Kenyan legislation

The Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations

Edition: 2022-12-31 · In force

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Part I – PRELIMINARY

1. Citation

These Regulations may be cited as the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations.

2. Interpretation

In these Regulations, unless the context otherwise requires—"Alternative Investment Market Segment" means a market segment for which securities of issuers that satisfy the eligibility requirements prescribed under regulation 7(1)(b) are listed;"days" means calendar days excluding Saturdays, Sundays and public holidays;"Directors Induction Program" means a training programme, approved by the Securities Exchange in consultation with the Authority, covering issues relating to directors responsibility in listed entities including corporate governance, regulatory compliance and accountability;"East African Partner State regulator" means the regulator in an East African Community member state charged with the supervision of the capital markets;"executive director" means a member of a board who also serves as a manager of a company;"Fixed Income Securities Market Segment" means a market segment for which fixed income securities of issuers that satisfy the eligibility requirements prescribed under regulation 7(1)(c) are listed, and include Government and corporate securities;"Growth Enterprise Market Segment" means a market segment where issues that satisfy the eligibility requirements prescribed under Regulation (7)(1)(c), are listed;"IAS" means International Accounting Standards;"independent director" means a member of a board of directors who—

(a)does not have a material or pecuniary relationship with the company or related persons;

(b)is compensated through sitting fees or allowances; and

(c)does not own shares in the company:

Provided that after nine years of continuous service he or she ceases to be an independent director and assumes the position of a non-executive director;"introduction" means the listing of securities that are listed on another securities exchange or that are publicly held other than as a result of an immediately preceding public offer;"issuer" in relation to any securities, means the person by whom securities have been issued or are to be issued and shall include a company or other legal entity that offers securities to the public or a section thereof in Kenya, whether or not such securities are subject of an application for admission or have been admitted to listing;"listing" means admission of a security to the official list of a securities exchange; and the terms "list" and "listed" shall be construed accordingly;"listing statement" means an information document prepared in connection with a listing on the Growth Enterprise Market Segment and does not constitute an information memorandum or prospectus unless specifically provided;"Main Investment Market Segment" means a market segment for which securities of issuers that satisfy the eligibility requirements prescribed under regulation 7(1)(a) are listed;"material information" means any information that may affect the price of an issuer's securities or influence investment decisions and includes information on—

(a)a merger, acquisition or joint venture;

(b)a block split or stock dividend;

(c)earnings and dividends of an unusual nature;

(d)the acquisition or loss of a significant contract;

(e)a significant new product or discovery;

(f)a change in control or significant change in management;

(g)a call of securities for redemption;

(h)the public or private sale of a significant amount of additional securities;

(i)the purchase or sale of a significant asset;

(j)a significant labour dispute;

(k)a significant law suit against the issuer;

(l)establishment of a programme to make purchases of the issuer's own shares;

(m)a tender offer for another issuer's securities;

(n)significant alteration of the memorandum and articles of association of the issuer; or

(o)any other peculiar circumstances that may prevail with respect to the issuer or the relevant industry;

"market segment" means a separate segment of the official list established by a securities exchange, with the approval of the Authority, with respect to listings of securities for which specific eligibility and disclosure requirements are prescribed;"Nominated Advisor" means a registered person appointed to undertake the responsibilities set out under regulation 10A;"non-executive director" means a member of a board of a company who can own shares in the company but—

(a)is not part of the management team or affiliated with the company in any way; and

(b)is not an employee of the company;

"offer period" means a period not exceeding ten working days, or such longer period as the Authority may approve, during which an offer for subscription or sale of securities to the public remains open;"official list" means a list specifying all securities which have been admitted to listing on any of the market segments of a securities exchange;"regional fixed income securities" means fixed income securities issued under regulation 7(1)(d);"Registrar" has the meaning as assigned to it in section 2 of the Companies Act (Cap. 486);"related company" means a holding company, a subsidiary of another company or a subsidiary of the holding company of another company";"supplementary prospectus" means the prospectus referred to in regulation 13.[L.N. 30/2008, r. 2, L.N. 61/2012, r. 2, L.N. 113/2013, r. 2, L.N. 36/2016, r. 2.]

