The Capital Markets (Licensing Requirements) (General) Regulations

These Regulations may be cited as the Capital Markets (Licensing Requirements) (General) Regulations.

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Jurisdiction: Kenya
Instrument: Notice
Citation: Legal Notice 125 of 2002
Version: Undated source snapshot
Language: en

Source attribution: Source: Kenya Law

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About this statute

These Regulations may be cited as the Capital Markets (Licensing Requirements) (General) Regulations. Contains the phrase "any person responsible for the incorporation of a listed company." Section 10: Records to be maintained (mentions its shareholders). Section 11 has been deleted. A securities exchange must publish and provide periodic reports and specified company information to the Authority and investors, including annual summaries within four months of year end, daily transaction reports, quarterly detailed transaction reports, and other disclosures.

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Provisions of The Capital Markets (Licensing Requirements) (General) Regulations

Showing 90 of 90

Part I

PRELIMINARY

1
PRELIMINARY - 1. Citation

AI-assisted research summary: These Regulations may be cited as the Capital Markets (Licensing Requirements) (General) Regulations.

Section 1. Citation Section These Regulations may be cited as the Capital Markets (Licensing Requirements) (General) Regulations.
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PRELIMINARY - 2. Interpretation

AI-assisted research summary: Contains the phrase "any person responsible for the incorporation of a listed company."

Section 2. Interpretation Section any person responsible for the incorporation of a listed company;

Part II

SECURITIES EXCHANGE

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SECURITIES EXCHANGE - 10. Records to be maintained

AI-assisted research summary: Section 10: Records to be maintained (mentions its shareholders).

Section 10. Records to be maintained Section its shareholders;
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SECURITIES EXCHANGE - 11.[Deleted byL.N. 88/2012, r. 9.]

AI-assisted research summary: Section 11 has been deleted.

Section 11.[Deleted byL.N. 88/2012, r. 9.]
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SECURITIES EXCHANGE - 12. Reporting obligations

AI-assisted research summary: A securities exchange must publish and provide periodic reports and specified company information to the Authority and investors, including annual summaries within four months of year end, daily transaction reports, quarterly detailed transaction reports, and other disclosures.

Section 12. Reporting obligations Section 12(1) A securities exchange shall within four months after the end of each financial year make available to the Authority , and to the investors, a summary of information on companies listed at the securities exchange. Section 12(2)(a) published accounts of companies listed on such securities exchange including balance sheet and profit and loss statements; Section 12(2)(b) date of incorporation, date of listing, names of directors, share capital, number and value of shares issued, and any changes in the share capital; Section 12(2)(c) details of securities transacted and the prices (high, low and mid-market) at which such securities have been transacted during the year; and Section 12(2)(d) earnings per share, dividend per share, shareholding structure (institutional, individual and foreign investors), principal or controlling shareholders and total number of shareholders. Section 12(3)(a) name of the issuer and date of incorporation; Section 12(3)(b) date of listing; Section 12(3)(c) names of directors; Section 12(3)(d) principal/controlling shareholders; Section 12(3)(e) total number of shareholders; Section 12(3)(f) authorized and paid-up share capital; Section 12(3)(g) changes in authorized or paid-up share capital; Section 12(3)(h) core and auxiliary line of business; Section 12(3)(i) balance sheet and profit and loss accounts for the last five years; Section 12(3)(j) volume and price movements (high and low) of the listed security; and Section 12(3)(k) earnings per share and dividend per share. Section 12(4)(a) changes in its rules and by-laws, if any; Section 12(4)(b) changes in the membership of its board of directors; Section 12(4)(c) composition and mandates of all the committees set up and changes (if any) in the membership of its existing ones; Section 12(4)(d) admission, suspension or expulsion of trading participants; Section 12(4)(e) disciplinary action against trading participants including appointment of statutory manager; Section 12(4)(f) arbitration of disputes; Section 12(4)(g) securities listed, suspended or de-listed; Section 12(4)(h) market turnover and capitalization per sector; and Section 12(4)(i) any other matters that the Authority may request. Section 12(5) A securities exchange shall submit to the Authority , through electronic means, and make public a daily report on the securities transacted, the price movements on each security including low, high and average prices, and the volume of transactions in each security. Section 12(6) A securities exchange shall furnish the Authority within thirty days after the end of each quarter, with a report of all securities transactions for each day, including private transactions, the value of each transaction, names of the parties for each private transaction and the holders of notifiable interest disclosed to the securities exchange under Part XI of these Regulations. Section 12(7)(a) A financial statement of a securities exchange shall include the disclosures prescribed in the Third Schedule. Section 12(7)(b) The annual accounts of a securities exchange shall be audited by an independent auditor appointed by the board of directors, with the consent of the Authority and such auditor shall not be removed without the approval of the Authority . Section 12(8) A securities exchange shall furnish the Authority with all documents and notices that it issues to its members in connection with the annual general meetings within ten days prior to the date of such meetings. Section 12(9) Communication to investors shall be by way of publication in at least two daily newspapers of national circulation. Section 12(10)(a) there is a delay in the opening or closing of the securities exchange; Section 12(10)(b) there is a default on settlement and delivery; Section 12(10)(c) trading is to be suspended in any security; Section 12(10)(d) there are incidences of violation of the Act or the securities exchange rules; Section 12(10)(e) there is unusual activity in the market; Section 12(10)(f) the securities exchange receives any non-public information that its chief executive believes could have a material effect on the market in general or on any specific securities; or Section 12(10)(g) the Authority requests for any information.
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SECURITIES EXCHANGE - 13. Listing of securities by a securities exchange

AI-assisted research summary: A securities exchange must not admit for listing any security that has not been approved for listing by the Authority.

Section 13. Listing of securities by a securities exchange Section 13(1) No securities exchange shall admit to listing a security which has not been approved for listing by Authority . Section 13(2)(a) a public offer, on attainment of the total minimum subscription of shares as disclosed in the prospectus approved by the Authority and minimum number of shareholders prescribed for the respective market segment; Section 13(2)(b) an introduction; Section 13(2)(c) rights issues; Section 13(2)(d) scrip dividend offer; or Section 13(2)(e) capitalization of reserves. Section 13(3) A securities exchange shall provide in its listing rules and with respect to each market segment the procedure for admission to listing of securities approved for listing by the Authority . [ L.N. 32/2008 , r. 2.]
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SECURITIES EXCHANGE - 3. Application for approval

AI-assisted research summary: Applicants seeking approval to operate a securities exchange must submit an application in Form 1 to the Authority and provide specified documents including rules and articles, trading system details, prescribed fees and any additional documents required by the Authority.

Section 3. Application for approval Section 3(1) An application for grant of approval to operate as a securities exchange shall be submitted to the Authority in Form 1 set out in the First Schedule. Section 3(2)(a) the rules, memorandum and articles of association of the applicant which shall be in a form that is satisfactory to the Authority and restricts the applicant to the business of operating a securities exchange and services incidental thereto; Section 3(2)(b) details of the trading system proposed to be adopted by the applicant; Section 3(2)(c) the prescribed fees set out in the Second Schedule; and Section 3(2)(d) such additional documents as may be required by the Authority .
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SECURITIES EXCHANGE - 4. Rules of the securities exchange

AI-assisted research summary: This section lists matters on which the securities exchange must make rules, including admission, suspension or de-listing of securities; conditions for trading; prompt and fair disclosure of price-sensitive information; investor protection against misuse of information and fraud; prohibition of market manipulation; investigations and surprise checks of trading participants; suspension of trading; maintenance and reporting of transaction information; segregation of customers’ funds and securities; arbitration and appeals; safekeeping of securities; trading rights; admission and registration of trading participants and their representatives; conduct and responsibility of trading participants for their employees and agents; and listing of medium and large companies in market segments.

Section 4. Rules of the securities exchange Section 4(1)(a) admission to the listing, suspension or de-listing of securities by the securities exchange, through a procedure prescribed by the Authority ; Section 4(1)(b) conditions governing dealing in securities by its trading participants so as to ensure protection of the rights of investors; Section 4(1)(c) prompt disclosure, in a manner that is fair to all investors, of material information of a price sensitive nature and information likely to affect the price of a security including fees on management contracts, to enable appraisal of an issue by investors; Section 4(1)(d) protection of investors against abuse of confidential information, misleading information, fraud, deceit, and other adverse practices in the issuing and trading of securities; Section 4(1)(e) prohibition of market manipulation in any form; Section 4(1)(f) investigation into trading in securities and financial transactions of trading participants and for conducting surprise checks on such trading participants; Section 4(1)(g) suspension of trading of any security for the protection of investors or for the conduct of orderly and fair trading; Section 4(1)(h) the conduct of securities trading by trading participants and the manner in which information relating to transactions is to be maintained and reported to other trading participants and customers of the securities exchange; Section 4(1)(i) segregation from other business accounts of trading participants, of customers’ funds and securities; Section 4(1)(j) arbitration of disputes and provision for appeal to the Authority by trading participants, investors and listed companies; Section 4(1)(k) proper safe keeping of securities in its custody; Section 4(1)(l) carrying out of the business of the securities exchange with due regard to interest of the investing public; Section 4(1)(m) trading rights on a securities exchange; Section 4(1)(n) admission of trading participants to the securities exchange, registration of representatives of trading participants with the securities exchange and to provide for different categories of trading participants, where appropriate, and the rights and obligations attaching to each category; Section 4(1)(o) conduct of trading participants, their representatives, authorized clerks and dealers; Section 4(1)(p) responsibility of trading participants for the actions of their employees and agents in their dealings with the public; and Section 4(1)(q) listing of medium and large sized companies in the respective market segments such that investors have a range of investment opportunities in listed securities across all sectors of the economy. Section 4(2) The provisions made under paragraph (1) shall conform to the provisions of the Act. [ L.N. 88/2012 , r. 4.]
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SECURITIES EXCHANGE - 5. Membership of securities exchange

AI-assisted research summary: Trading participants must be licensees; the Authority can set ownership limits; persons cannot hold interests in more than one trading participant unless exempted; 15%+ voting share interest is deemed beneficial.

Section 5. Membership of securities exchange Section 5(1) Trading participants of a securities exchange shall be licensees of the Authority with rights to trade at an approved securities exchange. Section 5(1A) The Authority may prescribe limits on the ownership of a securities exchange by its trading participants. Section 5(2)(a) if that person satisfies any admission requirements of the securities exchange; and Section 5(2)(b) on payment of admission fee approved by the Authority under section 29(2) of the Act, Section 5(3) A trading participant of a securities exchange or a director or a shareholder of a trading participant shall not be a director or hold beneficial interest either directly or indirectly in more than one trading participant of a securities exchange unless the trading participants has been exempted by the Authority on the basis of evidence of adequate internal controls to address conflict of interest. Section 5(4) In case of a listed trading participant of a securities exchange, an interest of fifteen per cent or more of the voting shares held directly or indirectly shall be deemed to be a person’s beneficial interest for purpose of these Regulations. [ L.N. 88/2012 , r. 5.]
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SECURITIES EXCHANGE - 6. Chairman, directors and chief executive

AI-assisted research summary: Requires a securities exchange to have a chief executive responsible for day-to-day operations and professional administration; sets board composition and term-length rules and requires submission of proposed director appointments to the Authority for confirmation.

Section 6. Chairman, directors and chief executive Section 6(1) A securities exchange shall have a chief executive who shall be in charge of the day to day operations of the securities exchange and an administration of sufficient professional capability to carry out trading, clearing and compliance functions of its trading participants and listed companies. Section 6(2)(a) at least ten years’ experience at a senior management level in matters relating to law, finance, accounting, economics, banking or insurance; and Section 6(2)(b) expertise in matters relating to money, capital markets or finance. Section 6(3)(a) there shall be a fixed term of office for its chairman and chief executive, which shall be three years, renewable once for the chairman and four years renewable once for the chief executive; Section 6(3)(b) a board of directors comprising of the chief executive of the securities exchange and at least one third independent and non-executive directors; Section 6(3)(c) a maximum of two members of the board of directors who shall be elected from among or to represent the trading participants; Section 6(3)(d) the independent and non-executive directors appointed under subparagraph (b) shall be persons who have knowledge and experience in investments, public service and corporate governance and shall represent the interests of investors and the public interest: Provided that prior to making any such appointment the securities exchange shall submit the names of the persons proposed to be appointed as directors to the Authority for confirmation that the Authority has no objection to the proposed appointments; Section 6(3)(e) two members of the board shall be elected by the shareholders of the securities exchange from nominees of companies listed on the securities exchange to represent the listed companies. Section 6(4) Subject to paragraph (3)(c) , (d) and (e) , the other persons appointed to the board of directors shall be elected by the shareholders of the exchange in accordance with the Companies Act. Section 6(5) Deleted byL.N. 88/2012, r. 6. [L.N. 88/2012, r. 6, L.N. 194/2022, r. 2.]
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SECURITIES EXCHANGE - 7. Requirements for approval of a securities exchange trading system

AI-assisted research summary: The Authority must approve any trading system adopted by a securities exchange before the system is implemented.

