Privatisation Act

Section 1. Short title Section This Act may be cited as the Privatisation Act, 2023.

Section 2. Interpretation Section 2(1) In this Act, unless the context otherwise requires— "Authority" means the Privatisation Authority established under section 8 ; "Board" means the Board of the Authority ("the Privatisation Authority established under;") constituted under section 10 ; "Cabinet Secretary" means the Cabinet Secretary to the National Treasury; "Corporation Secretary" means the Corporation Secretary appointed in accordance with section 17 ; "Managing Director" means the Managing Director of the Authority ("the Privatisation Authority established under;") appointed under section 16 ; "national government-linked corporation" means a corporation in which the National Government or a national government entity is a shareholder with less than fifty per centum of the share capital of the corporation; "privatisation" means a transaction that results in a transfer, other than to a public entity , of the assets and or liabilities of a public entity including the shares in a public entity ; "privatisation programme" means the privatisation programme provided for under section 19 ; "privatisation proposal" means a proposal provided for under section 30 ; "public entity" inclu...

Section 3. Objects and purpose of the Act Section provide for the establishment of the Privatisation Authority ("the Privatisation Authority established under;") ; and

Section 4. Limitation of application Section sale of shares in the secondary market ("a financial market in which previously issued financial instruments such as shares and other marketable securities are traded") ;

Section 5. Guiding principles of the Act Section the national values and principles of governance set out under Article 10 of the Constitution;

Section 6. Purpose ofprivatisation Section encourage more participation of the private sector in the economy by shifting the production and delivery of products and services from the public sector to the private sector;

Section 7. Role ofCabinet Secretary Section providing policy direction on matters related to privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") ;

Section 8. PrivatisationAuthority Section 8(1) There is established an authority to be known as the Privatisation Authority ("the Privatisation Authority established under;") . Section 8(2)(a) suing and being sued; Section 8(2)(b) taking, purchasing, charging and disposing of movable and immovable property; Section 8(2)(c) entering into contracts; and Section 8(2)(d) doing or performing all other things necessary for the proper discharge of its functions under this Act which may be lawfully done or performed by a body corporate.

Section 9. Functions of the Authority Section advise the government on all aspects of privatisation of public entities;

Section 10.Boardof theAuthority Section 10(1)(a) a chairperson appointed by the President; Section 10(1)(b) the Principal Secretary to the National Treasury or a representative designated in writing; Section 10(1)(c) the Principal Secretary in the Ministry responsible for matters relating to investment promotion or a representative designated in writing; Section 10(1)(d) the Attorney General or a representative designated in writing; Section 10(1)(e) the secretary to the State Corporations Advisory Committee or a representative designated in writing; Section 10(1)(f) four other persons, not being public officers, appointed by the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") through a competitive process, each possessing a degree in either economics, accounting, finance or any other relevant degree from a recognized institution and having ten years of work experience of which five shall be at senior management level in a relevant field; Section 10(1)(g) the Managing Director ("the Managing Director of the Authority appointed under;") of the Authority ("the Privatisation Authority established under;") , who shall be an ex-officio member of the Board ("the Boa...

Section 11. Functions of theBoard Section 11(1)(a) ensure the proper and effective performance of the functions of the Authority ("the Privatisation Authority established under;") ; Section 11(1)(b) determine the mission, vision, purpose and core values of the Authority ("the Privatisation Authority established under;") ; Section 11(1)(c) set and oversee the overall strategy and approve policies of the Authority ("the Privatisation Authority established under;") ; and Section 11(1)(d) ensure availability of adequate resources for the achievement of the Authority ("the Privatisation Authority established under;") ’s objectives. Section 11(2)(a) subject to the approval of the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") , invest any of the Authority ("the Privatisation Authority established under;") ’s funds that are not immediately required for the purposes of this Act; Section 11(2)(b) monitor and evaluate the performance of the Authority ("the Privatisation Authority established under;") ; Section 11(2)(c) open and operate bank accounts for the funds of the Authority ("the Privatisation Authority established under;") in accordance with the Public Finance M...

Section 12. Vacancy in theBoard Section 12(1)(a) dies; Section 12(1)(b) resigns from office by notice in writing addressed to the appointing authority; Section 12(1)(c) absence from three consecutive meetings of the Board ("the Board of the Authority constituted under;") without a reasonable explanation; Section 12(1)(c)(i) absence from three consecutive meetings of the Board ("the Board of the Authority constituted under;") without a reasonable explanation; Section 12(1)(c)(ii) incapacitation due to prolonged physical or mental illness and inability to discharge the duties of his or her office; Section 12(1)(c)(iii) failure to comply with the provisions of this Act relating to disclosure of interest; Section 12(1)(c)(iv) being adjudged bankrupt or entering into a composition scheme or arrangement with his or her creditors; Section 12(1)(c)(v) being convicted of a criminal offence and sentenced to imprisonment for a term exceeding six months; or Section 12(1)(c)(vi) being otherwise unable or unfit to discharge the functions of his or her office. Section 12(2) Where a vacancy occurs in the membership of the Board ("the Board of the Authority constituted under;") , the appointing aut...

