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SPECIAL ISSUE
Kenya Gazette Supplement No.89
( I* gislative Supplemeit No. 45 )
LECALNOTICENO. I02
THE PROVISIONAL COLLECTION OF TAXESAND DUTIES ACI
(Cap.4t5)
THE PROVISIONAL COLLECTION OFTAXES AND DUTIESORDER,2OI3
WHEREAS a Bill entitlpd "An Act of Parliament tq amend the
law relating to various taxes and duties and for matters incidenralthereto", the short title of which is "The Finance Bill,20l3", has been
published in the Gazette on the l8th June, 2013:
NOW THEREFORE, in exercise of the powers conferred by
section 2 of the Provisional Collection of Taxes and Duties Act, the
Cabinet Secretary for National Treasury orders that all the provisions ofthe Bill relating to tlxes or duties shall have effect as though the Billwere passed into law.
This Order shall come into effect on the l8th June,20l3.
Dated the l8th June,20l3.
HENRY ROTICH,Cabinet Secretary for the NationalTreasury.
LEGALNoTICENo. I03
THE CUSTOMS AND EXCISE ACT
(Cap. a7))
IN EXERCISE of the powers conferred by section 139 of the
Customs and Excise Act, the Cabinet Secretary for the NationalTreasury makes the following Regulations:-
THE CUSTOMS AND EXCISE (REMISSION OF EXCISE DUTY)REGULATIONS, 20I3
L.These Regulations may be cited as the Customs and Excise(Remission of Excise Duty) Regulations, 2013 and shall come into
effect on the I st October, 20 I 3.
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lSth June,20tr3
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1438 Kenya Subsidiary l*gislation, 2013
2. The Cabinet Secretary may, on the application by amanufacturer, grant remission of excise duty at frfty per centum wilhrespeict to beer made from sorghum, millet or cassava grown in Kenya.
3. A manufacturer applying for remission under paragraph 2
shall-
(a) be tax compliapt;
(b) have a valid excise licenc" to pridr." b."r;
(c) have been producing beer in the last three years preceding
the application;
(d) have a minimum monthly yield of excise duty of at least ten
million shillings;
(e) ensure that the beer has at least seventy five per cenlumcontent of sorghum, millet or cassava excluding sugar;
(f) pack the beer in a pressurized container of at least thirtylitres or such other container and quantity as the CabinetSecretary may approve;
(g) sell the beer at not more than one hundred and sixty shillingsper litre; and
(h), comply with such other conditions as the Commissioner mayimpose.
4. Subject to all other provisions relating to returns under the Acta manufdcturer granted remission under these Regulations shall submitto the Commissioner, a detailed return of quantities oJ beermanufactured and sold on a monthly basis or at such interval as theCommissioner may require.
5. A manufacturer who is granted a remission under paragraph 2based on false or misleading information shall, upon demand by theCommissioner, refund the excise duty remitted under theseRegulations.
6. Legal Notice No. 8 of 2005 is revoked.
Made on the l8th June, 2013.
HENRY ROTICH,Cabinel Secretqryfor the National Treasury.
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I 1439Kenya Subsidiary Lcgislation, 20 I t
LEGALNOTICENO. I04
THE CAPITAL MARKETS ACT
(Cap.485A)
IN EXERCISE of ihe po*ers conferred by section 12 of the
Capital Markets Act, the Cabinet Secretary to the National Treasury,makes the following Regulations:-
THE CAPITAL MARKETS (DEMUTUALIZATION OFTHENAIROBI SECURITIES EXCHANGE) (AMENDMENT)
REGULATIONS, 20I3
l. These Regulations may be cited as the Capital Markets citation'
(Demutualization of the Nairobi Securities Exchange) (Amendment)Regulations, 2013.
2. Regulation4 of the'Capital Markets (Demutualization of the
Nairobi Securities Exchange) Regulations,20l2 is amended in
, paragraph (2Xd) by deleting-
(a) the lvords "the Government of Kenya and"; and
(b) the lvoid "twenty" and substituting therefor the rvord "ten".
Made on the l8th June,20l3.HENRY ROTICH,
Cabinet Secretary for the National Treasury.
LEGAL NOTICENO. I05
THE CAPITAL MARKETS ACT
(Cap.485A)
IN EXERCISE of the polvers conferred by section 12 of theCapital Markets Act, the Cabinet Secretary to the National Treasury.makes the following Regulations:-
CAPITAL MARKETS (CONDUST OF BUSINESS) (MARKE'TINTERMEDIARIES) (AMENDMENT) REGULATIONS, 20I 3
l. This Regulations may be cited as the Capital Markets citation'
(Conduct of Business) (Market Intermediaries) (Amendment)Regulations, 20 I 3.