Part II – ELIGIBILITY, DISCLOSURE AND GENERAL REQUIREMENTS FOR PUBLIC OFFERS

3. Application

(1)These Regulations shall apply to all offers of securities to the public in Kenya whether or not the issuer is seeking a listing on any securities exchange in Kenya.

(2)The Authority shall be the competent authority to grant approval for all public offers and listing of securities on any securities exchange in Kenya.

(2A)A Securities Exchange may approve the listing of a security on a Growth Enterprise Market Segment if—

(i)that security is not offered to the public; and

(ii)the listing is by way of introduction.

(3)A securities exchange shall list all securities approved for listing by the Authority upon being satisfied that the issuer has—

(a)obtained a letter of approval from the Authority for the listing of securities confirming that the issuer has satisfied the eligibility requirements prescribed under regulation 7(1) and the disclosure requirements prescribed under regulation 10(1) with respect to the market segment in which the securities are to be listed; and

(b)attained the—

(i)total minimum subscription of shares as disclosed in the approved prospectus by the Authority in respect of public offering and listing of securities;

(ii)minimum shareholders prescribed for the respective market segment under regulation 7(1)(a) and (b); and

(c)with respect to additional issue and listing of securities of the same class as those already listed, obtained a letter of approval from the Authority confirming that the issuer satisfied the requirements for additional issues prescribed under regulation 11.

(4)Every issuer of securities approved for listing by the Authority at a securities exchange shall pay the listing fees prescribed under the Sixth Schedule, to the securities exchange at which its securities are listed.

(4A)An issuer of securities approved for listing by a securities exchange shall pay the listing fees as set out in the Seventh Schedule.

(5)Every person whose securities have been approved by the Authority for a public offer or listing shall state that fact on all announcements of the public offer or listing.

(6)A person whose securities have been approved by a Securities Exchange for listing shall state that fact on all announcements of the listing.[L.N. 30/2008, r. 3, L.N. 61/2012, r. 3.]

4. Meaning of "offer of securities"

A person is to be regarded as offering securities if, as principal—

(a)he makes an offer which, if accepted, would give rise to a contract for the issue or sale of the securities by him or by another person with whom he has made arrangements for the issue or sale of the securities; or

(b)he invites a person to make such an offer,

but not otherwise and, except where the context otherwise requires, "offer" and "offeror" shall be construed accordingly.

5. Meaning of "offer to the public"

(1)A person offers securities to the public in Kenya if, to the extent that the offer is made to persons in Kenya, it is made to the public and for this purpose, an offer which is made to any section of the public, whether selected as members or debenture holders of a body corporate, or as clients of the person making the offer, or in any other manner, is to be regarded as made to the public; and the terms "public offer" and "public offering" shall be construed accordingly.

(2)An issuer applying for a listing shall be bound by all the obligations arising in respect of a public offer of securities in so far as the obligations apply.

(3)An issuer applying for a listing on the Growth Enterprise Market Segment shall be bound by all the obligations arising in respect of listing in such market.[L.N. 30/2008, r. 4, L.N. 61/2012, r. 4.]

5A. Appointment of transaction advisor

(1)Any company proposing to offer its securities to the public or a section of the public shall appoint a transaction advisor.

(2)A transaction advisor appointed under paragraph (1) shall be responsible for ensuring that the offer of securities is made in accordance with the provisions of the Act and regulations issued thereunder.

(3)A person shall not be eligible for appointment as a transaction advisor unless such person is licensed as an investment bank or is approved by the Authority to act as a transaction advisor for the particular offer of securities.[L.N. 101/2009, r. 2.]

6. Issuer to publish prospectus

(1)When securities are to be offered to the public or a section of the public in Kenya the issuer shall publish an Information Memorandum by making it available to the public or the section of the public, free of charge at an address in Kenya, during the offer period or for such period prior to Listing as prescribed by the Authority.

(2)The issuer shall, before the time of publication of the information memorandum, obtain approval of the Authority that the information memorandum complies with these Regulations and shall deliver a copy thereof to the Registrar for registration.