Section 13. Conduct of business and affairs of theBoard Section The conduct of the business and affairs of the Board ("the Board of the Authority constituted under;") shall be as set out in the First Schedule.

Section 14. Delegation by theBoard Section The Board ("the Board of the Authority constituted under;") may, by resolution either generally or in a particular case, delegate to a subcommittee of the Board ("the Board of the Authority constituted under;") or to a member, officer, employee or agent of the Authority ("the Privatisation Authority established under;") , the exercise of any of the powers or performance of any of the functions of the Board ("the Board of the Authority constituted under;") .

Section 15. Remuneration of the members Section The chairperson and members of the Board ("the Board of the Authority constituted under;") , other than the Managing Director ("the Managing Director of the Authority appointed under;") , shall be paid out of the funds of the Authority ("the Privatisation Authority established under;") such allowances or other remuneration as the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") , on the advice of the Salaries and Remuneration Commission , determines.

Section 16.Managing Director Section 16(1) There shall be a Managing Director ("the Managing Director of the Authority appointed under;") of the Authority ("the Privatisation Authority established under;") who shall be competitively recruited and appointed by the Board ("the Board of the Authority constituted under;") on such terms as may be specified in the instrument of appointment. Section 16(2)(a) the day-to-day management of the affairs of the Authority ("the Privatisation Authority established under;") ; Section 16(2)(b) the exercise and performance of the objectives, functions and duties of the Authority ("the Privatisation Authority established under;") , and the general administration of the Authority ("the Privatisation Authority established under;") ; and Section 16(2)(c) performing such other duties as may be determined by the Board ("the Board of the Authority constituted under;") . Section 16(3)(a) holds a degree in either economics, accounting, finance, or any other relevant degree from a recognized institution; Section 16(3)(b) has ten years of work experience of which five shall be at senior management level in a relevant field; Section 16(3)(c) meets the requireme...

Section 17.Corporation Secretary Section 17(1) There shall be a Corporation Secretary ("the Corporation Secretary appointed in accordance with;") who shall be competitively recruited and appointed by the Board ("the Board of the Authority constituted under;") on such terms as the Board ("the Board of the Authority constituted under;") , on the advice of the Salaries and Remuneration Commission , determines. Section 17(2)(a) provide secretariat services to the Board ("the Board of the Authority constituted under;") ; Section 17(2)(b) record and keep minutes and other records of the Board ("the Board of the Authority constituted under;") ; Section 17(2)(c) ensure that members of the Board ("the Board of the Authority constituted under;") are aware of all relevant laws affecting the Authority ("the Privatisation Authority established under;") ; and Section 17(2)(d) carry out such other functions as may be assigned from time to time by the Board ("the Board of the Authority constituted under;") or the Managing Director ("the Managing Director of the Authority appointed under;") . Section 17(3) The Corporation Secretary ("the Corporation Secretary appointed in accordance with;") shall b...

Section 18. Staff of theAuthority Section The Authority ("the Privatisation Authority established under;") shall have such staff as it may require for the proper discharge of its functions under this Act, on such terms and conditions of service as the Board ("the Board of the Authority constituted under;") may determine.

Section 19. Privatisation programme Section 19(1) There shall be a programme to be known as the privatisation programme ("the privatisation programme provided for under;") . Section 19(2)(a) be formulated by the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") in accordance with this Act and approved by the Cabinet; Section 19(2)(b) be annually audited and reported on; Section 19(2)(c) specify the public entities identified and approved for privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") ; and Section 19(2)(d) serve as the basis upon which a privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") shall be undertaken.

Section 20. Consultation in formulation of the programme Section 20(1) During the formulation of the privatisation programme ("the privatisation programme provided for under;") , the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") shall make appropriate consultations with persons who are likely to be affected by the privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") of a public entity . Section 20(2)(a) persons with expertise in fields relevant to the entities to be included in the privatisation programme ("the privatisation programme provided for under;") ; Section 20(2)(b) organisations representing persons who are likely to be affected by the proposed privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") ; and Section 20(2)(c) members of the public.

Section 21. Identification of entities for the programme Section 21(1) The Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") shall identify and determine the entities to be included in the privatisation programme ("the privatisation programme provided for under;") . Section 21(2)(a) the relevant government policies in respect of privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") ; Section 21(2)(b) the strategic priorities and policy goals to be achieved by the privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") ; Section 21(2)(c) the strategic nature of the public entity to be privatised; Section 21(2)(d) the need to avoid a privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") that may result in an unregulated monopoly; Section 21(2)(e) the need to avoid a privatisation ("a...

