Capital Markets Act

Section 1. Short title Section This Act may be cited as the Capital Markets Act. [Act No. 3 of 2000 , s. 3.]

Section 2. Interpretation Section In this Act, unless the context otherwise requires— “agent” means any person appointed in writing by a licensed person , except in a derivatives market , to perform any of the functions ordinarily performed by the licensed person on behalf of that licensed person ; “authorised securities dealer” means a person authorized to deal in securities and operate in a specific market segment as may be prescribed by the Authority ; “Authority” means the Capital Markets Authority established by section 5; “beneficial owner” means a natural person who, whether alone or with associates, is the ultimate owner or controller of a legal person or arrangement, or, if there is no legal person or arrangement, the person on whose behalf a transaction is being conducted; “Board” means the Board of the Authority constituted under section 5; “capital market instrument” means any long-term financial instrument whether in the form of debt or equity developed or traded on a securities exchange or directly between two or more parties for the purpose of raising funds for investment; “collective investment scheme” includes an investment company , a unit trust , a mutual fund or...

Section 3. Meaning of the termassociate Section For the purpose of this Act— "associate" , in relation to— (a) an individual, means— (i) a spouse, son, adopted son, step-son, son-in-law, daughter, adopted daughter, step-daughter, daughter-in-law, father, step-father, father-in-law, mother, step-mother, mother-in-law, brother, step-brother, brother-in-law, sister or step-sister, sister-in-law, grandchild or spouse of a grandchild; of that individual; (ii) any company in which that individual is a director or secretary, has a controlling interest or is the controlling interest; (iii) any company in which that individual, or any of the persons specified in subparagraph (i), has control of twenty per cent or more of the voting power on appointments to the board of directors or entitlement to dividends in the company , whether such control is exercised individually or jointly; (iv) any employee of that individual; or (b) a company , means another company in which the first mentioned company has control of not less than twenty percent of the voting power in that company , and a reference in this Act, regulations, rules, guidelines or notices issued thereunder, to an associated person or...

Section 4. Definition of “interest insecurities” Section 4(1) Where any property held in trust consists of or includes securities in which a person knows, or has reasonable grounds for believing, that he or she has an interest, he or she shall be deemed to have an interest in those securities . Section 4(2)(a) the body corporate is, or its directors are, accustomed or under an obligation, whether formal or informal, to act in accordance with directions, instructions or wishes of that person in relation to that security; Section 4(2)(b) that person has a controlling interest in the body corporate; or Section 4(2)(c) that person is, or the associates of that person or that person and his associates are, entitled to exercise or control the exercise of not less than fifteen per cent of the votes attached to the voting shares in the body corporate. Section 4(3)(a) where he or she has entered into a contract to purchase a security; Section 4(3)(b) where he or she has a right, otherwise than by reason of having an interest under a trust, to have a security transferred to himself or to his order, whether the right is exercisable presently or in the future and whether on the fulfillment of...

Section 5. Establishment and membership of theAuthority Section 5(1) There is hereby established an authority to be known as the Capital Markets Authority . Section 5(2)(a) suing and being sued; Section 5(2)(b) taking, purchasing or otherwise acquiring, holding, charging and disposing of both movable and immovable property; Section 5(2)(c) borrowing and lending money; Section 5(2)(d) entering into contracts; and Section 5(2)(e) doing or performing all such other things or acts necessary for the proper performance of its functions under this Act which may lawfully be done by a body corporate. Section 5(3)(a) a Chairperson to be appointed by the President on the recommendation of the Cabinet Secretary; Section 5(3)(b) six other members appointed by the Cabinet Secretary; Section 5(3)(c) the Principal Secretary to the National Treasury or a person deputed by him or her in writing for the purposes of this Act; Section 5(3)(d) the Governor of the Central Bank of Kenya or a person deputed by him or her in writing for the purposes of this Act; Section 5(3)(e) the Attorney-General or a person deputed by him or her in writing for the purposes of this Act; Section 5(3)(f) the chief executive...