Section 7. Requirements for approval of a securities exchange trading system Section 7(1) A trading system to be adopted by a securities exchange shall be approved by the Authority before such system is implemented. Section 7(2)(a) a trading facility at which all bids to purchase and offers to sell are exposed to each other and at which members of the public are granted an opportunity to witness trading; Section 7(2)(b) displays the best offer and bid prices; Section 7(2)(b)(i) displays the best offer and bid prices; Section 7(2)(b)(ii) provides for automatic matching; Section 7(2)(b)(iii) displays the highest and lowest prices, the latest transactions as well as the volume of securities traded; Section 7(2)(b)(iv) has an audit trail and trace back mechanism for all transactions; Section 7(2)(b)(v) has sufficient internal controls and security measures to ensure that only authorized persons have access; Section 7(2)(b)(vi) provides for integration with a central depository system; and Section 7(2)(b)(vii) maintains records of all transactions and retrieves such records as may be necessary.
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SECURITIES EXCHANGE - 8. Submission of annual budget

AI-assisted research summary: A securities exchange must submit its annual budget to the Authority not later than thirty days before the start of its financial year.

Section 8. Submission of annual budget Section 8(1) A securities exchange shall submit its annual budget to the Authority not later than thirty days before the commencement of its financial year. Section 8(2) Any revisions to the budget shall be submitted to the Authority not later than fifteen days before the commencement of its financial year. Section 8(3)(a) disclose details of revenue and expenditure as prescribed under these Regulations; Section 8(3)(b) make provision for a minimum of twenty per cent of the total annual listing fees receivable each financial year to support the development of the securities exchange infrastructure and investor education programme.
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SECURITIES EXCHANGE - 9. Self-regulation

AI-assisted research summary: Section 9 requires a securities exchange to self-regulate its trading participants by having procedures, a code of conduct, surveillance and dispute resolution; it must oversee compliance, require timely breach reporting, and may allow appeals.

Section 9. Self-regulation Section 9(1)(a) a procedure and appropriate system of exercising self-regulation over its trading participants; Section 9(1)(b) a code of conduct for its trading participants; Section 9(1)(c) adequate trading surveillance and compliance capacity; and Section 9(1)(d) a procedure for dispute resolution. Section 9(2)(a) the rules of the securities exchange approved by the Authority ; and Section 9(2)(b) laws, regulations and guidelines relating to securities issued by the Authority . Section 9(3)(a) promote investor protection; Section 9(3)(b) promote fair treatment of its trading participants and any person who applies for admission as a trading participant; Section 9(3)(c) exclude a person who is not fit and proper from being its trading participant or being appointed as its chief executive, director or officer; Section 9(3)(d) promote proper regulation and supervision of its trading participants; Section 9(3)(e) promote appropriate standards of conduct of its trading participants; Section 9(3)(f) manage any conflict of interest which may arise between its interest and the interest of investors and the general public; Section 9(3)(g) ensure that its trading participants and officers duly comply with the securities laws , regulations and guidelines issued by the Authority and where relevant, the rules of the securities exchange, or approved central depository; Section 9(3)(h) require trading participants to report in a timely manner any breaches of applicable rules; Section 9(3)(i) prevent the use of any information by its trading participants or officers which may result in such trading participants or officer making an unfair gain; expel, suspend, discipline or sanction a trading participant if a trading participant contravenes securities laws , regulations and guidelines issued by the Authority or where relevant, the rules of the securities exchange, or an approved central depository; Section 9(3)(j) require a trading participant to report any action, restriction or limitation imposed on its operations by another securities exchange, central depository or the Authority ; and Section 9(3)(k) allow an aggrieved trading participant to appeal against any decision of the securities exchange acting in its capacity as a recognized self-regulatory organization. Section 9(4)(a) exercise self-regulatory responsibility over its trading participants; and Section 9(4)(b) put in place independent management of and budgetary structures for the commercial and regulatory functions of the securities exchange.

Part III

STOCKBROKERS AND DEALERS

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STOCKBROKERS AND DEALERS - 14. Application for licence

AI-assisted research summary: To obtain a licence to operate as a stockbroker or dealer, an application must be submitted to the Authority using Form 1 in the First Schedule.

Section 14. Application for licence Section An application for a licence to operate as a stockbroker or a dealer shall be submitted to the Authority in Form 1 set out in the First Schedule.
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STOCKBROKERS AND DEALERS - 15. Specific requirements for approval

AI-assisted research summary: Section 15 sets document, capital, management, staffing, IT and reference requirements for approval of stockbroker and dealer licences and requires certain fit-and-proper and application-letter conditions.

Section 15. Specific requirements for approval Section 15(1)(a) the certificate of incorporation; Section 15(1)(b) the memorandum and articles of association; Section 15(1)(c) a statement of the un-audited accounts for the period of the accounting year ending not earlier than six months prior to the date of application and audited accounts for the preceding two years (where applicable); Section 15(1)(d) the prescribed fees set out in the Second Schedule; Section 15(1)(e) the management structure; Section 15(1)(e)(i) the management structure; Section 15(1)(e)(ii) the directors, including one or more executive directors, their qualifications, addresses and details of other directorships; Section 15(1)(e)(iii) the shareholding structure which shall disclose whether any of the shareholders will have an executive role to oversee the day to day operations of the business; Section 15(1)(e)(iv) the shareholding structure of a dealer; Section 15(1)(e)(v) the evidence of paid up share capital of a minimum amount of fifty million shillings in the case of a stockbroker and twenty million shillings in the case of a dealer; Section 15(1)(e)(vi) the qualifications, experience and expertise of the chief executive must be relevant to effectively manage or operate the business of a stockbroker or dealer; Section 15(1)(e)(vii) the proposed management and qualifications of key personnel; Section 15(1)(e)(viii) the financial projections for three years; Section 15(1)(e)(ix) the proposed information technology and access to the trading network in compliance with the trading, clearing, delivery and settlement requirements of the securities exchange to which the applicant intends to be admitted as a trading participant under these Regulations; Section 15(1)(e)(x) one bank reference; Section 15(1)(e)(xi) two business references; Section 15(1)(e)(xii) the proposed premises suitably located and equipped to provide satisfactory service to clients in the field of activity to which the licence relates or evidence acceptable to the Authority that such premises will be available; Section 15(1)(e)(xiii) the staff capable of providing professional services to clients in the field of activity to which the licence relates or evidence acceptable to the Authority that such staff will be available; Section 15(1)(e)(xiv) the proposed independent auditor; and Section 15(1)(e)(xv) a declaration that no person is a director or holds beneficial interest either directly or indirectly in more than one trading participant of a securities exchange. Section 15(2) Every person who is, or is to be, a director, chief executive, manager or floor dealer of a stockbroker or dealer shall be fit and proper to hold the particular position that he holds or is to hold. Section 15(3)(a) lodge a security of one million, five hundred thousand shillings or such higher amount with a securities exchange or a central depository as the Authority may determine, taking into account the financial position and settlement record of the applicant; or Section 15(3)(b) provide a guarantee or a security to a securities exchange or a central depository in a form acceptable or approved by the Authority in respect of which it is a trading participant or has applied for admission as a trading participant. Section 15(4) The eligibility of a dealer’s licence shall be restricted to institutions committing funds for investment as principals in securities dealings. Section 15(5) Deleted byLN 155 of 2017, r. 2. Section 15(6) Deleted byL.N. 88/2012, r. 11. Section 15(7) Deleted byLN 155 of 2017, r. 2. Section 15(8) Deleted byLN 155 of 2017, r. 2. Section 15(9) Deleted byLN 155 of 2017, r. 2. Section 15(10) An application for a stockbroker or a dealer license shall be accompanied by a letter from the securities exchange stating that the applicant meets all the relevant requirements of that securities exchange and that the securities exchange would admit the applicant if licensed by the Authority . [ L.N. 99/2009 , r. 2, L.N. 88/2012 , r. 11. L.N. 155/2017, r. 2]
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STOCKBROKERS AND DEALERS - 16. Stockbrokers’ financial requirements

AI-assisted research summary: Stockbrokers must keep shareholders' funds at or above fifty million shillings during the licence period; paid-up capital must remain unimpaired and not be advanced to directors or associates; each stockbroker must maintain liquid capital equal to thirty million shillings or eight per cent of total liabilities, whichever is higher.

Section 16. Stockbrokers’ financial requirements Section 16(1) The level of shareholders’ funds (paid up share capital and reserves) for stock brokers shall not fall below fifty million shillings at any time during the license period. Section 16(2) The minimum paid-up share capital shall always be unimpaired and shall not be advanced to the directors or associates of the stockbroker. Section 16(3) A stock broker shall maintain a liquid capital of thirty million shillings or eight per cent of is total liabilities, whichever is higher. Section 16(4) Deleted byL.N. 112/2013, r. 3. Section 16(5) Deleted byL.N. 112/2013, r. 3. [ L.N. 99/2009 , r. 3, L.N. 88/2012 , r. 12, L.N. 112/2013 , r. 3.]
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STOCKBROKERS AND DEALERS - 17. Dealers’ financial requirements and investment limits

AI-assisted research summary: Rules setting minimum capital, liquid capital, portfolio composition and turnover requirements for dealers.

Section 17. Dealers’ financial requirements and investment limits Section 17(1) The level of shareholders funds (paid-up share capital and reserves) shall not be below twenty million shillings, at any time during the licence period. Section 17(2)(a) set aside investment capital of not less than twenty million shillings (except as provided under paragraph (3) ) in cash or portfolio of listed securities, or such higher amount as may be prescribed by the Authority; and Section 17(2)(b) deleted byL.N. 112/2013, r. 4. Section 17(3) Where a dealer is promoted by a stockbroker through a subsidiary, the minimum investment capital committed to dealing operations by the subsidiary shall not be less than five million shillings in cash or listed securities portfolio at market value or such higher amount as may be prescribed by the Authority . Section 17(4) A dealer shall maintain a liquid capital of thirty million shillings or eight per cent of its total liabilities, whichever is higher. Section 17(5) Deleted byL.N. 112/2013, r. 4. Section 17(6) Deleted byL.N. 112/2013, r. 4. Section 17(7) A dealer shall maintain an investment portfolio out of its investment capital equivalent to a minimum monthly average of fifty per cent in listed equities and the remainder in listed fixed income securities provided that within twelve months from the date of these Regulations, the investment of the minimum monthly average in listed equities shall be adjusted to sixty per cent. Section 17(8)(a) At least an average of twenty-five per cent of the portfolio of securities held by a dealer shall be turned over every quarter and seventy-five per cent of the portfolio be turned over every twelve months. Section 17(8)(b) Every security held by a dealer shall be turned over at least once every eighteen months. Section 17(9) For the purposes of this regulation “turnover” means the value of securities purchased or sold during the period.
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STOCKBROKERS AND DEALERS - 18. Financial year

AI-assisted research summary: Stockbrokers and dealers must end their financial year on the 31st of December each year.

Section 18. Financial year Section The financial year of stockbrokers and dealers shall end on the 31st of December in each year. [ L.N. 112/2013 , r. 4.]
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STOCKBROKERS AND DEALERS - 19. Records to be maintained

AI-assisted research summary: The Authority or the securities exchange may inspect the accounting documents specified in paragraph (1) at any time without notice; and a stockbroker must decline an order if, after reasonable inquiry, the client refuses to provide the information required by paragraph (3)(a),(b) and (c), recording that refusal while retaining the client's name and address.