(3)With respect to initial offers to the public, the prospectus shall include—

(a)an accountant's report confirming compliance by the issuer of the financial disclosures prescribed under regulation 10(1); and

(b)a legal opinion which shall include but not be limited to the following—

(i)whether all licences and consents required to perform the business or proposed business of the issuer have been duly obtained;

(ii)the validity of evidence of ownership of land, plant and equipment and other important and relevant assets of the issuer;

(iii)any agreements or contracts with respect to the proposed issue of securities, including, where applicable but not limited to, underwriting contracts, agreements or contracts with any securities exchange, registrar and trustees of bonds, debentures or other credit securities;

(iv)any material litigation, prosecution or other civil or criminal legal action in which the issuer or any of its director is involved;

(v)whether the existing capital of the issuer and any proposed changes thereto is in conformity with applicable laws and has received all necessary authorizations; and

(vi)any other material items with regard to the legal status of the issuer and the proposed issue,

Provided that where by reasons of exceptional circumstances acceptable to the Authority and disclosed in the prospectus, the issuer is not able to obtain a legal opinion, the directors of the issuer will be required individually and severally to declare and give an undertaking on the matters stated in regulation 6(3)(b)(i) to (vi), and such declaration and undertaking shall be included in the prospectus.

(4)The prospectus shall be published in the English language and shall be in black and white except for the issuer's logo.

(5)No person shall offer any securities to the public through an electronic form, unless on the basis of a prospectus approved by the Authority.

(6)Any person offering securities through an electronic form which has been approved by the Authority shall state in the prospectus whether the application for subscription of such securities may be made in an electronic form and in that regard, the procedure and process of facilitating subscription and payment shall be disclosed in the prospectus.

(7)An issuer may distribute a prospectus to prospective investors through electronic form provided such prospectus shall be in the form and content as approved by the Authority.

(8)Where securities are offered through an electronic form the results of the subscription including the allocation process shall be posted on the issuer's website which shall disclose the broad classification of the allottees into individuals, local institutional investors and foreign investors.

(9)Allotment of securities offered to the public shall be made on the basis of the allotment policy disclosed in the prospectus unless the results of the subscription make such policy impractical and in such a case an amendment of the allotment policy shall be made with the approval of the Authority:Provided where such amendment has been approved by the Authority the issuer shall announce the fact within twenty four hours of the grant of approval.

(9A)When developing an allocation policy, an issuer or offeror shall ensure that the policy reserves at least forty per centum of the ordinary shares that are subject to an initial public offering and subsequent listing for investment by local investors.

(9B)Where the per centum reserved for local investors is not fully subscribed for by local investors, the issuer or offeror may, with the prior written approval of the Authority allocate the shares remaining to foreign investors.

(10)No person shall publish the results of the allotment of the public offer without notifying the Authority of the results at least twenty four hours prior to the date on which the allotment results are to be released to the public.[L.N. 30/2008, r. 5.]

6A. Issuing on growth Enterprise Market Segment

(1)A person who intends to issue securities on a Growth Enterprise Market Segment shall publish a listing statement by making it available to the public or to a section of the public, free of charge at an address in Kenya, for such period prior to listing as prescribed by the Securities Exchange.

(2)The issuer shall, before the time of publication of the listing statement, obtain approval of the Securities Exchange that the listing statement complies with these Regulations.

(3)A Securities Exchange shall, at least seven days prior to granting any approval of a listing statement, submit to the Authority a copy of the listing statement it is considering for approval with a confirmation that the listing statement is in compliance with these Regulations.[L.N. 61/2012, r. 5.]

6B. Book building

A person proposing to offer its securities to the public or a section of the public may use a book building process to determine the price for the offer of securities in accordance with the requirements set out in the Eighth Schedule to these Regulations.[L.N. 113/2013, r. 3.]

