paragraph
(

l)

may include-

(aj (b)

furnishing of such returns and the provision of such books and other information relating to the htrsiness of
the futures exchange;

information in respect of trading in futures contracts; or

(c) any other specified information as the Authority may require for the proper adniinistration of its functions
under the Act.

PART Vt
Self'-

-

SEJ F- REG TJLATORY ORGANIZA]'ION

regulation

36. A futures axchange shall

have-

(a) a procedure
(b)

and appropriate system regulation oyer its futures members;

of exercising

self-

a code of conduct

for its futuresmembers;

(c)

adequate trading surveillance and compliance capacity;
and

(d) a procedure

for dispute resolution.

toov3rsceits
members.

Futuresexchangc

J7. A futures exchange shall, as a condition for a license to operate a futures market, implement a system of self- regulation rvith respect to futures brokers, lvho are its futures members, and shall ensure the day to day management of trading, clearing settlement, delivery and all other activities of futures brokers , lvho are its futures
members, are in accordance

rvith-

(a) the rules of the futures
Authority;and

exchange approved

by

the

Kenya Subsidiary Legislation, 20 t3

1483

(b) larvs, regulations and guidelines relating to
contracts issued by the Authority. PART VII-ACCOUNTS AND AUDIT

futures

38. (l) A licensed futures exchange strall keep proper books of accounts and records of income and expenditure, assets and liabilities and all other transactions of the futures exchange.

Accounts and audit

(2) A licensed futures exchange shall, as soon as practicable after the end of each financial year, prepare a slatement of accounts of the futures exchange for the financial year, including a statement of comprehensive income and a statement of financial poJition.
accounts prepared under paragraph (2) to its auditors for audit.

(3) A licensed futures exchange shall submit the statement of

(4) The Auditors shall prepare a report on the accounts and send the report to the futures exchange.
(-5)

A licensed furures

of auditor's report under paragraph (4), send a copy of the r'eport and'a copy of the statement of accounts to the Authority.
(6) The Auditors report shall include-

exchange shall, immediately upon receipt

(a) the opinion of the auditor,

rvhether the statement of comprehensive income for the financial year to rvhich the report relates gives a true and fair vierv of the surplus or deficit of the futures exchange; and

(b) a statement
statement

gives

a

financial affairs at the end of that financial year.

in the opinion of the auditor, the financial position for the financial year true and fair viel of the futures exchinge

of

rvhether,

(7) The auditors shall have a right of access at all reasonable times to the books, accounts, vouchers and othei records and are
en-titled

information and explanations as they consider necessary
performance of their duties as the auditors.

to require from the employees of the futures exchange

ior

such the

in the public interest to do so, appoint, in writing, an auditor, at

39. The Authority may, rvhere the Authoriry is satisfied that it is
the

expense of the licensed futures exchanle, to examine, audit, and report, either generally or in relation to any matter, on the books, accounts and records of the futures exchange.

The Authority may appoint an auditor.

40. (l) A licensed futures exchange shall, rvithin four months after the end of its financial year, submit to the Authority an annual
report.

Annual rcport.

t484

Kenya Substdiart' Legtslation, 20 I 3

(2) The annual report submittecl under paragraph ( I )
include(a) a description

shall

of the activities undertaken by' the futures

exchange in that financial Year;

(b)

the

resources including financial, technological and
its

human resources that the futures exchange had available,

and used, in order to ensure compliance rvith
fair, efficient and transparent manner,

obligations and, in particular, the obligation of the futures e^change to ensure that the futures market operates in a

(c)

an anallsis of the extent to u'hich the futures exchange considers that the activities undertaken, and resources used have resulted in full compliance rvith all of the

obligations

of the futures

exchange under

these

Regulations and the rules of the futures exchangc;

(d)

the audit report as required under these Regulations; and

(e) any' other information and statements as thc Authority
ma1 specifl'.

Ket,"e Subsidiart Legtslation, 201 3

l-+85

Form

I

FIRST SCHEDULE

(r''t(l))

APPLICATIQN FOR A I-ICENSE TO CONDUCT THE BTJSINESS OF A FLITURES EXCHANGE Application is made for a futures exchange license under the Act and the following are
made in respect thereof:

Note:

If space is insufficient to provide details, please attach annexure(s). Any annexure(s) should be identified as such and signed by the signatory of this application.
Information provided should be as at the date of application or renewal.

[. Name of the

Company......

..........Limited

2. Registered office.
3. Date of incorporation... ... 4. Address... 5. E-mail.

I

6. Location, address and telephone number of principal office..

7. Location, address and telephone number ofbranch offices

8. Details of capital structure:

(a) (b)

Nominal/authorized capital (KSh.).. Number of shares Paid-up capital (KSh.)...

(c)

9. Shareholders (please attach list) Name Address and telephone number

Number of
shares held

10. (a) Directors (please attach a list) Name

Identity
:ard/Passpor t number

Date

of

Date

of

appointment

Birth

Permanent Academic or address and professronal telephone qualification

Number of
shares held in the company

number

1486

Kenya Subsidiary lzgislation, 201 3

(b) Secretary Name...
Address... Institute of Certified Secretaries of Kenya Registration

No......

(c)

Chief Executive Officers and other key personnel
ldentity card
or Passport
number. Date

Name

ol

Date

of

appointment

birth.

Permanent address and telephone

Academic and professional

Numbcr

ol

qualifications

sharcs held in thc
comDanY.

numbcr

I

l. Particulars ofother directorship

(s) ofthe directors and secretary

12. Particulars of shares held by the directors and secretary in other companies.

13. Has the applicant or any of its directors, secretary or members of senior management at any time been placed under receivership, declared bankrupt or compounded with or made an assignment for the benefit of his creditors in Kenya or elsewhere? YesNo. If "Yes", give details

14. Has any director, secretary or key personnel company that has been:

of the applicant been a director of

a

(a) denied

any license or approval under the Capital Markets Act or equivalent in any other jurisdiction: YesNo If Yes, give details.

(b) a director of a

company providing banking, insurance, financial or investment aCvisory services whose license has been revoked by the appointing authority:
YesA.lo. If Yes, give details..

Ke

n,-a S ub s id iar 1- k

g

is

lat io n, 20 I 3

t487

(c)

subjected to any form of disciplinary action by any professional body of which the app!icant or any of its director was a member? YesArlo. if yes, give details....... ...

15. Has any court ever found that the applicant, or a person associated

with the applicant was involved in the violation of the Capital Markets Act or Regulations thereunder or equivalent law outside Kenya? YesAllo. If Yes, give details..

16. Is the applicant or a person associated with the applicant is subject to any proceedings

that could result in a "yes" answer to question l5?

yesNo. If "yes" give details......

17.

(l)

is the applicant, any shareholder, director or secretary of the applicant a member of a member company of any securities exchange, futures exc lange or cornmodities exchange? YesNo. If "yes" give details.
<rr director

(2) have any ofthe above persons been-

(a)

refused admission as a futures member Yes, give details...

of any securities organization? YesNo. if

(b) expelled from or suspended from trading
Yes, give details.

on any securities organization?

Yes6o if

(c) subjected to any other form of disciplinary action by any stock exchange? YesNo Yes, give details

if

I

8. Business references:
Address Telephone number(s) Occupation

Name

19. Profile of the chief executive officer and key personnel in the applicant

company

1488

Kenya Subsidiarv Legislation, 20 I 3

20. List of office facilities of the applicant......

2l.Anyotheradditional informationconsideredrelevanttothisapplicant........................

We...... and....
Dated

..........(Director)... of.......

....(Secretary) declare that

all the information

....... (Director)

given in this application and in the attached documents is ttue and correct.

this...

.....day

......20....

Signed:

..) Director

......) Director
....) Secretary
Note:

l.The following shall be submitted witti the application for a license:

(a) memorandum and articles of association; (b) certificate of incorporation; (c)
feasibility plan complying with regulation a Q)@) of these regulations; futures exchange containing provisions in compliance with the matters detailed under regulation 3 of these regulations;

(d) rules of the proposed (e)
details

of the proposed trading system complying with the requirements of regulation 7 of these Regulations;
staternents of the unaudited accounts for the period of accounting year ending not earlier than six months prior to the date of application and audited annual accounts for the preceding two years (in case of application of license);

(0

Kenya Subsidiary Legislation, 20 I 3

I

489

(e) a declaration by directors as to whether after due enquiry by them in relation to the interval between the date to which the last accormts have been made and a date not earlier than fourteen days before the date ofapplication-

(i)

the business of the company has, in their opinion, been satisfactorily
maintained;

(ii) they have, in their opinion, arisen any
(iii)

circumstances adversely

affecting the company's trading or value of its assets;
there are any contingent liabilities by reason ofany guarantees given by the company or any of its subsidiaries;

(iv) there are, since the last annual accounts, any changes in published reserves or any unusual factors affecting the profit of tho company or any of its subsidiaries;
(h) a declaration by persons authorized as prescribed to accompany the application

form; and

(i) application

fee.

SECOND SCHEDULE

(rr.4(2) (c), l2)

I

LICENSING AND ANNUAL FEES FOR FUTURES EXCHANGES Application fees... .
Licensing fees...
... .........KSh. 2,500.00 ... ........KSh. 2,500,000.00

. fees.....

Annualregulatory

.....KSh.2,500,000.00

THIRD SCHEDULE(n. 2a, 26)
PART A
Code ofconductfor the directors on the board

(r.24(t)

l.

Meetings and minutes.
Every director ofthe licensed futures exchange

shall-

(a) (b)

not participate in discussions on any subject matter in which any conflict of interest exists or arises, whether pecuniary or otherwise, and in such cases the same shall be disclosed and recorded in the minutes of the meeting;

not encourage the circulation circumstances so require;

of

agenda papers during the meeting, unless

\

r+90

Kenva Sttbsitliort' Lag,islutton. 20 I 3

(c) (d) (e) (i)

offer their comments on the draft minutes and ensure that the salne are incorporated in the final minutes;
insist on the nrinutes of the previous meeting being placed fbr approval in
subsequent mecting;

endeavor to have the date of next meeting flxed at each board nteeting in consultation with other nrernbers of the board,
endeavor to crlsure that in case all the itenrs ol'the agenda of a rneeting were not covered for want of time, the next rnecting is held within fifteen days for considering the remaining itenrs.

2. Code of Conduct for the public interest directors.

(a) ln addition to the conditions stated in Paragraph (i) above, public interest

directors of the licensed futures exchange shall, endeavor to attend all the
board nreetings and they shall be liable to vacate office if they remain absent for three consecutive meetings of the board or do not attend seventy five percent of the total meetings of the board in a calendar year'

(b)

Public interest directors shall rneet separately. at least once in six months to exchange viervs otr critical issues.

3. Strategic planning.
E,very director of the licensed lutures exchange shall'--

(a)

participate in the formulation and execution of strategies in the best interest of the licensed lutures exchange and contribute towards pro-active decision rnaking at the board level;

(b) give benefit of their experience and expeqtise to the Iicensed futures
exchange and provide assistarrce
decisions.

in strategic planning and execution of

4. Regulatory compliarrces.
Every director of the licensed futures exchange

shall-

(a) (b) tc) (d)

endeavor

to ensure that the licensed futures exchange abides by all the provisions of the Act and regulations framed thereunder and the circulars, directions issued by the Authority from time to time;
endeavor compliance at suffer any breaches;

all levels so that the regulatory system does not

endeavor to ensure that the licensed futures exchange takes steps commensuratd to honour the time limit stipulated by Authoriry for
corrective.action;

not support any decision in the meeting of the board which may adversely affect the interest of investors and shall report forthwith any such decision to the Authority.

I
Kettva Subsidiary

kgislation,

20 I 3

t49t

5. General responsibility.
Every director ofthe licensed futures exchange

shall-

(a) (b) (c) (d) (e)

place priority for redressing investor grievances and encouraging fair trade practice so that the licensed futures exchange becomes an engine for the growth of the futures market; endeavour to analyze and administer the licensed futures exchange issues

with

professional competence, fairness. impartiality. efficiency

and

effectiveness;

submit the necessary disclosures/statement of dealings in futures contracts as required by the licensed futures exchange from time to time as per their rules or articles of association:
unless otherwise required by law, maintain confidentiality and shall not divulge/disclose any information obtained in the discharge of their dury and no such information shall be used for personal gains;

maintain the highest standards of personal integrity, truthfulness, honesty and fortitude in discharge of their duties in order to inspire public confidence and shall not engage in acts ,d iscreditable to their
responsib ilities;

(0 (g) (h)

perform their duties in an independent and objective manner and avoid activities that may impair, or may appear to impair, their independence or objectivity or official duties; perform their duties with a positive aftitude and constructively support open
commun ication, creativ ity, ded icat ion, and compassion
;

not engage in any act involving moral turpitude, dishonesty, fraud, deceit, or misrepresentation or any other act prejudicial to the administration of the
licensed futures exchange.

PART-B
Code of Ethics

G.2aQ)

for direclors and key personnel of Futures Exchunge The 'Code of Ethics' for directors and key persortnel of the licensed futures exchange, is aimed at improving the professional and ethical standards in the functioning of licensed futured exchange thereby creating better investor confidence in
the integriry of the futures market.

l. Objectives and underlying principles.
seeks to establish a minimum level

these directors and

key personnel, towards establishing a fair and transparent marketplace. The Code of Ethics is based on the following fundamental principles: (a)
Fairness and transparency in dealing with matters relating
exchange and the investors;

The Code ofEthics for directors and key personnel ofthe licensed futures excfange of business/professional ethics to be followed by

to the

futures

1492

Kenya Subsid iary Lzgislation, 20 I 3

(b) (c) (d)

Compliance

with all laws/ rules/ regulations laid down by

regulatory

agencies/ licensed futures exchange;

Exercising due diligence in the pbrformance of duties; and

of conflict of interest between self-interest of directors/ key management personnel and interests of licensed futures exchange and
Avoidance
investors.

2. Ethics committee.

For overseeing implementation of this Code, an ethics committee shall
constituted by every licensed futures exchange under the respective board.
3. General standards.

be

(a)

Directors and key personnel shall endeavor to promote greater awareness
and understand ing of eth ical responsib il ities;

(b)

Directors and key personnel, in the conduct of their business shall observe high standards of commercial honor and just and equitable principles of
trade;

(c) (d)

The conduct of directors and key personnel in business life should be exemplary which will set a standard for other members of the licensed
futures exchange;

Directors and key personnel shall not use their position to give/get favors to/from the executive or administrative staff of the futures exchange, technology or service providers and vendors of the licensed futures
exchange;

(e) (0

Directors and key personnel shall not commit any act which reputation ofthe Iicensed futures exchtnge, injcopardy; and

will put the

Directors, committee members and key personnel of the licensed futures exchange, should comply with all rules and regulations applicable to the

futures market. 4. Disclosure oTdealings in Futures ContraDts by key personnel of the Futures Exchange.

.Key personnel of the licensed futures exchange shall disclose on a periodic basis as Jdetermined by the laws, regulations, guidelines, rules relating to the futures markets (which could be monthly), all their dealings in futures contracts, directly or indirectly, to the board/ ethics committee/ Compliance Officer.