Section 19. Records to be maintained Section 19(1)(a) journals or other records of original entry containing an itemized daily record of all purchases and sales of securities, all receipts and deliveries of securities (including certificate numbers), all receipts and disbursements of cash and all debits and credits; the records shall show the account for which each transaction was effected, the name and amount of securities, the unit and aggregate purchase or sale price (if any), the trade date and the name or other designation of the person from whom the securities were purchased or received or to whom they were sold or delivered; Section 19(1)(b) ledgers, (or other records) reflecting all assets and liabilities, income, expense and capital accounts; Section 19(1)(c) detailed records of nominee accounts; Section 19(1)(d) all cheque books, bank statements, cancelled cheques and bank reconciliation accounts; Section 19(1)(e) clients’ accounts (or other records) itemizing separately each account of a client, all purchases, sales, receipts and deliveries of securities and all other debits and credits; Section 19(1)(f) a memorandum of each client’s order received for the purchase or sale of securities; the memorandum shall show orders in chronological sequence, the time of receipt, the terms and conditions of the order or instructions and of any modification or cancellation thereof, the account for which the order was entered, the time of entry into the market for execution, the price at which the order was executed and, to the extent feasible, the time of execution or cancellation; Section 19(1)(g) copies of confirmation of all purchases and sales, notices of all other debits and credits for securities and other items for the account of client; Section 19(1)(h) records on all commissions earned on account of equities, bonds and others; Section 19(1)(i) contract books or records, showing details of all contracts entered into with trading participants of a securities exchange and duplicates of memoranda of confirmation issued to such other trading participant; and Section 19(1)(j) any other accounting documents as may be determined by the Authority . Section 19(2) The accounting documents specified under paragraph (1) shall be subject to inspection from time to time and without notice, by the Authority or securities exchange of which the stockbroker or dealer is a trading participant. Section 19(3)(a) where the client comes through an investor agent, in the agent sub-account and where the client has been attended to by the supervisor or employee of the stockbroker authorized to attend to clients in the stockbroker’s account, the client’s name, date of birth, address, nationality or citizenship, identification, written instructions of the client, price limit, duration of the instructions and date of order and the name and address of the investor agent (where applicable) and where the client is a company, certified copies of memorandum and articles of association and the certificate of incorporation; Section 19(3)(b) where the stockbroker, or any of its agents has made any recommendations to the client to purchase or sell any security, the record of such client shall include the client’s occupation, identification, investment objectives, other information concerning the client’s financial situation and needs which the stockbroker or any of its agents considered in making the recommendation, and the signature and name of the agent who made the recommendation to the client and the date when any order was given to the stockbroker or its agent and any price limit given; Section 19(3)(c) the client’s written authorization to the stockbroker to exercise discretionary power or authority in the client’s account; Section 19(3)(c)(i) the client’s written authorization to the stockbroker to exercise discretionary power or authority in the client’s account; Section 19(3)(c)(ii) the reason given by the client for granting discretionary power or authority in his account; and Section 19(3)(c)(iii) the written approval of the stockbroker’s designated supervisor of each transaction in such account indicating the exact time and date of such approval; Section 19(3)(d) a separate record for all complaints by clients and persons acting on behalf of clients; the complaints shall be filed alphabetically by clients’ names and shall include copies of all materials relating to the complaint, and record of what action, if any has been taken by the stockbroker; copies of such materials and record of action taken shall be kept in the office through which the client’s account is handled; Section 19(3)(e) a separate record of all securities transactions by the stockbroker’s or dealer’s employees and directors in their own name or under nominees' accounts; Section 19(3)(f) a separate record of all securities transactions between the stockbroker or dealer, and all listed companies in which the directors of the stockbroker or dealer have an interest; and Section 19(3)(g) such other records as the Authority shall determine from time to time. Section 19(4) A stockbroker shall decline to take an order if, after reasonable inquiry, the client declines to furnish such items of information as required in paragraph (3)(a) , (b) and (c) and a statement to that effect is placed in the records, provided, however, that the client’s records shall state the client’s name and address. [ L.N. 88/2012 , r. 13.]
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STOCKBROKERS AND DEALERS - 20. Client accounts

AI-assisted research summary: Clients’ funds must be deposited in one or more bank accounts labelled “clients’ accounts”, those accounts must contain only clients’ funds, and such client accounts must not be overdrawn for any reason.

Section 20. Client accounts Section deposit clients’ funds in one or more bank account(s), which account(s) shall contain only clients’ funds and be clearly marked “clients’ accounts”. Such client accounts shall not be overdrawn for any reason;
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STOCKBROKERS AND DEALERS - 21. Reporting obligations

AI-assisted research summary: Every stockbroker or dealer must prepare monthly reports and accounts and provide them to the Authority within fifteen days after each calendar month, and produce them when the Authority requests.

Section 21. Reporting obligations Section 21(1)(a) quarterly reports and accounts within fifteen days of the end of each calendar quarter; Section 21(1)(b) half yearly reports and accounts within thirty days of the end of each half year; and Section 21(1)(c) audited annual accounts within three months following the end of the stockbroker and dealer’s financial year; Section 21(1)(d) a financial statement complying with the disclosures prescribed under the Fourth Schedule of these Regulations. Section 21(2) Every stockbroker or dealer shall prepare monthly reports and accounts within fifteen days the end of each calendar month which shall be made available to the Authority at such times as the Authority may request. [ L.N. 99/2009 , r. 4, L.N. 88/2012 , r. 14.]
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STOCKBROKERS AND DEALERS - 22. Conduct of stockbrokers and dealers

AI-assisted research summary: Stockbrokers and dealers must operate independently, conduct business efficiently, honestly and fairly with professional integrity and skills, and must not have agreements with trading participants that undermine competitiveness or fair trade practices.

Section 22. Conduct of stockbrokers and dealers Section 22(1)(a) operate independently of any other stockbroker or dealer; Section 22(1)(b) conduct the business efficiently, honestly, and fairly, with the integrity and professional skills appropriate to the nature and scale of activities; Section 22(1)(c) have no formal or informal agreement with a trading participant of the same securities exchange whether through an association or not, relating to the stockbroker’s or dealer’s trading activity, personnel, commissions or any joint activity that is likely to undermine the competitiveness or fair trade practices and service to clients. Section 22(2) Without prejudice to the generality of paragraph (1) , in consideration whether a stockbroker or dealer is conducting or will conduct business efficiently, honestly and fairly, regard shall be made to the management and organizational structure, reporting principles and procedures, internal audit procedures, procedures for compliance with the securities laws and risk management policies which the stockbroker or dealer has adopted or proposes to adopt for its business. [ L.N. 88/2012 , r. 15.]
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STOCKBROKERS AND DEALERS - 22A. Conducting business through a stock broking agent

AI-assisted research summary: Rules for stockbrokers using stockbroking agents: permitted to use agents if contracted in writing; stockbrokers must register agents annually and notify changes within five working days; must perform due diligence; must submit standard agency agreement for Authority approval; must not appoint agents already appointed to another stockbroker (transitional six-month compliance); agents must not handle clients' funds; stockbrokers must ensure agents act properly; report agent misconduct to Authority within 48 hours.

Section 22A. Conducting business through a stock broking agent Section 22A(1) A stockbroker may conduct business through a stockbroking agent provided the stockbroking agent has been contracted in writing to render such services. Section 22A(2) Every stockbroker shall forward to the Authority , on an annual basis, a register of any stockbroking agents contracted pursuant to paragraph (1) and shall notify the Authority of any amendment to the register of agents within five working days of such change. Section 22A(3) A stockbroker shall be responsible for conducting all necessary due diligence to establish the competence, fitness and propriety of any person so appointed as a stockbroking agent, having specific regard to the past experiences and conduct of any such person, in establishing his capacity to facilitate the purchase and sale of securities as an agent of the stockbroker in the best interests of investors. Section 22A(4) A stockbroker shall submit to the Authority for approval the standard form agency agreement they propose to enter into with their stockbroking agents and shall thereafter secure the approval of the Authority prior to amending such agreement. Section 22A(5) A stockbroker shall not appoint as its agent any person already appointed by another stockbroker as its agent: Provided that a stockbroker who, at the commencement of this provision, has appointed an agent who acts for more than one stockbroker shall, within six months of the commencement, comply with the requirements of this provision. Section 22A(6) A stockbroking agent shall not handle or deal with clients’ funds. Section 22A(7) The stockbroker shall be responsible for ensuring that the stockbroking agent conducts his business efficiently, honestly and fairly with the integrity and professional skills appropriate to the nature and scale of activities and in accordance with the provisions of the Act and Regulations issued thereunder. Section 22A(8) In the event of any misconduct by the stockbroking agent, the stockbroker who appointed the stockbroking agent shall report the misconduct to the Authority within forty-eight hours of the occurrence of the misconduct. [ L.N. 99/2009 , r. 5.]
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STOCKBROKERS AND DEALERS - 23. Conduct of stockbrokers

AI-assisted research summary: Stockbrokers must follow specified conduct when accepting and executing client orders, including accepting only written orders, ensuring clients have funds or securities arranged, executing orders in chronological order with client priority, keeping daily records, exercising due diligence, informing clients of order details with written confirmation, providing accurate information in communications, and recommending securities only when suitable based on reasonable inquiry.

Section 23. Conduct of stockbrokers Section 23(1)(a) execute an order only where the client has made sufficient arrangements for funds or securities with the stockbroker; Section 23(1)(b) only accept written orders and shall ensure that the client is not only capable of honouring the order before acting on the order, but has made arrangements with the stockbroker for fulfilment of its obligations arising from such order; Section 23(1)(c) execute clients’ orders in the chronological sequence of orders received and which have been so recorded in accordance with these Regulations and shall give priority to orders of clients over orders of any shareholder or employee of the stockbroker or related dealer subsidiary, whether directly or indirectly; Section 23(1)(d) maintain a daily record of orders received from clients showing the name of each client, the specific order and time the order was given, and execute the same in order of receipt; Section 23(1)(e) exercise due diligence and care at all times so as not to misinform or misdirect clients; Section 23(1)(f) while accepting an order from a client, inform the client of all constituent parts of an order prior to executing the order and get the client to give a written declaration to confirm the same; Section 23(1)(g) provide factual and accurate information to clients’ through newsletters and advertisements; Section 23(1)(h) not recommend to a client the purchase, sale or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the client on the basis of information furnished by the client after reasonable inquiry concerning the client’s investment objectives, financial situation and needs, and any other information known or acquired by the stockbroker after reasonable examination of the client’s financial records. Section 23(2) An “order” for the purpose of this regulation, shall constitute written instructions by a client to a stockbroker as to the security name, quantity, price or price limits and duration or validity of instructions.
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STOCKBROKERS AND DEALERS - 24. Prohibited dealings and associations

AI-assisted research summary: Prohibits specific dealings and associations listed in Section 24(1)(a)–(f) and defines when "a corner" arises in Section 24(2).

Section 24. Prohibited dealings and associations Section 24(1)(a) create a false market in any listed security by way of any artificial device including but not limited to advising clients to buy or sell a particular security while selling or buying through its dealing or related party transactions, without disclosing that fact to the investors; Section 24(1)(b) establish a corner or trade where a corner has developed in a listed security; Section 24(1)(c) negotiate on any issue relating to trading with any other person on the trading floor of the securities exchange; Section 24(1)(d) be party to any trading and price manipulative scheme or device which may directly or indirectly influence or interfere with the market price formation and fair trading process with respect to any listed security; Section 24(1)(e) make general recommendations to the public on particular securities through publications or statements; or Section 24(1)(f) sell securities which are not registered in the name of the stockbrokers’ client or central depository in the case of a depository environment. Section 24(2) For the purposes of this regulation, “a corner” shall be deemed to arise when a single interest or group has acquired such control of any listed security that the same cannot be obtained except at prices or on terms dictated by such single interest or group.
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STOCKBROKERS AND DEALERS - 25. Sale of securities

AI-assisted research summary: If a person already has an exercisable, unconditional right to have securities vested in them, they are deemed to have a present right to vest those securities in another person.

Section 25. Sale of securities Section 25(1)(a) the stockbroker or dealer has or, in the case of a stockbroker, its client has; or Section 25(1)(b) the stockbroker or dealer believes on reasonable grounds, that it has, or in the case of a stockbroker, its client has, Section 25(2) A person who, at any particular time, has an existing exercisable and unconditional right to have securities vested in him or in accordance with his directions shall be deemed to have at that time a presently exercisable and unconditional right to vest the securities in another person. Section 25(3) A right of a person to vest securities in another person shall not be deemed not to be unconditional by reason only of the fact that the securities are charged or pledged in favour of another person to secure the repayment of money. Section 25(4)(a) purports to sell securities; Section 25(4)(b) offers to sell securities; Section 25(4)(c) holds himself out as entitled to sell securities; or Section 25(4)(d) instructs a stockbroker to sell securities.
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STOCKBROKERS AND DEALERS - 26. Code of conduct to be approved

AI-assisted research summary: Proposed codes of conduct or self-regulation agreements for stockbrokers and dealers must be submitted to the Authority for prior approval and must be consistent with the Regulations; such codes must not restrict free negotiation or competition regarding commissions.

Section 26. Code of conduct to be approved Section 26(1) Any proposed code of conduct or agreements to self-regulate the operations of stockbrokers and dealers, shall be submitted to the Authority for prior approval and must be consistent with these Regulations. Section 26(2) No code of conduct of any associations or agreements of stockbrokers or dealers whether in written form or not shall seek to restrict free negotiation or competition by trading participants with regard to commissions payable on any transactions as provided in the Fifth Schedule. [ L.N. 88/2012 , r. 16.]
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STOCKBROKERS AND DEALERS - 27. Payment of transaction and InvestorCompensation Fundfees

AI-assisted research summary: All stockbrokers and dealers must pay the prescribed transaction fees to the Authority and to the securities exchange of which they are trading participants, and must pay prescribed fees to the Investor Compensation Fund.