7. Eligibility to issue securities

(1)No person shall be eligible to issue securities to the public or list at a securities exchange, unless—

(a)with respect to securities to be listed on the Main Investment Market Segment, the issuer complies with the eligibility requirements prescribed in Part A of the First Schedule;

(b)with respect to securities to be listed on the Alternative Investment Market Segment, the issuer complies, with the eligibility requirements prescribed in Part B of the First Schedule;

(bb)with respect to securities to be listed on the Growth Enterprise Market Segment, the issuer complies with the eligibility requirements as set out in Part C of the First Schedule;

(c)with respect to securities to be listed on the Fixed Income Securities Market Segment, the issuer complies with the eligibility requirements prescribed in the Second Schedule;

(d)with respect to regional fixed income securities to be issued within the East African Community, the issuer complies with the eligibility requirements as set out in Part B of the Second Schedule.

(2)Any person who does not receive the minimum number of subscriptions in a public offering shall not be eligible to make another public offering before the expiry of one year from the date of approval of the previous public offering.[L.N. 30/2008, r. 6, L.N. 61/2012, r. 6, L.N. 113/2013, r. 4.]

8. Issuers not seeking listing

(1)An issuer who does not wish to list on any market segment of a securities exchange shall comply with the eligibility and disclosure requirements prescribed for the Alternative Investment Market Segment in the case of an offer of shares to the public or for the Fixed Income Securities Market Segment in the case of an offer of debt securities or other fixed income security to the public.

(2)An issuer who has made a public offer in accordance with subsection (1), may, after the expiry of not less than one year since the securities in question ceased to be the subject of an offer to the public, list those securities by introduction.[L.N. 30/2008, r. 7.]

9. Transfer to other market segment

(1)An issuer whose shares are listed on the any market segment of a Securities Exchange shall not be eligible to transfer such securities to the other market segment before the expiry of one year from the date of listing on the first mentioned market segment.

(2)A transfer of shares from or to the any market segment of a Securities Exchange shall be subject to the approval of the Authority and compliance with the eligibility and disclosure requirements prescribed under these Regulations.[L.N. 61/2012, r. 7.]

10. Disclosure requirement for public issues

(1)The form and content of a prospectus or listing statement shall comply with–

(a)Part A of the Third Schedule where the issuer seeks to list in the Main Investment Market Segment;

(b)Part B of the Third Schedule where the issuer seeks to list in the Alternative Investment Market Segment;

(c)Part C of the Third Schedule where the issuer seeks to list in the Fixed Income Securities Market Segment;

(cc)Part CC of the Third Schedule where the issuer seeks to list on the Growth Enterprises Market Segment; and

(d)Part D of the Third Schedule where the issuer seeks to list on any segment of the market by way of Introduction.

(1A)Notwithstandiing paragraph (1), the Authority may prescribe different disclosure requirements for entities listed on a foreign securities exchange recognised by the Authority that are seeking to list on a securities exchange in Kenya.

(2)Every prospectus or listing statement shall–

(a)contain the following statement on its front page–"As a matter of policy, the Capital Markets Authority assumes no responsibility for the correctness of any statements or opinions made or reports contained in this prospectus or listing statement, as the case may be. Approval of the issue and/or listing is not to be taken as an indication of the merits of the issuer or of the securities"; and

(b)state the allotment procedure to be applied in case of an over subscription for the securities to be issued pursuant to the prospectus.

[L.N. 30/2008, r. 8, L.N. 61/2012, r. 8, L.N. 95/2019, r. 2.]

10A. Nominated Advisors

(1)An issuer seeking to be listed on the Growth Enterprise Market Segment shall appoint a Nominated Adviser by a written contract and shall ensure that it has a Nominated Advisor at all times.

(2)The Securities Exchange shall suspend an issuer from trading if the issuer, at any time, ceases to have a duly appointed Nominated Advisor.

(3)A Nominated Advisor shall—

(a)advise and guide an issuer on the application of listing requirements of Growth Enterprise Market Segment;

(b)manage the submission of the listing statement and all other documentation to the Securities Exchange and ensure its completeness and correctness before submission;

(c)confirm to the Securities Exchange that—

(i)the issuer complies with all the conditions for listing as set out in the listing requirements for the Growth Enterprise Market Segment;

(ii)the information contained in the listing statement is accurate and complete in all material aspects;

(iii)there are no other matters, the omission of which would make any statement in the listing statement false or misleading;

(iv)statements of fact and opinion expressed by the directors in the listing statement have been arrived at after due and careful consideration on the part of the directors founded on fair and reasonable bases and assumptions; and

