ADVOKS GLOBAL · KENYA
The Crops (Tea Industry) Regulations
24. Auction Operations
Edition: 2022-12-31 · In force
24. Auction Operations
(1)All teas processed and manufactured in Kenya for the export market with the exception of orthodox and purple teas shall, within two (2) months from the commencement date of these regulation, be offered for sale exclusively at the tea auction floor.(2)Any tea not sold at the auction shall be re-listed for sale during a subsequent auction.(3)All buyers at the auction shall prior to the auction submit to the Authority a performance bond equivalent to 10% of the estimated value of the tea or teas they intend to buy at the auction in the form of a bank guarantee from a licensed commercial bank within the meaning of the Banking Act in Kenya.(4)The estimated value of tea or teas referred to in subregulation (3) shall be based on a three (3) month weighted average value of tea or teas the buyer has bid and won at the auction over a three-month period preceding the auction.(5)For avoidance of doubt, a buyer who fails or refuses to pay in full and collect the teas they have bid and won at the auction shall forfeit the 10% performance bond.(6)The monies accruing from a performance bond under subregulation 5 above shall be forfeited to the seller of the teas.(7)A buyer shall pay in full (100%) the value of the tea bids they have won at the auction before collecting and/or taking custody of the tea or teas.(8)All tea factory limited companies shall register and enlist with the Authority and the auction organizer to participate in the tea auction directly. For avoidance of doubt, management agency service providers or other service providers in the tea value chain shall not register and/or enlist at the auction on behalf of factory limited companies.(9)A registered broker shall offer tea brokerage services to a maximum of fifteen (15) tea factory limited companies at the auction.(10)Notwithstanding the requirement of subregulation (9) above, brokers that are already registered and in operation before the commencement date of these regulations shall continue to offer their services under the existing arrangement until their current annual registration is due for renewal by the Authority.(11)Tea brokers, buyers and the auction organizer shall ensure that the proceeds from the sale of tea are remitted to the tea factory limited company accounts within fourteen (14) days from the date of the auction less the agreed commissions for brokers.(12)Smallholder tea factory limited companies shall within thirty (30) days of receipt of the proceeds of the sale of tea pay tea growers at least 50% of payment due for green leaf delivered every month.(13)The payment of the balance due to the tea grower shall be made by a smallholder tea factory limited company within the financial or calendar year as shall be agreed with the tea growers.(14)The Cabinet Secretary may on his motion as provided by Section 40 of the Crops Act issue further guidelines and operation procedures on the organization, rules, regulations, management and governance structures for tea auctions in furtherance of competition, good governance, auction efficiency, transparency and price discovery.(15)The Cabinet Secretary may take further administrative action or other lawful sanctions against a tea broker, tea factory limited company, buyer/exporter, importer and any other player at the tea auction for any actions that undermine the proper, efficient, competitive and transparent operation of the auction process.(16)A person who contravenes the provisions of this regulation commits an offence and shall be liable upon conviction to the penalty prescribed under section 37 of the Act.