Section 6. Meetings and procedures of theAuthority Section 6(1) The Board shall meet not less than six times in every financial year and not more than two months shall elapse between the date of one meeting and the date of the next meeting. Section 6(2) The quorum for the conduct of the business of the Board shall be six members including the chief executive. Section 6(3) The Chairperson shall preside at every meeting of the Board at which he or she is present but in his absence, the members present shall elect one of their number who shall, with respect to that meeting and the business transacted thereat, have all the powers of the Chairperson. Section 6(4) All questions for decisions at any meeting of the Authority shall be decided by the vote of the majority of the members present and in case of an equality of votes the Chairperson shall have a casting vote. Section 6(5) If the Chairperson of the Authority , by reason of extended illness or absence is temporarily unable to perform the duties of his office, the President, on the recommendation of the Cabinet Secretary, shall appoint another member of the Authority to act in his place during the period of absence. Section 6(6) The...

Section 7. Seal and execution of documents Section 7(1) The common seal of the Authority shall be kept in the custody of the Authority and shall not be affixed to any instrument or document except as authorized by the Authority . Section 7(2) The common seal of the Authority shall be authenticated by the signature of the chief executive and the Chairperson or of one other member authorised by the Board in that behalf. Section 7(3) All documents, other than those required by law to be under seal, made by, and all decisions of, the Authority may be signified under the hand of the Chairperson, or, in the case of a decision taken at a meeting at which the Chairperson is not present, under the hand of the person presiding at such meeting. [Act No. 3 of 2000 , s. 7.]

Section 8. Appointment of chief executive of theAuthority Section 8(1) There shall be a Chief Executive of the Authority who shall be appointed by the Cabinet Secretary and who shall, subject to this section, hold office on such terms and conditions of service as may be specified in the instrument of appointment, or otherwise from time to time. Section 8(2)(a) has at least ten years’ experience at a senior management level in matters relating to law, finance, accounting, economics, banking or insurance; and Section 8(2)(b) has expertise in matters relating to money or capital markets or finance. Section 8(3) The Cabinet Secretary, in consultation with the Board , shall appoint a person qualified in terms of this section as the chief executive. Section 8(4) The chief executive shall hold office for a period of four years but shall be eligible for reappointment for a further term of four years: Provided that no person shall serve as the chief executive for more than two terms. Section 8(5) The chief executive shall, subject to the general direction and control of the Authority , be charged with the direction of the affairs and transactions of the Authority , the exercise, discharge a...

Section 9. Appointment and remuneration of staff Section 9(1) The Authority may appoint such other officers and servants as it considers necessary for the efficient discharge of its responsibilities and functions. Section 9(2) The officers and servants appointed under subsection (1) shall be remunerated in such manner and at such rates, and shall be subject to such conditions of service, as may be determined by the Authority . Section 9(3) Every officer or servant appointed under subsection (1) shall, subject to this Act, exercise such powers and functions and perform the duties assigned to him or her from time to time by the chief executive.

Section 10. Protection from legal action Section 10(1) Neither the Authority , any of its members, officers nor servants shall be personally liable for any act which is done in good faith or purported to be done by such person, on the direction of the Authority or in the performance or intended performance of any duty or in the exercise of any power under this Act or the regulations guidelines or notices made thereunder. Section 10(2) Any expenses incurred by any person referred to in subsection (1) in any suit or prosecution brought against him or her before any court in respect of any act which is done or purported to be done by him or her under the Act or on the direction of the Authority shall, if the Court holds that such act was done in good faith, be paid out of the general fund of the Authority , unless such expenses are recovered by him or her in such suit or prosecution. [Act No. 48 of 2013 , s. 5.]