2. Regulation 27 of the Capital Markets (Conduct of Business) Subt'cg'
(Market Intermediaries) Regulations (hereinafter referred to as "theprincipal Regulations" is amended in paragraph 4-
(a) in subparagraph (c), by inserting the word "internal"immediately after the word "new"; and
G) bV deleting subparagraph (e).
{tIKenya Subsidiary lzgislation, 2013
3. Regulation 30 of the principal Regulations is amended inparagraph (l) by deleting subparagraph (b) and inserting therefor thefollowing new subparagraph-
(b) the amount of clients fundd standing to the credit of eachclient can be ascertained, at all times, by the Authority or any otherparty;
4. Regulation 39 of the principal Regulations is amended by-
(a) deleting the word "and" appearing immediately aftersubparagraph (b); and
(b) inserting the following new subparagraphs immediately aftersubparagraph (b)
(c) a statement of changes in owners' equity;
(d) a statement of cash flows;
(e) a dEscription of the accounting policies which the marketintermediary has applied and adopted while preparingthe financial statements; and
(f) notes on financial stratements explaining the various itemsthat appe4r in the financial statements under thisRegulation.
5. Regulation 42of theprincipal Regulations is amendeJ by-
(a) deleting subparagraph (3) and substituting therefor thefollowing nelv paragraph -
*(3) A market intermediary shall not appoint or removean auditor except rvith prior approval of the Authority atleast one month prior to such appointment or removal."
(b) deleting subparagraph (4) and substituting rherefor rhefollorving nerv subparagraph-
"(4) A person appointed as an auditor under thisRegulation shall serve for a maximum period of fourconsecutive years."
6. The principal Regulations are amended by deleting regulation46.
Made on the l8th June, 201 3.
HENRY ROTICH,Cabinet Secretary for the National Treasury.
Katr.w Strbtttltttrt' l,a,qttlutrorr. )0 I .l H-+t
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Lt r;,.rt- N(x I('ti No. 106
'l'lll: l'tllll-l(' PR(X'tlltEMIlN'l' ANI) I)tSt,osn t, A("t'
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lN t'.XER('l.Sll ol'thc l)()\\crs cttnl'crrctl bt Scctiotr l-10 ol'thcl)uhlic l)rocrrrcrncrrt and I)isposal Act. thc (-atrinct sccrctar\ Iilr theNittional 'l rcasrrr\ ntakcs thc lirllou irrg Rcgrrlltions.
I'l I I r l't I B l,l (' l'R(X-t I RllM t.N-l' n N I) t)tS I ()SA I _ ( A Mt-..N DM [rNt')RH(;til.n't'toNS.20I3
C'rlill ron
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l. 'l'hesc Rcgulations rnar hc citcd as thc puhlicl)rocurcrncnI antl l)is;tosaI (Arncnclnrcnt) Rcgulations. 20 I3.
2. Rcgulrtion 8(-l ) ol' tlrc I)ublic l)rocurcrncnt anclI)isposal Rcgulations.2(X)(r. in thcsc Rcgulatrttns rcl'crrccl to as"lhc principal Rcgultrions". is arncntlcd b1 tlclctingsubparagraph (tr) illl(l sullstitutlrrg thcrclilr tlrc lolloning novsu [rparag ra ph
(a) nrarntlin urrtl u;tdatc hi-annuall1,, stnncling lists iil'rcgistcrcd tcn(lcrcrs rcquirccl b1 thc procuring cntitythrough a prc-qualil'ication proccss ancl subrnit thcrcsults to tlrc Authority, lbr consolidatitx, rvithinI'ourtcclt clal s l'rorn dalc of notit'ication.