5. Avoidance of conflict of interest.

(a)

No director of the board or member of any committee of the licensed futures exchange participate in any decision making/adjudication in respect of any person lmatter in which he is in any way, directly or indirectly,
concerned

or

interested.

Kettya Subsidiary Legislation, 20 I 3

t493

(b)

Whether there is any conflict
decided by the board.

of

interest or not in

a matter, should

be

6. Role of the Chairperson and directors in the day to day functioning of the futures
exchange or clearing corporation.

(a) (b)

The chairperson and directors shall not interfere in the day to day functioning of the licensed futures exchange and shall limit their role to
decision making on policy issues and to issues as the board may decide; The chairperson and directors shall abstain fiom influencing the employees of the licensed futures exchange in conducting their day to day activities;
and

(c)

The chairperson and directors shall not be directly involved in the function of appointment and promotion of employees unless specifically's'o decided
by the board.

7. Acccss to information.

(a) (b)

Directors shall call for information only as partpf specific committees or may be authorized by the board.

as

There shall be prescribed channels through which information shall move and further there shall be audit trail of the same. Any retrieval of
confidential documents/ information shall be properly recorded.

(c)

All

such information, especially which is non-public and price sensitive, shall be kept confidential and not be used for any perSonal consideration/
gain.

(d)

Any information relating to the business/operations of the licensed futures exchange, which may come to the knowledge of directors/ key personnel during performance of their duties shall be held in strict confidence, shall
not be divulged to any third party and shall not be used in any manner
except for the performance of their duties.

Misuse of position.

Directors/ committee members shall not use their position to obtain business or any pecuniary benefit in the organization for themselves or family members.
9. Ethics committee to lay down procedures.

(a)

The ethics committee shall lay down procedures for the implementdtion of the code and prescribe reporting formats for the disclosures required under
the code.

(b)

The compliance officer shall execute the requirements laid down by the
ethics committee.

While the objective of this Code is to enhance the level of market integrity and investor confidence, it is emphasized that a written code of ethics rnay not completely guarantee adherence to high ethical standards. This can be accomplished only if directors and key

t494

Ken r-a Subsidiarv

kgislation,

20 I 3

personnel of the licensed futures exchange commit themselves to the task the fairness and integriry of the system in letter and spirit.

of enhancing

PART-C
Meqsures lo ensure segregalion o/ regutatory depqrtmenls

(r.26)

In order to ensure the segregation of regulatory departments, every licensed futures exchange shall adopt a "Chinese Wall" policy which separates the regulatory departments of the licensed futures exchange from the other departments. The employees in the
regulatory departments shall not communicate any information concerning regulatory activity to any one in other departments. The employees in regulatory areas may be physically segregated from employees in other departments including with respect to
access controls. In exceptional circumstances employees from other departments may be given confidential information on "need to know" basis, under intimation to the

compliance officer
Made on the l8th June'

2013'
Cabinet Secretary

HENR' RorrcH, for
the Nalional Treasury.

LEGAL NoTICE NO. I09

THE PUBLIC PROCUREMENT AND DISPOSAL ACT,2OO5

(No.3 of2005)

IN EXERCISE of the powers conferred by Section 140 of the Public Procurement and Disposal Act, the Cabinet Secretary for Treasury makes the following Regulations:THE PUBLIC PROCUREMENT AND DISPOSAL (AMENDMENT) REGULATIONS,
2013

citation.

l. These Regulations may be cited as the Public Procurement and Disposal (Amendment) Regulations,2013.

2. The Public Procurement and Disposal Regulations, 2006 and Public Procurement and Disposal (Amendments) Regulations, 2009 in these regulatio.ns referred to as "the principal Regulations", are amended by inserting the following new regulations immediately after regulation 94Rcporting on

contractawards

public

96. In order fulfil the requirements of section a6(l) of the Act, every procuring entity shall on

quarterly basis submit to the Authority information of all public contract arvards as directed by the Authority.
6. Regulation 8 (3Xa) of the principal'regulations is amended by deleting and substituting therefore the following nerv paragraph-

(a)

registered tenderers required by the procuring entity through a pre-qualification process and submit the results to the Authority for consolidation within fourteen days from date of notification.

maintain and update bi-annually standing lists of

Kenya Subsidiary lzgislation, 20 l3
-1. Regulation l0(2Xd) ot-the principal Regulations is amended by deleting and substituting therelbre the foilorving nerv paragraph_

t19s

(d) approve the comrncncement of the procurement process after

th^e. annual procuremcnt. plan is approved by thi accounting oflficer, and rvhere applicabre by ihe board bf directors or a

similar body and upon satisfaction that sufficient funds to
meet the obrigations of the resurting contract are refrected in
such sufficient funds before making an arvard is provided.

its budgetary estimates, or the evidence of the availability of

. -5. Regulation l7 of the principal regulations adding the fol lorvin g sub-regulation (

is amended

hy

I I ) The rolc of rhe obscrvers shall be _

(c) to

observe

been carried out in accordance rvirh Seition 2 and prepare a report;

.rvhether the procurement proccedings have of ihe Act

(d) the reporr prepared under
notification of arvard.

sub_regulation

simultaneously be submittcd to the accounting officer and

(a)

shall
ol.

the Authority rvithin fburteen days flr;

date

6. Regulation l6 of the principal rcgulations is amended by deleting and substituting therefor the follorvirig nerv paragraph _
Forcach procurement, the procuring entiry shalr estabrish an - .(l). Inspection and Acceptahce Evaluation, & N"egotiations committeefor the purposes of carrying out the evaluation of-the tende^ o, profurui, or negotiations or inspection and acceptance of goods, i"ort, oi
serv ices.

Evaluation, Ncgotiations,

lnspcction and
Acccptance

Committcc

(l) shall consist of a at leasr three other membirs:ali uppoint"a -Uj tfr" accounting officer or the head of the procuring entity 'upon
chairman and
recommendation by the procurement unit.

(2) A committee established under paragraph

person is a member of the tender committee of ttre paragraph

(3) No person shall be appointed under paragraph (2) pricurinj

if

such ---'

"ntity.
sub_

(4) In tender evaluations, the committee established under

(l)

shall be responsible

for_

(d) (e)

evaluation rvith all due diligincJurA *ittin fifteen days after the openingbf the tenders;

the technicar evaruation of the tenders or proposars received in strict adherence to the compriance and evaruation criteria set out in the tender documents; commitree established under paragraph (l) perfonming the

a perio"A oi

t196

Kenya Subsidiary Legislation, 20 I 3

(0 (g)

the financial evaluation of the tenders or proposals received in strict adherence to the compliance and evaluation criteria set out in the tender documents or request for proposals; and performing the tender evaluation rvith all due diligence.

(5) Each member of the committee shall evaluate independently from the other members prior to sharing his or her analysis, questions and evaluation including his or her rating rvith the other members of
the committee.

(6) Llnder tto circumstances may any member of the committee cnter into direct communication rvith any of the tenderers participating in a tender or proposal that such evaluation committee is considering.
(7) An evaluation committee shall prepare a report on the anall'sis

of the tenders received, and f,inal ratings assigncd to each tender and
submit the rcpclrt to the tender committec. (8) l-hc report preparcd under paragraph (7) shall include

-

(f) (g) (h) (i)

thc rcsults of the preliminary el'aluation, rvith reasons rvhy any tenders or proposals rvere rejected;

thc scores arvarded by each evaluator for cach tender or
proposal; a summary of the relative strengths and rveakncsses of each tender or proposal; the total score for each tender or proposal; and

0) a

recommendation to arvard thc tender to thc lorvest evaluated tendcrer or to thc' person rvho submitlcd the
proposal rvith the highest total score.
by

Inspcctionand 7. Regulations 17 of the principal regulations is amended acccptance deleting and substituting therefor the follorving nerv paragraph -

A committee established under regulation 6 of these Regulations shall immediately after delivery of the goods, rvorks or services -

(i) 0) (k) (l)

inspect and rvhere necessary, test the goods received; inspect and revierv tfie goods, lvorks or services in order to ensure compliance rvith the terms and specifications of the contract;

accept or reject, on behalf of the procuring entity, the delivered goods, rvorks or services;
ensure that the correct quantity of has been received;

Ketryct Subsidrur.t, Le!:rslutton, 20 I -l

t197

(m) cnsurc that thc goods, (n) (o) (p)

rvorks

or

serviccs mcct thc

tcchnical standards dcl'incd in the contract.

cnsure that the goods, *,orks or sen,iccs have hccn dclivcred or complctcd on timc, or that any dclay has
bccn ncltcd; cnsure that all rcquircd manuals or documcntation havc bcen reccived; and

cnsure issuance ol' intcrirn or complction ccrtil'icates or goods rcceived notcs, as apprcrpriatc and in accorclancc

n'ith thc contract.
8. Rcgulation 20 (5) of'the principal rcgulations is arnendcd by deleting and substituting thcrcfbr the follorving ncw paragraph atrd adding the lblIorving sub-rcgulationsI)rocurc rtte n L

plannrng

(5) 'l'he consolidated annual procuremcnt plan shall bc
dircctors or a sirnrlar bodl'.

pre parcd

by thc procurcment unit and approvcd bl,both thc tcndcr cornmittcc, the hcad of the procuring entitl'and w'hcre applicablc b1,thc board ol'

(6)'l'hc approval ol thc plan in sub-regulation (.5) by thc tcrrdcr cclmmittce shall bc dccrncd to includc approval ol'all altcrnativc procurcment methods as rcquircd urrder scction 29(.1) ol'the Act.
9. Rcgulation 21(4) ol' thc principal Regulations is amcndcd dclcting and substituting thcrcfor the lbllo*'ing nc\\' paragraph by
Prcqual r frcatron documcnl.s

'l'he procuring cntity shall allow' the candidates a[ least sevcn
days to preparc and submit thcir applications to bc pre-quali['icd.
10. Regulation 3

I is arncndcd by adding thc l'ollorving sub-

Varrallons to
con trac
I

rcgulation

-

\.

(c) thc cumulative valuc ol all contract amcndments shall not incrcase the total contracl. pricc by morc than trvcnty' fivc porcent from thc original contract sum.
I l. Regulation 36 ol' the principal Rcgulations is amendcd dcleting and substituting thercfor thc follorving nerv paragraph by,

'l'inrc lor lnternatlona
tcndeflng

For thc purposcs of scction 7l(c) of thc Act, the minimum period of time bctrvecn advertisement and dcadline lor submission of international tenders shall be trventy one days.
12. Rcgulation 39 ol' the principal Regulations is amended. by deleting and substituting thcrcfor thc follou,ing nov paragraphFee for tender documents

(l) Pursuant to scction -56 (2) oi the Act. procuring entity may charge a l'ee not exceeding one thousand shillings for hard copies of
tender documents.

t498

Kenya Subsidiarv Lzgislation, 201 3

(2) In arriving at the fee payable under paragraph (l), a procuring entity shall only have regard to the costs related to printing, copying, and diStribution or of converting the documents into electronic form.
(3) No fee shall be charged rvhere the tender documents

are-

.

(a) obtained electronically; (b) for invitations for expression of interestt (c) for invitations f,or pre-qualification.

or

(4) Where tender documents are sold, the procuring entity shall allorv potential tendcrers to inspect the documents, prior to purchasing
the document.
Timc for prcparrng
national tcndcrs.

13. Regulation 40 of the principal Regulations is amended by deleting and substituting therefor the follolying new paragraph-

The minimum time for the preparation of national open tenders for the purposes of section -5-5 ( l) of the Act shall be a period of
fourteen days.
Tcndcr sccurity.

14. Regulation 4l (3) of the principal Regulations is amended by deleting and substituting therefore the follorving nerv paragraph-

(3) The tender security to be provided under section 57 of the Act shall be in any of the follorving forms only(a) cash;

(b) a bank guarantee; (c) such insurance company guarantee as may be approved by
the Authority;

(d) a letter of credit; or (e) guarantee by a deposit taking microfinance institution, Sacco society, the Youth Enterprise Development Fund or the Women Enterprise Fund.
Pcriod for cvaluation of tcndcrs.

l-5. Regulation 46 of the principal Regulations is amended by deleting and substituting therefore the following new paragraph-

(l) A procuring
opening of the tender.

entity shall, for purposes of section 66 (6) of the
the

Act, evaluate the tenders rvithin a period of fifteen days after

(2) Where a tender is complex, and/or has attracted a high number of tenderers, the accounting officer or head of a procuring entity.may extend the period for lender evaluation to a further period rvithin the tender validity period but not exceeding thirty more days.
hoccdurc for
rcstrictcd tcndcring.

16. Regulation 5a(5) of the principal Regulations is dmended by deletigg and substituting therefore the following new paragraph-

The minimum time for the preparation of tenders for the purposes of section 73 of the Act shall be a period of seven days.

Kenya Subsidiary l,egislation, 201 3
17. Regulation 55 is is amended by deleting and therefor the follolving nerv paragraph -

1499

substituting - Rcqucstfor
proposals.

(l)

request for proposals method pursuant to section 76 of the Act shill be sub.iect to the procurement thresholds set out in the First Schedule.

-A

procuring entity that conducts procurement using

the

(2) The notice inviring expressions of interest prepared by the procuring entity pursuant to section 78 of the Act shall give a minimum period of seven days for tenderers to submii tteir expressions of interest.
tender committee of a procuring entity has expressly

(3) Invitation of expressions of interest may not apply rvhere approveddirect Request for Proposals;
direct procurement or Single Source Selection: restricted tendering; or

the

(a) (b) (c) (d)
regulation

request for quotations

18. Regulation G4

(l)

is amencied by adding the following

sub-

rvorks or services.

Uscof spccia[y pcrmittcd procc<lurcs.

(d) Where competitive negotiations are critical for achieving value for money in the procurement of specialized goods,
19. Regulation 66(2) of the principal Regulations is amended deleting and substituting therefor the following new paragraph -

by -

Notification of thc'
award.

A procuring entity shall notify an unsuccessful tenderer in lvritipg and shall in the same letter provide reasons as to lvhy the
tender, proposal or application to be pre-qualified was unsuccessful.

20. Regulation 73 of the principal Regulations is amended by deleting and substituting therefore the follorving new paragraph-.

Modcof fiting
rcqucsts.

(l) A request for revierv.under the Act shall be made in Form RB I set out in the Fourth Schedule of the principal Regulations.
(2) The request referred
do

i,

purugruph

(l) shall-

(a)

state the reasons for the complaint, including any alleged breach of the Act or Regulations;

(b) be

accompanied

by such statements as the

applicant

considers necessary in support of its request;

(c) from the date of the occurrence of the breach complained of rvhere the request is made before the makins of an arvard or the notification under sections 67 or g3 oinct & made within-

r

500

Kentrt Srtbstdiart' Legislation, 20 I -l

(i) tcn calendar days if
national tcndcr; or

procurement proceeding

is
is

a

(ii) tcn uclrking
(d)

days

if

procurement proceeding

an

intcrnational tender.
be submittcd in thrcc bound copies and a soft cop)', pages ol' rvhich shalI bc collsectttivel1' nttmberecl; bc accompaniccl hy rton-rcfttndahlc lees set out the Second Scheduleof tlrese Rcgulations.

