ADVOKS GLOBAL · KENYA
Prevention of Fraud (Investments) Act
17. Restriction on distribution of circulars
Edition: 2023-12-11 · Not commenced
17. Restriction on distribution of circulars
(1)Subject to the provisions of this section, no person shall—(a)distribute or cause to be distributed any documents which, to his knowledge, are circulars containing—(i)any invitations to persons to do any of the acts mentioned in paragraphs (a), (b) and (c) of section 16 of this Act; or(ii)any information calculated to lead directly or indirectly to the doing of any of such acts by the recipient of the information; or(b)have in his possession for the purpose of distribution any documents which, to his knowledge, are circulars as aforesaid, being documents of such a nature as to show that the object or principal object of distributing them would be to communicate such an invitation or such information as aforesaid.(2)Subsection (1) of this section shall not apply—(a)in relation to any of the matters mentioned in paragraphs (b), (c) and (d) of subsection (2) of section 8 of this Act; or(b)in relation to any distribution of documents which is required or authorized by or under any written law other than this Act; or(c)in relation to any distribution of documents permitted by the Minister.(3)This section shall not prohibit the distribution or possession of any document by reason only that it contains an invitation or information—(a)made or given with respect to any securities by or on behalf of the holder of a principal’s licence; or(b)made or given with respect to any securities by or on behalf of the Central Bank of Kenya or by any exempted dealer; or(c)made or given by or on behalf of a corporation to holders of securities of, or to persons employed by, or to creditors of, the corporation or any other corporation that, in relation to the first-mentioned corporation, is a subsidiary company with respect to securities of either such corporation; or(d)made or given by or on behalf of the manager of a unit trust with respect to any securities created in pursuance of such trust; or(e)made or given by or on behalf of the Government of Kenya or the Government of any other country with respect to securities of that Government; or(f)made or given by or on behalf of any co-operative society or building society with respect to shares of the society, or loans or deposits which may be made to or with the society; or(g)made or given to beneficiaries under a trust by or on behalf of a person acting in the capacity of a trustee of that trust; or(h)made or given with respect to any securities in connexion only with a sale or proposed sale of those securities by auction; or(i)which a person whose ordinary business, or part of whose ordinary business, it is to buy and sell any property other than securities (whether as a principal or as an agent) may make or give in the course of the business of buying and selling such property—Provided that nothing in this paragraph shall authorize any person to do any thing in pursuance of, or for the purpose of, any arrangements the purpose or effect, or pretended purpose or effect, of which is to provide facilities for the participation by persons in profits or income alleged to arise or to be likely to arise from the acquisition, holding, management or disposal of any property other than securities.(4)Documentation shall not, for the purposes of this section, be deemed not to be circulars by reason only that they are in the form of a newspaper, but a person shall not be taken to contravene this section by reason only that he distributes, or causes to be distributed, to purchasers thereof, or has in his possession for the purposes of distribution to purchasers thereof, copies of any newspaper.(5)A person shall not be taken to contravene this section by reason only that he distributes documents to persons whose business involves the acquisition or disposal, or the holding, of securities (whether as principal or agent), or has documents in his possession for the purpose of distribution to such persons.(6)Any person who contravenes this section shall be guilty of an offence.(7)Where any person is convicted of an offence under this section, the court dealing with the case may make an order authorizing the destruction or other disposal of any documents produced to the court which are shown to its satisfaction to be documents in respect of which the offence was committed:Provided that an order under this subsection shall not be carried into effect until the conclusion of all proceedings in the matter concerned.(8)In this section, "subsidiary company" has the meaning assigned to it in section 4 of the Companies Act, 2015.