The Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations

Section 1. Citation Section These Regulations may be cited as the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations.

Section 2. Interpretation Section does not have a material or pecuniary relationship with the company or related persons;

Section 3. Application Section 3(1) These Regulations shall apply to all offers of securities to the public in Kenya whether or not the issuer is seeking a listing on any securities exchange in Kenya. Section 3(2) The Authority shall be the competent authority to grant approval for all public offers and listing of securities on any securities exchange in Kenya. Section 3(2A)(i) that security is not offered to the public; and Section 3(2A)(ii) the listing is by way of introduction. Section 3(3)(a) obtained a letter of approval from the Authority for the listing of securities confirming that the issuer has satisfied the eligibility requirements prescribed under regulation 7(1) and the disclosure requirements prescribed under regulation 10(1) with respect to the market segment in which the securities are to be listed; and Section 3(3)(b) total minimum subscription of shares as disclosed in the approved prospectus by the Authority in respect of public offering and listing of securities; Section 3(3)(b)(i) total minimum subscription of shares as disclosed in the approved prospectus by the Authority in respect of public offering and listing of securities; Section 3(3)(b)(ii) minimum shar...

Section 4. Meaning of "offer of securities" Section he makes an offer which, if accepted, would give rise to a contract for the issue or sale of the securities by him or by another person with whom he has made arrangements for the issue or sale of the securities; or

Section 5. Meaning of "offer to the public" Section 5(1) A person offers securities to the public in Kenya if, to the extent that the offer is made to persons in Kenya, it is made to the public and for this purpose, an offer which is made to any section of the public, whether selected as members or debenture holders of a body corporate, or as clients of the person making the offer, or in any other manner, is to be regarded as made to the public; and the terms "public offer" and "public offering" shall be construed accordingly. Section 5(2) An issuer applying for a listing shall be bound by all the obligations arising in respect of a public offer of securities in so far as the obligations apply. Section 5(3) An issuer applying for a listing on the Growth Enterprise Market Segment shall be bound by all the obligations arising in respect of listing in such market. [ L.N. 30/2008 , r. 4, L.N. 61/2012 , r. 4.]

Section 6. Issuer to publish prospectus Section 6(1) When securities are to be offered to the public or a section of the public in Kenya the issuer shall publish an Information Memorandum by making it available to the public or the section of the public, free of charge at an address in Kenya, during the offer period or for such period prior to Listing as prescribed by the Authority. Section 6(2) The issuer shall, before the time of publication of the information memorandum, obtain approval of the Authority that the information memorandum complies with these Regulations and shall deliver a copy thereof to the Registrar for registration. Section 6(3)(a) an accountant's report confirming compliance by the issuer of the financial disclosures prescribed under regulation 10(1); and Section 6(3)(b) whether all licences and consents required to perform the business or proposed business of the issuer have been duly obtained; Section 6(3)(b)(i) whether all licences and consents required to perform the business or proposed business of the issuer have been duly obtained; Section 6(3)(b)(ii) the validity of evidence of ownership of land, plant and equipment and other important and relevant asse...

Section 7. Eligibility to issue securities Section 7(1)(a) with respect to securities to be listed on the Main Investment Market Segment, the issuer complies with the eligibility requirements prescribed in Part A of the First Schedule; Section 7(1)(b) with respect to securities to be listed on the Alternative Investment Market Segment, the issuer complies, with the eligibility requirements prescribed in Part B of the First Schedule; Section 7(1)(bb) with respect to securities to be listed on the Growth Enterprise Market Segment, the issuer complies with the eligibility requirements as set out in Part C of the First Schedule; Section 7(1)(c) with respect to securities to be listed on the Fixed Income Securities Market Segment, the issuer complies with the eligibility requirements prescribed in the Second Schedule; Section 7(1)(d) with respect to regional fixed income securities to be issued within the East African Community, the issuer complies with the eligibility requirements as set out in Part B of the Second Schedule. Section 7(2) Any person who does not receive the minimum number of subscriptions in a public offering shall not be eligible to make another public offering before...

Section 8. Issuers not seeking listing Section 8(1) An issuer who does not wish to list on any market segment of a securities exchange shall comply with the eligibility and disclosure requirements prescribed for the Alternative Investment Market Segment in the case of an offer of shares to the public or for the Fixed Income Securities Market Segment in the case of an offer of debt securities or other fixed income security to the public. Section 8(2) An issuer who has made a public offer in accordance with subsection (1), may, after the expiry of not less than one year since the securities in question ceased to be the subject of an offer to the public, list those securities by introduction. [ L.N. 30/2008 , r. 7.]