(c)

(3) Irvcr)'requcst for reviov shall bc l'ilcd w'ith thc Sccretary'ol
thc Revie rv Btlard ttpon paymellt ol'thc requisitc fees'

(-l) 'l'he
rcl
ie r.t'.

Secre

tar) shall ackntlrvledge I'iling.of thc request for

Norrficarronol l'rlrirg 21. Rcgulation 7-l (.1) ol'thc princiltal Rcgulatitlns is amcnded by o[rcque\r dclcting and substituting thcrcfore thc lollow'ing rrerv paragraph -

lpon bling
shnl
I

scrvccl rvith a notification ol'a requsst, the proctrring cntitl'

(a) (b)
notil'y the Secrctary immcdiatcly of thc names and contact dctails of all partics to thc reviov,
w'ithinl'ivc clay's or sttch lesser period as may be stated by thc Sccrctary in a particultlr casc, submit to the Secretary a rvrittcn mcmorattdum of response to thc reasons for thc requcst togethe r ivilh such documents as the Secretary may spccily.

't'hc Frrsr

Sche<lutc

22.'l-he First Schedule ol'the principal regulations is amended by dcleting and substituting thergl'or w'ith thc First Schedule ol' these Rcgulatitlns. Fourth Schcclule of the principal regulations is amended by deleting and substituting *'ith thc Second Schedule to thcse Regulatitlns'
2.1.

't'he Fourth

Schedutc

I)art

II of the

Madc on the l8th June, 20 13.

HENRY ROTICH,
C ab i nc

t

Secre

tar 1- .fo r t he N at io na I T r e as u r y'

Kent'a Subsidiarv Legislation, 201 3

r.50

t

Lecel NorrcE No. I l0
THE CUSTOMS AND HXCISE ACT (Cap.172)

'f reasurl, makes the fol lorvin g Regu lations:

IN EXERCISE of the po$,ers conferred b1, secrion 234 of the Customs and Ercise Act, the Cabinet Secretary to the National

20 I 3
Cltatron

, THE CTISTOMS AND EXCISE (EXCISABI-E GOODS

MANAGEMENT SYSTEM) REGULATIONS,

I These Regulations may be cited as the Customs and Excisc (Excisable goods Managemenr Sysrem) Regulations ZOl3. ,
2. In thesd Regulations, unless the conte\t othenvise requires_

lnterprctatton

"authorised

Commissioner to perform any act under these Regulations;

officer" means an officer authorised by.the
means spirit ready

"compounded spirit" . beverage and put

up for retail;

for consumption as a

"contractor" means a person appointed by the commissioner to supply, install, and maintain the System;

system, production accounting system and .related softrvare
hard rvare;

"Excisable goods management system" in these Regulations ^ referred'to as "the System" includes excise stamps, track and trace
and

^ commissioner
Regulations;

"im.porter".means

to import excisabre

a

pcrson registered as an importer

goods specified un<ter ihese

by

the

"Manufacturer" means a manufacturer ricensed to manufacture goods specified in these Regulations;
"package" means packet, bottle or similar retail unit of excisable goods specified in these Regularions;

"printer" means a person appointed by the Commissioner to print and supply excise stamps; and

3. Every package of excisable goods, except motor vehicle, manufactured in or imported into Kenya shall be affixed rvith an excise stamp of a type and in a manner specified by the Commissioner.
4. Every excise stamp required to be affixed under regulation shall be of such specifications as3

Excisable $oods to affixcd with excise
stamps

be

Features of thc excise stamp

(a) to deter counterfeiting;

I

I

502

Kenya Subsidiary lzgislation, 20 I 3

(b) to facilitate tracking
the supply chain;

of the stamps and excisable goods along

(c)
(d)
Excisc stamps

to enable accounting for the production of excisable goods manufactured or imported ; and to facilitate any,persons in the supply chain to authenticate
the stamps and excisable goods.

fcc.

5.

(

l)

Manufacturers and Importers shall purchase excise stamps

from the Commissioner at a prescribed fee.
(2) The fee prescribed by the Commissio.ner under paragraph ( I ), shall not exceed the cost of the stamps and the maintenance costs of the
System.

(3) The revenue from the sale of excise stamps shall be retained by the Commissioner for financing the System.

Rcgistration.

6. (l) The Commissioner shall register importers of any excisable goods specified under these Regulations subject to such
conditions as he may deem necessary.

(2) A person shall not manufacture or import excisable goods for lvhich anexcise stamp is required to be affixed in accordance with these Regulations, unless that person
Commissioner.
Application for

is

licenced

or

registered

by

the

stamPs

cxcisc
.

7

.

(I

Commissioner for excise stamps in the prescribed format.

) A

manufacturer

or importer shall apply to
subparagraph

the

(2) An application made under
submitted

to the Commissioner

(l) shall be
to
the

atleast ninety days prior

manufacture or importation of the goods.

(3) A manufacturer or importer shall pay for excise stamps upon approval by the Commissioner.

(4) In case of imports; the Commissioner may require evidence of importation before delivery of excise stamps.
(5) Despite subparagraph (4), the Commissioner may, subject to such conditions as he may specify, allow delivery of excise stamps to a person before importation.

of 8. (l) The Commissioner may require a manufacturer or importer consumption' to provide, at least 120 days before tlie beginning of every financial
Forccast

year, a forecast of quantities of excise stamps which the manufacturers and importer intend to use in the subsequent year.

(2) A manufacturer or importer shall bear the cost of the excise
stamps procured under the forecast and not used.

Kenya Subsidiary Leg islation, 20 I 3

r

503

Commissioner shall appoint a suitable person to

^

9 (l)

Subject

to the lalv regulating public procurement, the

Appointmcnts.

-

(a) print and deliver

excise stamps;
and

(b) develop and install the System;
(c) install any other related.systems.

excise

.stamps required under these Regulaiions unless requested by Commissioner.

.

(2) A person appointed under paragraph (l) shall not print any

10. (l) The Commissioner may, where necessary and subject to Delivcry of cxcisc such conditions as he may impose, require the printer io deliver excise stamps.
stamps directly to a manufacturer, or importer,.

(2) The printer shall notify the Commissioner of the quantity and stamps supplied under paragraph (l) ivithin'such period as the Commissioner mdy require.

type

of the excise
rr.(r)

Excise sramps shail be affixed on excisabre goods

-

lll;i""J:j:H
slamps'

"

(a) in case of locally manufactured goods, in the production
faci I ity immed iately after packaging
;

(b) in the case of imported goods, in a ptace approved by the Commissioner lvithin seven days upon clearance from
Customs for home use;
1c)

in any other case, at a place appointed by the Commissioner.

excise . stamps
as the

12. Despite paragraph (lxb), the Commissioner may allow on imported excisable goods to be affixed in the production facility in the exporting country subject to such conditions

.

Commissioner may specify.

13.

(l)

Manufacturers

stamps to the Commissioner

when-

or importers shall return unused excise

Rcturnorrransfcrc
cxcisc stamps.

(a) they stop manufacturing;
(b)
there are defects in the excise stamp sheets or reels;

(c) tliey fail to import;

(d) the excise stamps are declared out of use by
Commissioner;

the

(e) the Cabinet Secretary for finance exclude the products frcm the'requirements of these Regulations;

l-50-1

Kettta Subsrcliart' Leg,islatton, 20 I -l

(2) Erccpt for thc stamps rctrlrned undcr paragraph I (a) and (h)' thc Corntnissiuner shall rcfuncl, within sixty days. thc l'ces paid on thc
rcturncd c\cisc stalnPS.
Allow ancc I'or
rvastage and darrragcs

l-1. (l) Darrragcd c\cis0 stalnps shall bc prcscrvcd for vcril'ication b1 att utrthoriscd tll'l'iccr.

(2) Whcre ir tnanufacturer ol importcr cannot account tor

the

e\cisc statnps issucd to him b1 thc Commissioner, the Commissigner shall cornptrtc excisc dutl' n,.,4 othcr ta\cs on the unaccounted excisc starnps btiscd on thc highcst cxcisc rate of crcisc dutl', I'alue and volume o['cxcisablc goods manufactured or imported by the person'

(3) In computing c\cise duty on account of the unaccounted cxcisc stalnps, the Commissioncr shall allou' a \\'astage and damages not exceeding onc percent of the isstred stamps.
Transfer of cxctsc

stal

ps

thc

manutacturing unit owned by thc sarne mantlfacttlrer or importer'

or importcr lnay, w'ith prior approval of cxcisc stamps in stock to another transfer Comrnissioner,
l-5.

(l) A manttlacltlrer

(2)'Ihe
paragraph.

('ommissioner shall prcscribc
accoul.lting

the

procedtrre and
this

condition for lransler and

ol' e\cise stamps under

A manufactttrer or ilnporter rvho transfcrs excise stamps prior approval ol thc commissioner commits an offence' rvithout
(3)
lnstallatrgn of the
System

rnanufacturer or importer o[ excisable goods specified in these Regulations shall facilitate theinstallation ol' the System in their production or import facilities in accordance rvith the provisions of
16.

A

these Regulations.
Composltlon the
System,

of-

17. The System installed under

relulation l6 shall be composed

(a) excise stamps authentication and validation equipment;

(b) devices for identification and association rvith individual excise stamp; (c) production accounting equipment;and

of each package

(d) devices for the control, registration, recording and transmission of data on the quantities of excisable goods to rhe Commissioner.
Marking of product
packagcs.

18. (l) The Commissioner may require that the excisable goods be marked by the System on each package and in a visible place, as appropriate for the type of package, by a process of printing rvith indelible security ink, rvith codes that enable authentication, production accounting and track and trace of excisable goods.

Kenya Subsi.diary lzgislation, 20 I 3

1505
Intcgration.

19. The installation, integration, preventive and corrective
lnaintenance procedures of all the equipment comprising the System at

the manufacturers or importers' premises shall be done by
20.The Commissioner shall be responsible for

an

authorised contractor under the supervision of an authorised officer.

-

ffr".j:#;:,

*o

(a) defining the functional, secuilty and fiscal control requirements to be observed by the contractor in
developing the System;

(b)
21.

supervising and monitoring the process
System.

of

installing

the

the manufacturers or importers premises corresponding to
packaging machine end laUelling

(l)

The System shall be installed on

all

production lines

machine;

at each

Installationof
cquipmcntand
_dcviccs'

(2) The System for management of imports shall be irlstalled in a manner prescribed by the Commissioner.

22. (l) The manufacturers and'importers shall be notified writing by Commissioner at least thirty days in advance regarding -

in

Noticcof insallation.

(a)

requirements for the equipmenr ro

f*ilio*

use of System;

(b) the adaptive

features required, on each production line;

(c)

the connectivity features and operating environment for the installation and operation of computers and other equipment comprising the system;
the starting date of instdllation of the System.

(d) of

(3) Manufacturers or importers shall be responsible for the cost. excise stamps applicators, adjustments and adapAtions of their :quipment and premises necessary to install the System on each
production line.

(4) Where a manufacturer or importer is required to carry out adjustments or provide information required by the Commissioner for the installation of System, the manufacturer or importer shall carry out the adjustments or provide the information at least seven days before the starting date for installation of the System.
23. During the installation of the System, the manufacturer Manufacturcrmd importer shall make production lines available in operating conditions. importr to rvdil
production lincs.

or

U. (l) After conclusion of the installation on each production line, the contractor shall list in a specific format the pieces of
equipment making up the System, one copy of which shall be delivered to the'manufacturer and the other to the Commissioner.

Scrling ofcquipmcnt rnd dcviccs.

1.506

.

Ke

tt

)'u

Su b

s,lyl _4-y:lllyl]91!

(2) 'l'hc authoriscd ol'l'icershall sccure System, in the prcscnce ol'
thc contractor and manufacturcr, b1, using sccurity seals.

Manufacturerand

"0'n ;:fi:1|ff,,"",
l1o_o'_::l:

2-5. (l) The manufacturer or importer shall report inopcratiye production lines, rvithin twenty-four hours of occurrence to thc tlommissioncr rvho shall secure the lines using a security seal and register the action in the Sysrem,

(2)'l'hc production lincs ref'erred paragraph (l) shall rlot resume operation e\cept rvith the authority ol'the ('omrnissioncr.
Sccurrty of
eq u l pnrent.

26. (l) A manufacturer or importcr shall be responsiblc flor conscrvation and security, ol'thc S),stem installed in their premiscs.
(2) Manul'acturcr or importcr shall report any' operating lailure or
tamper ol' thc sccurity seals rvithin trventy-four hours.

Effcctivc datc for of

Svstcm

use

27.'l'he Commissioncr shall, through a public nohce in at least trvo daily newspapers rvith national circuiation, declare the date rvhen the Systcm shall come into eff'ect.

Preventiveand 28. (l) -l'he prcyentiye and corrective maintenance of thc System shall be pcrfbrmed b), thc contractor, under supen'ision of authorised 1'],T:1",: marntcnalrce ol" ol I lcer' Systcm
Systern.
Advancc rcports on nerv brands ctc

(2) 'l'he contractor shall provide to the Commissioner the list of technicians authorised to carry out installation and maintenance of the

29. Manufacturer or importer

shall-

(a) declare to Commissioner packages and labels of brands manufactured or imported including those for export and
duty free;

(b)

declare to the Commissioner, at least thirty days in advance the start of production of new brands of goods or any change

in the

graphic art

of existing ones, together rvith

the

corresponding packages and labels;

(c)

apply at least thirty days to the Commissioner for installation

or

removal

of the System, as the case may be, in
events-

the

occurrence of the follolving

(i) reactivation of inoperative production lines; (ii) deactivation of production lines;

(iii) ntaintenance and reallocation of production lines;

(iv) installation of new production lines; And (v) acquisition or sale of industrial machinery
equipment.

and

*d !11T" oackascs.

larkingofdutyfree 30. (l) All
track and trace.

packages of duty free or export excisable goods specified in these'Regulations shall bear distinct markings to enable

Kettva Subsid tarv Leg,iskttion, 20 I -l

I

507

shall bc printcd-

(2) 'l'hc material rvrapping the package fbr rvholesalc purposes

(a) in thc casc o[ exports, the countrl, ol'final destination; or

(b) in casc of cxcisable goods lor consumption in Kcn1,a, ..FOR TISE IN KENYA'':
(c)

in

case ol'excisable goods

Diplomatic shops,
(d)

"Dtl'IY

lbr sale to Duty-flrce shops,
FREE"; and

or

in the casc of ercisable goods lbr consumption by
Dclencc Forces, "KENYA DEFI:NCII FORCES".

Kenya

31. ( l) Excisable

goodsF-orces

Exemption fiom

(a) manufacturcd for export, Kcnya Dcf'cnce
to a duty free shop;

or dcliverctj

excrsc stamps.

(b) importcd or purchased from a dury free shop by privileged persons and institution listed in the'l'hird Schedulc to thc
Act;
(c) rvith approval ol the Cornmissioner ol Custorns, imported.into

Kenya as samples

or by

international mail, rvith

no

commercial value. shall be exempted from the requirement of excise stamps.

