ADVOKS GLOBAL · KENYA
Banking Act
9A. Directors, Chief Executive Officers and significant shareholders to be fit and proper persons
Edition: 2024-12-27 · In force
9A. Directors, Chief Executive Officers and significant shareholders to be fit and proper persons
(1)An institution shall ensure that no person is appointed or elected as a director or appointed as a senior officer unless the Central Bank has certified the person as a fit and proper person to manage or control the institution.(2)A person shall ensure that the person does not become a significant shareholder of an institution unless the Central Bank has certified the person as a fit and proper person to manage or control the institution.(3)For the purposes of certification under subsection (2), the Central Bank shall vet a significant shareholder—(a)when the shareholder initially becomes a significant shareholder after the commencement of this section;(b)when a new institution is applying for a licence to commence business under the provisions of this Act;(c)when new evidence becomes available to the Central Bank indicating that an already existing significant shareholder does not fulfil the fit and proper criteria as set out in Part B of the First Schedule.(3A)Notwithstanding any other provision in this section, the Central Bank may vet any shareholder who is not a significant shareholder if—(a)the Central Bank has reason to believe or reasonably suspect that such shareholder has reduced its direct or indirect shareholding in an institution or in a corporate entity to below five percent in order to avoid vetting; or(b)the shareholder exercises or has the capacity to exercise direct or indirect control of the institution or corporate entity through his or its associates.(3B)For the purposes of subsection (3A)(b) "control" means—(a)the ability to influence the management of an institution, a corporate shareholder of an institution or a corporate entity seeking to become an institution; or(b)the ability to influence, directly or indirectly, the decisions of the shareholders of an institution, a corporate shareholder of an institution or a corporate entity seeking to become an institution.(3C)Any non-significant shareholder proposed to be vetted under this section shall be vetted in accordance with the criteria set out in Part B of the First Schedule and the vetting requirements for significant shareholders set out in the Prudential Guidelines.(3D)A non-significant shareholder, upon being determined by the Central Bank as not fulfilling the fit and proper criteria as set out in Part B of the First Schedule shall be subject to the limitation set out in subsection (4)(a) of this section and may in addition be directed by the Central Bank to cease any form of association or relationship with a particular person or institution.(4)A significant shareholder, upon being determined by the Central Bank as not fulfilling the fit and proper criteria as set out in Part B of the First Schedule, shall—(a)cease to exercise all his voting rights immediately upon the institution being notified by the Central Bank in writing that the shareholder does not fulfil the fit and proper criteria as set out in Part B of the First Schedule; and(b)reduce the holding of shares to below five percent of the share capital in the institution within twelve months, or such longer period as the Central Bank may determine.(5)The Central Bank may determine that a person who already is a director or senior officer of an institution is not a fit and proper person to manage or control the institution and upon the institution being notified in writing of that determination, the person shall, if he is a Director or senior officer, cease to hold office.(7)In determining whether or not a person is a fit and proper person to manage or control an institution the Central Bank shall apply the criteria prescribed in the First Schedule to determine whether the Central Bank is satisfied as to the professional and moral suitability of the person.(8)For the purposes of this section and of the First Schedule, "senior officer" means a person who manages or controls an institution licensed under the Act, and includes—(a)the chief executive officer, deputy chief executive officer, chief operating officer, chief financial officer, secretary to the board of directors, treasurer, chief internal auditor, or manager of a significant unit of an institution licensed under this Act;(b)a person with a similar level of position or responsibilities as a person described in paragraph (a).