Section 27. Payment of transaction and InvestorCompensation Fundfees Section All stockbrokers and dealers shall pay to the Authority and to the securities exchange of which they are trading participants the fees prescribed as payable by every buyer and seller of a security and shall pay to the Investor Compensation Fund the fees prescribed as payable by each buying and selling stockbroker, or dealer within fifteen days following a transaction. [ L.N. 88/2012 , r. 17.]

Part IV

INVESTMENT ADVISERS AND FUND MANAGERS

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INVESTMENT ADVISERS AND FUND MANAGERS - 28. Application for license

AI-assisted research summary: Certain persons may apply to the Authority for licences: sole proprietors, companies, partnerships and limited liability partnerships may apply to be investment advisers; companies may apply to be fund managers.

Section 28. Application for license Section 28(1) A sole proprietor, company, partnership or limited liability partnership may apply to the Authority for a licence to operate as an investment advisor. Section 28(2) A company may apply to the Authority for a licence to operate as a fund manager. Section 28(3) An application for a license in paragraphs (1) or (2) shall be submitted to the Authority, in duplicate, in Form 1 as set out in the First Schedule. [ L.N. 67/2022 , r. 2.]
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INVESTMENT ADVISERS AND FUND MANAGERS - 29. Specific requirements for approval

AI-assisted research summary: Section 29 sets specific requirements for approval of investment advisers and fund managers, requires certain persons to be fit and proper, prohibits unlicensed persons from acting as fund managers, and requires the Authority to publish licensed fund managers.

Section 29. Specific requirements for approval Section 29(1)(a) certificate of incorporation or registration; Section 29(1)(b) memorandum and articles of association in case of a company; Section 29(1)(c) a statement of the un-audited accounts for the period of the accounting year ending not earlier than six months prior to the date of application and the applicant’s audited accounts for the preceding two years (where applicable); Section 29(1)(d) the management structure; Section 29(1)(d)(i) the management structure; Section 29(1)(d)(ii) the directors, including one or more executive directors, their qualifications, addresses and details of other directorships; Section 29(1)(d)(iii) the shareholding structure, disclosing whether any of the shareholders will have an executive role to oversee the day-to-day operations of the business; Section 29(1)(d)(iv) the evidence of a minimum paid-up share capital of not less than ten million shillings for fund managers; Section 29(1)(d)(v) the qualifications, experience and expertise of the chief executive; Section 29(1)(d)(vi) the proposed management and qualifications of key personnel; Section 29(1)(d)(vii) the financial projections for three years; Section 29(1)(d)(viii) the particulars of the proposed operating and information technology system; Section 29(1)(d)(ix) one bank reference; Section 29(1)(d)(x) two business references; Section 29(1)(d)(xi) the proposed premises suitably located and equipped to provide satisfactory service to clients in the field of activity to which the licence relates or evidence acceptable to the Authority that such premises will be available; Section 29(1)(d)(xii) the staff capable of providing professional services to clients in the field of activity to which the licence relates or evidence acceptable to the Authority that such staff will be available; Section 29(1)(d)(xiii) the proposed independent auditor where applicable; Section 29(1)(e) the fees prescribed in the Second Schedule. Section 29(2) Every person who is, or is to be, a director, chief executive or manager of an investment adviser or fund manager, shall be fit and proper to hold the particular position which he holds or is to hold. Section 29(3) A person shall not carry on or hold out himself as carrying on the business of a fund manager of a registered venture capital company unless that person is a fund manager licensed by the Authority . Section 29(4)(a) a detailed information on qualifications, experience and expertise of the directors, chief executive and senior investment in managing venture capital investments and private equity; and Section 29(4)(b) information proving ability to provide technical and managerial expertise to eligible venture capital enterprises. Section 29(5) The Authority shall publish the names of all fund managers it has licensed to manage registered venture capital companies in the Kenya Gazette . [ L.N. 32/2008 , r. 3, L.N. 67/2022 , r. 3.]
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INVESTMENT ADVISERS AND FUND MANAGERS - 30. Financial requirements

AI-assisted research summary: Fund managers must keep shareholders' funds at least ten million shillings at all times during the licence period, keep paid-up share capital unimpaired and not advanced to directors or associates, and maintain liquid capital of five million shillings or 8% of total liabilities, whichever is higher.

Section 30. Financial requirements Section 30(1) Deleted byL.N. 67/2022, r. 4(a). Section 30(2) The level of shareholders funds (paid-up share capital and reserves) for fund managers, shall not fall below ten million shillings at any time during the licence period. Section 30(3) The paid-up share capital fund manager shall always be unimpaired and shall not be advanced to the directors or associates fund manager. Section 30(4) A fund manager shall maintain a liquid capital of five million shillings or eight per cent of its total liabilities, whichever is higher. Section 30(5) Deleted byL.N. 112/2013, r. 5. Section 30(6) Deleted byL.N. 112/2013, r. 5. Section 30(7) Deleted byL.N. 67/2022, r. 4(d). [ L.N. 112/2013 , r. 5, L.N. 67/2022 , r. 4.]
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INVESTMENT ADVISERS AND FUND MANAGERS - 31. Records to be maintained

AI-assisted research summary: Investment advisers and fund managers must keep and maintain specified business records and allow inspection by the Authority; they must notify the Authority of a custodian and segregate client securities; limited exception for distribution to more than ten persons.

Section 31. Records to be maintained Section 31(1)(a) journals, including cash receipts and disbursement records and any other records or original entry, forming the basis of entries in any ledger; Section 31(1)(b) general and auxiliary ledgers, or other comparable records reflecting assets, liabilities, reserves, capital, income and expense accounts; Section 31(1)(c) show the terms and conditions of the order, instruction, modification or cancellation; Section 31(1)(c)(i) show the terms and conditions of the order, instruction, modification or cancellation; Section 31(1)(c)(ii) identify the person connected with the investment adviser or fund manager who recommended the transaction to the client and the person who placed such order; Section 31(1)(c)(iii) show the account for which the order was entered, the date of entry, and the stockbroker by or through whom the order was executed, where appropriate; and Section 31(1)(c)(iv) show orders entered pursuant to the exercise of discretionary power on account of management of investment portfolios in which case a record of details of such contracts with clients, constituents of the portfolio, transaction fees agreed with the client and value of the portfolio shall be included; Section 31(1)(d) all cheque books, bank statements, cancelled cheques and cash reconciliation of the investment adviser or fund manager; Section 31(1)(e) all bills, statements or copies thereof, paid or unpaid relating to the business of the investment adviser or the fund manager; Section 31(1)(f) any recommendations made or proposed to be given; Section 31(1)(f)(i) any recommendations made or proposed to be given; Section 31(1)(f)(ii) any receipts, disbursement or delivery of funds or securities; and Section 31(1)(f)(iii) the placing or execution of any order to purchase or sell any security; provided, that if the investment adviser or fund manager sends any notice, circular or other advertisement offering any report, analysis, publication or other investment advisory services to more than ten persons, the investment adviser or fund manager shall not be required to keep a record of the names and addresses of the persons to whom it was sent except that if such notice, circular or advertisement is distributed to persons named on any list, the investment adviser or fund manager shall retain a copy of such notice, circular or advertisement, a record or memorandum describing the list and the source thereof; Section 31(1)(g) deleted byL.N. 67/2022, r. 5(a); Section 31(1)(h) deleted byL.N. 67/2022, r. 5(b); Section 31(1)(i) all written agreements or copies thereof entered into by the investment adviser or fund manager with any client or otherwise relating to the investment adviser’s or fund manager’s business; Section 31(1)(j) a copy of each notice, circular, advertisement, newspaper article, investment letter, bulletin or other communication recommending the purchase or sale of a specific security, which the investment adviser or fund manager circulates or distributes, directly or indirectly, to ten or more persons, and if such notice, circular, advertisement, newspaper article, investment letter, bulletin or other communication does not state the reasons for such recommendation, a memorandum from the investment adviser or fund manager (as the case may be) indicating the reasons thereof; all advertisements by the investment adviser or fund manager and all records, worksheets and calculations necessary to form the basis for performance data in such advertisements; Section 31(1)(k) a record of every transaction in a security in which the investment adviser or fund manager or any of the investment adviser or fund manager’s employees acquire any direct or indirect beneficial ownership; the record shall state the title and amount of the security involved, the date, whether the transaction was a purchase or sale or other acquisition or disposition, the price at which it was effected, and the name of the stockbroker with or though whom the transaction was effected; and Section 31(1)(l) a copy of each written statement, the amendment or revision thereof, given or sent to any client or prospective client of such investment adviser or fund manager and a record of the dates that the same was given or offered to be given; Section 31(1)(m) any other records as may be determined by the Authority . Section 31(2) The records specified under paragraph (1) shall be subject to inspection from time to time and without notice, by the Authority. Section 31(3)(a) notify the Authority of the custodian appointed; and Section 31(3)(b) segregate the securities of each client and mark such securities to identify the particular client having the beneficial interest therein.
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INVESTMENT ADVISERS AND FUND MANAGERS - 32. Reporting obligations

AI-assisted research summary: Fund managers must submit monthly, quarterly, half-yearly and annual reports and audited annual accounts within specified days after each period; the Authority may require other forms.

Section 32. Reporting obligations Section 32(1)(a) quarterly management accounts and reports of the portfolio under its management within fifteen days of the end of each calendar quarter: Provided that every fund manager shall prepare monthly reports of the portfolio under its management within fifteen days of the end of each calendar month, which shall be made available to the Authority at such times as the Authority may require; Section 32(1)(b) half-yearly reports of the portfolio under its management within thirty days of the end of each half-year, including reports of its own financial performance; Section 32(1)(c) annual reports of the total value of the portfolio under its management including the number of clients; and Section 32(1)(d) audited annual accounts for its operations in the form prescribed in the Fourth Schedule within three months following the closure of the financial year. Section 32(2) Notwithstanding the provisions of paragraph (1) , the Authority may require such other form of financial statement as it may from time to time specify. [ L.N. 99/2009 , r. 6, L.N. 67/2022 , r. 6.]
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INVESTMENT ADVISERS AND FUND MANAGERS - 33. Conduct of investment advisers and fund managers

AI-assisted research summary: Investment advisers and fund managers are prohibited from a range of specified misconduct (Section 33(1)) and must follow duties including factual advertising, written client agreements, informing clients when taking orders, and acting fairly on conflicts.

Section 33. Conduct of investment advisers and fund managers Section 33(1)(a) recommend to a client to whom investment, supervisory, management or consulting services are provided, the purchase or sale of any security without reasonable grounds to believe that the recommendation is suitable for the client on the basis of information furnished by the client after reasonable inquiry concerning the client’s investment objectives, financial situation and needs, and any other information known or acquired by the investment adviser or fund manager after reasonable examination of the client’s financial records; Section 33(1)(b) place an order to purchase or sell a security for the account of a client without written authority to do so; Section 33(1)(c) place an order to purchase or sell a security for the account of a client upon instruction of a third party without first having obtained a written third-party authorization from the client; Section 33(1)(d) exercise any discretionary power in placing an order for the purchase or sale of securities for a client without obtaining written discretionary authority from the client; Section 33(1)(e) induce trading in a client’s account that is excessive in size or frequency in view of the financial resources, investment objectives and character of the account; Section 33(1)(f) misrepresent to any client, or prospective client, its qualifications or misrepresent the nature of the advisory services being offered or fees to be charged for such service or omit to state a material fact necessary to make the statements regarding qualifications, services or fees, in light of the circumstances under which they are made, not misleading; Section 33(1)(g) provide a report or recommendation to any client prepared by someone other than the investment adviser without disclosing that fact; Section 33(1)(h) compensation arrangements connected with advisory services to clients which are in addition to compensation from such clients for such services; or Section 33(1)(h)(i) compensation arrangements connected with advisory services to clients which are in addition to compensation from such clients for such services; or Section 33(1)(h)(ii) charging a client an advisory fee for rendering advice when a commission for executing securities transactions pursuant to such advice will be received by the investment adviser or fund manager or his employees; Section 33(1)(i) guarantee a client that a specific result will be achieved arising from the advice which will be rendered except in the case of fixed income securities; Section 33(1)(j) publish, circulate or distribute any advertisement which does not comply with the Act ; Section 33(1)(k) disclose the identity, affairs, or investment of any client to any third party unless required by law, court order or a regulatory agency to do so, or unless consented to by the client; and Section 33(1)(l) enter into, extend or renew any investment advisory contract unless such contract is in writing and discloses in substance the services to be provided, the term of the contract, the advisory fee, the formula for computing the fee, the amount of prepaid fee to be returned in the event of contract termination or non-performance, whether the contract grants discretionary power to the investment adviser or fund manager and that no assignment of such contract shall be made by the investment adviser or fund manager without the consent of the other party to the contract; Section 33(1)(m) fail to register all securities marketed and offered to clients by the investment adviser or fund manager or otherwise inform the client that the securities offered to them have not been registered with or approved by the Authority . Section 33(2) Any information provided by investment advisers or fund managers to clients through newsletters and advertisements shall be factual and accurate. Section 33(3) No investment adviser or fund manager shall loan money to a client unless the investment adviser or fund manager is a financial institution engaged in the business of loaning funds or the client is an affiliate of the investment adviser or fund manager. Section 33(4)(a) for any act or omission of the sub-contracted investment adviser or fund manager; Section 33(4)(b) the fees and expenses of any such person, which shall not be payable out of the fund of the portfolio investments; and Section 33(4)(c) any expenses incurred by any such person which if incurred by the investment adviser or the fund manager would have been payable out of the fund of the investment portfolio. Section 33(5) When accepting an order from a client the investment adviser or fund manager shall inform the client of all constituent parts of the service agreement prior to executing the order and get the client to give it a written declaration to confirm the same. Section 33(6) The investment adviser or fund manager shall be fair and equitable in the event of any conflict of interest that may arise in the course of its duties.
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INVESTMENT ADVISERS AND FUND MANAGERS - 34. Appointment of acustodian

AI-assisted research summary: Fund managers who manage discretionary funds must appoint a custodian for the fund's assets; custodians may be related holding or subsidiary companies subject to a 10% limit on investment in a related company; the Authority may revoke custodian approval if requirements cease to be met.

