ADVOKS GLOBAL · KENYA
The Capital Markets (Asset-Backed Securities) Regulations
3. Interpretation
Edition: 2022-12-31 · In force
3. Interpretation
In these Regulations, unless the context otherwise requires—"advisor" means a person appointed to arrange, package, place or market the application for issue, offer and listing of the asset-backed securities;"allowable expenses" includes trust fees, ongoing fees paid to rating agencies, servicing fees, origination fees; acquisition expenses, liquidation expenses, bank service charges, legal fees, audit fees and other direct charges incurred in the ordinary course of business, exclusive of organizational and offering expenses, conversion expenses and extraordinary expenses, all being deemed incidental expenses relating to the authorization and issue of asset-backed securities offered for purchase by the general public for the purposes of the Income Tax Act (Cap. 470);"asset-backed securities" means securities—(a)that are issued as part of a securitization transaction in which assets are transferred to a third party that issues the securities; and(b)that are primarily serviced, with respect to both return of investment and return on investment, by cash flow from assets described in paragraph (a) above;"asset-backed securities holder" means the person whose name appears in the register of asset-backed securities holders;"Authority" means the Capital Markets Authority established under section 5 of the Capital Markets Act (Cap. 485A);"day" means any calendar day excluding Saturdays, Sundays and public holidays;"Cabinet Secretary" Act means the Cabinet Secretary for the time being responsible for matters relating to finance;"Central Bank" means the Central Bank of Kenya established by section 3 of the Central Bank of Kenya Act (Cap. 491);"close relation" means a relationship supported by documentary evidence of a spouse, parent, sibling, child, father-in-law, son-in-law, daughter-in-law, mother-in-law, brother-in-law, son-in-law, grand child or spouse of a grandchild;"credit enhancement" means any arrangement including but not limited to insurance, letters of credit, lines of credit, collateralization, guarantees and other arrangements intended to decrease the credit risk on the asset-backed securities;"credit enhancer" means a person or entity that provides credit enhancement;"credit rating" means an objective and independent opinion on the creditworthiness of the debt instrument to be issued based on relevant risk factors;"Commissioner" means the Commissioner of Insurance appointed under the Insurance Act;"eligible assets" means assets which are the subject matter of the securitization transaction;"independent director" means a director who—(i)is not and has not been employed by the originator in an executive capacity within the five year period preceding the date of application;(ii)is not a member of the issuer or originator's senior management or a significant customer or supplier to the issuer or originator or is an entity that receives significant contributions from the issuer or originator; or within a period of five years immediately preceding the date of application has not had any business relationship with the issuer or originator (other than service as a director) for which the issuer has been required to make disclosure;(iii)has no personal service contract with any of the shareholders, directors or members of the senior management of the issuer or originator;(iv)is not employed by a company at which a director of the issuer or originator serves as a director;(v)is not a close relation of any person described above; or(vi)has not had any of the relationships described above with any affiliate of the issuer or originator;"information memorandum" means any prospectus , document, notice, circular, advertisement, or other invitation in print or electronic form containing information in relation to an issue of asset-backed securities and inviting offers from the public or a section of the public to subscribe for the purchase of asset-backed securities;"issuer" means an entity that seeks to offer or offers asset-backed securities to the public or a section thereof;"liquidation expenses" means the expenditures necessary to convert residual or non-performing eligible assets or any underlying collateral, into cash, including expenditures necessary to collect on credit enhancement;"liquidity provider" means a person who provides funds to a servicing agent for the settlement of payments due to asset-backed securities holders in accordance with the schedule of payments stipulated for the terms and conditions of asset-backed securities to cover any short-term cashflow shortfalls;"originator" means the entity that seeks to transfer its assets in a securitization transaction;"origination fees" means all fees, commissions or other consideration, paid by any party to any party in connection with the origination and sale of eligible assets to the Issuer, but not including the purchase price of the eligible assets, initial fees paid to rating agencies and professional fees paid to advocates, valuers and similar professionals for providing routine professional services;"securitization transaction" means an arrangement which involves the transfer of assets or risk to a special purpose vehicle where such transfer is funded by the issuance of securities to investors and payments to investors in respect of such debt securities are principally derived, directly or indirectly, from the cash flows of the transferred assets;"selling agent" means the entity appointed to distribute or offer the asset-backed securities to the public or a section thereof;"servicing agent" means an entity appointed to manage collections on the assets underlying the asset-backed securities and administering the cash flows of the asset pool;"transfer," means the transfer of legal and beneficial title to the assets that are the subject matter of a securitization transaction;"trustee" means the person or institution appointed to enforce the rights of the Asset-Backed Securities holders pursuant to the securitization;"working hours," means between 8.00 a.m. and 5.00 p.m. on any working day.