KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha and Brian Muchiri, Cliffe Dekker Hofmeyr (Kieti Law LLP)
shares are wholly owned by citizens of an EAC partner state. • In the aviation industry, companies licensed to provide air services must have at least 51% of the voting rights ultimately held by Kenyan citizens, the government of Kenya or both. The Kenya Civil Aviation Authority may exempt a person from this requirement where the air services are of special nature including services in the interest of social welfare, charity, humanitarian services or assis - tance in saving life or in the public interest. • In the pensions industry, at least 33% of the paid- up capital of a pension scheme administrator must be owned by Kenyan citizens, unless the adminis - trator is a bank or insurance company registered in Kenya. • In the mining sector, companies dealing with min - erals or small-scale mining operations may have a maximum of 40% foreign ownership. For large- scale operations, companies must list at least 20% of their equity on a local securities exchange within three years of beginning operations. • In the private security sector, private security ser - vice providers are required to have at least 25% of their shares held by Kenyans. • In relation to agriculture, a non-Kenyan or a pri - vate company with foreign ownership cannot own freehold land; it can only hold land on a leasehold basis only for a period not exceeding 99 years. Non-citizens or private companies with foreign ownership are restricted from holding agricultural land unless exempted by the President. 2.4 Antitrust Regulations The Competition Act, Chapter 504 of the laws of Ken - ya (Competition Act) is the main legislation govern - ing antitrust matters in Kenya. Under the Competition Act, a transaction would be considered a merger if it involves an acquisition of shares, business or other assets, whether inside or outside Kenya, resulting in the change of control of a business, part of a business or an asset of a business in Kenya in any manner, and includes a takeover. It is unlawful for anyone to implement a merger without first obtaining approval from the CAK. Implementation of a merger will be deemed to occur where more than 20% of the agreed purchase price has been paid. The
CAK will also consider the following when determining whether a merger has been implemented. • Whether there has been an actual integration of any aspect of the merging parties including their infrastructure, information systems, employees, corporate identity or marketing efforts. • Whether there has been placement of employees from the target undertaking to the acquiring under - taking. • Whether there has been an effort by the acquiring undertaking to influence or control any competitive aspect of the target undertaking’s business. • Whether there has been an exchange of strategic information between the merging parties for pur - poses other than valuation or due diligence or in ways compromising the strategic independence of each of the parties to the merger. The CAK has set specific criteria for when mergers must be reported to it. These criteria are based on the combined revenue or assets of the acquiring and target companies in Kenya, as indicated in their most recent audited financial statements. This has resulted in three distinct categories of merg - ers: • notifiable mergers; • excluded transactions requiring approval of the CAK; and • excluded transactions not requiring approval of the CAK. Notifiable Mergers (a) a minimum combined turnover or assets (whichever is higher) in Kenya of KES1 billion and the turnover or assets (whichever is higher) of the target firm is above KES500 million; (b) the turnover or assets (whichever is higher) of the acquiring firm is above KES10 billion and the merging parties are in the same market or can be vertically integrated, unless the trans - action meets the CCCC merger notification thresholds; (c) in the carbon-based mineral sector, if the value of the reserves, the rights and the associated assets to be held as result of the merger ex -
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