Section 34. Appointment of acustodian Section 34(1) A fund manager that manages discretionary funds shall appoint a custodian for the assets of the Fund. Section 34(2) A custodian of an investment portfolio may in relation to the fund manager be a holding company or a subsidiary company within the meaning of the terms as defined in section 154 of the Companies Act ( Cap. 486 ) or be deemed by the Authority to be otherwise under control of substantially the same persons or consist substantially of the same shareholders, provided that the investment in a related company shall be limited to ten per cent of the total funds managed by the fund manager. Section 34(3) The Authority may revoke the approval of a custodian if at any time thereafter the custodian ceases to satisfy the requirements of these Regulations. [ L.N. 67/2022 , r. 7.]
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INVESTMENT ADVISERS AND FUND MANAGERS - 35. Duties of acustodian

AI-assisted research summary: Section 35 lists duties of a custodian for fund managers, including custody of client property, safekeeping documents and cash, opening client accounts, acting on proper instructions, exercising care, and disclosure of custodial fees in the agreement and annual report.

Section 35. Duties of acustodian Section 35(1)(a) taking into its custody or under its control all the property of the clients of the fund manager and hold it in trust for the clients in accordance with the provisions of the written service agreement provided that cash and registrable assets shall be registered in the name of or to the order of the clients by the custodian ; Section 35(1)(b) receiving and keeping in safe custody title documents, securities and cash amounts of the investment portfolio; Section 35(1)(c) opening an account in the name of each client for the exclusive benefit of such investment portfolio; Section 35(1)(d) transferring, exchanging or delivering in the required form and manner securities held by the custodian upon receipt of proper instructions from the investment adviser or fund manager; Section 35(1)(e) requiring from the investment adviser or fund manager as the case may be, such information as it deems necessary for the performance of its functions as a custodian ; Section 35(1)(f) promptly delivering to the fund manager or to such other persons as fund manager may authorize, copies of all notices, proxies, proxy soliciting materials received by the custodian in relation to the securities held in the fund account, all public information, financial reports and stockholder communications the custodian may receive from the issuers of securities and all other information the custodian may receive, as may be agreed between the custodian , fund manager; Section 35(1)(g) exercising subscription, purchase or other similar rights represented by the securities subject to receipt of proper instructions from the fund manager; Section 35(1)(h) exercising the same standard of care that it exercises over its own assets in holding, maintaining, servicing and disposing of property and in fulfilling obligations in the agreement; Section 35(1)(i) where title to investments are recorded electronically, ensuring that entitlements of the clients of the fund manager are separately identified in the records of entitlement maintained by the custodian . Section 35(2) A custodian shall in executing its duties under paragraph (1) exercise the degree of care expected of a prudent professional custodian for hire. Section 35(3) A custodian discharging its contractual duties to an investment adviser or fund manager shall not contract agents to discharge those functions except where a portion of the investment portfolio is invested in offshore investments in which case the custodian may engage the services of an overseas sub- custodian approved by the fund manager as the case may be with notification of such appointment to the Authority . Section 35(4) The agreement referred to in paragraph (1) between the custodian and the fund manager shall make provision on the computation of the fee in respect of custodial services which will be disclosed to the clients by the fund manager in the annual report. [ L.N. 67/2022 , r. 8.]
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INVESTMENT ADVISERS AND FUND MANAGERS - 36. Custodian’s records and reports

AI-assisted research summary: Custodian must keep detailed records of the fund and transactions, provide periodic written and other reports to the investment/fund manager, and submit an annual report to the Authority; the fund manager or a duly authorized agent of the Authority is entitled to inspect those records on the custodian's premises during business hours.

Section 36. Custodian’s records and reports Section 36(1)(a) the entire fund of the investment portfolio held by the custodian ; Section 36(1)(b) each transaction carried out by the custodian on behalf of the fund manager as the case may be. Section 36(2) The records referred to in paragraph (1) shall be subject to inspection by the fund manager as the case may be or a duly authorized agent of the Authority within the premises of the custodian at any time during business hours. Section 36(3)(a) a written statement at agreed reporting dates which lists all assets of the fund manager’s clients in the clients’ account(s) together with a full account of all receipts and payments made and other actions taken by the custodian ; Section 36(3)(b) an advice or notification of any transfers of property or securities to or from the fund managers clients’ account(s) and indicating the securities acquired for the account(s), the identity of the party having physical possession of such securities; and Section 36(3)(c) a copy of the most recent audited financial statements of the custodian prepared together with such information regarding the policies and procedures of the custodian as the investment manager or fund manager may request in connection with the agreement or the duties of the custodian under that agreement. Section 36(4) The custodian shall prepare and submit to the Authority an annual report demonstrating how compliance with these Regulations and its service agreement have been achieved. [ L.N. 67/2022 , r. 9]
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INVESTMENT ADVISERS AND FUND MANAGERS - 37. Retirement of acustodian

AI-assisted research summary: Custodians may not retire voluntarily unless a successor approved by the Authority is appointed; if a custodian retires or stops being registered, the investment adviser or fund manager may (with the Authority's approval) appoint a replacement custodian.

Section 37. Retirement of acustodian Section 37(1) A custodian shall not retire voluntarily except upon the appointment of a successor approved by the Authority . Section 37(2) Where a custodian desires to retire or ceases to be registered as a custodian with the Authority , the investment adviser or the fund manager as the case may be may with the approval of the Authority appoint another eligible person to be a custodian in its place.
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INVESTMENT ADVISERS AND FUND MANAGERS - 38. Removal of acustodian

AI-assisted research summary: If a custodian's service agreement ends or the custodian is wound up, the custodian must hand over all assets, documents and funds to the newly appointed custodian within thirty days, and must submit an audit report to the Authority within twenty days; the investment adviser or fund manager may appoint a new custodian with the Authority's approval when directors resolve that notice be given.

Section 38. Removal of acustodian Section 38(1)(a) the custodian goes into liquidation other than a voluntary liquidation for the purpose of reconstruction or amalgamation or where a statutory manager or a receiver is appointed over any of its assets; Section 38(1)(b) the custodian ceases to be an authorized depository or ceases to carry on business as a bank or financial institution; Section 38(1)(c) the custodian fails or neglects after reasonable notice from the investment adviser or fund manager, to carry out or satisfy any duty imposed on the custodian in accordance with the agreement; or Section 38(1)(d) the directors of the investment adviser or fund manager as the case may be, by extraordinary resolution resolve that such notice be given, and the investment adviser or fund manager with the approval of the Authority appoints as custodian some other qualified authorized depository. Section 38(2) On receipt of the notice referred to in paragraph (1) by the investment adviser or the fund manager, the service agreement between investment adviser or the fund manager as the case may be and the custodian shall be deemed to have been terminated. Section 38(3) In the event of a termination of the service agreement as referred to in paragraph (2) or from the date of winding-up order issued by a court against the custodian, the custodian shall hand over, all assets, documents and funds including those from the bank account(s) of the investment adviser or fund manager held by such custodian to the custodian appointed in writing by investment adviser or fund manager (as the case may be) and approved by the Authority within thirty days from the date of such termination. Section 38(4) The custodian shall submit to the Authority an audit report indicating the assets, liabilities and an inventory of the investment portfolio, securities and title documents of the assets which have been handed over, transferred and delivered to the appointed custodian within twenty days from the termination of the service agreement.

Part IX

DISSEMINATION OF INFORMATION TO THE PUBLIC AND SHAREHOLDERS

62
DISSEMINATION OF INFORMATION TO THE PUBLIC AND SHAREHOLDERS - 62. Disqualification of professionals

AI-assisted research summary: Disqualifies any person from giving professional opinion on matters related to listed securities, public offer or issue of securities.

Section 62. Disqualification of professionals Section disqualify any person from giving professional opinion on matters related to listed securities, public offer or issue of securities; or
63
DISSEMINATION OF INFORMATION TO THE PUBLIC AND SHAREHOLDERS - 63. Content of public communication and circular to shareholders

AI-assisted research summary: Licensed persons or analysts who make recommendations must disclose price, market-making status if applicable, supporting facts and assumptions including ownership of securities, risks considered, and the source and time frame of assumptions; offers of reports or analyses free of charge must have no hidden conditions; statements in circulars and advertisements must be supported and sources disclosed; circulars and offers to shareholders of listed companies must be submitted to the Authority for approval.

Section 63. Content of public communication and circular to shareholders Section 63(1)(a) assisting in the evaluation of a particular security, or type of securities; Section 63(1)(b) promoting the industry, the service offered or the desirability of investing in securities in general; or Section 63(1)(c) providing shareholders or the public with accurate and adequate information about the listed company or securities transaction and market activity. Section 63(2) No material fact or qualification may be omitted if such omission would cause a shareholders’ circular, advertisement or offer document to be misleading in the context of other information presented to the shareholders, investors or the general public. Section 63(3)(a) disclose the price at the time of the recommendation and, if applicable, the fact that such licensed person or analyst makes a market in the securities recommended (where applicable); Section 63(3)(b) recommend a buy or sell action and shall disclose the basic facts and assumptions in support of such recommendation and whether the licensed person or analyst or person associated to it owns more than a nominal amount of such securities; Section 63(3)(c) highlight all risk factors that such licensed person or analyst has taken into consideration in the recommendation; and Section 63(3)(d) state the source of the facts and the recommended time frame for the validity of assumptions. Section 63(4) Any offer of a report, analysis including their updates or other service without any charge must be provided as such without any condition or obligation other than what is clearly described in the offer. Section 63(5) No claim with respect to research or analysis, capacity or expertise under which the facilities are available, may be made beyond those in actual possession of the person making the claim. Section 63(6) All statements made in a circular to shareholders and an advertisement directed to the general public shall be supported by facts the source of which shall be disclosed therein. Section 63(7) All circulars, advertisements or offer of securities to shareholders of listed companies shall be submitted to the Authority for approval prior to distribution, provided that the Authority may require the inclusion of such additional information which in its opinion is relevant to the shareholders or investors. Section 63(8)(a) “analyst” includes business, economic, financial or any other analyst by whatever name who analyses and expresses opinions or recommendations about securities or public listed companies; Section 63(8)(b) “nominal” in relation to a security means a value of ten thousand shillings or less.

Part V

INVESTMENT BANKS

39
INVESTMENT BANKS - 39. Application for licence and specific requirements for approval

AI-assisted research summary: Application for a licence to operate as an investment bank shall be submitted to the Authority in Form 1 set out in the First Schedule; required supporting documents include certificate of incorporation, memorandum and articles, accounts, management and shareholding structure, directors' details, evidence of paid up share capital of a minimum amount of two hundred and fifty million shillings, qualifications of chief executive and dealers, proposed systems and staffing, prescribed fees and name of proposed independent auditor. An Investment Bank seeking admission as a trading participant at a securities exchange shall submit a letter from that exchange confirming admission upon securing a licence from the Authority.