Section 11. Objectives of theAuthority Section 11(1)(a) the development of all aspects of the capital markets with particular emphasis on the removal of impediments to, and the creation of incentives for longer term investments in, productive enterprises; Section 11(1)(b) to facilitate the existence of a nationwide system of securities commodities market and derivatives market and brokerage services so as to enable wider participation of the general public in the securities commodities market and derivatives market ; Section 11(1)(c) the creation, maintenance and regulation of a market in which securities can be issued and traded in an orderly, fair and efficient manner, through the implementation of a system in which the market participants are self-regulatory to the maximum practicable extent; Section 11(1)(d) the protection of investor interests; Section 11(1)(e) the facilitation of a compensation fund to protect investors from financial loss arising from the failure of a licensed broker or dealer to meet his contractual obligations; and Section 11(1)(f) the development of a framework to facilitate the use of electronic commerce for the development of capital markets in Kenya. S...

Section 12. Power of the Cabinet Secretary to issue rules and regulations Section 12(1)(a) listing and de-listing of securities on a securities exchange ; Section 12(1)(b) stockbrokers, derivatives brokers and dealers; Section 12(1)(b)(i) stockbrokers, derivatives brokers and dealers; Section 12(1)(b)(ii) persons who acquire or dispose of securities or exchange-traded derivatives contracts; and Section 12(1)(b)(iii) a securities exchange ; Section 12(1)(c) the keeping and proper maintenance of books, records, accounts and audits by all persons approved or licensed by the Authority and regular reporting by such persons to the Authority of their affairs; Section 12(1)(d) the operations of any other bodies corporate or persons dealing with capital market instruments; Section 12(1)(e) the procedure for the participation of foreign investors in the securities market; Section 12(1)(f) collective investment schemes; Section 12(1)(g) registered venture capital companies; Section 12(1)(h) credit rating ("a public rating issued from time to time by a credit rating agency and where the context permits includes any subsequent review, update or modification;") agencies; Section 12(1)(hh) the is...

Section 13. Furnishing of information to theAuthority Section 13(1) The Authority or any person officially authorized in that behalf by the Authority may, by notice in writing, require any person to furnish to the Authority or to the authorized person, within such period as is specified in the notice, all such returns or information as specified in such notice. Section 13(2) The Authority or any member thereof, or any officer or servant of the Authority , shall not disclose to any person or use any return or information acquired under subsection (1) except for the purpose of achieving the objectives of the Authority unless required to do so by a court of law. Section 13(3)(a) are enforced or administers by that regulatory body; or Section 13(3)(b) relate to securities transactions regulated by that regulatory body, Section 13(4) For the purposes of subsection (3), the provisions of this Act shall, with such modifications as may be necessary, apply and have effect as if the contravention of the legal or regulatory requirement referred to in subsection (3) were an offence under this Act. Section 13(5)(a) it is desirable or expedient that the assistance requested should be provided in...

Section 14. Committees Section 14(1) The Authority may appoint committees, whether of its own members or otherwise, to carry out such general or special functions as may be specified by the Authority , and may delegate to any such committee such of its powers as the Authority may deem appropriate. Section 14(2)(a) a committee to hear and determine complaints of shareholders of any public company listed on an authorized securities exchange , relating to the professional conduct or activities of such securities exchange or such public company , or any other person under the jurisdiction of the Authority and recommend actions to be taken, in accordance with rules established by the Authority for that purpose; and Section 14(2)(b) a committee to make recommendations with respect to assessing and awarding compensation in respect of any application made in accordance with rules established by the Authority for that purpose.

Section 15. General fund Section 15(1) The Authority shall have its own general fund. Section 15(2)(a) all such sums of money as may be paid as fees under this Act; and Section 15(2)(b) all such sums of money as may be received by the Authority for its operations from any other source approved by the Cabinet Secretary. Section 15(3) There shall be paid out of the fund all such sums of money required to defray the expenditure incurred by the Authority in the exercise, discharge and performance of its objectives, functions and duties.