(v)the directors of the applicant have made sufficient enquiries to enable them give the confirmations set out in the responsibility statement contained in the listing statement;

(d)satisfy itself on the credentials of the reporting accountants, auditors, competent persons, valuers, providers of opinions and any other party responsible for a listing statement as required under paragraph A.02 of Part CC of the Third Schedule;

(e)satisfy itself, prior to submitting any documentation which requires approval by the Securities Exchange, that to the best of its knowledge and belief, having made due and careful enquiry of the issuer and its advisers—

(i)it is in compliance with the eligibility and disclosure requirements for listing on the Growth Enterprise Market Segment; and

(ii)there are no material matters, other than those disclosed in writing to the Securities Exchange, which should be taken into account by the Securities Exchange in considering the application;

(f)provide the Securities Exchange with any information or explanation known to it in such form and within such time as the Securities Exchange may reasonably require for the purposes of verifying whether the Nominated Advisor or the issuer have complied with the listing requirements;

(g)advise the Securities Exchange immediately if it is aware or have reason to suspect that any of its clients have or may have breached the listing requirements;

(h)submit all documents to the Securities Exchange and ensure that where such documents or any announcements are required, that they are in compliance with the continuous listing obligations;

(i)take all reasonable steps to brief all new appointments to the board of directors of the issuer as to the nature of their responsibilities under the listing requirements, other applicable regulation and the general nature of their obligations in relation to shareholders and shall ensure that—

(i)at least one third of the directors of the issuer have completed the Directors Induction Programme (DIP) prior to listing and the remainder complete the same within six months after the listing; and

(ii)all new appointments to the board of directors of the issuer complete the DIP within six months of appointment;

(j)review with the issuer, prior to publication, all periodic financial information announcements, and any other documentation to ensure that the directors of the issuer, after due and careful consideration, understand the importance of accurately disclosing all material information to shareholders and the market;

(k)ensure that at least one of its authorised representatives attends all board audit committee meetings of the issuer in an advisory capacity to ensure that the issuer conducts its meetings in compliance with the listing requirements and any applicable regulations; and

(l)carry out any activities relating to company for which it is the Nominated Advisor as may be requested by the Securities Exchange, from time to time.

(4)A Nominated Adviser shall, in the discharge of its responsibilities under these Regulations, observe due care and skill and ensure, at all times, that its conduct or judgment does not impair the integrity and reputation of the Growth Enterprise Market Segment.[L.N 61/2012, r. 9.]

11. Disclosure requirements for additional issues

An issuer whose securities are listed at a securities exchange shall not issue, or authorize its registrar to issue or register, by way of capitalization, scrip dividend, rights issue or additional shares of the class listed, to a greater amount than the number hitherto authorized for listing except in accordance with the disclosure requirements for additional listing prescribed in the Fourth Schedule.

12. General duty of disclosure in prospectus

(1)In addition to the information required to be disclosed by virtue of these Regulations, a prospectus or information memorandum or a listing statement shall, subject to these Regulations, contain all such information as investors would reasonably require, and reasonably expect to find therein, for the purpose of making an informed assessment of–

(a)the assets and liabilities, financial position, profits and losses, and prospects of the issuer of the securities; and

(b)the rights attaching to those securities.

(2)The information to be included by virtue of these Regulations shall be such information as is referred to in paragraph (1) which is within the knowledge of any person responsible for the prospectus, or which it would be reasonable for him to obtain by making enquiries.

(3)In determining what information is required to be included in a prospectus by virtue of these Regulations, regard shall be had to the nature of the securities and of the offeror of the securities.

(4)The Authority may require additional information to be included in a prospectus if, in its opinion, it deems it in the interests of investors to be in a prospectus, supplementary prospectus or information memorandum.

(5)A Securities Exchange may require additional information to be included in a listing statement if, in its opinion, it is in the interest of investors to be in a listing statement.[L.N. 61/2012, r. 10.]