32. A manufacturer, importer, distributor, retailer or any other person involved in the supply chain ofexcisable goods, shall verify and authenticate the stamps and excisable goods before admitting them in their premiscs or in any rvay handle the goods.
33.

Vcrrfication of'
stamps.

(llA

person shall

nor-

(a) import any excisable goods on rvhich an excise stamp should be affixed rvithout being registered rvith the Commissioner in accordance lvith these Regulations;

Prohibitron and offcnccs.

(b) fail to maintain excise stamp register or records as the
Commissioner may prescribe;

(c) fail to afTix an excise
goods

in

stamp on the package of excisable such secure manner as the Commissioner may

prescribe;

(d) print over or deface an excise stampaffixed on a package;

(e)

knowingly submits a return that is incorrect;

(0

fail to furnish any information that the Commissioner may
require;

(e) be

in possession of excisable goods on which the excise

stamps have not been affixed and which are not exempted under these Regulations;

(h) attempt to acquire or acqu.ire an excise stamp without authority from the Commissioner;

(i) counterfeit, or print, make or in any way create an excise
stamp without the authority

of

the Commissioner;

0) be found in possession of an excise stamp printed, made or

in

any way acquired without ttrc authority

of

the

Commissioner;

(k)

in possession of, convey, distribute, sell, offer for sale or by way of trade cxpose excisable goods without affixing excise stamps in accordance with these Regulations'
be found

.",,1?i#':'#X,T':"*"il;ff l$::::"""'.',"'HljXffi :Tll,:l]
pcnelty.

than one hundred thousand shillings and not more than one million five hundred thousand inittings or to imprisonment for a t€rm not exceeding three years or, to both.

Gcncnl

34.

A

person who commits an offence under these Regulations

for which no specific penalty is providcd is liable, on conviction, to a
fine not less than one hundred thousand shillings and not more than one million fivb hundred thousand shillings or to imprisonment for a term
not exceeding three years or, to both.
Scizur!

of strnps,

cquipmc,nt end goods,

35. The Commissioner shall seize excise stamps, equipment and goods whcre_ (a) excise stamps

are-

(i)

counrcrfeircd;

(ii)

subject to return and.manufacture or imporrcr fails to do
so; or

(iii) found in the possession of
thcy have becn zupplicd.

pcrsons other than to whom

G) the equipmcnt or plant is u,ed in the Fanufacture of
oounterfeit cxcise starnps
;

(c) the goods-

(i) bcar counterfeitcd cxcise stamps;

(ii) bcar excise

stamps affixed in a manncr not consistent with guidclincs prescribcd by thc Commissioner; stamps as required

(iii) do not bear cxcisc

in

accordance

with thesc Regulations.

Ke nya Su b s idiary Le g is

tation, 20 I 3

1509
Disposd of forl
cxcisc strmps a scizcd goods.

36. Any excisable goods, stamps anil e4uipment which are seized under these Regulations shall be disposed ln a manner that the Commissioner considers fit.

2008 are revoked.

37. The Customs and Excise (Excise Duty Stamps) Regulations,
Made on the l8th June, 2013.

Rcvocrtion of I

84of 2008.

HENRY ROTICH,
Cabinet Secretary
LEGAL NoTIcE

for

the NationalTreasury.

No. I I I
THE INSURANCEAgT
(Cap.

$7)

the following Rules:

IN EXERCISE of the powers conferred by section 169 (6) of the Insurance Act, thg cabinet secretary to the Nitional rreasury maker

.
iTSUNAL)
RULES, 2013
Citrtion.

THE INSURANCE (INSURANCE APPEAI-S

l.

Tribunal) Rules, 2013.

These Rules may be cited as the Insurance (Insurancc Appeals

2. In these Regulations, unless the context otherwise requires_

Intcrprctation

"appeal" means an appeal to the Tribunal;

_ "appellant" means the person entering an appeal, the advocate or duly authorized agent of that person;
"Chairman" means the Chairman gf the Tribuflat appointed
such under section 169(2) of the Acq
as

"Company" means the Kenya Reinsurance Corporation Limited; "member" u person appointed as a member of the Tribunal under section 169(2) ot rhe Acq

*.t,

rulel0 of these Rules;
rule 6

"memorandum" means a memoragdum of appeal presented under

"Secretary" means the Secretary to the Tribunal af;pointed under

(l)

of these Rules;

"Tribunal" means the Insurance Appeats Tribunal establisneo
under iule 4.
the.

3. Nothing contained in these Rules shall linlit or otherwisc power of the Tribunal to make such orders as inay bc neircssary te ends of justice or to prevent the abuse of the process of

lribunal.'

affcct for tn" 4

Sqving of thc

tnhcrcnt Powcr.

thcTribunal.

I 510
[:stabl rshrncnl ol' the

Kenya Subsidiarv Izg islation, 20 I 3

'l'ribunal agd'l'cnurc

ol'Ol'llcc

There shall be estahlished a'l'ribunal to bc knorvn as the Tribunal for the purposc of hearing appeals under Appeals Insurance
.1.

(l)

thc Act. ancl mcmhcrs of the l'ribunal appointed undcr scction 169(2) of thc Act slrall hold ol'l'ice lor a tcrm of three ycars brrt shall hc cligiblc lbr rc-appointmcnt I'or onc f urther term ol'three years.

(2)'thc Chairman

Chairman or a membcr hccotnc disqtralil'icd il'-

(3) A pcrson shall not bc qualified to be appointed as the of thc 'l'rihunal or if already appointed shall

(a) hc is a clirccttlr. ol'f iccr, cmployee or
<Jirectly

shareholder. rvhether

Insttrancc Providcr. insuratrcc agcnt or any other member ol the insttrancc indttstrY;
has hecn adjudicated bankrttpt, applics to take the benefit of any larv for thc relief of bankrupt or insolvent debtors, compounds rvith his creditors or makes an assignment of his remuncraticln for thcir benefit;

or

inclircctly,

ol'an

insurcr, broker, Medical

(b)

(c)
(4)

has previously becn involvcd
insurer that has collaPsed.

in the

management

o[ an

membcr of the Tribunal may at any time resign his office by notice in rvriting addrcsscd to thc Cabinet Secretary.

A

'l'hc Cabinct Sccretary' may canccl the appointment of the Chairman tlr amcmbcr ol' thc l'ribunal on the ground of his infirmity, incapacity or misbchaviour, or il' a rnember is absent from three consecutive rnectings of the Tribunal rvithout leave of the Tribunal'
(-5)

a vacancy in its membership, and the presence 6r participation of a person not entitled to be present or participate in the proceedings of the l'ribunal as a member shall not invdlidate the proceedings.
Powers o l' lhe -5. (

(6) Subjcct to these Rules, the 'I'ribunal may act notrvithstanding

l) The Chairman shall have the porver to give directions
,statements;

for-

Charrman.

(a) furnishing of further particulars and

supplementary

(b) liling and exchange of documents; (c) framing of issues ; and (d) ofher directions as areflecessary to enable the parties to prepare for the hearing or to assist the Tribunal to
determine any issue. (2) The Chairman, in matters before the Tribunal, shall have the same powers as vested in the Registrar of the High Court and shall exerciie the porver, mutatis mutandis, in accordance lvith the Civil

frocedure Rules.
Trrbunal Secretary.

6. (l) The Cabinet Secretary shall appoint a person with relevant experience and competency in lalv, insurance, actuarial science, finance or economics as a Secretary to the Tribunal.

Ken

"-a

Subsid iarv

k gislation, 20 I 3

t.5lt

(2) Sub.iect to thc Rules ol'confidcntialiry, the Secretary shall, in mattcrs relating to appcals to thc 'l'ribunal and procedure therefore, 99mply rvith any gcncral and spccial dirccrions larvfully givcn by the
Chairman.

(3)-l'hc Sccretar),shall, hy noticc in thc (iaz_crtc, publish his addrcss lbr thc prcscnr.ation of scrvicc ol'documcnts lbr thc pr-rrposes o[' these Rulcs, and shall in thc samc tnanncr puhlish any chinge in that
addrcss.

7. (l) Every appcal under scctiorr 146 ol'thc Act by an insurcr aggricvcd hy a rcl'usal ol thc (bmpany unclcr that section shall be entered b1, prescntation o[ a memorandum ol' appeal, togcther rvith such nurnber of copics as ma), bc ncccssary, to the Secrctary.
I
I

Proscrrtatron ol' appca ls

(2) Evcrl appcal undcr scction 173 ol' the Act by a pcrson aggricvcd by a decision of thc Commissioner under that scction, shall
be entcrcd by prescntation of a mcmorandum o[ appeal, togcthcr rvith such number of copies as may bc neccssary, to thc Secrctary.

8.'Ihc fces prcscribed by the Ministcr under sccrion 169 (6) (a) shall be as sct out in the Schedule to thcse Rulcs.
9. In cxercising its funcrions, the shall'have powcr to prescribe the forms and any ol.her documents as it may deem necessary.
10. A mcmorandum of Appcal shall be signed by thc appcllant and shall set lbrth concisely under distinct hea<js, n jnibered consecutively, the grounds of appcal rvithout any argument or
narrati ve.

Fces

'Iribunal

Forms

Menrorandum ol' Appeal

ll. (l) Each copy of a mcmorandum shall be accompani.ecl by a statement signed by the appcllant sefl.ing out precisely all the facts on rvhich the appeal is based and referring specifically to any documentary or other evidence which it is proposed to adduce at the hearing of an appeal, and there shall be annexed to the statement of facts a copy of the decisions appealed against and any other document referred to upon rvhich the appellantproposes to rely on as evidence at the hearing of the appeal. . (2) The f'ee for presentation of a memorandum shall accompany the memorandum and shall be paid in favour of the principar Secritary to the Treasury.
12. Within three lvorking days after the prescntation
Company, as the case may be, a copy of theMemorandum, the statement of facts and any otherdocuments annexed thereto.
13. (l) Where the Commissioner or the Companydoes not accept any of the facts of the appellant, the Commissioner or the Company , i, the case may be,shallfile rvith the Secretary a statement of facis within

Memorandunr to bc accompanred by appellant's Statement and fees

Memorandum, the Secretaryshall transmitto the Commissioner or the

of

a

Service of Memorandum on

Commssioner

Commissioner's deahng with Memorandum.

fifteen days after service thereof under rule 12, together with such number of copies as may be necessary and the provisions of rule I I
shall mutatis mutandis apply to that statement of facts.

(2) At the time of filing a staremenr of facts u4der paragraph (l), the Commissioner or the Company, as the case may be, shail serve a

t5t2

Ke

nya

Sub sidiary Le I

is

latio n, 20 I 3

copy thereof together with copies of any documents annexed thereto'
upon the appellant or any other interested party'

(. ; If the Commissioner or the Company, as the case may be, does not desire to file a statement of facts under this rule, the Commissioner or the Company shall forthwith give written notice to that effect to the Secretary and to the appellant, and in that case the commissioner or the company shall be deemed at the hearing of the appeal to have accepted the facts set out in the statement of facts of the
appellant.
Noticc to

Chairman 14. (l) The

Secretary shallforthwithafter receipt

of

the

Mgrno-ryfum lnd Memorandum notify the Chairman of the receipt. 9_f Hcaring Notice. '

(2) The Chairman shall, after the CommissiQner or the Company' may be, has filed a statement of facts or has notified the the'case as secretary that he or the company does not intend to do so, fix atime,
date and place for themeeting of the Tribunal for the purpose of hearing
e apPeal.

(3) The Secretary shall cause such notice of the time, date and olace of the meetine to be served on the appellant and the
bommissioner or the C-dmpany, as the case may be.

(4) The Secretary shall cause to be supplied to each member of the Tribunal a copy of the notice of hearing altd of all documents received by him from the parties to the appeal'

. 'shall
Intcrim reJief and Intcrlocutory
application.

(5) Untess the parties to the appeal otherwise agree, eac-h party be entitled to noi less tban seven days' notice of the time, date and

place fixed for the hearing of the appeal.

15.'(l) The appellant may make application to the Secretary that Oe Tribunal suspinds operation of a -decision of the Company or Commissioner whicl h r' rbject'of appeal. (2) The Tribunal may determine the application on the basis of written presentation if the parties to the proceedings in the_Tribunal agree in writing or it may direct the parties or any interested party to
appear before it.

(3) The Tribunal shall notify th'e parties and the interested parties of its determination giving a statement of its reasons'

(4)Allinterlocutoryapplicationsmadeto-theTribunalshallbein form as may be diricteti by the Tribunal,,signed by qe.applicant' .such 'his advocate or aduly authorised agent, supported by an affidavit' (5) A party served with an application ras directed by the Tribuni, mayfile a Replying Affidavit or Grounds of Opposition'

(6) The Tribunal shall have the power !o hear any Party who disires to be heard despite failure to file Replying Affidavit or Grounds
of Opposition.
Arircndmcnt

Mcmorandum Appcal..

of of

16. (1) An appellant may file with the Secretary a notice of amendment of the MCmorandum at any time before the hearing'

Kenya Subsidiary l,egislation, 201 3

l5l3

(2) Leave to amend the Memorandum-

(a) shall not be granted unless the Commissioner or fhe Company, as the case may be, has been afforded an opportunity to make representation on the proposed
amendment;

(b) may be granted on such terms, including terms as to costs
the Tribunal thinks

as

fit.

(3) Where the Memorandum of Appeal is amended, the Secretary shall immediately notify any party or inrerested party to the appeal.

(4) The Commissioner or the Company or any other interested party may amend any response rvhere the Memorandum of Appeal has been amenCed rvithin such time as may be directed by the Tribunal.
17. observed

At the hcaring of an appeal the follorving procedure shall

be

the Commissioner or the Company, as the case may be, shall be entitled to be present or to be represented;

Procedure at heartng of appeal.

(a) (b)

the appellant shall state the grounds support it by any relcvant evidence:

of his appeal and may

Provided that, except rvith the consent of the Tribunal and upon such terms as it may determine, the appellant may not at the hearing rely on any grounds of appeal other than a ground stated inr the Memorandum and may not adduce any evidence of facts or documents

unldss those facts have been referred to in, and copies of those documents have been annexed to, the statement of facts of the
appellant;

(c)

I
(d)

at the conclusion of the statement and evidence on behalf of thq appellant the Commissioner or the Company, as the case may be, shall be entitled to make such submissions, supported by such relevant evidence, as may be necessary to support his case, and the provisions of the proviso to subparagraph (b) shall applymutatis mutandis to evidence of facts and documents to be adduced by the Commissioner or by the Company. the appellant shall be entitled ro reply but may not raise any nerv issues or arguments in the reply;

(e) the

Chairman

or any

member

of the Tribunal shall be

entitled at any stage of the hearing to ask such questions of the appellant or the Commissioner or the Company, as the case may be, or any rvitness examined at the hearing as he considers necessary to the determination of the appeal;

(0
(g)

a rvitness called and examined by either party may be crossexamined by the other party to the appeal and, if so cross examined, may be re-examined;
a lvitness called and examined by the Tribunal may be crors-

examined by either party to the appeal;

\

l-514

Kenya Subsidiary Legislation, 20 I 3

(h)

the 'l'ribunal may adjourn the hearing ol the appeal for the production of further evidence or for other good cause, as it considcrs necessary, on such terms as it n'lay detcrmine;
the dccision of the Tribunal shall be by a majority;

(i) 0)

the proccedings of the hearing shall be maintaincd and the dccision of the l'ribunal recorded therein.