Section 39. Application for licence and specific requirements for approval Section 39(1) An application for a licence to operate as an investment bank shall be submitted to the Authority in Form 1 set out in the First Schedule. Section 39(2)(a) the certificate of incorporation; Section 39(2)(b) the memorandum and articles of association; Section 39(2)(c) a statement of the un-audited accounts for the period of the accounting year ending not earlier than six months prior to the date of application and applicant’s audited accounts for the preceding two years (where applicable); Section 39(2)(d) management and shareholding structure of the investment bank; Section 39(2)(d)(i) management and shareholding structure of the investment bank; Section 39(2)(d)(ii) directors, including their qualifications, addresses and details of other directorships; Section 39(2)(d)(iii) evidence of paid up share capital of a minimum amount of two hundred and fifty million shillings; Section 39(2)(d)(iv) qualifications, experience and expertise of the chief executive and dealers that must be relevant to effectively manage or operate the business of an investment bank; Section 39(2)(d)(v) proposed operating systems including dealing infrastructure suitably located and equipped to provide satisfactory service to clients; and Section 39(2)(d)(vi) staff capable of providing professional services to clients in the field of activity to which the licence relates or evidence acceptable to the Authority that such staff will be available; Section 39(2)(e) the fees prescribed in the Second Schedule; Section 39(2)(f) the name of the proposed independent auditor. Section 39(3) An Investment Bank which intends to be admitted as a trading participant at a securities exchange shall submit a letter from the securities exchange which the applicant is seeking admission as a trading participant confirming the admission of that applicant upon securing a license from the Authority . [ L.N. 99/2009 , r. 7, L.N. 88/2012 , r. 18.]
40
INVESTMENT BANKS - 40. Authorized functions

AI-assisted research summary: Section 40 concerns authorized functions relating to the public offering of securities.

Section 40. Authorized functions Section public offering of securities;
41
INVESTMENT BANKS - 41. Admission to a securities exchange

AI-assisted research summary: A person licensed by the Authority as an investment bank is entitled to apply to be a trading participant of a securities exchange, provided the bank meets the admitting exchange's eligibility requirements.

Section 41. Admission to a securities exchange Section A person licensed by the Authority as an investment bank shall be eligible to apply for admission as a trading participant with a securities exchange: Provided that the licensed investment bank complies with the eligibility requirements of the admitting securities exchange. [ L.N. 88/2012 , r. 19.]
42
INVESTMENT BANKS - 42.[Deleted byL.N. 88/2012, r. 20.]

AI-assisted research summary: Section 42 has been deleted.

Section 42.[Deleted byL.N. 88/2012, r. 20.]
43
INVESTMENT BANKS - 43. Conduct of investment banks

AI-assisted research summary: An investment bank must comply with the provisions listed in these Regulations relating to client accounts, records, reporting, conduct, prohibited dealings and associations, investment requirements, appointment of custodian, and payment of transaction and investor compensation fees, where applicable.

Section 43. Conduct of investment banks Section An investment bank shall comply with the provisions on client accounts, records to be maintained, reporting obligations, conduct, prohibited dealings and associations, investment requirements and appointment of custodian , relating to stockbrokers, broking agents, dealers, investment advisers and fund managers and payment of transaction and investor compensation fees relating to stockbrokers, stockbroking agents and dealers as set out in these Regulations, where applicable. [ L.N. 99/2009 , r. 8.]
44
INVESTMENT BANKS - 44. Financial requirements

AI-assisted research summary: Investment banks must maintain specified capital levels, including a liquid capital requirement of thirty million or eight percent of total liabilities, and banks below the paid-up share capital requirement at commencement had to comply by 31st December 2010.

Section 44. Financial requirements Section 44(1) The level of paid-up share capital shall not fall below two hundred and fifty million shillings at any time during the licence period and in addition, shareholders’ funds (paid up share capital and Reserves) shall at no time fall below two hundred and fifty million shillings: Provided that any investment bank whose paid-up share capital is below the required amount at the time of commencement of this paragraph shall comply by the 31st December 2010. Section 44(2) The minimum paid-up share capital shall always be unimpaired and shall not be advanced to the directors or associates of the investment bank. Section 44(3) Deleted byL.N. 112/2013, r. 6. Section 44(4) An investment bank shall maintain a liquid capital of thirty million or eight per cent of its total liabilities, whichever is higher. Section 44(5) Deleted byL.N. 112/2013, r. 6. [ L.N. 99/2009 , r. 9, L.N. 88/2012 , r. 21, L.N. 112/2013 , r. 6.]

Part VI

AUTHORISED SECURITIES DEALERS

45
AUTHORISED SECURITIES DEALERS - 45. Application for licence

AI-assisted research summary: Applicants listed in paragraph (2) must demonstrate capacity; authorized securities dealers seeking trading-participant admission must submit a letter from the exchange confirming post-license admission.

Section 45. Application for licence Section 45(1) An application for a licence to operate as an authorized securities dealer shall be submitted to the Authority in Form 1 set out in the First Schedule. Section 45(2)(a) a bank licensed under the Banking Act ( Cap. 488 ); Section 45(2)(b) an investment bank or a fund manager; Section 45(2)(c) an insurance company licensed under the Insurance Act ( Cap. 487 ); or Section 45(2)(d) any other person who meets the requirements of this Part and approved by the Authority , Section 45(3) An applicant under paragraph (2) shall demonstrate effective capacity and expertise in dealing in securities. Section 45(4) An authorized securities dealer who intends to be admitted as a trading participant at a securities exchange shall submit a letter from the securities exchange, which the applicant is seeking admission to as a trading participant, confirming that applicant shall be admitted into the securities exchange upon securing a license from the Authority . [ L.N. 88/2012 , r. 22, L.N. 112/2013 , r. 7.]
46
AUTHORISED SECURITIES DEALERS - 46. Specific requirements for approval

AI-assisted research summary: Specific requirements for approval Section the certificate of incorporation;

Section 46. Specific requirements for approval Section the certificate of incorporation;
47
AUTHORISED SECURITIES DEALERS - 47.[Deleted byL.N. 112/2013, r. 9.]

AI-assisted research summary: Section 47 has been deleted by L.N. 112/2013, r. 9.

Section 47.[Deleted byL.N. 112/2013, r. 9.]
48
AUTHORISED SECURITIES DEALERS - 48. Functions and membership on a securities exchange

AI-assisted research summary: Licensed authorized securities dealers may apply to be trading participants of a securities exchange if they meet that exchange's eligibility requirements; authorized securities dealers must comply with specified provisions on client accounts, conduct of business and related requirements.

Section 48. Functions and membership on a securities exchange Section 48(1)(a) restricted to dealing in fixed income securities whether listed on an approved exchange or not; Section 48(1)(b) entitled to trade on behalf of others as well as on their own account in such segment; and Section 48(1)(c) required to implement necessary operational, trading and settlement procedures and systems necessary to minimize settlement and counter party risk and manage conflicts of interest. Section 48(2) A person licensed by the Authority as an authorized securities dealer shall be eligible to apply to be admitted as a trading participant with a securities exchange: Provided that the authorized securities dealer meets the eligibility requirements of the admitting securities exchange. Section 48(3) An authorized securities dealer shall comply with 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, where applicable. [ L.N. 88/2012 , r. 23, L.N. 112/2013 , r. 10.]
49
AUTHORISED SECURITIES DEALERS - 49. Records of transactions

AI-assisted research summary: Section title: "Section 49. Records of transactions Section type of security;"

Section 49. Records of transactions Section type of security;
50
AUTHORISED SECURITIES DEALERS - 50. Report of dealing transactions

AI-assisted research summary: The Authority may require other forms of financial statements.

Section 50. Report of dealing transactions Section 50(1)(a) monthly reports and accounts within fifteen days of the end of each calendar month; Section 50(1)(b) quarterly reports and accounts within fifteen days of the end of each calendar quarter; Section 50(1)(c) half yearly reports and accounts within thirty days of the end of each year; Section 50(1)(d) audited annual accounts within three months following the end of the authorized securities dealer financial year; and Section 50(1)(e) a financial statement complying with the disclosures prescribed under the Fourth Schedule of these Regulations. Section 50(2) The Authority may require such other form of financial statement as it may from time to time specify. Section 50(3)(a) type of securities; Section 50(3)(b) total value of securities traded in terms of sales and purchases during the relevant period; and Section 50(3)(c) average yield of the total value of securities traded during the relevant period.

Part VII

GENERAL REQUIREMENTS FOR LICENSING

51
GENERAL REQUIREMENTS FOR LICENSING - 51. Renewal of licence

AI-assisted research summary: Authorised securities dealers must submit annual accounts and reports as required by the Authority; every licensed person must have a financial year ending 31 December and, if different at commencement, must comply within twelve months.

Section 51. Renewal of licence Section 51(1) An application for the renewal of a licence shall be submitted to the Authority in Form 1 set out in the First Schedule by the 30th of November of each year. Section 51(2)(a) the fees set out in the Second Schedule; Section 51(2)(b) where the application is for the renewal of a licence, management accounts for the period up to 30th November of each year not later than the 15th December in the same year. Section 51(3) Authorised securities dealers shall submit the annual accounts and report the dealings operations as may be required by the Authority . Section 51(4) The audited accounts for each year shall be submitted to the Authority not later than the 31st day of March. Section 51(4A) The financial year of every licensed person shall be the period of twelve months ending on the 31st December in each year: Provided that where the financial year of a licensed person is different from that prescribed in this paragraph at the commencement of this paragraph, the licensed person shall comply therewith within twelve months of such commencement. [ L.N. 99/2009 , r. 10.]
51A
GENERAL REQUIREMENTS FOR LICENSING - 51A. Financial Statements

AI-assisted research summary: Licensees must prepare financial statements in accordance with International Financial Reporting Standards; half-year unaudited statements are due within two months after the first half, and full-year audited statements are due within three months after year end.

Section 51A. Financial Statements Section 51A(1) All financial statements prepared by licensees shall be prepared in accordance with International Financial Reporting Standards. Section 51A(2)(a) half-year unaudited financial statements within two months after the end of the first half of the financial year; and Section 51A(2)(b) full-year audited financial statements within three months after the end of the financial year.
51B
GENERAL REQUIREMENTS FOR LICENSING - 51B. Professional indemnity insurance

AI-assisted research summary: Certain financial services firms must obtain professional indemnity insurance with specified minimums or as determined by the Authority.

Section 51B. Professional indemnity insurance Section 51B(1) Stockbrokers and investment banks shall obtain professional indemnity insurance to secure an amount not less than five times their daily average turnover. Section 51B(2) For the purposes of paragraph (1) , the daily average turnover shall be calculated based on the firm’s turnover for the previous year, where applicable, or such amount as the Authority may determine. Section 51B(3) Fund managers shall obtain professional indemnity insurance to secure such amount as the Authority may determine based on the portfolio under the management of the Fund Manager. Section 51B(4) Investment advisers shall obtain professional indemnity insurance the value of which shall not be less than five hundred thousand shillings. [ L.N. 99/2009 , r. 11, L.N. 67/2022 , r. 10.]
51C
GENERAL REQUIREMENTS FOR LICENSING - 51C. Display of audited balance sheet

AI-assisted research summary: Licensed stockbrokers, fund managers and investment banks must display, year-round and in every Kenyan office and branch, copies of their most recent audited balance sheet and profit and loss statement, the auditor’s report, and the full names of all directors; the statements must conform to the minimum financial disclosure requirements prescribed by the Authority.

Section 51C. Display of audited balance sheet Section Every licensed stockbroker fund manager and investment bank shall display throughout the year in a conspicuous position in every office and branch in Kenya, copies of its last audited balance sheet and profit and loss statement which shall be in conformity with the minimum financial disclosure requirements prescribed from time to time by the Authority , and shall include a copy of the auditor’s report together with full and correct names of all persons who are directors of the licensee. [ L.N. 99/2009 , r. 11.]
52
GENERAL REQUIREMENTS FOR LICENSING - 52. Determination of suitability

AI-assisted research summary: Suitability is determined by the person's probity, competence and soundness of judgment in fulfilling the responsibilities of the position.

Section 52. Determination of suitability Section his probity, competence and soundness of judgment in fulfilling the responsibilities of that position;
53
GENERAL REQUIREMENTS FOR LICENSING - 53. Key personnel of full and associate members

AI-assisted research summary: All trading participants of a securities exchange must register with the Authority all key personnel each year and report any changes.

Section 53. Key personnel of full and associate members Section 53(1) All trading participants of a securities exchange shall register with the Authority all key personnel annually including any changes thereto. Section 53(2) For the purposes of this regulation “key personnel” includes employees and directors of a trading participant who have direct dealings with clients and carry on trading activities on behalf of clients. [ L.N. 88/2012 , r. 25.]
53A
GENERAL REQUIREMENTS FOR LICENSING - 53A. Designation of compliance officer

AI-assisted research summary: Every licensed person must, in writing, designate a compliance officer to coordinate compliance matters with the Authority.

Section 53A. Designation of compliance officer Section Every licensed person shall, in writing, designate in writing a compliance officer to coordinate all compliance matters with the Authority . [ L.N. 99/2009 , r. 13.]
53B
GENERAL REQUIREMENTS FOR LICENSING - 53B. Change of shareholders, directors,etc.