Section 22. Ratification by the National Assembly Section 22(1) Upon approval of the privatisation programme ("the privatisation programme provided for under;") by Cabinet, the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") shall submit the approved privatisation programme ("the privatisation programme provided for under;") to the National Assembly for ratification before implementation of the programme. Section 22(2)(a) a brief description of the public entity to undergo privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") ; Section 22(2)(b) a brief explanation of the reasons for undertaking the privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") ; Section 22(2)(c) the benefits to be gained from the proposed privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") including t...

Section 23. Publication of programme Section The privatisation programme ("the privatisation programme provided for under;") ratified under section 22 shall be published in the Kenya Gazette .

Section 24. Validity of the programme Section 24(1) A privatisation programme ("the privatisation programme provided for under;") shall be valid for a period not exceeding five years from the date of gazettement . Section 24(2) Notwithstanding subsection (1), the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") may extend the validity of the privatisation programme ("the privatisation programme provided for under;") for a period not exceeding twelve months. Section 24(3) If, on expiry of the programme under subsection (1) or at the expiration of the extended period under subsection (2), the implementation of the programme has not been completed, the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") may include the affected entities in another privatisation programme ("the privatisation programme provided for under;") formulated and approved in accordance with this Act.

Section 25. Amendment of the programme Section 25(1) The Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") may amend the privatisation programme ("the privatisation programme provided for under;") and the provisions of this Part relating to formulation and approvals shall apply with respect to any such amendments. Section 25(2) A privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") that entails the transfer of a public interest in a public entity shall not be implemented unless it is included in the privatisation programme ("the privatisation programme provided for under;") .

Section 26. Implementation of the programme Section The privatisation programme ("the privatisation programme provided for under;") shall be implemented by the Authority ("the Privatisation Authority established under;") in accordance with this Act.

Section 27. Eligibility in aprivatisation Section 27(1) Any person, whether Kenyan or non-Kenyan, is eligible to participate in a privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") : Provided that this section shall not affect the application of any other law imposing restrictions on participation by non-Kenyans. Section 27(2)(a) limit participation in any privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") to Kenyans; or Section 27(2)(b) ensure that there is a specified minimum level of participation by Kenyans in any privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") . Section 27(3) A national government-owned entity is not eligible to participate in a privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entit...

Section 28. Steering Committee Section 28(1) For each privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") , there shall be a steering committee to implement the privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") on behalf of the Authority ("the Privatisation Authority established under;") subject to any directions of the Authority ("the Privatisation Authority established under;") . Section 28(2)(a) the members of the Authority ("the Privatisation Authority established under;") described in paragraphs (b) and (c) of section 10 (1); Section 28(2)(b) the Principal Secretary of the ministry with responsibility over the asset or service being privatised; and Section 28(2)(c) such members of the Authority ("the Privatisation Authority established under;") as the Authority ("the Privatisation Authority established under;") specifies.

Section 29. Methods ofprivatisation

Section 30. Privatisation proposal Section 30(1) Where an entity has been identified for privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") under this Act, the Authority ("the Privatisation Authority established under;") shall prepare a privatisation proposal ("a proposal provided for under;") on the entity. Section 30(2)(a) the purpose for the establishment or existence of the entity to be privatised and the extent to which that purpose or operation has been met including any inadequacies in meeting that purpose; Section 30(2)(b) any rights or other entitlements and resources that have been provided to meet the purpose for the establishment or existence of the entity to be privatised; Section 30(2)(c) any recommendations for continuing to meet the purpose for establishment or existence of the entity to be privatised; Section 30(2)(d) the financial position of the entity to be privatised; Section 30(2)(e) the recommended method of privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities...

Section 31. Approval ofprivatisation proposal Section 31(1) For each privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") included in the privatisation programme ("the privatisation programme provided for under;") , the Authority ("the Privatisation Authority established under;") shall make a specific proposal for privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") to the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") . Section 31(2) The Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") shall present the privatisation proposal ("a proposal provided for under;") specified in subsection (1) to the Cabinet for approval.

Section 32. Implementation of a finalisedprivatisation Section 32(1) Upon approval of a privatisation proposal ("a proposal provided for under;") under section 31 , the determined and approved method of privatisation shall be effected in the manner specified in the Second Schedule. Section 32(2) The method of privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") specified in section 29 (d) shall be effected in the manner determined by the Cabinet.

Section 33. Valuation required for eachprivatisation Section 33(1) The Authority ("the Privatisation Authority established under;") shall undertake a business and assets valuation for each privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") , to assist in the implementation of the privatisation proposal ("a proposal provided for under;") . Section 33(2) The valuation shall be performed by a qualified person appointed by the Authority ("the Privatisation Authority established under;") .