Section 16. Financial year ofAuthority Section The financial year of the Authority shall be the period of twelve months commencing on the first day of July in each year.

Section 17. Accounts Section The Authority shall cause proper books of accounts to be kept of its income and expenditures, assets and liabilities and all other transactions of the Authority .

Section 18. Establishment of the InvestorCompensation Fund Section 18(1) There shall be established a Fund to be known as the Investor Compensation Fund for the purposes of granting compensation to investors who suffer pecuniary loss resulting from the failure of a licensed stockbroker or dealer to meet his contractual obligations. Section 18(2)(a) such moneys as are required to be paid into the Compensation Fund by licensed persons; Section 18(2)(b) such sums of money as are paid under this Act as fines or penalties or under section 34 as ill-gotten gains where those harmed are not specifically identifiable; Section 18(2)(c) such sums of money as accrue from interest and profits from investing Compensation Fund moneys; Section 18(2)(d) such sums of money recovered by or on behalf of the Authority from entities whose failure to meet their obligations to investors result in payments from the Compensation Fund ; Section 18(2)(e) interest deemed to accrue on the proceeds of a public issue or offer for sale of shares of a company listed or to be listed on an approved securities exchange , between the closing date and the date of dispatch of refund cheques, or, where there is no refund,...

Section 11A. Delegation of functions Section 11A(1)(a) a committee of the Board ; Section 11A(1)(b) a recognized self regulatory organization; or Section 11A(1)(c) an authorized person. Section 11A(2) The Authority may, at any time revoke a delegation made under this section. Section 11A(3) A delegation made under this section shall not prevent the Authority from performing the delegated function. [Act No. 37 of 2011 , s. 4.]

Section 12A.Authorityto issue guidelines and notices Section 12A(1)(a) efficient, orderly and fair operation of the segment, product or intermediaries; Section 12A(1)(a)(i) efficient, orderly and fair operation of the segment, product or intermediaries; Section 12A(1)(a)(ii) adequate provisions for risk management and controls on market misfeasance; Section 12A(1)(a)(iii) the proper protection of investor interests and appropriate level of disclosure; and Section 12A(1)(a)(iv) a facilitative environment for transparent operations; Section 12A(1)(b) the standards to be adhered to by regulated persons in the conduct of their business; Section 12A(1)(c) the attainment of any objectives of the Authority ; Section 12A(1)(d) any matter relating to any power, duty or function conferred or imposed on the Authority under this Act or any other legislation administered by the Authority ; Section 12A(1)(e) the supervision of persons licensed by a prescribed foreign regulatory authority; and Section 12A(1)(f) the operation of any provision of this Act or any other legislation vesting responsibility in the Authority . Section 12A(2) The Authority may publish guidelines and notices issued under s...

Section 12B. Powers on anti-money laundering, combating the financing of terrorism and countering proliferation financing matters Section 12B(1) Pursuant to sections 2A, 36A, 36B and 36C of the Proceeds of Crime and Anti-Money Laundering Act ( Cap 59A ), the Authority shall regulate, supervise and enforce compliance for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes by all reporting institutions regulated and supervised by the Authority and whom the provisions of the Proceeds of crime apply. Section 12B(2)(a) vet proposed significant shareholders, proposed beneficial owners, proposed directors and senior officers of a reporting institution; Section 12B(2)(b) conduct onsite inspection; Section 12B(2)(c) conduct offsite surveillance; Section 12B(2)(d) undertake consolidated supervision of a reporting institution and its group; Section 12B(2)(e) compel the production of any document or information the Authority may require for the purpose of discharging its supervisory mandate under the Proceeds of Crime and Anti-Money Laundering Act ( Cap 59A ); Section 12B(2)(f) impose monetary, civil or administrative sanctions for violat...