.1. Rcgulatitu l0 ol' thc principal Rcgulations isarncndccl in paragraph {2) h1 dclering ltaragraph (d) and.substitutine thcrclitr thc lbllorving nur ltaragraph-
(d) approvc thc cornrncnce menl. ol'the procurement processrrpon lhc approval ol lhc annual procurcment plan bythc accounting ol'licer ancl rvhcrc applicablc the bclardol' ilircctors or a sirnilar body. and upon satisl'actionthat sul'l'icient l'uncls are availahlc to lnect theohligations ol' thc cntitl' arising I'rorn any contract assct out in thc buclgetarl, cstimatcs or suchclocurncntation cvidcncing the availabilitl, of theI'uncls, beli'lrc rnaking :ut arvard is provided;
+. Rcgulation l2 ol'the principal Regulations isatncndccl-
(a) in paragraph (8) by' deleting the rvorb "fitty"'and substituting therefor the rvord "onehundred";
(b) adding thc follow,ing nc\!, paragraphimmediatell, after paragraph ( l0)-
( I l) -l-hc observers shall be to-
(a) rnonitor the procurement process and preparea reporl on rvhether the process has been
\
carried out in accordance rvith Section 2 of the
Act; and
(b) submitto the accounting officer and the
Authority, rvithin fourteen days from date
of notification of the arvard, the reportprePared under subParagraPh (a)'
5. 'Ihe principal Regulations are amended by deletingregulation l6 and substituting therefor the follorving nelv
regulation-16.(l) A procuring entity shall establish a tender
processing committee in relation to each procurementprocess for the purposes of carrying out the evaluation ofthe ten(ers or proposals,negotiations or inspection and
acceptance of goods, rvorks or services.
(2) A committee established under paragraph (l)shall consist of a chairperson and at least three othermembers all appointed by the accounting officer or the
head of the procuring entity upon recommendation by the
procurement unit.(3) Aperson shall be appointed as a member of the
committee under paragraph (2) if he or she is a member
o[ the tender committee of the procuring entity.
(4) The committee shall-
(a) adhere to the bompliance and evaluationcriteria set out ln the tender documents in
undertaking in carryout the technical and
financial evaluation of the tenders orproposals received by the procuring entity;
(b) evaluate the tenders rvithin a period offifteen days after the opening of the tenders;
and
(c) carry outthe tender evaluation rvith all duediligence.
(5) Each member of the committee shall evaluatethe tenders or proposals received by theprocuring entity independently from the othermembers prior to sharing his or her analysis,questions and evaluation including his or herrating with the other members of thecommittee.
(6) A member of the committee shall notcommunicate with a tenderer who has
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Evaluattorr,Negotrattons,Inspectton and
AcceptanceCommtttee.
kgislation,20l3
IKenya Subsidiary lzgislation, 2013 t4r'.3
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submitted a tender or proposal that is under theconsideration of the evaluation.
(7) A tender processing committee shall preparoan evaluation report on the analysis of thetenders receive, and final ratings assigned toeach tender and submit the repdrt to the tendercommittee.
(8) The report prepared under pafagraph (7) shallinclude-
(a) the results of the preliminary evaluation, withreasons why any tender or proposal lvasrejected;
(b) the scores arVarded by each evaluator for eachtender or proposal;
(c) a summary of the relative strengths andrveaknesses of each tender or proposal;
(d) the rordl score for each tender or proposal; and(e) a recommendation to arvard the tender to the
lorvest evaluated tenderer or to the person whosubmitted the proposal rvith the highest totalscore.
6. The principal RegulatiOns are amended by deletingregulation l Tand substituting therefor the follorvitlg nelvregulation-
17. The committee establishecl under regulation l6shall imnlediately atier the delivery of the goods, rvorksor services-
(a) inspect and rvhere necessary, test the goodsreceived;
(b) inspect and revielv the goods, rvorks or servicesin order to ensure compliance lvith the termsand specifications of the contract;
(c) accept or reject, on behalf of the procuringentity, the delivered loods, works or services;
(d) ensure that the correct quantity of goods havebeen received;
(e) ensure that the goods, rvorks or services meetthe technical standards specifiedin the contract;
(0 ensure that the goods, lvorks or services havebeen delivered or completed on time, or thatany delay has been noted;
G) ensure that all required manuals ordocumentation in relation to the goods, lvorksor services have been received; and
Inspection andacceptance
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(h) enstlrc thc issttance tll ttitcrtt.tt or complctionccrtitlcatcs or .qoods recclvcd llotcs. as
apprttpriate and in accordallcc rvith thc
c0ntracl
7. Rcgulatiort 2() ol thc prrrrcipal rcgttlatirlns is
atncn(lcd -(a) rn l)irrirgraph (.5 t h1 ilrscrting
corllnuttcc." itrtmctltatcll"irppro\ ccl b1 thc".
(b) br addrrrg thc litlkrtt ingr rlrrtcrliutclr itl tcr 1>aragrirllh
thc rr ords "tcndcrIrl'tcr thc rvrlrcls
nc\\' paragraph(.5) -
I cc lor lcndcrdoc u nrcn ls
(6) 'l hc appr()\ al tll it plan tllldcr
llilragraph 1-5) b1 thc lctrdcr comtnittcc shall bc
ilccmccl to incltrdc thc apllrtlval ol' allaltcrnativc Proctlrclnclll proccclttrcs ttnclcr
scctitltt 29( 3) ol'thc Act
tt. l{cgtrlation 21 ol thc prirlcrpal Rcgttlatiotrs is
arne nclccl in pitra-uraph (-11 b1' clclctirlg Lhc \\ ord "lottrtccn" itncl
suhstitutirrg thcrelor thc rrrlrd "scr en".