AI-assisted research summary: Licensees may not change shareholders, directors, chief executive or key personnel unless they obtain prior written confirmation from the Authority that it has no objection and comply with any conditions; licensees must lodge an annual list of key personnel and update it within five days of changes; proposed appointees who are former employees or connected to another licensee require reasons for departure to be forwarded in support of the request for no objection.

Section 53B. Change of shareholders, directors,etc. Section 53B(1) Any person licensed by the Authority shall not change its shareholders, directors, chief executive or key personnel except with the prior confirmation, in writing, by the Authority that has no objection to the proposed change and subject to compliance with any conditions imposed by the Authority . Section 53B(2) Where any person proposed to be appointed under paragraph (1) is found to be a former employee or otherwise connected with another licensee of the Authority, details of the reasons for their departure shall be forwarded in support of any request for no objection. Section 53B(3) Every licensee shall lodge with the Authority in every year, and update the same within five days of any change thereto, a list of all key personnel working with the licensee, which shall include the individual’s full name, national identity card number, job designation and description of responsibilities and, where they have worked with other licencees of the Authority , details of their former employers. [ L.N. 99/2009 , r. 13.]
53C
GENERAL REQUIREMENTS FOR LICENSING - 53C. Branch or new place of business

AI-assisted research summary: Licensed persons must not open or relocate branches, or close places of business, without Authority approval or required written notice.

Section 53C. Branch or new place of business Section 53C(1) A licensed person shall not open a branch or a new place of business in Kenya, or change the location of a branch or existing place of business, without the approval of the Authority . Section 53C(2) A licensed person shall not close any of its place of business in Kenya without first giving the Authority a three months’ written notice of its intention to do so or such shorter period of notice as the Authority may allow. [ L.N. 99/2009 , r. 13.]
54
GENERAL REQUIREMENTS FOR LICENSING - 54. Alteration of memorandum or articles of association

AI-assisted research summary: Every licensed person must submit any changes to its memorandum or articles of association to the Authority within thirty days after passing the approving resolution.

Section 54. Alteration of memorandum or articles of association Section Every licensed person shall submit to the Authority any alterations to its memorandum or articles of association within thirty days of passing the resolution approving such alteration.
54A
GENERAL REQUIREMENTS FOR LICENSING - 54A. Change to capital structure

AI-assisted research summary: Licensed persons must notify the Authority of any changes to their capital structure within five working days from the change.

Section 54A. Change to capital structure Section Every licensed person shall notify the Authority of any changes to its capital structure within five working days from the date of the change. [ L.N. 99/2009 , r. 14.]
55
GENERAL REQUIREMENTS FOR LICENSING - 55. Qualification of Secretary

AI-assisted research summary: No licensed person shall engage as a Secretary a person who is not qualified under the Institute of Certified Public Secretaries of Kenya Act ( Cap. 534 ).

Section 55. Qualification of Secretary Section No licensed person shall engage as a Secretary a person who is not qualified under the Institute of Certified Public Secretaries of Kenya Act ( Cap. 534 ).
55A
GENERAL REQUIREMENTS FOR LICENSING - 55A. Auditor

AI-assisted research summary: A licensed or approved person must not appoint or remove its auditor except with the Authority's prior written approval given at least one month beforehand; additional rules cover disqualification of auditors for failures, duties of auditors to report in good faith to the Authority, applicability to matters discovered in the auditor role, a maximum four-year continuous term for auditors (with a group exemption), and the Authority's power to hold trilateral meetings with licensees and auditors.

Section 55A. Auditor Section 55A(1) A licensed or approved person shall not appoint or remove its auditor except with the prior written approval of the Authority at least one month prior to such appointment or removal. Section 55A(2)(a) there has been a serious breach of or non-compliance with the provisions of the Act or Regulations, made thereunder, guidelines or other stipulations of the Authority ; or Section 55A(2)(b) a criminal offence involving fraud or other dishonesty has been committed by the licensed person or any of its key officers or employees; or Section 55A(2)(c) serious irregularities occurred which may jeopardize the security of investors or creditors of the licensed person; or Section 55A(2)(d) he is unable to confirm that the claims of investors and creditors of the licensed person are capable of being met out of the assets of the licensed person, Section 55A(3) Where an auditor of a licensed or approved person fails to comply with the requirements of paragraph (2) above, the Authority shall disqualify him from appointment as an auditor of its licensees and approved persons. Section 55A(4) A duty to which an auditor of a licensed or approved person may be subject to shall not be regarded as contravened by reason of his communicating in good faith to the Authority , whether or not in response to a request made by it or opinion on a matter to which this regulation applies and which is relevant to any function of the Authority under this Act or Regulations made thereunder. Section 55A(5) This regulation shall apply to any matter of which an auditor becomes aware in his capacity as an auditor or in discharge of his duties under these Regulations and which relates to the business or affairs of the licensed or approved person or any associated persons. Section 55A(6) A person appointed as an auditor shall serve for a maximum period of four consecutive years: Provided that a licensed or approved person which is a subsidiary, or an associated company of a listed company may be exempted from this requirement for purposes of aligning the term of an auditor in the entire group of companies. Section 55A(7) The Authority may arrange trilateral meetings with a licensed person and its auditor from time to time to discuss matters relevant to the Authority ’s supervisory responsibilities including relevant aspects of the licensed person’s business, its accounting and control system and its annual accounts. [ L.N. 99/2009 , r. 15, L.N. 67/2022 , r. 11.]
55B
GENERAL REQUIREMENTS FOR LICENSING - 55B. Notice to theAuthorityby Auditor

AI-assisted research summary: Notice to the Authority by Auditor

Section 55B. Notice to theAuthorityby Auditor Section resigns from office;
56
GENERAL REQUIREMENTS FOR LICENSING - 56. Marketing securities

AI-assisted research summary: No person may market securities in Kenya to the public (including by advertisement, solicitation or invitation) unless licensed under these Regulations.

Section 56. Marketing securities Section No person shall market securities in Kenya, whether the securities have been issued in Kenya or not, through advertisement, solicitation, invitation or by other means in whatever form or manner with an aim of reaching the general public or a section thereof unless such a person is licensed under these Regulations.

Part VIII

TRANSACTIONS OF LISTED SECURITIES OUTSIDE A SECURITIES EXCHANGE

57
TRANSACTIONS OF LISTED SECURITIES OUTSIDE A SECURITIES EXCHANGE - 57. Nature of transaction

AI-assisted research summary: transfer to a close relation in the form of a gift;

Section 57. Nature of transaction Section transfer to a close relation in the form of a gift;
58
TRANSACTIONS OF LISTED SECURITIES OUTSIDE A SECURITIES EXCHANGE - 58. Brokerage commission

AI-assisted research summary: If a private transaction is authorized, no brokerage commission shall be payable on the transaction except for a fee prescribed by the Authority; however, a private transfer under regulation 57(a) is subject to the prevailing prescribed brokerage commission.

Section 58. Brokerage commission Section Where a private transaction is authorized, no brokerage commission shall be payable on the transaction, except a fee prescribed by the Authority — Provided that a private transfer under regulation 57(a) shall be subject to the prevailing prescribed brokerage commission. [ L.N. 112/2013 , r. 14.]
59
TRANSACTIONS OF LISTED SECURITIES OUTSIDE A SECURITIES EXCHANGE - 59. Application for approval of a private transfer

AI-assisted research summary: Regulated entities (the securities exchange or central depository) must notify stockbrokers within seven days whether they object to a private transfer, approve and notify the Authority when an application complies, forward certain applications with recommendations to the Authority, and jointly submit approval guidelines to the Authority.

Section 59. Application for approval of a private transfer Section 59(1)(a) in the case of certificated securities, to the securities exchange where the security is listed, and Section 59(1)(b) in the case of immobilized securities, to the central depository at which the security is immobilized, Section 59(2) Where an application is made under regulation 57(a) or (b) , the securities exchange or a central depository, as the case may be, shall notify the stockbroker within seven days of receiving the application whether the securities exchange or the central depository objects to the private transaction or not, after examining and satisfying itself that the proposed transfer is eligible for consideration as a private transaction in accordance with these Regulations. Section 59(3) The securities exchange or a central depository, as the case may be, shall, upon determination of any application made under regulation 57(a) or (b) , approve and simultaneously notify the Authority that the application complies with regulation 57(a) or (b) . Section 59(4) The securities exchange or the central depository shall, upon receipt of an application made under regulation 57(e) , forward the application together with its recommendations to the Authority for approval. Section 59(5) 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 57(a) and (b) . Section 59(6) The guidelines stipulated under subparagraph (5) 3 shall apply to all stockbrokers. [ L.N. 112/2013 , r. 15.]
60
TRANSACTIONS OF LISTED SECURITIES OUTSIDE A SECURITIES EXCHANGE - 60. Approval fee

AI-assisted research summary: The approval fee for transactions of listed securities outside a securities exchange is set at the rate prescribed by the Authority.

Section 60. Approval fee Section The approval fee for any transaction of a listed securities outside a securities exchange shall be at the rate prescribed by the Authority .
61
TRANSACTIONS OF LISTED SECURITIES OUTSIDE A SECURITIES EXCHANGE - 61. Private transactions under section 31(1A) of theAct

AI-assisted research summary: Applicants must publicly announce their intention to apply for approval of a proposed transfer and must submit a copy of the transfer form to the Authority with the application.

Section 61. Private transactions under section 31(1A) of theAct Section 61(1)(a) the name and address of the applicant; Section 61(1)(b) the date of incorporation; Section 61(1)(c) the particulars of core activities, directors, management and major shareholders; Section 61(1)(d) the details of any agreements entered or proposed to be entered into and the cost; Section 61(1)(e) a statement by the financial adviser managing the transaction that to the best of its knowledge and belief the application constitutes full and true disclosure of all material facts about the offer and issuer and where appropriate it has satisfied itself that the profit forecasts have been stated by the directors after due and careful inquiry; Section 61(1)(f) the details of any proposed merger, takeover, acquisitions, share, swap, reorganization or restructure scheme and the relevant shareholders and/or board resolutions; Section 61(1)(g) a declaration by the directors of the applicant in the following form: “This application has been approved by the directors of the company all of whom jointly and severally accept responsibility for the accuracy of the information given and confirm that after making all reasonable inquiries and to the best of their knowledge and belief, there are no facts the omission of which would make any statement herein misleading.”; Section 61(1)(h) any other matters as may be requested by the Authority . Section 61(2) The applicant shall make a public announcement of its intention to apply to the Authority for approval of the proposed transfer and reasons therein and a copy of the transfer form for the proposed transaction shall be submitted to the Authority together with the application.

Part X

THE INVESTOR COMPENSATION FUND

64
THE INVESTOR COMPENSATION FUND - 64. Contribution by licensees

AI-assisted research summary: Every buying or selling stockbroker or dealer who is a trading participant of a securities exchange must contribute to the Compensation Fund the amount prescribed by the Authority.

Section 64. Contribution by licensees Section 64(1) Every buying or selling stockbroker or dealer that is a trading participant of a securities exchange shall contribute to the Compensation Fund such amount as shall be prescribed from time to time by the Authority . Section 64(2) All monies contributed to the Compensation Fund shall be credited to a bank account established by the Authority for that purpose. [ L.N. 88/2012 , r. 27.]
65
THE INVESTOR COMPENSATION FUND - 65. Management and audit of theCompensation Fund

AI-assisted research summary: The Authority must manage the Compensation Fund as a separate fund and disclose it in the Authority's annual balance sheet; keep proper accounts and prepare an annual statement of accounts for the Fund; and the Fund's accounts and records must be audited by the auditor appointed by the Authority for the Authority's annual accounts.

Section 65. Management and audit of theCompensation Fund Section 65(1) The Compensation Fund shall be managed by the Authority as a separate fund and disclosed as such in the Authority ’s annual balance sheet as an asset and liability. Section 65(2) The Authority shall keep proper accounts and records of the Compensation Fund and in every financial year, prepare a statement of accounts showing the movement and financial position of the Fund in the Authority ’s annual report. Section 65(3) The accounts referred to in paragraph (2) shall include the income and all sources of contribution to and expenses or disbursements of the Compensation Fund including the fees charged by the Authority for the management of the Fund and any investments of the Fund. Section 65(4) The accounts and records of the Compensation Fund shall be audited by the auditor appointed by the Authority for the Authority ’s annual accounts.
66
THE INVESTOR COMPENSATION FUND - 66. Trustees of theCompensation Fund

AI-assisted research summary: Members of the Authority must act as the trustees of the Compensation Fund and may appoint a Board committee to oversee its management.