(2) I'he l'ribunal may, lor good and sufficient cause, and in particular w'herc ncccssar)' or expedie nt in circumstances where publicity rvould pre.iudice the interests of justice, excludc from its procccdings pcrsons other than the partics thereto and their legal
rcprcscn tal.iv es.

(3) In matters of procedure not Eloverned by these Rules or the Act, the 'Iribunal may determine its own procedure.
Adrrussrbrlrtl,ol docunlcnts

Itl. Iixccpt rvherc thc Tribunal in any partiiular case otherwise directs or rvhcrc any party to the appeal ohjects, copies of documents shall bc adrnissiblc in evidencc:
Providcd that the-l'ribunal may at any time dircct that the original

shall hc produced nonvithstanding ihat a copy has already
adrnittcd in cvidcnco.
Sottrng asrdc

heen

ludgcnrcnl. ordcr or
award

19. A .ludgcment, order or award made e.r-parfe under. these Rulcs rnay, on application, be set asidc on such terms as may be just.

Wrthdrawal

of

appcal or opposrtron

20. ( l) 'l'he appellant may rvithdrarv an appeal, and
at any time bclbre thc hearing by giving notice in rvriting to

the the

C-'ornmissioner or C-ornpany may rvithdrarv its opposition to an appeal, Secrctary and the Sccretary5hall transmit the notice to the other party.

(2) At thc hearing, thc appellant may give notice to the 'l'ribunal that it desircs to rvithdrarv the appeal in rvhichcase such appeal shall be dcerncd dismisscd and thereupon the Tribunal shall bring the hearing to a closc rvith such ordcrs as may bc just and accordingly notify parties to thc appcal.

notice that
Costs.

(3) At the hearing, the Commissioner or Company may give it desires to rvithdrarv itsopposition to the appeal and

thereupon continue rvith thc proceedings rvithout the opposition.

21. The costs of an appeal shall be costs in the discretion of the Tribunal and shall be taxed by the Registrar of the High Court in the same manner as the bills of coSts in the High Court.

Appeal to the High
CourI

22. (l) Any party to the proceedings of the Tribunal rvho is dissatisfied rvith the de'cision of the Tribunal, if it involves a question of larv, shall appeal to the High Court rvithin one month from the date the decision is conveyed to him and the decision follorving such appeal shall be final.
(2) The Chiel'Justice may make Rules governing the making of
appeals arising from the decision of the Tribunal and providing for the fees to be paid, the scale of costs of any such appeal, and the procedure' to be followed therein, and until such Rules are made, and subject

I

Kettt-u Subsitltur.t, L,cgrslotitn, 20 l-l

t-5

l5

thcrcto,
original

r.hc

pr,visions olrhe

('i'ir

rnattcr appcalccl against \\'crc a dccrcc ol'a subordinatc couit -.-'-

Proccdurc Act shail appry,as

iI

thc (-up 2l
Rcgistcrs

.juriscliction.

txcrcisin, -'-'-'""'b

23"I'hc 'l'ribunal shiril-causc to hc kcpt ancl mainr.aincd a re gistcr ull. disputcs or appcars rc|crred to thc 'r'ribunar c.nr.aining' ttrc 9n.
lbllow,ing parliculars-

(a) (b) (c)

thc narncs o['thc partics; thc appcal nurnhcr; datc ol'l'iling lhc appcal;

(d) thc rclicl'sought; and (e) thc l'inal dctcrmination or order antl thc datc thcrcol'. 21. (l) 'l'hc principal rcgistry ol'thc 'l'ribunal shall bc at Nairobi.
(2) 'l'hc 'l'rihunal rnal cstahrish such othcr suh-rcgistrics at such othcr placcs as arrd rvhcn it dccms ncccssar) .

Re

grslncs

pcncling htlorr: thc .l.ribunal Rules may be c,ntinucd and c.ncludccl as it'thcy had bccn commcnccd undcr Lr by

25.

(|

imrncdiatcll, bclorc thc

) All thc procccdings

c,,r,n"ni..cnt oi thcsc
arvard

Savtngs l)rovrsrons

virtuc ol'thcse Rulcs.

cxccutcd or crrlrlrccd shall hc cxccur.ccl .r cnlbrccd in lhe samc manncr as il'it \!'crc A dccrcc or urclcr ol'thc'l'ribunal madc in accorclancc rvith tltcsc Rulcs.
arc rcvokcd.

imrncdiatcly hclilrc thc comrncnccrncnI of thcsc Rulcs had not bcen

(2) li'c11,dccrcc, ordcr ur

ol'thc'l'ribunal

*,hich

26. 'l'hc lnsurancc (lrsrrrancc Appcars 'r-ribunar) Rurcs

of l9g8

Rcvocatlon 0l' l. N 542lt 988

SCIIEDULE
Filing /bcs: KSh.

(r.8)

(a) (b) (c) (d) (e) (0

Filing of Memorandum of Appeal
Fiting 6f Defence Filing of inrerlocutory applications Presentation of Statements of Facts

10,000

t,000
1,000

Filing of Affidavit
Certification of Documents (per page)

500 500 300

Madc on thc I 8th Junc, 201 3.

HENRY RO'TICH,
Cabittet Secretary

for

the National Treasury.

l5r6

Kenva Subsidiary
LEGAL Norrce

kgislation, 2013

No. I l2
THE CAPITAL MARKETS ACT

(Cap.485A)

lN EXERCISE of the porvers conferred by section l2 (l) of the Capital Markets Act, the Cabinet Secretary to the National Treasury makes the follorving Regulations:

-

THE CAPITAL MARKETS (LICENSING REQUIREMENTS) (GENERAL) (AMENDMENT) REGULATTONS, 20 I 3
Crtation

l. These Regulations may be cited as the Capital Markets (Licensing Requirements) (General) (Amendments) Regulations, 20 I 3.
2. Regulation 2 of the Capital Markets (Licensing Requirements) (General) Regulations (hereinafter referred to as.,the principal

Sub Lcg

Regulations") is amended by inserting the foilorving nerv definition in
proper alphabetical sequence-

"liquid capital" in relation to a licensed entity, means the amount rvhich the liquid assets of a licensed entity exceed its liabilities, as may be prescribed by the Authoriry; deleting paragraphs (3), (4) and (-5) and substiruring therefor
follorving nerv paragraph-

3. Regulation l6of the principal Regulations is amended by
rhe

"(3) A stock broker shall maintain a liquid capital of thirty million shillings or eighr per cenr of its total liabilities
rvhichever is higher." 4. Regulation l7 of the principal Regulations is amended(a) in paragraph (2), by deleting subparagraph (b); and

(b)

by deleting subfaragraphs (a), (5) and (6) and subsriruting therefor the following nerv paragraph-

"(4) A deale'r shall maintain a liquid capital of thirty million shillings or eight per cent of its total liabilities,
rvhichever is higher."

following new paragrhph-

5. Regulation 30 of the principal Regulations is amended by deleting paragraphs (4), (5) and (6) and subsrituting therefor thl

"(4) An invesrment adviser shall maintain a liquid capital of one million shillings or eight percent of its total liabilities, whichever is higher, and a fund manager shall maintain a liquid capital of five million shillings or eight percent of its total liabilities, whichever is higher."

Kett.\'ct Su

bs

d iar,-

Le g is

latio n, 20 I 3

t5t'7

6. Regulation M of the principal Rcgulations is amended by deleting subparagraphs (3), (a) and (5) and substiruring therefor the
follorvi ng nerv subparagraph

-

"(4) An investment bank shall maintain a liquid capital of, thirty million or eight per cent of its total liabilities, rvhichever is higher."
7. Regulation
4-5

o[ thcprincipal Regulations is amended

bythc

(a) deleting paragraph (2) and substituiing thcrefor
follorving nerv paragraph "(2) An applicant shall

-

beCap 488

(a)

a bank licensed under the Banking Act;

(b) an investment bank or a fund (c) an insurance
Act; oi

manager;

company liccnsed under the Insurance
Cap 487

(d) any other

person rvho meets the requirements

of

this

Part and approved by thc Authority,

and rvho shall demonstrate effective capacity and expertise in dealing in securitics."

(b) inserting the follorving nelv paragraph immediately after
thc nerv paragraph

(2)-

"(3) An applicant under paragraph (2) shall dcmonsl.ratc el'l'ective capacity and expertise in dealing in
sec u ri ti es.

"

(c)
(a)

renumbering paragraph (3) as (4).

8. Regulation 46 of thc principal Regulations is amended

by-

deleting par4graph (dXiii);

(b) inserting the follorving ncw paragraphs (c) and
immcdiately after paragraph

(b)-

(d)

"(c)

evidcnce

ol' the minimum paid up share capital

prescribed by the Authority;

(d) evidence of the minimum financial

(c)

resources and financial capability prescribed by the Authority;" renumbering paragraphs (c) and (d) as (e) and (f),

respectively. 9. The principal Regulations are amended by'deleting regulation
47.

1.5

t8

Kent'a Subsidiarv Legislation. 20 I 3
10. Regulation 4tiof thc principal Regulations is amendcd

the

(a) by delcting

paragraph Ibllorving nerv paragraph

(l) -

and substituting rhercflor

"( l) An authorized securitics dcalcr shall

be-

(a) rcstrictcd to dcaling in [ired incomc sccuritics rvhelher listcd on an approved exchange or not;

(b) entitled to trade on behall'of others as rvell as on their orvn account in such segrnent; and (c) required

to implement necessary operal.ional, trading and settlcment procedures and systems necessary to minimize settlement and counter party
risk and manage conflicts of intcrest.

(b) by adding the follorving new paragraph immediately
paragraph

(2)-

after

(3) An

authorized securities dealer shall comply

rvith

the

provisions on client accounts, conduct of business, prohibited dealings and associations and investment requirements and appointment of

custodian relating

to

stockbrokers, stockbroking agents, dealers,

investment advisers and fund managers and payment of transaction and investor compensation fees relating to stockbrokers and dealers as set out in these Regulations, rvhere applicable.
I l. Regulation 49 of the principal Regulations is amended by inserting the rvords "in addition to the requirements specified under regulation 48(3)" immediately before the rvord "every".
12.

The principal Regulations are amended by deleting regulation

50 and substituting therefor the follorving nerv regulation-

Rcportofdcalinc
transactions.

50. (l) Every authorised securities dealer shall )-'"-,.-.' -------.-- -.--"---.:--'-'."":"' in respect of all its transactions in securities, rvhether or not such securities are traded on an approved exchange, submit to the Authority(a)

monthly reports and accounts tvithin fifteen days of the end of each calendar
month;

(b)

quarterly reports and accounts rvithin fifteen days of the end of each calendar
quarter;

(c)

half yearly reports

and accounts lvithin

I

Kenva Subsid;arv Legislation, 201 3

l-s

l9

thirty days ol the end of each half year;

(d)

audited annual accounts rvithin three months follorving the end of, the
authorized securities dealer financial year;
and

(d) a financial stqlement complying rvith
Schedule

the

disclosures prescribed under the Fourth

ol

these Regulations.

of

(2) The Authority may require such other lorm financial statement as it may from time to time

specify.

shall include particulars on

(3t 1'hc reports referred ro irt paragraph (l) the-

(a) type of securities;

(b)

total value of securities traded in terms of sales and purchases during the relevant period; and

(c) average yield of rhe roral value of securities traded.during the relevant
period.

13. Regulation 57 of the principal Regulations is amended by adding the follbrving nerv paragraph immediately after paragrap-h
(d)

-

(e) transfer not resulting in any change in beneficial olvnership othenvise than for purposes of regulation
57(c), (d) or section
3t(

tA)(ii) of

the Act.

14. Regulation 58 of the principal Regulations is amrnded by inserting the follolving proviso immediately after the sentence"Provided that a private transfer under regulation 57(a) shall be subject ro the prevailing prescribed brokerage commission."

15. The Principal Regulations are amended by deleting regulation 59 and substituting therefor the following n"*

Applicationfor
ll[?J:'of
a

regulation

private

59. (l) Where it is intended to effect a private ransacrion of a listed securiry under regulation 57 (a), (b) and (e), a srockbroker representing the proposed

1520

Kenya Subsidiarv Legislation, 201 3

transferee shall assess, endorse and submit a rvritten

application rvith the required information supportinB documenls(a)

and

thc

in the case of certificated securities, to securities exchangc w'here the

security is listed, and (b) in the case o[ immobilized securities, to

thc central depository at w'hich
security is immobilized,

the

stating rcasons rvhy the proposed transaction cligible to bc transl'errcd in a private transaction.

is

(2\

Where

an application iS made

under
a

regulation -57(a) or (b), the securities exchange or

central dcpository, as the case maybe, shall notify the

stockbroker n'ithin seven days of receiving application rvhcthcr thc securitics exchange or

the the

central dcpository objects to the private transaction or

not, al'tcr cxamining and satisiy'ing itself that the proposed transl'cr is cligiblc fbr consideration as.a private transaction in accotdancc rvith these
Rcgu lations.

(3) 'l-he securitics cxchange or a central depository, as the case maybe, shall, upon determination oi any application made under regulation -57(a) or (b), approve and simultaneously
notify the Authority that the appliiation complies rvith
regulation
-57

(a) or (b).

(4) The sccurities exchange or the central
depository shall, upon receipt of an application made under rcgulation -57(e), lbrrvard the application together rvith its recommendations to the Authority for
approval.

'the securities exchange and the central depository shall 'jointly submit to the Authority, guidelines for approval in respect of the processing requirements of a private transfer under regulation
(-5)
.57(a) and (b).

(6) The guidelines stipulated under subparagraph (5).3 shall apply to all stockbrokers.
l6.The Second Schedule of the principal Regulations is amended in Part

III-

Iicrr rir

.Srr/r rrr/

t t r

r

v l.e,q

i t lu t it

t t

r,

2( ) I

-l

1.52

I

(ir) br

pirltrrir;llr

irtscrlirrg tltc lollorvirrg uc\\ l)arug,ritllh intrrrcrliirtcll irl'tcr
(cl)
-

(rltl) [ssttcr ol rcsirlrurl lrrctl irtctlrtrc sccuritics-circh liast
Al'ricitn l'urtncr Slirtc rcgrrlirlrlr irpllrovirtg tltc issttc shlll rcccivc lrn cc;trirl slrarc ol'llrc cvalrrltion I'cu ol'

O.l(/(

rturrirrrrrrrt

Unitctl Stirtcs ol Arncricl tlollars 2(X).(X)0 attrl lt nrirtrrrtrrnr ol llrc locirl currcnc) cc;ttirirlcn( to IJttitctl Strrlcs ol Arrtcricir tlollitrs 20. (XX).
(

ol tlrc iirlrrc ol'tltc ol.l'cr suhiccI to u ol tlrc locirl currcnc) c(privillcnl to

lr)

111

1;11 1"1'lrlllr

(i)

(r)

bl

dclctins subparar.rrirplr (i) anil substitutrng tlrcrclor
rre

thc lilllorving

w subpru'iutraph

(i) trirnslcr in scttlcrncul ol' KSh. I ,.5(X) l)cr iur c\tltc ol' lr rlcccirsctl aplllicatiou (irrcltrrling l)crson or il trilnslr; r not ilr) irlllllicuti0n rcliltittg
rcstrlting irr lr cluutgc
irt

bcncliciirl orvncrship o(hcrrr rsc tlrirrr lirr
l)rrrl)osc\ ol (ii) urrtl (iii)

to ir llor(lillio
sccrlri tics), llrov iclttl

ol'

lltlt

rvlrcrc thc lotul valrtc ol'

llclort.

sccrtrilios in thc lplllicirtirln is hclotv KSh. 10,(XX), no l'cc
shtll
trc payahlc.