9. ltcgtrlirtiort 3l tll thc principal Rcg.ulatiotts is atncttdccl
b1 aclcling thc lirll<lrr'ing paragraph irnmcclialcll itl'tcr parasraph(+)-
(c) lhc cutnulatir c valuc ol' all cottlrttct t itritlti<ltts clo ttot
rcsult itt an itrcrcmcnt tll' thc t()tal- colltrttct pricc b1
tnorc thatr t$cntl live pcrccnt ol thc original cttntritct\ u tT].
l0 I{cgtrlation 36 ol thc principal Rcgtrlations is
arncndccl b1 de lcting thc uord "thirtl'" and \uhstittlting thcrclilrtlrc rr ords "t\\ cnl) ()rlc".
I l. 'l'hc principal Rcgulations arc atnendcd hy dcletingrcgulation 39 and substituting thcrclbr thc lilllorving nc\\'
rcg u lation-
(l) A procuring cntitl'ma1', Pursuant to scction 56(2)ol thc Act, chargc a fcc not cxcccding onc thousand shillings forhard cilpics ol' tcnde r documcnts.
(2) In dctcrmining thc f'cc payablc undcr paragraph ( l).a procuring cntit)'shall onll'have rcgard to thc costs rclatcd toprinting, copy'ing, and distributing or ol'converting thc
documcnts into clectronic lbrm.
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, Kctt t tt .\ trlt t rt! t u rt. I t g t s ltt t r r trt, 2 ( ) I -)
(l) A procrrrrrru cntil_\ shall rrot churge l lce urrclcrllirftruraPh ( I ) rr hcrc lhc tcnde r (loct,uncnt\ ilrc
(a) olttutrrctl elcctr-onicirllr:(b) irrr tllrlirrns lor<.1nrar-,,,n rll trttercst: rtr(c) nl\ ililti()n\ lor llrc_rpralil'tcation.
(1) \\'hcrc rr l)r()cuntrr.l cntit\ chilrgcs a l.cc lbr rhctlclrr crr ,r rcrrtlc. rr.crrrrrc,ts. thc pr,ri'urirrg i'ntit1 shail pcrnitIx)tc.lr.rl te rrtlcrcrs t. i11''1v"., trrc rlticurnc,ti, prioito par ing thcl'Cc Irrt llrt' rlr rr'ttiltcnl
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ll llrc plrnciptal Iicgulations arcrcgrrl.rtirrrr J() irntl substttuting thcrclilrrcgrrl.rtirln
-10 I hc r,rrrirnur. pcri.d ftrr thc pre pararirl, o| nati,nar()pcn tcn(lcr\ !or. 1l1g l)url)()scs ol'scction -5.5 ( i) ol' the Act shall bclirttrlccrr tllrr r
I -1. Rcsrriutton + I ol'rtrncrrdcd br r!clcting paragralthlirllol ing ncrr paratraph -
(.1)'l'lrc lcndcr sccurit\ undcr sccrion -57 ol-the Acr shallbc prrtvidccl irr the litllorr in.s lbrrn-
(a) cash:
(b) a hank guarantec:
(c) such insurance c()tnpan) guaranlce as ma\ beapprovcd hl the Authorir_r,;
(cl) a Icttcr ol'credit; ur
(c) guaralltcc b1 a cieposit taking rnicrofinanceinstitution, Sacco socicty,, thc youth Entcrprisel)cvcloprncnt Fund or the Wornen Enterprise Fund.
arncnclcd hr dclctingthe lbl lorr in-u nc\\
thc principal Rcgularions is(3) and suhstituring rhcrclbr thc
principal Regulations
existing provision
I rntc lbr prepannsIatrotlal lendcrs
l-1. Rcgulation -16 ol'arncrrdecl by -
(a) renumbcringparagraph ( I );
IS
ils
the
the
(b)
(c)
deleting tlrc rvord "thirtl'" appcaring irr rhc ncrvparagraph ( l) and subsrituring the relbre thcword "fifteen";inserting the lbllou.ing lrc\\, partgraphimrnediately after the ne\\' paragraph (l) _-
IM Kenya Subsidiary Legislation, 20I3
(2) Where a tender is comPlex or has
attracted a high number of tenderers, the
accounting officer or head of the procuringentity may extend the period for tender
evaluation under paragraph (l) for a furtherperiod within the tender validity period not
exceeding thirty more days from date of expiryof initial Period.