Section 34. Application of restrictions Section The restrictions set out under this Part shall begin to apply upon publication of privatisation programme ("the privatisation programme provided for under;") under section 23 .

Section 35. General restrictions Section allow the assets of the public entity to be dissipated;

Section 36. Control of investments Section A public entity undergoing privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") shall not undertake any new capital investment or disposal, other than those under ordinary course, had been approved prior to the entry into the privatisation programme ("the privatisation programme provided for under;") , or are critical to business continuity, unless approved by the Cabinet and ratified by the National Assembly.

Section 37. No credit on sale of shares Section The public entity undergoing privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") shall not extend credit or provide financing for the purchase of the shares.

Section 38. Obligation for record keeping Section keep up-to-date business records and books of accounts;

Section 58. Annual report Section 58(1) Within three months after the end of each financial year, the Authority ("the Privatisation Authority established under;") shall prepare and submit to the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") an annual report of the Authority ("the Privatisation Authority established under;") for the immediately preceding financial year. Section 58(2)(a) the operations of the Authority ("the Privatisation Authority established under;") for the immediately preceding financial year; Section 58(2)(b) activities undertaken under the privatisation programme ("the privatisation programme provided for under;") in each financial year; and Section 58(2)(c) any other relevant information. Section 58(3) The annual report submitted under subsection (1) shall form part of the annual report on privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") which shall be tabled in Parliament by the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") .

Section 59. Records Section The Authority ("the Privatisation Authority established under;") shall maintain updated records of each privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") undertaken under this Act.

Section 60. Protection from personal liability Section 60(1) No matter or action done by a member of the Board or by any officer, employee, or agent of the Authority shall, if the matter or action is done in good faith in the execution of the functions, powers or duties of the Authority under this Act, render the member, officer, employee or agent personally liable to any action, claim or demand. Section 60(2) The provisions of subsection (1) shall not relieve the Authority of any liability to pay compensation or damages for any injury or damage caused by the exercise of any power under this Act or any other written law or by the failure, wholly or partially, of any works.

Section 61. Information to theAuthority Section 61(1) In the implementation of this Act, a public entity to which this Act applies, shall provide the Authority ("the Privatisation Authority established under;") with such information as may be necessary to effectively implement the privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") . Section 61(2) The information given, furnished or maintained or required to be given, furnished or maintained under this Act shall be true, complete and accurate. Section 61(3) Any information required under subsection (1) shall be submitted to the Authority ("the Privatisation Authority established under;") within fourteen days of receipt of a request for information. Section 61(4) Any person who contravenes this section commits an offence and is liable, upon conviction, to a fine not exceeding five million shillings or to imprisonment for a term not exceeding five years or to both.

Section 62. Confidential information Section 62(1) Any information issued to or sought by the Authority ("the Privatisation Authority established under;") under this Act is confidential and shall not be disclosed unless with the written approval of the Authority ("the Privatisation Authority established under;") . Section 62(2) No person carrying out duties or responsibilities under this Act shall disclose any information or other data of a confidential nature obtained by virtue of their said authority, duties and responsibilities to any other person without the approval of the Authority ("the Privatisation Authority established under;") .

Section 63. Offences Section falsifies or omits material information from the privatisation proposal ("a proposal provided for under;") ;

Section 64. Regulations Section The Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") may make Regulations generally for the better carrying out of the provisions of this Act.

Section 39. Privatisation agreement Section Upon approval and implementation of a privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") under Part IV, an agreement to give effect to a privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") shall not be binding unless executed by the registered owner of the shares and countersigned by the Cabinet Secretary ("the Cabinet Secretary to the National Treasury;") .

Section 40. Limits on when agreement may be signed Section 40(1) An agreement to give effect to a privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") shall not be signed until the period for filing an objection has lapsed. Section 40(2)(a) a determination with respect to the objection or appeal has been made; and Section 40(2)(b) the time for filing a notice of appeal has expired without such a notice being filed.

Section 41. Regulation of monopolies Section ensure that the agreement to give effect to the privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") provides for the regulation of the monopoly; and

Section 42. Publication of finalisedprivatisation Section 42(1) After an agreement to give effect to a privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") becomes binding on the public entity , the Authority ("the Privatisation Authority established under;") shall promptly publish a notice of the privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") in the Kenya Gazette . Section 42(2)(a) a description of the entity being privatised; Section 42(2)(b) a summarised description of the transaction used to give effect to the privatisation ("a transaction that results in a transfer, other than to a public entity, of the assets and or liabilities of a public entity including the shares in a public entity;") ; Section 42(2)(c) the names and addresses of the persons to whom the shareholding is being transferred: Section 42(2)(d) such other information as the Authority ("the Privatisation Authority established under;") considers appro...

Section 43. Proceeds from sale of direct government shareholding Section Any proceeds from the sale of a direct National Government shareholding shall be paid into the Consolidated Fund.