(ii)

ll1,'11111 11o

thc lolloivirrg ttctv 1>rrlviso irtrtncdiatcly
(

irl'lcr strb;lirnrgrllllr

ii).-

'Srrlr.icct to u ttturinttttn ol' KSh. l(X),(XX)".

t522

Kenva Subsidiarv lzgislation. 20 I 3

17.;the Fifth Schcdule ol'thc principal Rcgulations is amended by inserting the follorving nerv item immediatcly after item 34. Private Transf'er I'ees

Regulation

57

(a)

BROKERS
INVESl'MENl'
I]ANKS.
('crtrfrcated
Sccu ri ti cs

&

NSE

CDSC

fees levied at2.lo/o

the

valuc

of of

transaction

(being prcscrrbed brokcrage

55%'
55Vo

45Vo

NII
J5a/o

ct>mmission) rvherc transaction valttc rs
bclorv Kshs. 100. 000

lrnrnobilrizcd Sccuritrcs

NIL

(subject to a maximum of l.-57o) and shared as
tbllorvs-

(e) Kshs. 1.500 pcr
application

Rcgulatron -57(b) or

(including

an

Ccrtrl'rcatcd Secrtrrties Irnrnohrliz-cd Scculrtrcs

55?o
55o/o

45o/0

NII

NII

$qc

application relating to a portfolio ol' securities), (provided that rvhere the total value of securities in

the application
belorv Kshs.

rs

no fee shall

101000, be

payable) and sharcd as follorvs-

ol the share caprtal thrt dnpc .h chere canital ll in,'hanoe nf hencfrciel (rrercentasc o[ the nominal value of the sharcs) and payable to the Authority
r

Regulatron -57 (c)...... Transfer anstng out of the rc-organlsatron

of a llste(
O lq,

Reorrlation 57 (cl or Id)
shares capital

A

nv olher tmnsfer lhnt resrrlts in chanse of henefrcial interest in th(
ol

of a listed company, including any transfer under a take-over scheme, merger

acqrrisition, approved by the Authority at0.54o (percentage of the market value of the shares) anc oavable to the Authoritv.

Made on the lSth June, 2013.

HENRY ROTICH, Cbbinet Secretary for the Nqtional Treasury.

Kenya Subsidiary
LEGAL NOTICE NO. I I3

kgislation,

201 3

1523

THE CAPITAL MARKETS ACT (Cap.485A)

IN EXERCISE of the porvers conferred by section 12 ol the Capital Markets Acq the Cabinet Secretary to the National Treasury makes the follorving Regulations: THE CAPITAL MARKETS (SECURITIES) (PUBLIC OI.FERS, I-ISTING AN D DISCLOSURES) (A MENDMENT) REGU LATIONS, 20r3

l. (l) ]'hese Rcgulations may be cited as the Capital Markets (Securities)(Public Ol'l'crs, l,isting and Disclosures) (Amendment)
Regulations 2013.

ShortTirtc

2. Regulition 2 of the Capital Markets (SecuritiesXPublic

Offers,

Sub.tcg

Listing and Disclosurc) Rcgulations (hereinafter referred to as "the principal Regulations") is amended by inserting the following nerv
dcflinitions in propcr alphabetical sequencc-

"lhst Al'rican Partncr State regulator"

means thc regulator in an

East Al'rican Community member statc charged rvith the supervision thc capital markcts; and

of

"regional fixed income securitics" means fixed income securities
issued under rcgulation 7(l)(d).

3. Thc principal Regulations are amended by inserting the follorving nerv regulation immediately after Regulation 6A[]ook

buildrng 68. A person proposing

to offer its securities to the public or a section of the public may use a book building process to determine the price for the offer of securities in accordance with the requiiements set
out in the Eighth Schedule to these Regulations.

4. Rcgulation 7 of the principal Regulations is amended in paragraph (l) by adding the following new subparagraph immediately aftcr subparagraph (c)(d) lvith respect to regional fixed income securities to
Part B of the Second Schedule.
be

issued rvithin the East Africhn Community, the issuer complies rvith the eligibility requirements as set out in 5. 'l'he Sebond Schedule to the principal Regulations is amendedby

--

(a) (b)

inserting the expression "Part A" immediately afterthe title "Second Schedule"; and inserting the follorving nerv Part immediaiely after the new
Part

A-

I

521

\c11 1' y-51r

b

yt

1l

i

u r.t.' l.a g i t.l u
_

titt

n, 201 -l

l,Alt'l t]

r.7( lXd)

I.

RF.QLIII{F,Ml1N'l'S lioR ISSI'lAN('F. OF RF.(.iIONAL FIXF'l) lN('OMh" SF,('I.JRI IIiS

Iit,IC I BI I,I'I'Y 1'O ISSTJ F]
l:lrgrbiliry to rs\uc

An offer ol' f rxccl irrcornc securitics approl'ed fbr issue in ntore than

otte

juriscliction irr L.last ol'fcr of frxctJ incotne securitics arrd shall corrrply rvith the relevant rcgulations, rurles or guictclines attachittg ttt issuers o{'securities to tlte ptrblic in any jurisdiction in rvlticlt tlte issue has bee n rnade'
Approrirl

African Conrrrrurtity shall be considered as a regional

crrtrty l'hc issuer slrall clcct

a prirrrary juriscliction irt rvhiclt tlte isstrcr slrall Iodge the prospcctus.'l'hc issucr shall sirrrultarteously'subntit the prospL'clLls to thc rcgrLlators ol'otlrcr jurisclictions u'lriclt the isstrcr proposcs to raise'Ihe prtlccdurc lor approval is as set oLlt ill itellt II of capital tbr approval,

tltis

Part'

tssrrcr
Incorporatiott
sl lrl
u

ISSUI'R

'l'lre issucr shall be an cntity'irrcorporated or rcgistercd as a lbreign entity
in alljurisdictiotts where the ofl'cr is to be ntade.

Whcrc the issuer
cstablished ttttder
treafy.

s.

is uot a conlpany, thcn the issuer shall be duly a writtert larv or recognized under an internatiorral

Shurc

('flpitrl

The nrininruut paid-up share capital slrall be the local currency equivalent of Un ited States ol' Arrterica do I larstt50'000. '['he net assets shall be tfie local currency equivalent America dollars 1,700,000.

Nct Asscts

of United

States

of

All sovcrcign lrorrowers, qtrasi-sovcreign borrowers and
requ irern ents.
I'}rol'itability

treaty
assets

orgarrizations are exentpted fionr the share capital and net

An issuer, other than a special purpose vehicle, shalI be required to have reported profits in at least two of the previous three years preceding the
offer. Provided

thatthe regulatory authorities shall retain the discretion to grant a waiver in circumstances where decline in profitabiliry is not considered to be a cdnsequence of the
fundamentals of the comPanY'

Exemption of
SPVs

A

special purpose vehicle without a track record may raise capital and

such special purpose vehic[e shall be subjected to disclosure requirements on performance projections, risk factors and mitigations and on the

I

Kert.y'et

Srtbtitliur.t' Legi.tlution,
assess any

2() I

.l

t.525

availability ol financial inlbrmation to

projections made.

An issuer that is an SPV shall be cligible for approval to rnakc otl'ers to institutional or sophisticatcd investors but not unrcstrictcd offcrs to thc
pub lic.

'Ihe minimum size of a regional fixed incomc security issuc shall be thc local currency equivalent of United States of Arnerica dollars850,000.
issucr may raisc funds in any jurisdiction in the region without restriction on the jurisdiction wherc procceds arc to be uscd subjcct to disclosure of that fact in thc information mcmorandum and subjcct to
obtaining the neccssary exemptions on exchange controls, if rcquircd.

ISST,JE

lssuc sizc

An

I)cnotrinutiott ol' Ol'lcr and
npplicution ol' Iunds uutsidc tltc ,iurisrlictiort rv ltcrc l ttnds arc ratsctl,

An issuer shalldctcrminc thc currcncy or currencies [or the issue. An issucr may sccure crcdit enhancemcnt:
Provided that whcrc crcdit enhanccment
foll<lwing rcquiremcnts shal I apply('rcdit
F,n

hn ncc ntc tt t

is to be provided,

the

-

In the casc ofa guarantcc:

-the guarantor shall hc a bank, duly liccnsed non-bank financial
institution, or recognized intcrnational llnancial institution;

-a lettcr ol no objcction shall bc provided by the crcdit enhancer's primary regulator (other than in the case of an international
financial institution); -thc guarantor shall be rcquired to havc a valid crcdit rating,

l'hc Authority may prcscribc any conditions or inlbrmation requircments
applicablc to any other [orm of credit cnhanccment.

Notwithstanding that an issuer has madc a regional fixed income security offer, the issuer, may, at any time, raise an additional amount in any one

Arlditionul offers,

or more jurisdictions in accordance with a further pricing

supplement

updating the disclosures in the rcgional information mcmorandum, ln all events, where a green sho6 option is availablc, it shall be made to all countries where the offer has been made available, FTNANCTAL DTSCLOSURE REQ.UtREMENl'S

Where an issuer has a track record, the following financial statemcnts complying with International Financial Reporting Standards for the three years preceding thc offer shall be required-Audited accounts not morc than six months old at the time of the offer; -Where the audited accounts are more than six months old they shall
be supported by management accounts. -Management accounts shall be prepared to a date wrthin one month

Flnrncinl Stltsment
Disclosurc

1526

Kenya Subsidiary I-egislation, 201 3

Financial

of the date of the offer. Ratios The financial ratios requirements applicable offers.

to national fixed income securities offers shall not be applicable to regional fixed income securities An issuer shall provide proforma financial statements which cover a period of not less than three years from the date of issue or where the
fixed income securiry has a shorter maturity period, the life of that fixed
income security.

Cash florv

projcctions.

Disclaimcr
statcmcnt.

All prospectuses for regional offers of fixed income securities shall contain the following statement on the front page"As a matter of policy, the approving regulators assume no responsibility for the correctness of any statements or opinions made or reports contained in this prospectus. Approval of the issue or listing is not an
indication of the merits of the issuer or of the securities"

Listrng.

Listing shall be mandatory for all regional offers of securities which are to be offered to the public or a section of the public:
Provided that this requirement shall not apply

targeted
investors.

at

institutional, sophisticated

or

to offers

professional

An issuer who is not eligible for listing may be approved to issue its
securities to sophisticated, institutional or professional investors and the securities may be approved for trade on regulated Over the Counter

(OTC) markets.

"An institutional", "a sophisticated" or "a professional" investor means
for the purposes of iegional fixed income securities

-

(a) any person (icensed under any securities legislation
applicable in the East African Community region:

(b) any autfiorized or a recognized (c)

scheme by any securities legislation applicable in the East African Community region;

an individual, either alone or with any of his associates on a

joint account, having proven liquid assets in excess of amount as may be prescribed from time to time, or
equivalent in any foreign currency;

an

its

(d) any company or partnership
Trading,clcaring
and

having proven liquid assets in

excess of an amount as may be prescribed from time to time,

or its equivalent in any foreign currency.

An issuer of regional fixed income securities shall comply with the scltlcmcnt' requirements relaiing to trading, clearing and settlement on iny exchange

I

Ke

nya

Su

b s

icl

iary

Leg

i

slation, 20 I 3

t527

on which its securities are traded or in line with the rules for the relevant OTC market as well as those of any central depository through which its
securities are cleared and settled.

An issuer of regional fixed income securities shall maintain
rating for so long as the issue remains outstanding:

a valid

credit

Crectrt Ratrngs

Provided that where an issuer has no track record or where the debt is to be funded froni revenue from a specific project or
designated cash flows, then the credit rating shall be in respect the project or performance projections.

of

Only a credit rating agency with a publicly available Code of Conduct guiding its ratings practices and which is in compliance with International Organization for Securities Commissions (IOSCO) Code of Conduct Fundamentals for Credit Rating Agencies (CRA) shall be eligible to
provide credit rating reports: Provided further th'at a credit rating agency which complies with the IOSCO CRA code Shall not be required to be registered in .any East African Community jurisdiction to be eligible to provide credit rating reports.

All Information Memoranda for regional offers of fixed income'securities
shall include a cautionary statement with words to the effect that-

"A credit rating is not a recommendatiqn to apply for the securities on offer or an assurance of performance of the offer or or the issue and
investors should exercise due diligence and use the rating only as one the considerations in making their investment decision."

of

An issuer of regional fixed income securities shall in respect of any issuer of securities comply with the following requirements relating to
professional parties. Transaclion Arranger, Sponsoring Stockbroker or Plucing Agenl:

Professionat Partres.