15. Regulation 54 of 'the principal Regulations is
amended in paragraph (5) by deleting the word "fourteen" and
substltuting therefor the rvord "seven".
16. Regulation 55 of the principal Regulations is
amended -(a) in paragraph (2) by deleting the word
"fourteen" and substituting therefor the word"seven";
(b) by adding the following new paragraph
immediatelY after ParagraPh (2) -
17. Regulation 64 of the principal Regulations is amended
in paragraph (l) by adding the following new paragraph
immediately after oaragraPh (c) -
(d) wliere competitive negotiations are critical forachieving value for money in the procurement ofspecialized goods, works or services.
18. Regulation 65 of the principal Regulations is amended
by-(a) renuribering the existing provision as
ParagraPh (l);'and
(b) adding the following new paragraph
immediatelY after Paragraph (l) -(2) The period of tender award shall not
exceed thirty days from the date oftender opening.
19. Regulation 66 of the principal Regulations is amended
by deleting paragraph (2) and substituting therefor the followingnew pardgraph -
(2) A procuring entity shall immediately aftertender award notify an unsuccessful tenderer in writingand shall in the same letter provide reasons as to whythe tender, proposal or application to be pre-qualifiedwas unsuccessful.
20. Regulation 73 of the principal Regulations is amended
in paragraph (2) by -
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Kenya Subsidiary Izgislation, 201 3 t47
(a) deleting the rvord "forfiteen" appearing insubparagraph (c) and substituting therefor thervord "seven";
(b) deleting the rvord "three" appearingparagraph (d) and substituting thereforrvord "fifteen"l
(c) inserting the word ..non-refundable',
immediately after the words ..by the" appearingin paragraph (e).
21. Regulation 74 of the principal Regulations is amendedby deleting paragraph (3) and substituting rherefore the follow,ingnerv paragraph -
(3) Upon being served rvith a notificarion of a request,the procuring entity shall-
(a) notify the Secretary of the names and contacr detailsof all parties to the revierv; and
(b) rvithin five days or such lesser period as may bespecified by the Secretary in a particular case,submit to the Secretary a rvritten memorandum ofresponse to the reasons for the request togetherrvith such documents as the Secretary may specify.
_ 22, The principal Regulations are amended by insertingIhe follorving nerv regulations immediately after regulation 94- -
Reporting on 95. For purposes of section 46(l), eachPublic contract procuring
-entity shall submit to the Authority, on
a quarterly basis, information of all publiccontract arvards as directed by the Authority.
23. The principal Regulations are amended by deletingthe First Schedule and substituting therefor the follorving nervSchedule.
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I
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l.El-q.:eE<E9EoE^Fg
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1462 Kettya Subsidiarv Legislation, 20 I -l
I. Administrative f'ec
2.Upon l'iling a rcquest
Part II
FIrtlS FOR RITVIEWS
KES.5,(XX)
lor ro icrr', thc f'ccs pa1'ablc shall bc as lollorvs-
Arnount ol'l'cndcr ljccs
l. Tendcrs of'Asccrtainable Value(a) Docs not cxcccd KES. 2,000,000 l% subicct to a minimum ol'KI-.S. 20,000/-(b) Exceeds KHS. 2,000,000/- but not
ov cr K I-.S. -50,000,000/-
-l'hc fecs lbr KI:S. 2000,000 plus an
additional l'cc <il' 0.2501 on thc amount abovcKHS. 2,000,000
(c) Ercccds KhS. 50,000,000/- 'l'hc l'ccs lor tcndcr sum ol' KHS. -50,(X)0,(X)0plus an additional l'cc ol 0.O25(/( on tltcamount ahovc Kl-.S.-50,000,(XX)/- suh.lcct to a
maximum I'cc ol'KhS. 2U).0001-
2. l)rc-qualil'icationand othcr" [Jnquantil icd'l'cndcrs
KI-.:S. -10, (XX)/-
(l.t Ani other'l cndcrs Sub.jcct to a minimum ol' KHS. 20,(XX)/- anda maxirnum ol'KlrS. -+0.000/-
3. Up<ln rcqucst ol' an adjournmcnt toa part)' b1 thc Board
Kl-.s.10, (x)0/-
-1. filins nrcliminarr ohicction Kr.,s..5:000/5. Fcc to accompan)' thc rcr icrv of
I)ircctor (icncral's rlrdcr (s. | 06(3))
KIrS.-10,0(X)/
6. Filing Iccs on cach rcqucst lirr a
rcv icrv on dcbartnctt L ordcr t :.I I7(3))
KIrS.40, 000/
7. -l'hc Secrcurr) ma)' dcmand additional I'cc il thc f'cc paid at thc timc of liling is lcss
than that asccrtaincd to bc chargcable.