Section 66. Trustees of theCompensation Fund Section Members of the Authority shall act as the trustees of the Compensation Fund and may appoint a committee of the Board to oversee its management.
67
THE INVESTOR COMPENSATION FUND - 67. Meetings of theCompensation Fund

AI-assisted research summary: The Chief Executive must convene special meetings of members when the Compensation Fund's business requires; the Board must determine the procedure for those meetings.

Section 67. Meetings of theCompensation Fund Section A special meeting of the members of the Authority shall be convened by the Chief Executive of the Authority whenever the business of the Compensation Fund so requires and the Board of the Authority shall determine the procedure for such meetings.
68
THE INVESTOR COMPENSATION FUND - 68. Report to the Cabinet Secretary

AI-assisted research summary: The Authority must include information about the Compensation Fund in its annual report to the Cabinet Secretary responsible for Finance.

Section 68. Report to the Cabinet Secretary Section The Authority shall include information relating to the Compensation Fund in its annual report to the Cabinet Secretary for the time being responsible for Finance.
69
THE INVESTOR COMPENSATION FUND - 69. Compensation of investors

AI-assisted research summary: Compensation of investors

Section 69. Compensation of investors Section from the bank guarantee or securities furnished by such licensed person to the securities exchange or central depository as the case may be of which such licensed person is a trading participant; or
70
THE INVESTOR COMPENSATION FUND - 70. Maximum compensation

AI-assisted research summary: Net loss to an investor is capped at two hundred thousand shillings.

Section 70. Maximum compensation Section 70(1) The net loss to an investor shall be subject to a maximum of two hundred thousand shillings. Section 70(2) The statutory manager shall recommend to the Authority the net loss that the investor may claim from the Compensation Fund . [ L.N. 72/2009, r. 2, L.N. 158/2023, r. 2.]
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THE INVESTOR COMPENSATION FUND - 71. InvestorCompensation Committee

AI-assisted research summary: Section 71. InvestorCompensation Committee Section 71(1) The Authority shall establish an Investor Compensation Committee to deal with claims from investors. Section 71(2) The Compensation Committee shall include the Chairman and the Chief

Section 71. InvestorCompensation Committee Section 71(1) The Authority shall establish an Investor Compensation Committee to deal with claims from investors. Section 71(2) The Compensation Committee shall include the Chairman and the Chief Executive of the Nairobi Stock Exchange and any other persons who may be appointed by the Authority to be members of the Committee. Section 71(3) The Compensation Committee shall, after examination of the evidence produced in support of a claim, make any recommendation to the Authority with respect to whether to allow or disallow such claim and, if the recommendation is to allow the claim, an assessment of the amount payable including any pro rata allocation of any such limit prescribed for every defaulting stockbroker or dealer or the size of the fraud, as applicable. Section 71(4) While determining the amount to be paid in compensation to an Investor, the Compensation Committee shall take into account the total amount available in the Compensation Fund . Section 71(5) The Authority shall give notice of its decision to the investors in writing or by other means of appropriate notification.
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THE INVESTOR COMPENSATION FUND - 72. Notification of pecuniary loss

AI-assisted research summary: Investors who suffer pecuniary loss must notify the statutory manager within sixty days; the statutory manager must pay all valid claims within six months of appointment.

Section 72. Notification of pecuniary loss Section 72(1) Every investor who has suffered a pecuniary loss shall notify the statutory manager of the licensed person liable for the loss within sixty days of the appointment of the statutory manager. Section 72(2) The statutory manager shall pay all valid claims within six months of its appointment.
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THE INVESTOR COMPENSATION FUND - 73. Submission of claims

AI-assisted research summary: The statutory manager must submit to the Authority a list of investors to be compensated and supporting documents; the Authority must convene the Compensation Committee within twenty-one days after receipt of such a claim submission.

Section 73. Submission of claims Section 73(1) The statutory manager shall submit to the Authority a list of investors to be compensated as well as the supporting documents. Section 73(2) The Authority shall convene a meeting of the Compensation Committee within twenty-one days of receipt of submission of a claim by the statutory manager.
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THE INVESTOR COMPENSATION FUND - 74. Payment of claims

AI-assisted research summary: If the Compensation Fund pays on behalf of a licensed person, that licensed person must reimburse the Fund for the payment; if a licensed person is liquidated, the liquidator must repay the Fund any sums the Fund paid to investors on behalf of the insolvent licensed person.

Section 74. Payment of claims Section 74(1) Where payment has been made out of the Compensation Fund on behalf of a licensed person, such licensed person shall be liable to the Compensation Fund for an amount equal to the payment made out of the Fund. Section 74(2) In the event of liquidation of a licensed person, the liquidator shall pay the Compensation Fund any money paid by the Fund to investors on behalf of the insolvent person under these Regulations to the extent of such payment.

Part XI

DISCLOSURE OF INFORMATION

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DISCLOSURE OF INFORMATION - 75. Disclosure of interest in shares

AI-assisted research summary: A 'notifiable interest' in a listed company is defined as three per cent or more of the company's relevant share capital.

Section 75. Disclosure of interest in shares Section 75(1)(a) by his knowledge acquires a notifiable interest in shares in a listed company’s relevant share capital, or ceases to be interested in such shares; or Section 75(1)(b) becomes aware that he has acquired a notifiable interest in the relevant shares of a listed company or that he has ceased to be interested in such shares in which he was previously interested, Section 75(2)(a) all persons from whom the listed company has received a notification under paragraph (1) ; Section 75(2)(b) all directors holding one per cent or more in the relevant share capital; Section 75(2)(c) cumulative holding of the relevant share capital by directors. Section 75(3)(a) if he is an employee of the listed company; Section 75(3)(b) if he is a director or chairman of the listed company; Section 75(3)(c) in which his spouse, any infant child or step child of his is interested; or Section 75(3)(d) the body corporate or its directors are accustomed to act in accordance with his directions or instructions; or Section 75(3)(d)(i) the body corporate or its directors are accustomed to act in accordance with his directions or instructions; or Section 75(3)(d)(ii) the person is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of the body corporate; or Section 75(3)(d)(iii) the person is a director or a shareholder of the body corporate. Section 75(4)(a) on circumstances obtaining before and after whatever is in that case the relevant time; and Section 75(4)(b) in a case within paragraph (1)(b) , the time at which the person became aware of the facts in question. Section 75(5)(a) a “director” means a director of a listed company; Section 75(5)(b) “relevant share capital” means the company’s issued share capital of a class carrying rights to vote in all circumstances at general meetings of the company; and Section 75(5)(c) a “notifiable interest” means three per cent or more of the relevant share capital of a listed company.
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DISCLOSURE OF INFORMATION - 76. Furnishing of information to theAuthority

AI-assisted research summary: Notified persons must provide specified information about securities transactions and beneficial ownership to the Authority; the Authority may share and verify that information under memoranda of understanding and may use it for regulatory, enforcement, reporting or publication purposes.

Section 76. Furnishing of information to theAuthority Section 76(1) Every person notified by the Authority pursuant to section 13 of the Act shall provide any specified information in the form and content as required by the Authority, with regards to the information on orders, purchases, sales or trading and settlement of securities including documentation relating to such transactions and disclosure of beneficial ownership of securities and such information may be shared with other regulatory agencies for the sole purpose of ensuring compliance, enforcement and any other matters pursuant to a bilateral or multilateral memorandum of understanding. Section 76(2) The information sought from any person under paragraph (1) shall be submitted to the Authority in a written form within the time specified by the Authority and such information shall include statements made under oath. Section 76(3) Where information has been submitted to the Authority under paragraph (2) , the Authority may seek to verify such information and the person in possession of such information and documentation shall avail it without obstruction to the authorized personnel of the Authority. Section 76(4) The Authority shall enter into a memorandum of understanding pursuant to section 11(3)(q) of the Act either on a bilateral or a multilateral basis with other regulatory organizations or agencies on a reciprocal basis to facilitate exchange of information for the purposes of development of the capital markets and for enforcement and compliance with the laws and regulations of capital markets applicable in the jurisdictions party to the memorandum of understanding. Section 76(5) Where the Authority does not have within its jurisdiction information or documents requested under a bilateral or multilateral memorandum of understanding the Authority shall seek to collaborate with other relevant agencies to obtain such information with a clear understanding with such other agencies that the information may be shared with other regulatory agencies pursuant to the memorandum of understanding. Section 76(6) The information obtained under paragraph (1) and (5) shall be used by the Authority for regulatory purposes including enforcement and compliance and sharing with other regulatory agencies pursuant to the memorandum of understanding. Section 76(7) The Authority may include information obtained under paragraph (1) and (5) in any report by the Authority for its internal regulatory purposes or exchange such information pursuant to the memorandum of understanding or publish such information pursuant to section 11(3)(k) of the Act.
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DISCLOSURE OF INFORMATION - 77. Preservation of financial and other records

AI-assisted research summary: Issuers to the public (or approved sections) and persons licensed by the Authority must preserve all financial and other records for a period of seven years.

Section 77. Preservation of financial and other records Section Every issuer of securities to the public or a section thereof approved by the Authority and every person licensed by the Authority , shall preserve all financial and other records whether such records are maintained in an electronic or manual form, relating to transactions conducted by the licensee or to the offer of securities by an issuer, including daily, weekly, monthly, quarterly and annual transactions and other relevant records including minutes of all meetings on account of such transactions and registers of securities, for a period of seven years.
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DISCLOSURE OF INFORMATION - 78. Destruction of financial and other records

AI-assisted research summary: No person must not interfere, deface or destroy the records referred to in regulation 77.

Section 78. Destruction of financial and other records Section No person shall at any time within the prescribed period interfere, deface or destroy the records referred to in regulation 77 , in any manner that will lead to the alteration of any facts or content therein including the date, amount and names of all persons party to the transactions whether such person is a licensee of the Authority; an issuer of securities to the public or a section thereof, an auditor of such licensee or issuer or any professional who is or will be involved directly or indirectly in the transactions.

Part XII

MISCELLANEOUS PROVISIONS

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MISCELLANEOUS PROVISIONS - 79.[Deleted byL.N. 99/2007, r. 3.]

AI-assisted research summary: Section 79 has been deleted.

Section 79.[Deleted byL.N. 99/2007, r. 3.]
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MISCELLANEOUS PROVISIONS - 80. Prevention of money laundering and other illicit activities

AI-assisted research summary: Licensed persons must collect specified client identity, business and source-of-funds information, obtain it each time an investment order is placed, maintain records, and provide the information on request; licensees may rely on regulated financial institutions for beneficial ownership information in specified circumstances.

Section 80. Prevention of money laundering and other illicit activities Section 80(1)(a) the identity of the client or a potential client supported by documentary evidence; Section 80(1)(b) nature of business activities of the client or potential client; Section 80(1)(c) origin and sources of funds used or to be used for investment in securities. Where the money or funds originate from outside Kenya a confirmation from the remitting entity of the nature of its business and of the source of the moneys or funds; Section 80(1)(d) the accuracy of all information given under paragraphs (a) to (c) ; and Section 80(1)(d)(i) the accuracy of all information given under paragraphs (a) to (c) ; and Section 80(1)(d)(ii) that the moneys or funds used for the investment in securities is not arising out of the proceeds of any money laundering or other illicit activities; Section 80(1)(e) where the client is a natural person, any person on whose behalf the client is acting, whether as nominee, trustee or any other capacity; Section 80(1)(e)(i) where the client is a natural person, any person on whose behalf the client is acting, whether as nominee, trustee or any other capacity; Section 80(1)(e)(ii) where the client is a limited partnership, the name of the general partner (and where the general partner is a body corporate, the information as prescribed under item (iv) shall be maintained); Section 80(1)(e)(iii) where the client is an unlimited partnership, the names of the other partners; Section 80(1)(e)(iv) where the client is a body corporate, the name of all individuals who have a direct or indirect interest amounting to thirty per cent or more of the equity; Section 80(1)(e)(v) where the client is a trust, the name of the settlers, trustees, protectors and principal named beneficiaries; Section 80(1)(e)(vi) where the client is a legal arrangement other than a trust, the name of the owner or controller; Section 80(1)(f) where the customer is a financial institution, such as a bank, insurance company, pension fund or collective investment fund and is conducting business collectively on behalf of a large number of underlying customers, and where the institution is subject to rules or regulations that require the financial institution to conduct customer due diligence, the licensee is permitted to rely on the financial institution to hold beneficial ownership information and need not hold that information itself. Section 80(2) The client information under paragraph (1) shall be obtained by the licensed person every time a client places an investment order with the licensed person. Section 80(3) The client information obtained under paragraph (1) and (2) shall be maintained by the licensed person as part of the records required under regulations 19 , 31 , 43 and 49 . Section 80(3A) The licensed person shall make such information available to the Authority on request and also to the central depository for the purpose of answering an enquiry made of it under Section 58 of the Central Depositories Act ( Cap. 485C ). [ L.N. 99/2009 , r. 16.]

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