13. Supplementary prospectus

(1)Where a prospectus has been approved under these Regulations in respect of a public offer of securities and, at any time between the opening date and the closing date while an agreement in respect of those securities can be entered into in pursuance of that public offer—

(a)there is a significant change affecting any matter contained in the prospectus the inclusion of which was required by these Regulations; or

(b)a significant new matter arises the inclusion of information in respect of which would have been so required if it had arisen when the prospectus was prepared; or

(c)there is a significant inaccuracy in the prospectus,

the offeror shall, of its own motion, with prior consent of the Authority, or if required by the Authority, publish a supplementary prospectus containing particulars of the change or new matter or, in the case of an inaccuracy, correct it and deliver the supplementary prospectus to the Registrar for registration.

(2)In paragraph (1), the word "significant" means significant for the purpose of making an informed assessment of the matters mentioned in these Regulations.

(3)Where a supplementary prospectus has been approved in respect of a public offer of securities, the preceding paragraphs of these Regulations shall have effect as if any reference to a prospectus were a reference to the prospectus originally registered and that supplementary prospectus, taken together.

(4)The provisions of regulation 6 shall apply to a supplementary prospectus.

13A. Supplementary listing statement

(1)Where a listing statement has been approved under these Regulations, and at any time between the date of the listing statement and the date of listing of the relevant securities—

(a)there is a significant change affecting any matter contained in the listing statement the inclusion of which was required by these regulations;

(b)a significant new matter arises the disclosure of which would have been required if it had arisen when the listing statement was prepared; or

(c)there is a significant inaccuracy in the listing statement,

the issuer shall, on its own motion, with prior consent of the Securities Exchange, or if required by the Securities Exchange, publish a supplementary listing statement containing particulars of the change or new matter or in the case of inaccuracy, correct it.

(2)For the purposes of this regulation, "significant" means material change for the purposes of making an informed assessment of the matters mentioned in these Regulations.[L.N. 61/2012, r. 11.]

14. Power of Authority to extend, reopen or cancel

Where, in the opinion of the Authority, circumstances have occurred or new information has emerged that fundamentally alters the basis of approval of a public offer before the allotment date or date of listing in the case of an introduction which renders the information memorandum inadequate, the Authority may require the issuer–

(a)to issue a supplementary prospectus disclosing such additional information; or

(b)extend the offer to allow investors to make an informed decision in light of the new disclosure; or

(c)re-open the offer for such period as shall be determined by the Authority to allow investors either to re-confirm their applications for subscription or withdraw their applications; or

(d)cancel the offer.

[L.N. 30/2008, r. 9.]

15. Exceptions

The Authority may authorise the omission from a prospectus or supplementary prospectus of information whose inclusion would otherwise be required by these Regulations if the Authority considers that the disclosure of that information would be prejudicial to the interest of the offeror but does not prejudice the interest of investors.

15A. Listing statement exceptions

The Securities Exchange may, in consultation with the Authority, authorize the omission from a listing statement, information whose inclusion would otherwise be required by these Regulations if the Securities Exchange considers that the disclosure of that information would be prejudicial to the interests of the issuer but does not prejudice the interests of investors.[L.N. 61/2012, r. 12.]

16. Advertisements etc. in connection with offer of securities

(1)An advertisement, notice, poster or documents including a bridge prospectus announcing a public offer or listing of securities for which a prospectus or a listing statement is or will be required under these Regulations shall not be issued to or caused to be issued to the public in Kenya unless it states that a prospectus or a listing statement is or will be published, as the case may be, and gives an address in Kenya from which it can be obtained or will be obtainable.

(2)The advertisements, notices, posters or documents referred to in paragraph (1) shall be submitted to the Authority or Securities Exchange in the case of listing on the Growth Enterprise Market Segment not later than forty-eight hours prior to publication, and the Authority or the Securities Exchange may require such amendments thereto as it may consider necessary.

(3)Every application form for subscription of the securities offered in a prospectus shall state, in a conspicuous position, where the prospectus may be obtained, and the issuer shall disclose to the Authority the number of copies of the prospectus printed.

(4)Every issuer shall publish a bridge prospectus in at least two daily newspapers of national circulation and such prospectus shall disclose basic information on the issuer, including–

(a)a summary of balance sheet and profit and loss accounts for the three years immediately preceding the issue;

(b)the broad shareholding structure prior to the issue and the anticipated structure after the issue;

(c)important highlights of the issue; and

(d)any other information on the issue considered essential by the issuer.