Madc on thc ltlth Junc, 20 I 3
HENRY RO'I'I(]H,C ub t t r e t S e c' r a tar y' Jo r t lta N at rc na I Tr e asu r v-.
Kenya Subsidiarv kgislarion, 201 3
LEGAL NO'IICE NO. I 07.THE
CEN'IRA L DEPOSITORIES ACf , 2OOO
(No.1 of2000)
IN EXERCISE ol the powers conferred .by section 65 of theCentral Depositories Act, the Capital Markets Authority rnakes thefbllow'ing Rules:-
THE CENTRA L DEPOSI'TORIES ( REG TI LATIONOF CENTRAL DEPOSITORI ES) (A M ENDMENT)
RULES2OI 3
l. These Rules may be cited as the central Depositories citarion.(Regulation ol' Central Depositories) (Amendmenr) Rules, 20 L3.
2. Rulcl I of theCentral Depositories (Regulation' of Central Sub. LegDepositories) Rules (hereinafter referred to as ,.the principal Rules',)is- amcnded by adding the follorving new paragraph immediatelyalter paragra ph 2-
(2A). A body corporare shall qualify ro beappointed as a central depository agent under sectio.n 9(2) (d) ol the Act, if that body corporare meers thecriteria. sct orlt in the 'l-hird Schedulc to theseRegulations.
3. l'he principal Rules are arnended by adding the follorvingrrerv Schcdule immediately after the Second Schedulel-
.I-HIRD SCHEDTJI-E (r.ll (2A)).
CRII'ERIA FOR APPOINl'MEN'T AS CENI'RAL DEPOSITORYAGEN'I'
l. A body corporate rvhich intends to apply tbr an approval as accntral depositorl agent shall submit to tlre central depository-
(a) an ovcrviov of the current or proposed business ol'thc bodycorporarc cstablishing the need for the appointment as acentral clcpository agent;
(b) specific dctails on the fr.rnctions ol'a ccntral depository age ntas stipulated under the Act, the Principal Rules and the rulesof the central dcpository rvhich it intends to carry out;
(c) evidence that the directors and the management of the bodycorporate arc fit and proper persons;
evidence of adequate systems, procedures, facilities andtechnical capacity that will cnable the body corporate fulfillits <lbligations and operational requirernents in accordancervith the rules of the central depository as rvell as the termsand conditions of the agenc), agreement entered rvith thecentral depository,;
an assessment of all potential risks and proposed mitigationmsasures; and
evidence of arrangements in place for the proper supervisionof its compliance rvith the rules of the central depository.
t463
II
(d)
(e)
(r)
1464 Ken r-a Subsidiarv Legislation, 20I 3
2. (l) The central depository shall, in considering an application
b1' a body corporate to operate as a central depository agent' have
regard to rvhether the-(a) proposed functions of .the applicant fall rvithin the approved
functions of central depository agents under its rtlles;
(b) applicant can meet any requirements or conditions to be
imposed, if an1', prior to the appointment;
(c) applicant has capacity to and has committed to comply rvilh
ail the continuing obligations imposed on cential depository
agents under the central depositories rules; and
1d) applicant demonstrates capacity and commitment to comply,ui-ttr Capital Markets (Conduct of Business) (Market
lntermediaries) Regulations, 201 I as far as they are relevant
to the activities of the central depository agent:
(2) A central depository shall consult the Authority rvhen
determining compliance under paragraph 3( I )(d).
3. A body corporate w'hich qualifies for apfointment as a central
depository agent and is subsequently appointed as such, shall comply
rviih the i:entrat Depoiitories Act, the principal Rules and all rules ofthe central depository rvhich it is appointed to act as an agent.
Made on the l8th June, 2013.KUNG'U GATABAKI,
Chairman, Capital Markets Authoritv'
PAUL MUTHAURA,Acting Chief Executive, Capital Markets Authoritv'
LEGAL NortcE No. 108
THE CAPITAL MARKETS ACT
Qap. a85A)
THE CAPITAL MARKETS (FUTURES EXCHANGES)(LICENSING REQUIREMENTS) REGULATIONS' 201 3
ARRANGEMENT OF REGULATIONSRegulations
PART I-PRELIMINARYl-Citation.2-lnterpretation.
PART II-OBLIGATION TO SEEK A LICENCE ANDLICENSING OF A FUTURES EXCHANGE
3--Obligation to obtain a license.