Appoint a transaction arranger, placing agent ora sponsoring stockbroker who shall be a corporate body licensed to carry out such function by at least one East African Communiry Partner State regulator dnd has affiliates in all regional jurisdictions where the security will be issued.
Accountant's reporl

Appoint a reporting accountant for the issue who shall be in compliance

with all the requirements of their professional bodies. The reporting accountant shall be a firm registered in any East Africa Community
country with affiliates in all East African Community countries. Legal Opinion

Appoint

a

requirements

legal adviser who shall be in compliance with all, the of their professional bodies. The legal advisers shall be a

\I

firnr rcgistcrccl irr arry I:ast Afiicarr Coruntuttitv cotlttll\ rvitlr all East Aliican Conttttultity cotlntrics.
l'
u.t' i

al'l

rliates itt

ttg

un

tl

llt' c' t' iv i rrg, Bu rt k

Appoirrt payirrg nrrcl rccciving banks rlltich shnll lrc [ritttks liccrtscd irl thc ltrc [rcitrg ritisctl. 'l'ltc

Irasr Aliicrirr C'orrrrrrunity countrics w'lte't'c titttds isstrcr slra I I clctcrttt irtc tltc rttrtrtbct' ol' rccc'iv iltg [ritlrks'

('rrrrlrrruous An

discltrrttrc

(lhlrgitlr()rr\ rvith thc continuous

disclosurc otrligatiorrs npplicirtrle to ot'l'r"rs ot't'ixcd irr all .lurisdictiorts itt rvhich it Itns raisr'd caPititl liottt irrcorrrc sccrrlitics ptrblic. tlrc

issucr ol'a regional llxcd incoutc scctrrity sltitll [rc rcqtrircd to cottlPlr

Where thc rcgiorral ljxcd inc0urc sccurity

is listctl oll ollc oI

llloIc

sccuritics cxcharrgcs or is trirclcd on uny rcgttlrttcr.l rttittkct rvithirt thr.'liitst Atiican ('orrrrrrunity lcgiou, it shall coruply rvitlt tltc col'llilltlotls obli-eati0ns iurposcd lly that sc.crrritics cxcltartgc or lllilrkct,

'l'5e issucr is ellligcd to avnil to irrvcstots irr all.irrristlicliorts itt rvlticlt tlte issucr lras ritiscd capitirl. nll rclcvurtt iulbrnration lilt'propct'lppritisitl trl' thc l'irrancial positiorr ol'thc isstrcl in nrr cl'lcctivr"' rutrl tintcly l'l'lllllllcr.
'l'he tttitttcrs strbjcct to contittttotts rcporting ittclttr'lus'
-updatcs on rtttittg rcpol'tsi

-intcrittt I rnattcial reportittgl
-irucl

itccl l'inanc iul rcPorts.

l)cnutriss,

An issucr wlro firils to courply witlr the cotllinttotls disclostrrc otrligatiorts ,ncluding larilure to provide arry reqrrircd intirrtttatiotl to all iltvestors simultancously. is liablc t'or [rreach ol'tltc c()tltilltlotls rcportirtg obligations in any jurisdictiorr irr whiclr suclt otnissiort occtll's itttd tltc
applicablc sanctions shall apply'

l)ispulc rcsolurit)n,l'he

law in f'orcc in tlrc juriscliction whcre fl catlsc ot'itctiott ariscs sltall apply in case of'a cl ispute lretween an investor ilnd illl itttctttlediitry ot betwecn irn issucr and an intcrrnediary. l'hc ittlorntation tttcntorattdtttn
shall spccity thc applicable law and rrrode ofl dispute resolution rvltcre dispute involvcs the isstter aRd all invcstor,
tt

[)nymenrot' Evaluation l'ccs shall trc paid at thc tinte of applicatiott to tltc prirnary cvnluutionfecs regulator, lt shall be the duty oIthe primary regulatot'to transf'cr to thc other regulators their share ol'the evaluation t'ees paid. ln the event of a rejection, thc issucr shall forl'eit twenty live pcr ccnt of tltc evaluation f'ec
paid,

I

I

,(crr

ltr

.\rrlr,rlr

I

t

ur

v l,a g t ; I u t r r t t t, 20 I -l

l-529

It. lN ITORMAI'ION MLMORAN DU M AI'PROVAI- PROClrl)[ j I{l: ljOI( ISSt IANCI: OIr Rt(; IONA L F'l X F.D INCOMI: SI-CI.J I{l l'l l:S
I

l-he issucr shall submit. for approval. a drali ittlbrnratrort tnenrorattdunt
acconrpanied by an evaluation fce to all l:ast Aliican Parlrrer Statc regulators in which it inlends to raise capitalindicating thc jurisdictiorr that thc issucr desires to be the primary approving jurisdiction (printar;" rcgulator)

2

Where an application has hccr] ltidged that is inconrple'te or unnrcrrlorinus rrb initrc as a regiorral llxcd rnconrc securitl,, thc prinrary rcgulator shall hal'c thc discretion to rejcct the applic.rtion in wholc and infclrur the otltcr resulators of sr.rch rejcction and thc rcasons thcreol'. In the event of a rcjcctron and thc issuer wishes to proceed urth the issuance. the issuer shall be rccluircd to lodgc the application alicslr irr all _turrsdictions and bc liable to pay an) application.costs attaching tltcrcto.

l:ach rcgulator shali apply rhe eligibility and disclosure recluiretttcrrts lbr issuarrcc ol rcgional fixed incorne sccurities for purposes of'assessirrg the
applicatiorl.

ln thc event tlrat any regulator sceks to intcrpret the applicabilitl ot' any provision ot' the eligibility and disclosure requirements, that regulator shall otiicially conrnunicate with all other regulators to determine the manner ln
rvhich that matter willbe addressed and the rnajority opinion sllall prevail.
5.

Where a rcgulator has communicated with the other regulators in accordance with paragraph4, the reguli.tors consulted shall revert within five working days

o[the receipt of communication and the final position shall be communicated to
the issuer within ten days and copied to all regulators.
6.

The other regulators shall submit any comments on the

infbrmation mernorandum to the primary regulator for consolidation for communication to the issuer. Where the primary regulator proposes to exclude certain matters from communication to the issuer, it shall communicate its intention to the other regulators, which action shall be subject to the timelines for communication
under paragraph 5. 1'he primary regulator shall, upon completion

of its reView, submit the same for

consideration and approval by its relevant authority in accordance with its applicable procedures for approval of offers to the public:
Provided that the submission shall not be made later than five working days following the receipt of the complying document from the issuer.

8. 9.

In the event of an approval, the primary regulator shall issue a letter to all other regulators communicating its approval and confirming that the issue complies with the regional criteria.

that approval to all the other regulators. This approval will not

ln the event of the grant of an approval of the issue, the primary regulator shall provide a copy of the letter of approval and details of any conditipns imposed on
be

l

530

Kenya Subsidiary l,egislation, 20 1 3

cotnmunicated to the issuer pending circulaticin and determination by the other
regulators.

10.

Upon receipt of a copy of'the approval letter from the primary regulator, every regulator which is in receipt of the information memorandum shall submit the final Information Memorandum together with the primary regulator's approval letter to their respective authorities for consideration and determination:
Provided that such submission shall not be made later than five working days following the receipt of the primary regulators decision as per the approval timetable set out in item III of this Part.
.

I

l.

In the event that approval is declined, the primary regulator shall provide a copy reasons for such decision to all other regulators for their consideration. The primary regulator shall speciff where the approval has been withheld for reasons other than those in the criteria set down for regional issues. Where a rejection occurs for reasons other than failure to comply with the regional guidelines, the other regulators shall retain full statutory discretion to approve or reject the application placed before it notwithstanding any approval or rejection by the primary regulator.

of the

12.

For the purposes of coordination, the approving regulators shall engage with any listing exchange in their jurisdiction to ensure compliance by the issuer with any reporting and disclosure obligations issued by the regulator and the securities
exchange.

13.

In so far the issuer has raised capital in a particular jurisdiction, the relevant regulator shall be responsible for the supervision of that issuer in respect of that
issue.

14.

in information disclosure occurs, the regulators shall coordinate any action with any relevant securities exchanges or trading platforms on which the securities in question are traded to mitigate the negative impacts of such information asymmetry on investols.
Where an imbalance Any changes or interpretations made to this Schedule or the Approval Procedure
shall be published by all the jurisdictions.

15.

III. APPROVAL TIMETABLE
T: Complying application lodge$ with all the regulators. T+ l0: All comments from regulators lodged with the primary regulator. T + l5: All areas for consultation for interpretation resolved. T+ 20: All issues communicated to the issuer. Y (date issuer reverts with complying documents) + l0: Primary regulator board determination (primary board may approve with conditions) and issues leter of
comfort.

Y+ 15: All other regulator's

board determination (decisions may be conditional

indicating matters to be addressed).

Y+ l7: Communication of regulator's decision to issuer.
"day" means a business day.

Kenya Subsidiary

kgislation, 2013

l53

t

6. The principal Regulations are amended by inserting the follorving new Schedule immediately after the Seventh ScheduleEIGHTH

SCHEDULE

(r.68)

REQUIREMENTS FOR OFFER OF SECURITIES USING A BOOK

BUILDING PROCESS
PART I

PRELIMINARY

l.

"Book building" means a process undertaken by which

a

demand for the securities proposed to be issued by an issuer is elicited and built up and the price of such securities is assessed

for the determination of the quantum of such securities to be
issued.
.

"Book building portion" refers to the pool of securities that will be available for offer and allotment to the participating entities through the book-building process and which haye been segregated from the securities to be.offered at a fixed price.

"Book runner" refers to the primary coordinator of the book
building process in debt and equity offers.

"Participating entity" means
prescribed by the Authority.

a

professional investor

as

"Regulations" means the, Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002.

PART

II_BOOK BUILDING

PROCESS

2.

'The portion of securities offered to the public that are to

be

Bookbuildingportion

available for the book-building process shall be identified as the "book building portion" in the information memorandum.'

3.

The balance of securities constituting the offer to the public, excluding the book building portion, shall be separately

'Fi*ed price portion

identified

as fixed price portion in the information

memorandum.

4.

A

complying information memorandum shall be lodged

and approved by the Authority prior to the opening of the

building

with book process and shall disclose, in addition to all other

Approvat of thc information
mcmorandum

requirements:

(l) (2)

the size of the issue and the amounts to be raised through.the book buildiag and fixed price portions; .the criteria for bid consideration and selection in the

l\.12

A crt t

rr .lrri.r,

rc

I

t

tt

rt Lt g r t I tt

Irrtt

t.

2 () I

-l

(.!) (-+)
r.5

book [rtrrldins l)r(x'css; thc tlrrratiorr ol tlrc book builcling l)crio(l;

lhc rrclhorl and ltnlccss ol bicliling:
narrres

t llrc

iln(l

sr rrtlrcatc tncltrbcrs

addrcsscs ol' thc [)(x)k nulncr or ()pcrating thc biclcling tcrrnirlrls lirr

\ul)nltttt)!l hirl\ \ccuritic\ to bc
.\,'po,IliltcIl ol lllc
hr tk ttlrrrcl

rtlctl tlrc rrtlirrrntrllon tne ln()riul(lutn shall bc altpror crl pcnilrrrr.r rrrclusiorr ol tllc l)ncc ol'thc ol'l'cr and thc qu.ultunl ()l
I'ror
rssucrl.

)

l'hc llook runtrer \hilll hc rrorninittccl lrr the issucr l'ronr anlotrg\t l)crs()r)s \\h() ilrc rlUirllltcrl t() ircI as transitcttotl aclriscrr ttrtrl :lrall bc itlcntilicd ils sl,tch irr tlrc inlilrrnation lnclnorarrtlrrrrr.

('trcrrl,rtrorr ol

Itl()rnl,t(l(|n

ntctt rrandttrtt

'l'ltc inlorrrration rncrnorandutn al)pro\ ccl b1 thc Authorrtr :hlll trc errculutcrl ht thc trottk runrrcr kt thc participatirrg elltittc\ ln\ rtirrg olll'rs lor tlrc sccuritics in rcsltcct ol'thc hook builtlrrrg
portitrn.

Rccords ol ordcrs ort 7 book htttldtttu ltor lrrrrr

'l hc [r,rok :"unncr ()l) rcceil)t ol'thc ordcrs shall nraintair) a rcc()r(l rrl'lll thc particiltirting cntitics'nttncs and tlrc nunrber ol :ccurrlics orclcrcd and thc pricc at n hich thc l)articipatillS cntit\ is ollcrirrg to suhscribc to sccurities undcr thc book builrlirrg
l) l'( )cCsS.

[)ctCnnrn,lll(rn ()l lltc
ol lcr prreq

Al thc closc ol'thc bouk burlding l)criod and lirllorving a revic\\ ol thc orclcrs rcccivccl in accordancc rvith the critcria cliscloscd
irr lhc inlirrnrirlion tncrnorundutn, thc book runncr ancl thc issucr slrirll tlctcrrninc thc pricc at rvhich thc securities shall bc ol'fercd to thc public.

l'rrcc lur thc oll'e r shall bc thc sanrc
lssucr to uttsrrre
adcq uate

9.

I hc issuc pricc fi)r the book building porl,ion and I'ixed pncc' l)ortion catcllorics slrall bc lhc satnc.

10.

'l'hc

issue

r

ancl book

rullne

r shall ensurc that adcquale

arrangcnlenls are nrade to secure paynrcnt

ilrrangctncnts lbr lirtrds arc rnadc by all participating enlities to sr.rpport any ol't'crs lodged during the book building proccss. Thc naturc ol' the arrangement rcquired of participating entities shall bc discloscd in the inlormation lnetnoratrdum.

Allotnrcnt lbr the
book burlding portron category. Responsrbrlrty of the book runner.

ll.
t2.

J'he infbrmation memrtrandum shall indicate one clate of
allotmcnt rvhich shall bc dcerncd date of'allotmcnt I'or the both thc book building and fixcd price portions.
I-lrc book runner shall have prirnary responsibility for the.book

building process.

Securities to be 13. off'ered through book buildrng

An issuer may offer up to one hundred per cent of the off'er securities through a book building process subject, rvhere
appropriate, to compliance rvith eligibility requirements relating to listing.

Kc tt

t'u Su b s trl urv l,c.g t t lrt I tr ttt.
t

2 ()

I

.l

t5.l.l
Intltc.tlton ol'llurtr prtcc ttr prtcc brtntl

l.l. l-5.

'l'he irrlornratiorr rncrnorandtrrn ma1' prcscribc a l'ltxlr pricc or att rrrtlicatir c l)ricc bancl hlr thc book huilcling proccss ancl shall givc tlre basis lilr thc rlclcrrnination ol'thc satnc.

()n establishrncnt ol thc <ll'l'cr pricc, thc (plantuln ol sccuritics to hc ol'l'crccl shall bc clctcrrnirrcrl bascd on tlrc issuc sizc rlivirlccl h1 thc prrcc *,hich has becn tlctcrrnirrcd

l)clcrrnrnltron ()l'lhc
nttttthcr ttl \cctrrrlrc\ ltr hc .llcrctl No t)arlrLrtrirtron rrrccrrlr\e\

l6 l1

to

No inccntivc. rvhcthcr in cirsh or kincl, shall bc paid to ittvcstors parlicipatc in thc book building pr()ccss or thc ol'lcr tll

sccrr ri t ics.

On tlctcrrnirrirtron ol' cntitlcrncnts in thc book builcling

procc\\

(unttttutttculton ol'
crrlrlrc\

allocitlton ltr thc rrtrrnbcr ol sccurrtrcs rvhich cach participating clltit) is lo hc parlre rl)atrnB all0catcd shall trc comr-nur)lcatccl lo thc rcspcctivc pilrliciputins cntrl\ w'rlhir) 2-l ltours artd ir rclurtt on all allocatiorts shlll bc rnatlc to tlrc Authoritl w'ithin thc santc pcriod.

Iu.

'ilrc inlirrrnati<ln
I{cgistrar ol

rncrnrtrantltrrrt contirirtittg

rcr;urrccl trnclcr thcsc rcgulatiorrs inclrrclirrg thc pricc rtrtcl

rrurnbcr ol'sccuritics ol'l'crcil sltall bc icgistcrcrl rvith

all clisclosurcs thc

l(currlrltrorr ol lhc lltral tttl.rtttittttttt

('ornplrrtics. I'AIt'I' III AI)I)I'I'IONAI,

thc

lil:'iilXlll,::ll,i""
{ ,,rrrp,rrrrc,

I)IS('I,OSIIRI:S

19.