Section 13A. Power of entry and search Section 13A(1) The chief executive officer may authorise an officer of the rank of Senior Officer or above to inquire into the affairs of a person under this Act. Section 13A(2) An officer authorised under subsection (1) may, where he or she is satisfied that a person has committed or is reasonably suspected of committing an offence under this Act in Kenya or elsewhere, apply to a magistrate for a warrant to search the premises of that person. Section 13A(3)(a) to enter any premises between sunrise and sunset to search for money, documents or other assets relevant to the inquiry; Section 13A(3)(b) to seize money, documents or assets which may be necessary for the inquiry or for which the purpose of civil or criminal proceedings and to retain them for as long as they are so required; and Section 13A(3)(c) to direct any person who has control over such assets to take any action with respect to such assets as the Authority may reasonably require with a view to protecting the assets until the court determines the appropriate course of action. Section 13A(4) In the interest of bank confidentiality, the powers of the officer in respect of any docume...

Section 13B.Authoritymay investigate Section 13B(1)(a) an offence has been committed under this Act; or Section 13B(1)(b) a director , manager or employee of a licensee, approved person or an issuer or any other person, may have engaged in embezzlement, fraud, misfeasance or other misconduct in an issuer, licensee or approved person in connection with its regulated activity; or Section 13B(1)(c) the manner in which a licensed or approved person has engaged or is engaging in the regulated activity is not in the interest of the person's clients or in the public interest, the Authority may in writing depute a suitably qualified person to conduct investigations into the matter on behalf of the Authority . Section 13B(2)(a) to produce to the investigator, within such time and at such place as the investigator may require in writing, any record or document specified by the investigator which is, or may be, relevant to the investigation, and which is in the possession or under the control of that person; Section 13B(2)(b) to give an explanation or further particulars in respect of any record or document produced under paragraph (a); Section 13B(2)(c) to attend before the investigator at t...

Section 13C. Data protection principles Section The principles of personal data protection as set out in the Data Protection Act (Cap. 411C) shall apply to the collection and processing of personal data by the Authority or any person authorized by the Authority . [Act No. 24 of 2019 , Sch.]

Section 18A.[Repealed by ActNo. 15 of 2018, s. 6.]

Section 18B. Recognition ofself-regulatory organization Section 18B(1) An organization which intends to operate as a self-regulatory organization shall apply to the Authority , in the prescribed form, for recognition as such. Section 18B(2) An application made under subsection (1) shall specify the functions and powers that the organization is seeking to exercise upon recognition. Section 18B(3)(a) has a constitution and internal rules and policies which are consistent with this Act or related legislation; Section 18B(3)(b) has the capacity and financial and administrative resources necessary or desirable to carry out its functions as a self-regulatory organization , including dealing with a breach of the law or of any other applicable standards or guidelines; Section 18B(3)(c) is a fit and proper person; Section 18B(3)(d) has competent personnel for the carrying out of its functions; and Section 18B(3)(e) satisfies such other criteria as may be specified by the Authority . Section 18B(4) A person who operates or purports to operate as a self-regulatory organization without being recognized as such by the Authority commits an offence. Section 18B(5) The Authority may, in writing, d...

Section 18C. Rules of self-regulatory organizations Section 18C(1) A self-regulatory organization shall make rules relating to the matters for which it has regulatory or supervisory functions, including any sanction and disciplinary powers to be exercised in connection with the functions delegated to it. Section 18C(2)(a) management structures and shareholding rights of the self-regulatory organization taking into consideration the interests, rights and liabilities of its members, consumers, investors and users of their services; Section 18C(2)(b) rules of membership and conditions for approval and admission of members; Section 18C(2)(c) the procedure for dispute resolution between members, users, investors and their clients and the right of appeal to the Authority or other relevant primary regulator; Section 18C(2)(d) the rules and procedures of the self-regulatory organization relating to reporting and accountability to any primary regulator other than the Authority ; and Section 18C(2)(e) mechanisms of protecting personal data of the data subjects in compliance with the Data Protection Act (Cap. 411C). Section 18C(3) The rules made under subsection (1) shall not be implemented u...

