KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Deborah Sese, Cliffe Dekker Hofmeyr
Other regulators Private equity transactions will be subject to additional regulations under other laws specific to particular sec - tors, especially if these laws have provisions regarding ownership and control changes. For example, sub - scription for shares in financial institutions and pay - ment system service providers will need approval from the CBK, while buying significant rights in an aviation company will require clearance from the Kenya Civil Aviation Authority. Similarly, transactions in the communication, insur - ance and energy sectors would require the approval of the Communications Authority of Kenya (CA), the Insurance Regulatory Authority (IRA) and the Energy and Petroleum Regulatory Authority (EPRA), respec - tively. It is important to note that approvals from the regulators are not mutually exclusive and that acquir - ers may be required to obtain multiple approvals for a transaction. With regard to any recent developments or evolution of these regimes in Kenya, see 2.1 Impact of Legal Developments on Funds and Transactions . Foreign investment restrictions Restrictions on foreign investment tend to be sector- specific, as outlined in the following. ICT industry As indicated in 2.1 Impact of Legal Developments on Funds and Transactions , the local 30% share - holding requirement for Kenya companies providing ICT services has been removed off the back of inter - national 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 multination - als. Banking In the banking industry, no individual or entity other than licensed financial institutions, the government, foreign governments, state corporations, foreign
However, transactions that qualify for notification to the CAK and CCC need not be notified to the former if two-thirds of the turnover or assets (whichever is higher) is generated or located outside of Kenya. In this instance, the parties are required to file the merger notification with the CCC and only inform the CAK of the filing at the CCC within 14 days. EU Foreign Subsidies Regulation (FSR) regime The EU FSR grants the European Commission the authority to investigate financial contributions provid - ed by non-EU governments to companies operating within the EU. This includes: • financial contributions from non-EU governments to companies with significant activities in the EU; and • bids in public procurement processes by non-EU governments that meet certain thresholds. These regulations are unlikely to impact transactions in Kenya, and Kenya does not have comparable regu - As stated in 2.1 Impact of Legal Developments on Funds and Transactions , the CMA has the authority to licence, approve and regulate private equity funds that have access to public funds. In addition, the CMA oversees the capital markets sector in Kenya, and its approval is required for the acquisition of compa - nies listed on the Nairobi Securities Exchange (NSE) or entities licensed by it, such as investment banks, stockbrokers, securities exchanges, fund managers, dealers and depositories. lations in place. Capital markets The CMA also regulates venture capital companies incorporated in Kenya that provide substantial risk capital to small- and medium-sized businesses in the country through the Capital Markets (Registered Ven - ture Capital Companies) Regulations, 2007 (the “VC Regulations”). Fund managers of venture capital com - panies registered under the VC Regulations need to be approved by the CMA. The VC Regulations do not apply to venture capital companies or private equity funds registered outside Kenya.
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