KENYA Law and Practice Contributed by: Mary Waithiegeni Chege, Mary Anne Wachira and Joy Odhiambo, EMSI & Associates
in respect of the terms of employment of employees; and (d) the capability of being owned up to 100% by persons who are not nationals of, or resident in, Kenya. Dispute Resolution The Constitution of Kenya requires judicial authorities, the courts and tribunals to be guided by the following key principles: • justice shall be done to all, irrespective of status; • justice shall not be delayed; and • alternative forms of dispute resolution shall be promoted, including reconciliation, mediation, arbitration and traditional dispute resolution mechanisms. Arbitral proceedings in Kenya are governed by the Arbitration Act, 1995 and the Nairobi Cen- tre for International Arbitration Act, 2013. Kenya has acceded to the New York Convention on the Recognition and Enforcement of Arbitral Awards and to the International Convention on the Settlement of International Disputes (ICSID); the recognition and enforcement of international awards is therefore entrenched in accordance with the Investment Disputes Convention Act, 1966, subject to the provisions of the ICSID. 1.4 Sale of Power Industry Assets Subject to prior approval from the Energy and Petroleum Regulatory Authority (EPRA), entities in the power sector are permitted to dispose of any of their assets by any means, including sale, transfer, merger and lease. The sale of genera- tion, transmission and distribution assets is gov- erned by various laws and regulations, including the following primary legislation.
• The Energy Act, Energy (Electricity Licensing) Regulations, 2012 and Licence Conditions, all of which require a licensee to obtain EPRA’s prior approval before: (a) disposing of assets through a sale, trans- fer, merger, lease or any other means; (b) taking any action that may lead to a de- crease in the licensee’s share capital; (c) allowing any acquisition by a third party of more than 25% of the licensee’s share capital; (d) implementing a change in control of the licensee; or (e) any increase or decrease of its authorised or paid-up share capital. • The provisions of the Companies Act, the Competition Act and the Capital Markets Act would be applicable to mergers, amalgama- tions and acquisitions of private and publicly listed companies, as the case may be. • The Public Procurement and Asset Disposal Act and the Public Finance Management Act would also be applicable to the disposal of assets by a state-owned corporation or government-linked corporation (one in which government is a minority shareholder). • The Income Tax Act would impact the pro- ceeds of the sale of the investments. The regulator responsible for mergers is the Competition Authority of Kenya (CAK). Where a merger is proposed, each of the undertakings involved is obliged under the Competition Act to notify the CAK of the proposal in writing; the CAK will then make a determination in relation to the proposed merger and may either decline or give an approval for its implementation with or without conditions. The CAK is also respon- sible for determining thresholds for transactions that require the mandatory merger notification, in which case mergers below the specified thresh- olds would not need to be notified to the CAK.
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