Section 18D. Restriction on decision by aself-regulatory organization Section has given that person an opportunity to make representations about the matter; or

Section 18E. Disciplinary action by aself-regulatory organization Section 18E(1) A self-regulatory organization may take disciplinary action against any of its members in accordance with its rules, if the member contravenes any provision of the rules. Section 18E(2) A self-regulatory organization shall, where it has taken disciplinary action under subsection (1), immediately inform the Authority , in writing, of the name of the member , the action taken and the reason therefor, including the amount of any fine and the period of suspension, if any. Section 18E(3) The Authority may, on its own motion or on application by an aggrieved person, review any disciplinary action taken under subsection (1) and may affirm, modify or set aside the decision after giving the aggrieved person and the self-regulatory organization an opportunity to be heard. Section 18E(4) Nothing in this section shall preclude the Authority , in any case where a self-regulatory organization fails to act against its member , from suspending, expelling or otherwise disciplining a member of the self-regulatory organization . Section 18E(5) The Authority shall, before taking any action under subsection (4), give the l...

Section 18F. Protection from personal liability Section a self-regulatory organization ; or

Section 18G. Appointment ofkey personnelby aself-regulatory organization Section A self-regulatory organization shall not change its key personnel except with prior written notification to the Authority of the intention to change and receipt from the Authority of a confirmation that it has no objection to the proposed change. [Act No. 37 of 2011 , s. 6.]

Section 18H. Directions to aself-regulatory organization Section 18H(1) The Authority may, after giving a self-regulatory organization a reasonable opportunity to be heard in respect of any matter, give a direction, in writing, to the self-regulatory organization in terms of this section. Section 18H(2)(a) suspend any provision of the constitution or rules of a self-regulatory organization for a period specified in the direction; Section 18H(2)(b) require a self-regulatory organization , subject to the Companies Act (Cap. 486) or any other law, to amend its constitution in the manner specified in the direction so as to bring it in conformity with this Act, or any other law; Section 18H(2)(c) require a self-regulatory organization to amend its rules; or Section 18H(2)(d) require a self-regulatory organization to implement or enforce its constitution or its rules. [Act No. 37 of 2011 , s. 6.]

Section 18I. Removal of an officer of theself-regulatory organization Section an officer of a self-regulatory organization is not a fit and proper person to be an officer of the organization; or

Section 18J. Annual report Section 18J(1)(a) a report on the corporate governance policy of the self-regulatory organization ; Section 18J(1)(b) financial statements prepared and audited in accordance with the accounts and audit requirements for regulated persons; and Section 18J(1)(c) such other requirements as may be specified by the Authority . Section 18J(2)(a) there is or has been an adverse change in the risks inherent in the business of a self-regulatory organization with the potential to jeopardize the ability of the self-regulatory organization to continue as a going concern; Section 18J(2)(b) the self-regulatory organization may be in contravention of any provisions of this Act, or directions issued by the Authority ; Section 18J(2)(c) a financial crime has been or is likely to be committed; or Section 18J(2)(d) serious irregularities have occurred, Section 18J(3) A report made under subsection (2) shall not constitute a breach of the duties of the auditor. [Act No. 37 of 2011 , s. 6.]

Section 19. Approval ofsecurities exchangerequired Section Subject to this Act, no person shall carry on a business as a securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") or hold himself out as providing or maintaining a securities market or a derivatives market unless he or she has been approved as a securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") by the Authority in such manner as the Authority may prescribe. [Act No. 3 of 2000 , s. 13, Act No. 37 of 2011 , s. 7, Act No. 48 of 2013 , s. 10, Act No. 38 of 2016 , s. 72.]