4-Appl ication for I icensing.
5-Consideration for grant of license.
6-Rules of the Exchange.
Kenya Subsidiary I* gislation, 20 I 3 t46.5
I
7-Trading system.
8--Crant of provisional approval.9- Power to make inquiries and call for information.lO--Grant of license.
I l- Period oflicense.l2- Regulatory fee.
l3- Revocation of license.
l4- Effect of revocation.
PART III-NETWORTH AND OWNERSHIP OFA EUTURESEXCHANGE
I S-Networth requ irements.
I 6- General conditions.
l7-Shareholding in a licensed future exchange.,
l8- Eligibility for acquirin! or holding shares.
l9- Disclosure of shareholding.
20- Record keeplrrg.
PART IV-GOVERNANCE OF FUTURES EXCHANGE2l- Composition of the board.
22- Conditions of appointment of directors.23- A.ppointment of chief executive officer.24- Code ofcohduct for directors and key personnel.25-Compensation and tenure of key personnel.
26-Segregation of regul'atory deparfinents.
27--Oversight comm ittees.
28-Advisory Committee.29;-R isk management comm ittee.
30-Appointment of compliance offi cer.3 I
-Transfer of penhlties.
32- Disclosure and corporate governance norrns.
PART V-DUTIES OF A FUTURES EXCHANGE33- Disclosure and corporate governance norrns.34- Facilities to be maintained by a futures exchange.3S-Futures exchange to assist Authority.
PART VI-SELF-REGULATORY ORGANIZATION36-Self-Regulation.37-Futures Exchange to oversee its trading participants.
PART VII-SELF-REGULATORY ORGANIZATION38-Accounts and audit.
39-The Authority may appoint an auditor.4G-Annual report.
t466 Kenya Subsidiary Legislation, 20 I 3
Cttatton
lnterpretation
Cap 485A
FIRST SCHEDULE--APPLICATION FOR A LICENSE TOCONDUCT THE BUSINESS OF A FUTURES EXCHANGE
SECOND SCHEDULE-LICENSINC AND ANNUAL FEES FORFUTURES EXCHANGES
THIRD SCHEDULE-CODE OF CONDUCT FOR THE DIRECTORSAND KEY PERSONNEL
THE CAPITAL MARKETS ACT
(Cap.485A)
lN EXER('ISE of the powers confcrred by section l2(l) of the
Capital Markets Act, the Cabinet Secretary of thc National 'l'rcasury
makes the follorving Rcgulations: -THE CAPII'AL MARKE-IS (F tll'tlRI:S I1X(IHANGIlS)(LICENSING REQL,IRIlMF-N'[S) RITGULAI'IONS, 201 3
I'}ARl- | - PRIll,l MINA RY
I . 'l'hcse Rcgulations may bc citcd as thc Capital Markets(Futures Exchanges) (l-icensing Requircmcnts) Rcgulations, 201 3.
2. In these Regulations, unlcss thc contcxt otherrvise requires-
"Act'i means the Capital Markcts Act;
"associate", in relation to-(a) an individual, mcans-
(i) a spousc, a son, an adopted son, a stcP-son, so.n-in-
larv, a daughter, an adoptcd. daughtcr, a step-
daughter, daughter-in-larv, a fAther, a stcp-father,father-in-larv, a mother, a step-mother, mothcr-in-larv, a brother, a step-brothcr, brothcr-in-larv, a
sister or a step-sister, sister-in-larv, grand child orspouse of a grandchild, of that individual;
(ii) any company of rvhich that individual is a directoror secretary, has a controlling intcrest ;
(iii; any company in rvhich that individual, or any of thepersons mentioned in subparagraph (i), has controlo[ trventy per cent or more of the voting power onappointments to the board of directors orentitlement to dividends in the company, rvhethersuch control is exercised individually or jointly;
(iv) any employee of that individual; or
(b) a company, means another company in which the firstmentioned company has control of not less than trventy per
cent of the voting porver in that company;
"Authority" has the meaning assigned to it under the Act;
Ketr ya Su bsid iarl- Le g i s lation, 20 I 3 1467
"b.ard" mca,s the board of directors of a ricensed futurescrchange;
"chicl' crccutile olliccr"means the chiel executive officer of afutures crchangc appointcd in accordance rvith the articles of thatfutures erchange arrd approved hy the Authority;
"clearing bank" means a bank, as defined under section 2 or theBanking Act, rvhich is designated or appointed to provide banking and.ther facilities to the Futures Exchange, the Clearing House oi theExchange and brokers o[ the Exchangelo facilitate segiegated accountmaintenance, clearing and settlement functions;
"clearing house" means the clearing house of the futuresexchange rvhich refers to the settlement system managed and operatedby. tl1l futures exchange rvhether as a deparrment or its rvhoily-s1v6s6subsidiary and includes a place rvhere and the system by rvtrich ttreclaims and liabilities of furures brokers and their clients in respect ofdil'f'erent lutures contracts confirmed by the exchange arereceived,ad.iusted. settled and paid;
"demutualization' means the separation of orvnership of aneichange from the right to trade on such exchangel
"demutualized exchange" means a futures exchange in rvhichorvnership and rights to trade are separate;
