ADVOKS GLOBAL · KENYA
Kenya Deposit Insurance Act
50. Receivership powers
Edition: 2022-12-31 · In force
50. Receivership powers
(1)The Corporation or the person appointed by the Corporation as receiver, in effecting any transaction under this Part shall not be required to—(a)notify or obtain the approval of shareholders or creditors of the institution in a general meeting or otherwise notwithstanding any rule of law, contract or anything in any law including the Companies Act or anything in the constituent documents of the institution; and(b)make a take-over offer or be required to acquire the shares of the other shareholders of the institution or its borrowers notwithstanding any rule of law, contract or anything in any law.(2)For the purposes of discharging its responsibilities as receiver, the Corporation shall have power to declare a moratorium on the payment by the institution to its depositors and other creditors and the declaration of the moratorium shall—(a)be applied equally and without discrimination to all classes of creditors:Provided that the Corporation may offset the deposits or other liabilities owed by the institution to any depositor or other creditor against any loans or other debts owed by that depositor or creditor to the institution;(b)limit the maximum rate of interest which shall accrue on deposits and other debts payable by the institution during the period of the moratorium to the minimum rate determined by the Central Bank under the provisions of section 39 of the Central Bank of Kenya Act or such other rate as may be prescribed by the Central Bank for the purposes of this section:Provided that the provisions of this paragraph shall not be construed so to impose an obligation on the institution to pay interest or interest at a higher rate to any depositor or creditor than would otherwise have been the case;(c)suspend the running of time for the purposes of any law of limitation in respect of any claim by any depositor or creditor of the institution; or(d)cease to apply upon the termination of the Corporation’s appointment whereupon the rights and obligations of the institution, its depositors and creditors shall, save to the extent provided in paragraphs (b) and (c), be the same as if there had been no declaration under the provisions of this subsection.(3)The Corporation shall, to the extent not inconsistent with its powers and duties under this Act, have any other power conferred on or any duty related to the exercise of that power imposed on a receiver for an institution under any other written law.(4)Where the Corporation has assumed control of an institution under section 44(2)(b), the Corporation shall have the power—(a)to enter into any premises of an institution and take possession and control of the assets and require any person in the premises to account for and deliver up to the Corporation or the appointed person possession and control of the assets;(b)subject to paragraph (c), to sell or otherwise dispose of the assets and business undertaking of the institution by private treaty or public sale or in such other manner and on such terms and conditions as the Corporation or the appointed person, deems it appropriate;(c)to sell or otherwise dispose of any asset that is subject to an agreement creating a security interest to any person who agrees to assume the obligation secured by the security interest;(d)to arrange for the assumption of all or any part of the liabilities of an institution by a person;(e)to carry on the business of an institution to the extent that the Corporation or the appointed person, deems it necessary or beneficial;(f)to sue for, defend, compromise and settle, in the name of an institution, any claim made by or against it;(g)in the name of an institution, to do all acts and execute all receipts and other documents and for that purpose, when necessary, use its common seal;(h)to do all such other things as may be necessary or incidental to the exercise of the rights, powers, privileges and immunities of the Corporation or the appointed person; or(i)to recover out of the assets of an institution all the costs, charges and expenses, including the remuneration, properly incurred by the Corporation or the appointed person in the exercise of powers under paragraph (a), in priority to all other claims.(5)Where the Corporation, exercises one or more powers under this section, the Corporation shall not, by reason of the exercise of such powers, be held to have assumed or incurred any obligation or liability of the institution for its own account.(6)Where the Corporation has assumed control or appointed a person to do so on its behalf under section 44(2)(b), the Corporation or the appointed person may, in addition to any of its rights and powers, carry out any liquidation comprising a transaction or a series of transactions that involves the sale or other disposal by the institution of all or part of its assets or the assumption by another person of all or part of its liabilities or both.(7)In undertaking its functions under this Part, the Corporation may—(a)in circumstances that do not pose systemic risk, draw from the Fund to facilitate a bank resolution process under the lesser cost rule;(b)in circumstances that pose systemic risk and in order to minimize moral hazard and resolution costs while preserving banking services in case of an institution’s failure adopt various resolution mechanisms as may be prescribed with the assistance of the Central Bank and the Government.(8)The transfer of assets and liabilities of an institution by the Corporation under this Part shall be irrevocable and shall not require the consent of debtors, creditors or any security holders.(9)In undertaking the exclusion and transfer process the Corporation shall rank liabilities as follows—(a)claims by the Corporation;(e)statutory obligations;(10)The Central Bank shall in circumstances that pose systemic risk provide technical assistance to restore the financial and economic condition of an institution.