Section 20. Application forsecurities exchange, commodities exchange approval Section 20(1) An application for securities exchange , commodities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") approval shall be made to the Authority in the form and manner prescribed by the Authority and shall be accompanied by the prescribed fee. Section 20(2)(a) that the applicant is a limited liability company whose liability is limited by shares, or as may be prescribed by the Authority ; Section 20(2)(b) that the applicant’s board of directors is constituted in a manner prescribed by the Authority ; Section 20(2)(c) the applicant has made and adopted rules in compliance with the Act and any Regulations made thereunder. Section 20(3) Deleted by of ActNo. 10 of 2010, s. 47(b) . Section 20(4) The directors of a securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authori...

Section 21. Changes insecurities exchange, commodities exchange rules Section 21(1) The rules of an approved securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , in so far as they have been approved by the Authority , shall not be amended, varied or rescinded without the prior approval of the Authority . Section 21(2) Where the board of directors of an approved securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") wishes to amend its rules, it shall forward the amendments to the Authority for approval. Section 21(3) The Authority shall, after hearing from the securities exchange , commodities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded deriv...

Section 22. Disciplinary action bysecurities exchange Section 22(1) Where a securities exchange or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") reprimands, fines, suspends or expels, or otherwise takes disciplinary action against a trading participant or a listed company , it shall within seven days give notice to the Authority in writing, giving particulars including the name of the person, the reason for and nature of the action taken. Section 22(2) The Authority may review any disciplinary action taken by a securities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") under subsection (1) and, on its own motion, or in response to the appeal of an aggrieved person, may affirm or set aside a securities exchange or derivatives exchange ("a securities exchange which has been granted a...

Section 19A. Restriction on use of the words “stock exchange”, “securities exchange”etc. Section A person shall not use the words “ stock exchange ”, “ securities exchange ”, “commodities exchange”, “ derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") ” or “futures exchange” in connection with a business except in accordance with an exchange licence granted by the Authority . [Act No. 37 of 2011 , s. 8, Act No. 38 of 2016 , s. 73.]

Section 21A. Securities exchange to make rules Section An approved securities exchange may make rules for the carrying out of its functions and, in particular, for the regulation of its activities, products, systems and fees. [Act No. 48 of 2013 , s. 13.]

Section 21B. Submission of rules toAuthority Section Not less than thirty days prior to the proposed date of introduction of the rules made under section 21A, an approved securities exchange shall submit the rules to the Authority for review and consideration to determine if there exists risks that have not been adequately mitigated in the proposed rules. [Act No. 48 of 2013 , s. 13.]

Section 21C.Authoritymay abrogate rules Section Subject to section 21B, the Authority may abrogate any rules made under section 21A if there exists risks that have not been adequately mitigated in the rules. [Act No. 48 of 2013 , s. 13.]

Section 22A. Directions to asecurities exchange, commodities exchange and a futures exchange Section 22A(1)(a) the fair, transparent and efficient operation of a securities market, commodities markets or derivatives market ; Section 22A(1)(a)(i) the fair, transparent and efficient operation of a securities market, commodities markets or derivatives market ; Section 22A(1)(a)(ii) the fair, transparent and effective clearing and settlement of transactions in exchange-traded derivatives contracts or securities transactions; Section 22A(1)(a)(iii) the integrity and proper management of systemic risks in securities markets, commodities markets or derivatives market ; or Section 22A(1)(a)(iv) a fair and proper governance structure of the securities exchange , commodities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") ; Section 22A(1)(b) in the interest of the public; or Section 22A(1)(c) for the protection of the interests of investors. Section 22A(2)(a) the clearing or settlement o...

