KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha and Brian Muchiri, Cliffe Dekker Hofmeyr (Kieti Law LLP)
tion Act, 2006 from 1 November 2025. The EACCA has entered into memoranda of understanding with the CAK and the CCCC to strengthen cooperation in the advancement of competition enforcement. How - ever, there are no carve-outs that prevent dual notifi - cation to the EACCA and either the CAK or the CCCC (as applicable). Taxation The Finance Act, No 4 of 2023, included amendments with direct implications for M&A in Kenya. Firstly, a 15% capital gains tax (CGT) now applies to indirect sales of shares in Kenyan companies (where the seller held at least a 20% stake). This impacts the returns on exiting investments. Secondly, the sale of at least 20% of a Kenyan company’s shares must be reported to the Kenya Revenue Authority, adding an adminis - trative step for both buyers and sellers in M&A deals. 3.2 Significant Changes to Takeover Law The Business Laws (Amendment) Act 2020 amended the Takeover Regulations to allow the purchaser to squeeze out dissenting shareholders where the pur - chaser acquires 90% of the share capital of the target. The threshold for squeeze-out had momentarily been reduced to 50% in 2019, but this has been reinstated to 90%. There has not been any subsequent change to the takeover laws since. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies An offer made to acquire additional shares will typi - cally be made by a shareholder already having a sig - nificant shareholding, which they had since listing or which they have increased over time. However, there are restrictions on how much share - holding can change in a year. In this regard, the Takeo - ver Regulations provide that a company holding 25% or more but less than 50% of the voting shares of a listed company can acquire up to 5% additional shares in a calendar year in such listed company up to a maximum of 50%. In addition, certain actions may trigger mandatory takeover obligations. Such actions include:
• an existing shareholder holding more than 25% but less than 50% of the voting shares of a listed company acquiring in any one year more than 5% of the voting shares of such company; • an existing shareholder holding 50% or more of the voting shares of a listed company acquiring any additional voting shares; • a person acquiring a company that holds effective control in a listed company; and • a person acquiring 25% or more of the shares in a subsidiary of a listed company that has contributed 50% or more to the average annual turnover of the listed company in the last three years preceding the acquisition. Where an offer is made by a person who has no stake in the target, such a person would usually engage the major shareholders and obtain their consensus before making the offer. This creates certainly on the offeror’s part in relation to the minimum acceptances required to make the offer successful. 4.2 Material Shareholding Disclosure Threshold Every year, companies are required to submit returns with information about their shareholders. In addition, the Companies (Beneficial Ownership Information) Regulations, 2020 (“BO Regulations”) introduced a requirement for companies incorporated in Kenya to file a register of beneficial owners. A ben - eficial owner is a natural person who either directly or indirectly (i) holds at least 10% of the shares or voting rights, (ii) has the power to change directorship or (iii) has a significant influence over the company. The BO Regulations do not provide clear instructions on how to show the beneficial interest of companies with mul - tiple shareholders, such as public companies, where no shareholder beneficially owns 10% of the shares. This has caused practical difficulties for such compa - nies in meeting compliance requirements. Companies are also required to maintain a register of members with details of the nominee shareholders. These are shareholders who exercise the associated voting rights according to the instructions of the nomi - nator or receive dividends on behalf of the nominator.
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