KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Deborah Sese, Cliffe Dekker Hofmeyr
companies licensed as financial institutions in their own countries and non-operating holding companies approved by the CBK may hold more than 25% of the share capital of a Kenyan bank. Insurance In the insurance industry, at least 33.33% of the controlling interest in an insurer must be owned by citizens of a partner state of the EAC, a partnership whose partners are all citizens of an EAC partner state or a corporation whose shares are wholly owned by citizens of an EAC partner state. Aviation In the aviation industry, for companies licensed to pro - vide air services, at least 51% of the voting rights must ultimately be held by Kenyan citizens, the government of Kenya or both. Pensions In the pensions industry, at least 60% of the paid-up capital of a pension scheme administrator must be owned by Kenyan citizens, unless the administrator is a bank or insurance company registered in Kenya. Fintech In the fintech industry, there are no specific restric - tions on foreign investment yet. However, the Kenyan government has introduced the Virtual Assets Service Providers Bill, 2025 (the “VASP Bill”), which aims to safeguard investors and restore trust in the crypto market. The VASP Bill seeks to regulate virtual assets, which are defined as “any digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes and does not include digital representation of fiat curren - cies, e-money, securities and other financial assets”. The government has been considering local share - holding restrictions in order to promote local participa - tion in the financial services sector, while also attract - ing foreign investment. The restrictions on foreign investment are designed to strike a balance between these two goals. National security review There is no specific rule requiring security reviews for private equity transactions or investments by
sovereign wealth investors. However, it was recently reported that the National Security Council sought involvement in the approval process for the sale of a 60% stake in a national telecommunications firm to the National Treasury by a private equity investor. This involvement was based on the fact that the telecom - munications firm provides critical services to various government departments. It is anticipated that if a transaction involves matters of national security or significant public interest, the National Security Coun - In the event that a private equity fund wishes to acquire a stake in a public company listed on the NSE, the acquisition may be subject to the Capital Markets (Takeovers and Mergers) Regulations, 2002 (the “Takeover Regulations”). The Takeover Regulations prescribe that the follow - ing scenarios may require mandatory reporting to the CMA, for which the acquirer is then required to submit a takeover document as prescribed: cil will likely seek to be involved. Listed company transactions • direct or indirect acquisition of effective control of the voting rights of a listed company (ie, control of 25% of the shares or voting rights); • direct or indirect acquisition of a company that has effective control of a listed company; • acquisition of more than 5% of the voting rights in any one year by an existing shareholder, if the shareholder holds more than 25% of the shares but less than 50% of the voting rights; • acquisition of voting rights by an existing share - holder holding at least 50% of the voting shares; or • acquisition of at least 25% of a subsidiary that has contributed at least 50% of the overall turnover of the listed company in the previous three fiscal years. Importantly, changes to the Takeover Regulations have been proposed in the 2023 draft Capital Mar - kets (Takeovers and Mergers) Regulations 2023 (the “Draft Regulations”) as part of an overhaul of capital markets regulation in Kenya. Key proposed changes in the Draft Regulations include:
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