Section 22B. Powers of theAuthorityto intervene in the operations ofsecuritiesand futures exchanges Section 22B(1)(a) there is in place, an act of Government affecting securities or commodities; Section 22B(1)(b) there is a major market disturbance which prevents the market from accurately reflecting the forces of supply and demand for such securities or commodities; Section 22B(1)(c) there is a threatened or actual manipulation of the market; Section 22B(1)(d) the Authority considers it necessary or expedient in the interest of the public or for the protection of the interests of the investors, Section 22B(1)(i) maintain or restore the fair, efficient and transparent trading in securities or any class of securities or exchange-traded derivatives contracts or any class of exchange-traded derivatives contracts; or Section 22B(1)(ii) liquidate any position in respect of any securities or any class of securities or exchange-traded derivatives contracts or any class of exchange-traded derivatives contracts. Section 22B(2)(a) terminating trading on a securities market or a derivatives market or trading of a specific security or a exchange-traded derivatives contract; Section 22B(2)(b) s...

Section 22C. Futures contract to be approved by theAuthority Section 22C(1) A derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") shall not permit the trading of an exchange-traded derivatives contract on the derivatives market established or operated by the derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") without the written approval of the Authority to trade in such exchange-traded derivatives contracts. Section 22C(2) The Authority may grant approval for the trading of an exchange-traded derivatives contract on the derivatives market established or operated by the derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunde...

Section 22D. Fixing of position and trading limits in futures contracts Section 22D(1) The Authority may, for the purpose of preventing, diminishing or eliminating excessive speculation in any commodity under an exchange-traded derivatives contract, by notice in writing, from time to time, fix such limits as the Authority considers necessary on the amount of trading which may be done or exchange-traded derivatives contracts' positions which may be held by any person, generally or specifically, under an exchange-traded derivatives contract traded on the derivatives market of or subject to the rules of a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") . Section 22D(2) The limits upon exchange-traded derivatives contracts' positions and trading fixed by the Authority under subsection (1) shall apply to positions held by, and trading done by two or more persons acting in accordance with an express or implied agreement or understanding, as if the positions were held by, or the trading done by a...

Section 22E. Default process of a clearing house to take precedence over laws of insolvency Section The provisions in respect of a default process and the precedence of the default process over the laws of insolvency in relation to a central depository under the Central Depositories Act (Cap. 485C) shall apply to a clearing house of a securities or a derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") . [Act No. 48 of 2013 , s. 15.]

Section 23. Licences required Section 23(1) No person shall carry on business as a stockbroker , derivatives broker, REIT manager ("a company incorporated in Kenya and licensed by the Authority to provide real estate management services in respect of a real estate investment trust;") , trustee ("a person appointed under the trust deed as a trustee of the securitisation trust and any successor;") , dealer , investment adviser , fund manager , investment bank , central depository, authorised securities dealer , authorized depository, online forex broker , commodity dealer , commodity broker or hold himself out as carrying on such a business unless he or she holds a valid licence issued under this Act or under the authority of this Act. Section 23(2) No person shall carry on or hold himself out as carrying on business as a securities exchange , commodities exchange or derivatives exchange ("a securities exchange which has been granted a license to list exchange-traded derivative contracts by the Authority under the Act or approved for such purposes and in accordance with the regulations issued thereunder;") , registered venture capital company , collective investment scheme or credit...

Section 24. Application forlicence Section 24(1) An application for a licence or for the renewal of a licence shall be made to the Authority in the prescribed form and shall be accompanied by the prescribed fee and in the case of an application for the renewal of a licence , may be made within three months but not later than one month prior to the expiry of the licence . Section 24(2) The Authority may require an applicant to supply such further information as it considers necessary in relation to the application. Section 24(3) A licence shall only be granted if the applicant meets and continues to meet such minimum financial and other requirements as may be prescribed by the Authority . Section 24(4) The Authority may grant a licence subject to such conditions or restrictions as it thinks fit and the Authority may, at any time by written notice to a licence holder, vary any condition or restriction or impose further conditions or restrictions. Section 24(5) The Authority shall not refuse to grant a licence without first giving the applicant or holder of a licence an opportunity of being heard. Section 24(6) Deleted by ActNo. 48 of 2013, s. 17(b) . Section 24(7) A license granted u...

Section 25.[Repealed by ActNo. 48 of 2013, s. 18.]