ADVOKS GLOBAL · KENYA
Capital Markets Act
18. Establishment of the Investor Compensation Fund
Edition: 2025-12-11 · In force
18. Establishment of the Investor Compensation Fund
(1)There shall be established a Fund to be known as the Investor Compensation Fund for the purposes of granting compensation to investors who suffer pecuniary loss resulting from the failure of a licensed stockbroker or dealer to meet his contractual obligations.(2)The Compensation Fund shall consist of—(a)such moneys as are required to be paid into the Compensation Fund by licensed persons;(b)such sums of money as are paid under this Act as fines or penalties or under section 34 as ill-gotten gains where those harmed are not specifically identifiable;(c)such sums of money as accrue from interest and profits from investing Compensation Fund moneys;(d)such sums of money recovered by or on behalf of the Authority from entities whose failure to meet their obligations to investors result in payments from the Compensation Fund;(e)interest deemed to accrue on the proceeds of a public issue or offer for sale of shares of a company listed or to be listed on an approved securities exchange, between the closing date and the date of dispatch of refund cheques, or, where there is no refund, the date of dispatch of share certificates or crediting of securities accounts, to be determined at the rate prescribed by the Authority;(f)such sums of money as are received for purposes of the Compensation Fund from any other source approved by the Cabinet Secretary.(2A)The Authority may reward any person who provides new and timely information leading to the recovery of sums of money referred to in subsection (2):Provided that—(a)this provision shall not apply to any officer of the Authority;(b)the reward payable under this subsection shall be three per cent of the amount recovered subject to a maximum of five million shillings; and(c)the reward referred to in paragraph (a) shall be paid before the recovered sums of money are transferred to the Fund.(2B)The Cabinet Secretary shall make regulations to give effect to the provisions of subsection (2A).(2C)A person who—(a)colludes with an officer of the Authority for the purpose of collecting the reward under subsection (2A);(b)while working at the Authority aids another person to get and provide information under subsection (2A);(c)provides false information under subsection (2A),commits an offence and shall on conviction be liable to a fine not exceeding five million shillings or to imprisonment for a term not exceeding five years.(3)Moneys which have accumulated in the Compensation Fund may be invested by the Authority.