Section 9. Transfer to other market segment Section 9(1) An issuer whose shares are listed on the any market segment of a Securities Exchange shall not be eligible to transfer such securities to the other market segment before the expiry of one year from the date of listing on the first mentioned market segment. Section 9(2) A transfer of shares from or to the any market segment of a Securities Exchange shall be subject to the approval of the Authority and compliance with the eligibility and disclosure requirements prescribed under these Regulations. [ L.N. 61/2012 , r. 7.]

Section 10. Disclosure requirement for public issues Section 10(1)(a) Part A of the Third Schedule where the issuer seeks to list in the Main Investment Market Segment; Section 10(1)(b) Part B of the Third Schedule where the issuer seeks to list in the Alternative Investment Market Segment; Section 10(1)(c) Part C of the Third Schedule where the issuer seeks to list in the Fixed Income Securities Market Segment; Section 10(1)(cc) Part CC of the Third Schedule where the issuer seeks to list on the Growth Enterprises Market Segment; and Section 10(1)(d) Part D of the Third Schedule where the issuer seeks to list on any segment of the market by way of Introduction. Section 10(1A) Notwithstandiing paragraph (1), the Authority may prescribe different disclosure requirements for entities listed on a foreign securities exchange recognised by the Authority that are seeking to list on a securities exchange in Kenya. Section 10(2)(a) contain the following statement on its front page– "As a matter of policy, the Capital Markets Authority assumes no responsibility for the correctness of any statements or opinions made or reports contained in this prospectus or listing statement, as the case ma...

Section 11. Disclosure requirements for additional issues Section An issuer whose securities are listed at a securities exchange shall not issue, or authorize its registrar to issue or register, by way of capitalization, scrip dividend, rights issue or additional shares of the class listed, to a greater amount than the number hitherto authorized for listing except in accordance with the disclosure requirements for additional listing prescribed in the Fourth Schedule.

Section 12. General duty of disclosure in prospectus Section 12(1)(a) the assets and liabilities, financial position, profits and losses, and prospects of the issuer of the securities; and Section 12(1)(b) the rights attaching to those securities. Section 12(2) The information to be included by virtue of these Regulations shall be such information as is referred to in paragraph (1) which is within the knowledge of any person responsible for the prospectus, or which it would be reasonable for him to obtain by making enquiries. Section 12(3) In determining what information is required to be included in a prospectus by virtue of these Regulations, regard shall be had to the nature of the securities and of the offeror of the securities. Section 12(4) The Authority may require additional information to be included in a prospectus if, in its opinion, it deems it in the interests of investors to be in a prospectus, supplementary prospectus or information memorandum. Section 12(5) A Securities Exchange may require additional information to be included in a listing statement if, in its opinion, it is in the interest of investors to be in a listing statement. [ L.N. 61/2012 , r. 10.]

Section 13. Supplementary prospectus Section 13(1)(a) there is a significant change affecting any matter contained in the prospectus the inclusion of which was required by these Regulations; or Section 13(1)(b) a significant new matter arises the inclusion of information in respect of which would have been so required if it had arisen when the prospectus was prepared; or Section 13(1)(c) there is a significant inaccuracy in the prospectus, Section 13(2) In paragraph (1), the word "significant" means significant for the purpose of making an informed assessment of the matters mentioned in these Regulations. Section 13(3) Where a supplementary prospectus has been approved in respect of a public offer of securities, the preceding paragraphs of these Regulations shall have effect as if any reference to a prospectus were a reference to the prospectus originally registered and that supplementary prospectus, taken together. Section 13(4) The provisions of regulation 6 shall apply to a supplementary prospectus.

Section 14. Power of Authority to extend, reopen or cancel Section to issue a supplementary prospectus disclosing such additional information; or

Section 15. Exceptions Section The Authority may authorise the omission from a prospectus or supplementary prospectus of information whose inclusion would otherwise be required by these Regulations if the Authority considers that the disclosure of that information would be prejudicial to the interest of the offeror but does not prejudice the interest of investors.

