Capital Markets Act

11. Objectives of the Authority

Edition: 2025-12-11 · In force

11. Objectives of the Authority

(1)The principal objectives of the Authority shall be—

(a)the development of all aspects of the capital markets with particular emphasis on the removal of impediments to, and the creation of incentives for longer term investments in, productive enterprises;

(b)to facilitate the existence of a nationwide system of securities commodities market and derivatives market and brokerage services so as to enable wider participation of the general public in the securities commodities market and derivatives market;

(c)the creation, maintenance and regulation of a market in which securities can be issued and traded in an orderly, fair and efficient manner, through the implementation of a system in which the market participants are self-regulatory to the maximum practicable extent;

(d)the protection of investor interests;

(e)the facilitation of a compensation fund to protect investors from financial loss arising from the failure of a licensed broker or dealer to meet his contractual obligations; and

(f)the development of a framework to facilitate the use of electronic commerce for the development of capital markets in Kenya.

(2)A reference to electronic commerce shall be construed as a reference to the use of information technology to effect linkages among functions provided by licensed persons or other market participants and describes technology platforms that allow—

(a)the transfer and dissemination of market information to a wider number of users within and between networks;

(b)the offer, distribution or delivery in electronic form of securities or services ordinarily provided by licensed persons; and

(c)the execution of securities transactions without the need for parties to the transaction to be physically present at the same location.

(3)For the purpose of carrying out its objectives, the Authority may exercise, perform or discharge all or any of the following powers, duties and functions—

(a)advise the Cabinet Secretary on all aspects of the development and operation of capital markets;

(b)implement policies and programmes of the Government with respect to the capital markets;

(c)employ such officers and servants as may be necessary for the proper discharge of the functions of the Authority;

(cc)impose sanctions for breach of the provisions of this Act or the regulations made thereunder, or for non-compliance with the Authority’s requirements or directions, and such sanctions may include—

(i)levying of financial penalties, proportional to the gravity or severity of the breach, as may be prescribed:Provided that the financial penalties shall be recoverable summarily by the Authority as civil debts;

(ii)ordering a person to remedy or mitigate the effect of the breach, make restitution or pay compensation to any person aggrieved by the breach;

(iii)publishing findings of malfeasance by any person;

(iv)suspending or cancelling the listing of any securities or exchange-traded derivatives contracts, or the trading of any securities or exchange-traded derivatives contracts, for the protection of investors;

(d)to issue guidelines and notices on all matters within the jurisdiction of the Authority under this Act;

(e)to grant a licence to any person to operate as a stockbroker, derivatives broker, dealer or investment adviser, fund manager, investment bank, central depository or authorised securities dealer, and ensure the proper conduct of that business;

(f)to grant approval to any person to operate as a securities exchange, commodity exchange, derivatives exchange, credit rating agency, registered venture capital company or to operate in any other capacity which directly contributes to the attainment of the objectives of this Act and to ensure the proper conduct of that business;

(fa)regulate spot commodity markets;

(fb)regulate virtual asset service providers in accordance with the Virtual Asset Service Providers Act;

(ff)recognize any person duly licensed by a prescribed foreign authority to carry on any licensed activity in Kenya which requires a license or an approval under this Act;

(g)register, approve and regulate collective investment schemes;

(ga)license, approve and regulate private equity and venture capital companies that have access to public funds;

(h)inquire, either on its own motion or at the request of any other person, into the affairs of any person which the Authority has approved or to which it has granted a licence and any public company the securities of which are publicly offered or traded on an approved securities exchange or on an over the counter market;

(i)give directions to any person which the Authority has approved or to which it has granted a licence and any public company the securities of which are publicly offered or traded on an approved securities exchange or on an over the counter market;

(j)conduct inspection of the activities, books and records of any persons approved or licensed by the Authority;

(k)deleted by Act No. 9 of 2007, s. 46(b);

(l)deleted by Act No. 9 of 2007, s. 46(b);

(m)appoint an auditor to carry out a specific audit of the financial operations of any collective investment scheme or public company the securities of which are publicly offered or traded on an approved securities exchange or on an over the counter market, if such action is deemed to be in the interest of the investors, at the expense of such collective investment scheme or company;

(n)grant compensation to any investor who suffers pecuniary loss resulting from the failure of a licensed broker or dealer to meet his contractual obligations;

(o)have recourse against any person whose act or omission has resulted in a payment from the Compensation Fund;

(p)act as an appellate body in respect of appeals against any self regulatory organization securities or exchange-traded derivatives contracts exchange, derivatives exchange or central depository in actions by parties aggrieved thereby;

(q)co-operate or enter into agreements for mutual co-operation with other regulatory authorities for the development and regulation of cross-border activities in capital markets;

(r)regulate and oversee the issue and subsequent trading, both in primary and secondary markets, of capital market instruments;

(s)regulate the use of electronic commerce for dealing in securities or offer services ordinarily carried out by a licensed person;

(t)trace any assets, including bank accounts, of any person who, upon investigation by the Authority, is found to have engaged in any fraudulent dealings in an issuer and its securities or insider trading;

(u)in writing, order caveats to be placed against the title to such assets or prohibit any such person from operating any such bank accounts as may be directed by the Authority, pending determination of any charges instituted against that person;

(v)prescribe notices or guidelines on corporate governance of a company whose securities have been issued to the public or a section of the public;

(va)ensure processing of personal data in the operations of capital markets is in accordance with principles set out under the Data Protection Act (Cap. 411C);

(w)do all such other acts as may be incidental or conducive to the attainment of the objectives of the Authority or the exercise of its powers under this Act.

(Act No. 10 of 1994, s. 2, Act No. 3 of 2000, s. 9, Act No. 9 of 2007, s. 46, Act No. 8 of 2008, s. 48, Act No. 37 of 2011, s. 3, Act No. 48 of 2013, s. 6, Act No. 38 of 2016, s. 69, Act No. 15 of 2018, s. 3, Act No. 23 of 2019, s. 42, Act No. 24 of 2019, Sch., Act No. 8 of 2020, s. 30, Act No. 20 of 2025, Sch.)

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Source: Kenya Law