'l.hc lollorr rng arlditronal clisclostrrc rcrlrrircrncrrts slrlll hc irt thc inlilrrnltiott tnctnoritrtcltrrn:

rnirtlc

.\tldtlrott.rl dtscl.stttcs

(I)

'l'hc particulars ol's1 nclicatc tnctnbcrs tll tltc lrortk rtttlllcr
rvhcrc lnorc thirn onc book runrtcr is irllptrintcrl.

I)rovitlccl that lhc rights, ohligittittns ittttl rcsltorrsibrlrtics ol'cach shall bc clcl'inccl in a hinding agrccrncnl.

(2) 'l'hc lirllorving statcrncnt shitll hc givctr
lirr issuc pricc:

trnclcr thc'basis

"'l'hc issuc pricc lras bcgn rlctcrmirred h1 thc issucr in consultation w'ith thc book runncr, tln thc basis of' asscssrncnI ol' dcrnancl l'rorn thc participating cntitics lbr thc ol'l'crccl sccuritics by rvay ol' htxlk-huilding."

(3)

'l'hc lirlkrrvinB acc()unling ratios shall bc givcn undcr thc hasis lilr issuc pricc lor cach of thc accttunting pcriods

lirr

rvhich thc I'inancial inlbrrnation

is givcn

rvhcrc

applicablc:

(a) (b) (c)

Harning pcr share, prc-issuc, l'or thc last live ycars, as adjusted for changcs in capital.

Price earning ratio (I'}/lr), pre-issuc and comparison thcrcof rvith indusl.ry IYE rvhcrc availablq
Avcrage rctunl on nct-rvorth in thc last l'ivc years.

1534

Kenya Subsidiary Legislation, 20 I 3

(d) Net-Asset value per share based on last balance sheet. (4) The accounting ratios disclose{ in the information
the consequent increase of capital on account of
compulsory conversions outstanding, as rvell as on the memorandum shall be calculated after giving effect to

assumption that the options outstanding, if any, to subscribe for additional capital shall be exercised.
PART V_PROCEDURE FOR BIDDING
Procedure tbr biddrng

20.

The method ,and process of lodging of offers during the book building process shall be subject to the following:

(l) (2)

Bidding during the book building period shall be open for at least 3 days. Bidding shall be conducted on an electronically linked
transparent system of computer ferminals.

Provided that the Authority may, in rvriting, authorize bidding to be conducted otherrvise than on an electronic
system on a case bY case basis.

(3)

The syndicate members shall ensure that at least

one

electronically linked computer terminal is available for
purposes of bidding at all locations rvhere bids may be submitted.

(4) All (5)

locations rvhere bids may be lodged shall

be

specified in the information memorandum.

Investors shalt place their bids only through the syndicate members rvho shall be responsible for
cnsuring that bids are only accepted from participating
entities.

(6)

The investors shall have the right to revise their bids in line rvith the procedure to be prescribed in the information memorandum.

Provided that rvhere the Authority has authorized
bidding to be conducted otherwise than on an electronic facility, investors shall not have rights to revise their
bids.

(7)

Bidding

formThere shall be a standard bidding form to ensure information.

(a)

uniformity in bidding and accuracy of

(b) The bidding form shall contain information
about the investor, the price and the number of securities that the investor wishes to bid for.

(c) All bidding forms shall be serially numbered. (d) The bidding form shall be dated and ttme

Kenya Subsidiary lrgislation, 201 3

I

535

stamped prior to being issued in duplicate and signed by the investor and countersigned by the syndicate member, with one form retained by the investor and the other by the book runner or
the syndicate member.

(8) At rhe end of each day of the bidding period

the demand

shall be displayed graphically on the computer terminals for the information of the syndicate members as rvell as
the investors and a record mainrained by the book runner. PART VI_ALLOCATION AND ALLOTMENT PROCEDURE

21.

In

case

of an under subscription in any category, the
in
accordance rvith the allocation policy

Allocatron in case

of

other categories
22.

undersubscribed portion may be allocated to the bidders in the

under subscrrption.

disclosed in the information memorandum. The allocation of securities to investors under the book building portion shall bc determined by the issuer and the book runner ii accordance rvith criteria explicitly set out in the information
memorahdum. 23.
Allocatron crrteria to
be disclosed

Following the book building process-.

Perrod

oflixcd price

(l)
(2)

The offer period lbr the fixed price portion, shall open rvithin -5 working days fiom the date of closure of
bidding; and The fixed price offer shall remain open for a period of at least l0 rvorking days.

offer.

24. The investors
PART

rvho have participated

in the book

building

lnvestors elrgrble to
make applicatron in

process shall not bc barred from participating in the fixed price portion of the ol'fer.

lixed price oller

VII-MAINI'ENANCE OI. BOOKS AND RECORDS
Separate collection accounts

25.

The issuer shall open r.rvo different accourits for collection of application moneys, one for the book building portion and the other for the fixed price portion category. bbok of demand showing the result

26. A final

of the allocation

process shall be maintained by the book runner.

Book runner to marntain the result of the allocation process
Records to be maintained

27. l'he book runner, any syndipate member,

participating entities and other intermediaries involved in the book building proc€ss shall maintain adequate records on the book building process. inspect the records, books and documents relating to the book building procdss.

28. The Authority shall have the polver to
Made on the lSrh June, 201 3.

Augority's power td
inspect records

HENRY ROTICH,
Cabinet Secretary

for

the National Treasury.

t 5.1(r

Kcttlv Sttbtttlturt l,e,gtsluttrttt. )()I
l.t-.r;nt.

-l

N(lt't('l Nrl I l-l

l'l{l: l't IIll.l(' l'l{( X t tRl:Ml:N'l
(,\'rr.

n

Nl) l)lSI{)Sn l- A("1'

.1 r.,/ 2(X).5 )

lN l:Xl:R('lSIr ol'thc p()\\crs c()trl'crrc(l [r1 sccti<ln l-10 ol'thc J'rrhlrc l)roetrrcnrcnl urrtl I)rsltosal Act. thc ('irbinct Sccrctar) to thc
Nirtirrlrirl'l'rcustrr\ nrtrkcs
AN
I

thc. l ol lorr

i

ns lLcgrrlatirlns:

'llll'. I'lllll.l('l'RO('trRl:Ml:N'l'ANl) l)lSl'OSn l. (l'>Rlrl-'llRliN('11
(-tt,rlr()tl
1-.1{V A'l'lON S) ( n M IrN l) M l:N'l') R l-.( i t I l .A'l'l( )N S. 20 I 3 'l'hcsc I l{cgulatiorrs rnal bc cilcrl trs rhc l'ublic l'rocurcrncrrl and l)isposal (Antcntlrncutl llcgulirtiorrs. 20 l.l.

)

l{ ES

l.N

-5U/l0t

I

2.

Rcgulation

(l'rclcrcncc arrcl Rcscrr ilti()ll\) l{cgtrl.rliorrs. 20 1 I . in llrcsc Rcgulalions rcl'crrctl to irs "thc;rrincipal Ii,cg,rrlutions". is amcnrlctl b1 inserting thc Iollorr ing ncrr clcl'initions in llro;tcr alltlrabctical sciltrcncc

2 ol'thc l'rrhlic l'rocurcntcnl and l)isl)osal

"l'rrrniturc" irrclrrclcs scrccrrs.
lrrrnrturc,
rr

lirctl

bcrrch cutrchcs,

g,arclcrr

artlrobcs arrcl Iight l'rrrrriturc:
clclcting

.1. 'l'hc princrpal l{csulutiorrs ilrc irrncnclccl b1

rcgulation(tantl strbslitutirrg thcrclirr thc lirllt;rving ncrv rcgulatiorr

-

6. (l) Small tlr rnicro cntcr;trisc rtr a tlisarlvunlagcd group w'ishing to ltarticipatc in ltublic procurcnrcnt shall appll' I'or rcgistration rvith rhc Natirlrral 'l'rcasurr or thc rcspcctivc count) lrcusurl N'ith rr hich thcl opcralc and arc locatccl in thc lilrnt scl out irr tlrc ljirst Schcdulc t() thcsc
Rcgu lutions.

(2) A!l'lists ol' rcgistcrc(l cntcrpriscs I'rour lhc national and courrll'lcvcls shall hc subnrittcd to thc
Au(hority lilr consolidation and pubtication.
4. 'l-hc principal Rcgulations arc arncndcd by dclcting rcgulation

l2

ancl substituting thcrclbr thc l'ollou'ing nov

rcgulation-

cntitics shall grant crclusivc prcl'crcncc contractors o[t'cri n g-

12. I-irr purposcs ol'scction 39(+Xd) ol'thc Act. public lo local

(a) (b)

rnotrlr velriclcs, plant and cquiptncnt that arc
asscmhlecl in Kcn1,a;

ctlnstruct.ion , material and othcr matcrial in thc trtrnsmission and conduction ol' clcctricity ol'rvhich such matcrial is madc in Kcnya;
tusecl
.

(c) I urniture,

tex

tilcs. litodstul'l's and

o(hcr

goods rnadc or locally available in Kcnya.

Kenya Subs idiary

I-e

gislation,

20 I

3

t537

5. The principal Regulations amended by deleting regulation l3 and substituting thercfor the following new regulation

are

-

13. For the purposes of section 39(8)(aXii)

of the Acr,

the threshold below which exclusive preference shall
be given to citizen contractors, shall be the sum

of-

(a) one.billion shillings for procurements in respect of road works, construction materials and other materials used in transmission and conduction of electricity of which the mateoial is made in Kenya;

(b) five hundred million shillings for procurements
in respect of other works;

(c) one hundred million shillings for procurements in respect of goods; and

,(d) fifty miltion shillings for procurements
rgspeci of services.

in

6. The principal Regulations are amended by deleting rcgulation '19 and substituting therefor the following new regulation

-

participation of citizen contractors, disadvantaged groups, small and micro- enterprisesin public procurement, procuring entities may unbundle goods works and services in practicable quantities pursuant to section 3l (7) of the Act.
procurements

19. (l)

For. the purpose

of

ensur[ng maxirnum

(2).For greater certainty; a procuring entity in unbundling in paragraph (l), may be lot goods, works or services in quantities that arg riffordable to specific target groups participating in public procurement proceedings.
7. The principal Regulations are amended by inserting the follorving nerv Regulations immediately after regulation 30-

Budgctary

31. (l) A procuring entity shall allocate at least Rcscrvations' thirty percent of its fro"u.iment spend for the purposes procuring goods, works and sdrvices from micro and small enterprises owned by youth, women and persons rvith disability.

(

I), a

(2) For the purpose of implementing paragraph

procuring entiry shall implement

the

requirement through its budgets, procurement plans, tender notices, contract alvards and submit quarterly
reports to the Authority.
Qualification

for

lJ:jilff"il:r"."..

32. For the purpose of benefiting from pr"["r"rce and reservations schenes, atr e4'terprise olvned by youth, lvomen or persons rvith disabilities

shall bea legal entity

that-

I i

1538

Kenya Subsidiary

Le g

islation, 20 I 3 the relevant government percent membership of

(a) is registered with
body; and

(b) has at least seventy

youth, women or persons with disabilities and the [eadership shall be one hundred percent youth, women and persons with disabil ity, respectively
Facilitation for financing of local
purchasc or scrvicc ordcrs.

ol

33. A procuring entity Shall facilitate financing enterprises owned by youth, women or persons with disabilities that have been awarded contracts, by

authenticating their notifications

and local purchase or service orders and subsequently entering into an agreement with the relevant financing institution with conditlons that shall include paying the contracted enterprise
through theiraccount opened with the financier'

of

tender awards

Prompt paymcnts for pcrformed contracts.

34.(l) For the purpose of ensuring sustained grolvth for enterprises owned by youth, women or persons with disabilities, procuring entities shall make prompt payments for all performed contracts through electronic media where possible and shall not delay beyond thirty days.
entity shall make at least fifty Percent Part-payment and shall give a written explanation for the delay to
the enterprises referred to in paragraph

(2) Where delay is inevitable, a

procuring

(l)'

(3) Where delay of

payments

for

works

performed are likely to happen, a procuring entity may facilitate invoice discounting arrangements with a financial institution for the purpose of advahcing credit to the affected enterprises stated in paragraph

(l).
Sourcinqsupplics

to

citizcncontractorsbY promotion

lntf'Ital:nat renocrcrs.

35. For th.e purpose of ensuring Sustainable of local indUstry, a procuring entity shall haue in its tender documents a mandatory requirement as a preliminary evaluation criteria for all foreign tenderers participating in international
tenders

to source at least forty

percent

of

their

supplies from citizen contractors prior to submitting' a tender. Made on the lSth June, 2013.

HENRY ROTICH,
Cabinet Secretary for the National Treasury.

t
I

Kenya Subsidiary
LEGAL NoTICE

kgislation,

20 I 3

I

539

No. I I5 CAPITAL MARKE-IS ACT (Cap.485A)

IN EXERCISE of the powers conferred by section l2 ( I ) of the Capital Markets Act, the Cabinet Secretary to the National Treasury,
makes the follolving Regulatibns;CA PITA

L MA RKE-TS (CORPORAT

(Corporate Governance) (Market Intermediaries) (Amendment)
Regulations, 201 3.

INTERMEDIA RIES) (A MENDMENT) REGU LATIONS, 20 I 3 l. This Regulations may be cited as.the Capital Markets Ciution.

E GOV ERNA N CE) ( MA RK ET

3 of the Capital Markets (Corporate Governance) - 2. Regulation (Market Intermediaries) Regulations.(hereinafter referred to as',the
principal Regulations" is amended in paragraph word "third" immediately after the lvord .,one".

Sub.rrg.

(l)(b) by inserting

the

3. R.egularion 4 of the principal Regulations is amended by deleting paragraph (b) and substituting rherefor the following new
paragraph-

"(b) has

undergone

a

relevant trainihg

on

corporate

governance:

Provided that a market intermediary shall engure that any person appointed as a director undergoes corporate governance training within six months of appointment."
paragraph (2)(f) by deleting_the word after the lvord "compliance". '

4. Regulation 13 of the prirrcipal Regulations is amended in "with" appearing inxnediately

deleting

paragraph

5. Regulation 15 of the principal Regulations is amended by (3) and substituting therefor the following new .paragraph

-

of any acquisition or transfer ,if the acquisition or transfer resulrs to a person being entitled to exercise control of over iive per{ cent or more of the share capital of that
approval intermediary."'
paragraph
papers".

"(3) The shareholders of a-.market intermediary shall ensure that the market intermediary'applies to the Authoiity for

6. Regulation 17 of the principal Regulations is amended in (l) (f) by deleting the words "by presenting relevant board

7. Regulation 20 of the principal Regulations is amended in paragraph (4) by deleting the .expression "16(2)" and substitu(ing therefor the expression " 17 (2)."
8. Regulation 36 of
paragraph

(l) by-

rhe principal Regulations

is amended in

(a) (b)

deleting the rvord, "il1s5e" ; and

inserting the expressions "13, l5(5), 18, 21,22,23'24 (6) and 30"-immediitely after the rvord, "r€gulations"'

Made on the l8th June,20l3' Cabinet Secretary

HENRY ROTICH'

for

the NationqlTreasury'

pRtt rrED AND PUBUsHEo 6v

rHe covenNMENT

PRINTER' NAIItoBI