Section 16. Advertisements etc. in connection with offer of securities Section 16(1) An advertisement, notice, poster or documents including a bridge prospectus announcing a public offer or listing of securities for which a prospectus or a listing statement is or will be required under these Regulations shall not be issued to or caused to be issued to the public in Kenya unless it states that a prospectus or a listing statement is or will be published, as the case may be, and gives an address in Kenya from which it can be obtained or will be obtainable. Section 16(2) The advertisements, notices, posters or documents referred to in paragraph (1) shall be submitted to the Authority or Securities Exchange in the case of listing on the Growth Enterprise Market Segment not later than forty-eight hours prior to publication, and the Authority or the Securities Exchange may require such amendments thereto as it may consider necessary. Section 16(3) Every application form for subscription of the securities offered in a prospectus shall state, in a conspicuous position, where the prospectus may be obtained, and the issuer shall disclose to the Authority the number of copies of the prospectus...

Section 17. Persons responsible for prospectus Section 17(1)(a) the issuer of the securities to which the prospectus or supplementary prospectus or a listing statement or a supplementary statement relates; Section 17(1)(b) where the issuer is a body corporate, each person who is a director of that body corporate at the time when the prospectus or supplementary prospectus or a listing statement or a supplementary statement is published; Section 17(1)(c) where the issuer is a body corporate, each person who has given his consent to be named and is so named in the prospectus or supplementary prospectus or a listing statement or a supplementary statement as a director or as having agreed to become a director of that body corporate either immediately or at a future time; Section 17(1)(d) each person who accepts, and is stated in the prospectus or supplementary prospectus or a listing statement or a supplementary statement as accepting, responsibility for, or for any part of, the prospectus or supplementary prospectus; Section 17(1)(e) the offeror of the securities, where the offeror is not the issuer; Section 17(1)(f) where the offeror is a body corporate, but is not the issuer and is n...

Section 18. Underwriting requirements Section 18(1) Every issuer shall seek professional financial advice to determine whether or not underwriting of the public offer of securities is deemed necessary and any underwriting arrangement shall be subject to the prior approval of the Authority. Section 18(2) Where the underwriter is a person related or associated to the issuer, the underwriter shall undertake to the Authority to dispose off any shares arising from the underwriting agreement within a period predetermined by the issuer and approved by the Authority. Section 18(3) The Authority may extend the period referred to in paragraph (2) if satisfied that such extension would be in the best interest of the holders of ordinary shares of the company, having regard to the prevailing market conditions and any other factors that are relevant in the circumstances. Section 18(4) Where the Authority extends the period referred to in paragraph (2) in accordance with paragraph (3), the issuer shall make a public announcement disclosing the period of such extension, any conditions attached to the extension and the circumstances necessitating the extension, in at least two daily newspapers of w...

Section 10A. Nominated Advisors Section 10A(1) An issuer seeking to be listed on the Growth Enterprise Market Segment shall appoint a Nominated Adviser by a written contract and shall ensure that it has a Nominated Advisor at all times. Section 10A(2) The Securities Exchange shall suspend an issuer from trading if the issuer, at any time, ceases to have a duly appointed Nominated Advisor. Section 10A(3)(a) advise and guide an issuer on the application of listing requirements of Growth Enterprise Market Segment; Section 10A(3)(b) manage the submission of the listing statement and all other documentation to the Securities Exchange and ensure its completeness and correctness before submission; Section 10A(3)(c) the issuer complies with all the conditions for listing as set out in the listing requirements for the Growth Enterprise Market Segment; Section 10A(3)(c)(i) the issuer complies with all the conditions for listing as set out in the listing requirements for the Growth Enterprise Market Segment; Section 10A(3)(c)(ii) the information contained in the listing statement is accurate and complete in all material aspects; Section 10A(3)(c)(iii) there are no other matters, the omission...

Section 13A. Supplementary listing statement Section 13A(1)(a) there is a significant change affecting any matter contained in the listing statement the inclusion of which was required by these regulations; Section 13A(1)(b) a significant new matter arises the disclosure of which would have been required if it had arisen when the listing statement was prepared; or Section 13A(1)(c) there is a significant inaccuracy in the listing statement, Section 13A(2) For the purposes of this regulation, "significant" means material change for the purposes of making an informed assessment of the matters mentioned in these Regulations. [ L.N. 61/2012 , r. 11.]

Section 15A. Listing statement exceptions Section The Securities Exchange may, in consultation with the Authority, authorize the omission from a listing statement, information whose inclusion would otherwise be required by these Regulations if the Securities Exchange considers that the disclosure of that information would be prejudicial to the interests of the issuer but does not prejudice the interests of investors. [ L.N. 61/2012 , r. 12.]

