ADVOKS GLOBAL · KENYA
The Capital Markets Authority Rules
25. Compensation of investors
Edition: 2022-12-31 · In force
25. Compensation of investors
(1)Whenever an investor has suffered pecuniary loss due to the failure of a licensed person to, meet his contractual obligations, which loss has not been recovered or recovered in full—(a)from the bank guarantee furnished by such license person to the securities exchange of which such licensed person is a member; or(b)from the compensation fund of the securities exchange of which such licensed person is a member; or(c)in legal proceedings including bankruptcy or liquidation proceedings against such licensed person,(hereinafter called "the net loss") the investor shall apply to the Authority for compensation from the Investor Compensation Fund cash or securities equal to the net loss.(2)An application by any investor for compensation shall be made to the Authority within six months of obtaining a final order in bankruptcy or liquidation proceedings against such licensed person.(3)The Investor Compensation Committee shall, after examination of the evidence produced in support of a claim, make a recommendation to the Authority with respect to whether to allow or disallow such claim and, if the recommendation is to allow the claim, an assessment of the amount payable.(4)The Authority shall give notice of its decision to the investor in writing.(5)The net loss to an investor shall be subject to a maximum of one hundred thousand shillings provided that the Cabinet Secretary may, by order, on the recommendation of the Authority increase the sum specified in this paragraph to a sum specified in such order provided further that the net loss payable on all claims in any one year shall not exceed the total sum in the Investor Compensation Fund for the year in question.(6)Where the Authority has made, or is under a liability to make, a payment to an investor, on behalf of a licensed person, such licensed person shall be liable to the Authority for an amount equal to the payment made out of the Investor Compensation Fund.(7)In the case of an insolvent licensed person, the duty of a liquidator shall be to pay the Authority the amount paid by the Authority to all investors on behalf of the insolvent person under these Rules instead of to such investors and if the liability to any investor exceeds the amount paid by the Authority, the liquidator shall thereafter distribute any remaining proceeds.