[L.N. 30/2008, r. 10, L.N. 61/2012, r. 13.]

17. Persons responsible for prospectus

(1)Subject to paragraphs (2) and (3), the persons who, for the purposes of these Regulations are responsible for a prospectus or a supplementary prospectus or a listing statement or a supplementary statement are–

(a)the issuer of the securities to which the prospectus or supplementary prospectus or a listing statement or a supplementary statement relates;

(b)where the issuer is a body corporate, each person who is a director of that body corporate at the time when the prospectus or supplementary prospectus or a listing statement or a supplementary statement is published;

(c)where the issuer is a body corporate, each person who has given his consent to be named and is so named in the prospectus or supplementary prospectus or a listing statement or a supplementary statement as a director or as having agreed to become a director of that body corporate either immediately or at a future time;

(d)each person who accepts, and is stated in the prospectus or supplementary prospectus or a listing statement or a supplementary statement as accepting, responsibility for, or for any part of, the prospectus or supplementary prospectus;

(e)the offeror of the securities, where the offeror is not the issuer;

(f)where the offeror is a body corporate, but is not the issuer and is not making the Offer in association with the issuer, each person who is a director of that body corporate at the time when the prospectus or supplementary prospectus or a listing statement or a supplementary statement is published; and

(g)each person not falling within any of the foregoing paragraphs who has authorised the contents of, or of any part of, the prospectus or supplementary prospectus or a listing statement or a supplementary statement.

(2)Notwithstanding the provisions of paragraph (1), a person shall not be responsible for a prospectus or a supplementary prospectus or a listing statement or a supplementary statement—

(a)under subparagraphs (1)(a), (b) or (c), unless the issuer has made or authorized the offer in relation to which the prospectus or supplementary prospectus or a listing statement or a supplementary statement is published; or

(b)under subparagraph (1)(b), if such prospectus or supplementary prospectus or a listing statement or a supplementary statement is published without his knowledge or consent and on becoming aware of its publication, he forthwith gives reasonable notice to the public and to the Authority that the prospectus or supplementary prospectus was published without his knowledge or consent.

(3)Where a person has accepted responsibility for, or authorised, only part of the contents of any prospectus or supplementary prospectus or a listing statement or a supplementary listing statement, he shall be responsible under paragraph (1)(d) or (g) only for that part and only if it is included or substantially included in the form and context to which he has agreed.[L.N. 61/2012, r. 14.]

18. Underwriting requirements

(1)Every issuer shall seek professional financial advice to determine whether or not underwriting of the public offer of securities is deemed necessary and any underwriting arrangement shall be subject to the prior approval of the Authority.

(2)Where the underwriter is a person related or associated to the issuer, the underwriter shall undertake to the Authority to dispose off any shares arising from the underwriting agreement within a period predetermined by the issuer and approved by the Authority.

(3)The Authority may extend the period referred to in paragraph (2) if satisfied that such extension would be in the best interest of the holders of ordinary shares of the company, having regard to the prevailing market conditions and any other factors that are relevant in the circumstances.

(4)Where the Authority extends the period referred to in paragraph (2) in accordance with paragraph (3), the issuer shall make a public announcement disclosing the period of such extension, any conditions attached to the extension and the circumstances necessitating the extension, in at least two daily newspapers of wide circulation.

Part III – CONTINUING OBLIGATIONS AND MISCELLANEOUS PROVISIONS

19. Continuing obligations

(1)Every issuer whose securities have been offered to the public or listed shall comply with the continuing obligations specified in the Fifth Schedule with respect to the relevant market segment.

(2)In relation to the continuing obligation to disclose information, an issuer shall make immediate public disclosure of information which might reasonably be expected to have a material effect on market activity in and prices of, its securities.

(3)The information required to be disclosed under these Regulations shall be disclosed within twenty-four hours of the event, simultaneously to the Authority, the securities exchange at which the issuer's securities are listed, if applicable, and to the public during non-trading hours of the relevant market segment.