Section 5A. Appointment of transaction advisor Section 5A(1) Any company proposing to offer its securities to the public or a section of the public shall appoint a transaction advisor. Section 5A(2) A transaction advisor appointed under paragraph (1) shall be responsible for ensuring that the offer of securities is made in accordance with the provisions of the Act and regulations issued thereunder. Section 5A(3) A person shall not be eligible for appointment as a transaction advisor unless such person is licensed as an investment bank or is approved by the Authority to act as a transaction advisor for the particular offer of securities. [ L.N. 101/2009 , r. 2.]

Section 6A. Issuing on growth Enterprise Market Segment Section 6A(1) A person who intends to issue securities on a Growth Enterprise Market Segment shall publish a listing statement by making it available to the public or to a section of the public, free of charge at an address in Kenya, for such period prior to listing as prescribed by the Securities Exchange. Section 6A(2) The issuer shall, before the time of publication of the listing statement, obtain approval of the Securities Exchange that the listing statement complies with these Regulations. Section 6A(3) A Securities Exchange shall, at least seven days prior to granting any approval of a listing statement, submit to the Authority a copy of the listing statement it is considering for approval with a confirmation that the listing statement is in compliance with these Regulations. [ L.N. 61/2012 , r. 5.]

Section 6B. Book building Section A person proposing to offer its securities to the public or a section of the public may use a book building process to determine the price for the offer of securities in accordance with the requirements set out in the Eighth Schedule to these Regulations. [ L.N. 113/2013 , r. 3.]

Section 19. Continuing obligations Section 19(1) Every issuer whose securities have been offered to the public or listed shall comply with the continuing obligations specified in the Fifth Schedule with respect to the relevant market segment. Section 19(2) In relation to the continuing obligation to disclose information, an issuer shall make immediate public disclosure of information which might reasonably be expected to have a material effect on market activity in and prices of, its securities. Section 19(3) The information required to be disclosed under these Regulations shall be disclosed within twenty-four hours of the event, simultaneously to the Authority, the securities exchange at which the issuer's securities are listed, if applicable, and to the public during non-trading hours of the relevant market segment. Section 19(4) The announcement shall state whether the consent of the Authority or the securities exchange or other person is necessary and where necessary, the issuer shall apply for such consent within seven days of the announcement. Section 19(5) An issuer who fails to comply with any continuing obligation within the prescribed time shall be liable to pay a penalty...

Section 20. Exceptions Section 20(1)(a) securities issued by or on behalf of the Government of Kenya or a body corporate established under any written law in Kenya other than the Companies Act ( Cap. 486 ); and Section 20(1)(b) private offers. Section 20(2) In considering the issue and listing of securities by a body corporate falling under subparagraph (a) of paragraph (1), the Authority shall take into account the issuer's ability to meet all financial obligations arising out of the issue and approve the issue subject to such conditions as may be necessary for the protection of investors or the public interest.

Section 21. Meaning of private offers Section 21(1)(a) the securities are offered to not more than one hundred persons; Section 21(1)(b) the securities are offered to the members of a club or association (whether or not incorporated) and the members can reasonably be regarded as having a common interest with each other and with the club or association in the affairs of the club or association and in what is to be done with the proceeds of the offer; Section 21(1)(c) the securities are offered to a restricted circle of persons whom the offeror reasonably believes to be sufficiently knowledgeable to understand the risks involved in accepting the offer; Section 21(1)(d) the securities are offered in connection with a bona fide invitation to enter into an underwriting agreement with respect to them; Section 21(1)(e) members or employees of the company; Section 21(1)(e)(i) members or employees of the company; Section 21(1)(e)(ii) members of the families of any such members or employees; or Section 21(1)(e)(iii) the securities are offered to a restricted circle of persons whom the offeror reasonably believes to be sufficiently knowledgeable to understand the risks involved in accepting t...

Section 22. Suspension and de-listing Section 22(1) No security shall be suspended or de-listed by a securities exchange without the prior approval of the Authority. Section 22(2)(a) a decision has been made or is imminent that will lead to the placing of the issuer of such securities under statutory management, receivership, liquidation or voluntary winding up; Section 22(2)(b) there is a significant restructuring involving the listed securities such as in the process of acquisition, mergers or takeovers; or Section 22(2)(c) a recommendation has been made by the directors to the shareholders to have the securities suspended and where the holders of such securities through a special resolution at which a minimum of 75% of such security holders are represented without objection to the proposed suspension from at least 10% of the holders of securities resolve to have the securities suspended. Section 22(3) The suspension of securities shall be subject to such time as predetermined by the Authority. Section 22(4)(a) the issuer of such securities has been placed under statutory management, receivership or liquidation or voluntary winding up; Section 22(4)(b) as a result of restructurin...