KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Deborah Sese, Cliffe Dekker Hofmeyr
Removal of local shareholding for ICT companies The local 30% shareholding requirement for Kenya companies providing ICT services has been removed off the back of international pressure to make Kenya a more attractive hub for international investors. The previous setup requiring investors to cede a portion of ownership to local shareholders made the sector less attractive as their corporate structures were not easily adjustable according to the requirements. The aim of the removal of this shareholding requirement is sector expansion, as it makes the sector more attractive to multinationals. Regulation of private equity The Capital Markets Authority (CMA) currently reg - ulates venture capital companies incorporated in Kenya under the Capital Markets (Registered Venture Capital Companies) Regulations, 2007. The Kenyan government has taken steps to expand this regula - tory oversight to venture capital organisations operat - ing in Kenya. In this regard, the Capital Markets Act was amended in 2020 to enable the CMA to licence, approve and regulate private equity funds with access to public funds. The term “public funds” remains undefined in the Capital Markets Act. The aim of the amendment is to safeguard funds accessed by private entities from public entities in Kenya, such as public pension schemes. In Kenya, pension schemes can invest up to 10% of their assets under management in private equity or venture capital investments. There have been no guidelines or regulations issued on how the proposed regulation of private equity funds that access “public funds” in Kenya will be effected, or whether the regulation will apply to offshore funds. The authors do not expect that this change will affect a majority of private equity funds with investments in Kenya, as the majority of these funds raise their capital offshore. It is, however, prudent to keep an eye on the
Contravention of this law is an offence for which a person is liable upon conviction to imprisonment for a term not exceeding three years, or to a fine not exceeding KES5 million. East Africa Community Competition Authority The East African Community Competition Act of 2006 governs the supervision of merger activities within the East African Community (EAC) member states (ie, Kenya, Uganda, Tanzania, Rwanda, Burundi, Rwanda, South Sudan and the Democratic Republic of Congo). It mandates that any merger or acquisition that has a cross-border effect in the East African Community be notified to the East African Community Competition Authority (EACCA). On 31 December 2024, the EAC promulgated and brought into effect an amendment to the East African Community Competition Act (the “Amendment Act”), as well as new regulations that set out the applicable merger thresholds and filing fees in the EAC. The promulgation of the Amendment Act and its regu - lations represents significant progress in the scaling up of competition enforcement by the EAC Competition Authority. It is also a notable development in the trend towards regional competition enforcement in Africa, where the past two decades have seen the Common Market for Eastern and Southern Africa (COMESA) and the Economic Community of West African States (ECOWAS) become fully operational. What remains to be seen, as the Competition Authority becomes operational, is the extent to which the EAC Compe - tition Authority, COMESA Competition Commission (CCC) and ECOWAS Regional Competition Authority will be prepared to collaborate on mergers that raise their concurrent jurisdiction. Nevertheless, in order to avoid surprises late in a transaction’s timeline, pri - vate equity firms active in EAC member states should remain aware of the imminent full operation of the EAC Competition Authority. It is therefore important for private equity funds to take note of the developments of the EACCA so as to ensure that all the regulatory approvals within the jurisdiction are obtained.
developments for regulatory purposes. Evolution of the Kenyan tax regime
The Finance Act, No 9 of 2025 (the “Finance Act”) came into force on 1 July 2025, resulting in the fol - lowing amendments that affect local private equity investments.
349 CHAMBERS.COM
Powered by FlippingBook