(4)The announcement shall state whether the consent of the Authority or the securities exchange or other person is necessary and where necessary, the issuer shall apply for such consent within seven days of the announcement.

(5)An issuer who fails to comply with any continuing obligation within the prescribed time shall be liable to pay a penalty at the rate prescribed by the Authority.[L.N. 61/2012, r. 15.]

20. Exceptions

(1)These Regulations shall not apply to—

(a)securities issued by or on behalf of the Government of Kenya or a body corporate established under any written law in Kenya other than the Companies Act (Cap. 486); and

(b)private offers.

(2)In considering the issue and listing of securities by a body corporate falling under subparagraph (a) of paragraph (1), the Authority shall take into account the issuer's ability to meet all financial obligations arising out of the issue and approve the issue subject to such conditions as may be necessary for the protection of investors or the public interest.

21. Meaning of private offers

(1)For purposes of these Regulations, an offer of securities shall be regarded as private offer and accordingly shall be deemed not to be an offer to the public in Kenya if, to the extent that the offer is made to persons in Kenya under the following conditions—

(a)the securities are offered to not more than one hundred persons;

(b)the securities are offered to the members of a club or association (whether or not incorporated) and the members can reasonably be regarded as having a common interest with each other and with the club or association in the affairs of the club or association and in what is to be done with the proceeds of the offer;

(c)the securities are offered to a restricted circle of persons whom the offeror reasonably believes to be sufficiently knowledgeable to understand the risks involved in accepting the offer;

(d)the securities are offered in connection with a bona fide invitation to enter into an underwriting agreement with respect to them;

(e)the securities are of a private company and are offered by that company to—

(i)members or employees of the company;

(ii)members of the families of any such members or employees; or

(iii)the securities are offered to a restricted circle of persons whom the offeror reasonably believes to be sufficiently knowledgeable to understand the risks involved in accepting the offer;

(f)the minimum subscription for securities per applicant is not less than Kenya Shillings one hundred thousand (Kshs.100,000);

(g)the securities result from the conversion of convertible securities and a prospectus relating to the convertible securities was approved by the Authority and published in accordance with these Regulations;

(h)the securities of a listed company are offered in connection with a take-over scheme approved by the Authority; or

(i)the securities are not freely transferable.

(2)For the purposes of paragraph (e)(ii) the members of a person's family are the person's husband or wife, widow or widower and children (including stepchildren) and their descendants, and any trustee (acting in his capacity as such) of a trust the principal beneficiary of which is the person himself or herself, or any of those relatives.

22. Suspension and de-listing

(1)No security shall be suspended or de-listed by a securities exchange without the prior approval of the Authority.

(2)The Authority may require a securities exchange to suspend a listed security where—

(a)a decision has been made or is imminent that will lead to the placing of the issuer of such securities under statutory management, receivership, liquidation or voluntary winding up;

(b)there is a significant restructuring involving the listed securities such as in the process of acquisition, mergers or takeovers; or

(c)a recommendation has been made by the directors to the shareholders to have the securities suspended and where the holders of such securities through a special resolution at which a minimum of 75% of such security holders are represented without objection to the proposed suspension from at least 10% of the holders of securities resolve to have the securities suspended.

(3)The suspension of securities shall be subject to such time as predetermined by the Authority.

(4)The Authority may require a securities exchange to de-list a security where—

(a)the issuer of such securities has been placed under statutory management, receivership or liquidation or voluntary winding up;

(b)as a result of restructuring involving the listed securities, the issuer ceases to exist; or

(c)a recommendation has been made by the directors to the shareholders to have the securities de-listed and where the shareholders of such securities through a special resolution at which a minimum of 75% of such security holders are represented without objection to the proposed withdrawal from at least 10% of the holders of securities resolve to have the securities de-listed.

(5)Notwithstanding the provisions of paragraphs (2) and (4), the Authority may require the suspension or de-listing of an issuer in any other circumstances, which in the opinion of the Authority, serves to protect the interest of the investors.

(6)Where a security has been suspended or de-listed, the securities exchange shall publish such information in at least two local English dailies of national circulation.

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Source: Kenya Law · Imported 4 October 2026