"futures broker" means a body corporate admitted to the futuresexchdnge membership and duly licensed by the Authority to engage inthe bus-iness of trading in futures contracts as an agent for inveJtois inreturn for a commission and on its orvn account;
. "futures contract" has the meaning assigned to it under section 2of the Act;
"futures exchange" means a securities exchange rvhich has beengranted alicense to Iist futures contracts by the Authority under the Actor approved for such purposes and in accordance rvith theseRegulations;
"futures market" means a place at rvhich, or a facility by meansof rvhich, offers or invitations to sell, purchase or exchange futurescontracts are regularly made on a centralised basis, being offers orinvitations that are intended or may reasonably be expecte-rl to result,directly or indirectly, in the acceptance or making, respectively, ofoffers to sell, purchase or exchange futures contracts, but doei notinclude the office or facilities of a furures broker;
"futures member"means a person admitted to the membership ofa futures exchange in accordance rvith these Regulations and the rulesofthat futures exchange but does not denote a shareholder or an equitlholder of that futures exchange;
Cap 488.
1468 ' Kenya Subsidiary lzgislation, 2013
"investor protection fund" means a fund established by the board
of a futures exchange in accordance with its rules and vested in a trust
which is separate from the board of the futures exchange, withprovisions for contributions by the futures brokers and the futures
exchange which satisfy claims of clients against futures brokers;
"key personnel"has the meaning assigned to it under section 2 ofthe Act;
"liquid networth" means the aggregate value of paid-up equity
share capital plus free reserves (excluding statutory funds, tenefitfunds, ahd reset"es created out of revaluation) reduced by the
investments in businesses, whether related or unrelated, aggregate
value of accumulated losses and deferred expenditure not written off,.including miscellaneous expenses not written off;
"margin"means a deposit or payment to create, vary or maintaih
a position i-n the futures "onttu.t,
andlncludes mark-to-market, regular, -
urid udditionul margins or such other margins, which may be specified
by the futures exchange from time to time;'netting' means the determination of net payment of delivery
obligations by setting off or adjustment of obligations or claims arising
out of buying and selling of futures'condracts, discontinuation ofbusiness, dissolution, winding-up or insolvency or. such other
circumstances as may be specified in the rules of the futures exchange;
"novation" means the act of the futures exchange and its
clearirighouse of becoming the legal counterparty to both parties ofeve.ry trade;
"public" includes any member or secti8n of the public but does
not include any futures member of a futures exchange or clearing bank
or their associates;
"public interest directors" means an independent director,
representing the interest of investors in a futures market and who does
not have any association with that futures market, either direct or '
indirect, which in the opinion of the Authority, is in conflict with the
role of that director;
"prescribe" means prescribed by these Regulations;
"regulatory department" means a department of a licensed
futures exchange which is entrusted with regulaory powers and duties
and such other departments as may be specified by the Authority;
"record" means all documentary and electronic materials created,generated, sent, communicated, received, or stored, regardless ofphysical form or characteristics;
"risk management" means the method of assessing, measuring
and controlling iisk using appropriate methods including statistiral
Kenya Sub sidiary Le gislation, 20 I 3 t46/9
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techniques routinely used ih other technicalfields.
"settlement guarantee fund" , means a fund established and'maintained by a futures exchange .in accordance with its rules, tostrengthen the financial integrity of settlement by the futures exchangeand used in a manner specilied by the rules of the futures exchangi;and
"trading in futures contracts" means making or offering to makewith any person, or inducing or attempting to induce any
-person to
enter into or to offer to enter into any agreement for or wiih L view tothe purchase or sale of a futures contract.
PART II_OBLIGATION TO SEEK A LICENSEAND LICENSINGOFA FUTURES EXCHANGE
3. A porson shall not establish,run, conduct, organize or assisi inestablishing, running, conducting or organizing a futu.es exchangeunless- that person has obtained a license from the Authority Inaccordance with the Act and these Regulations:
Provided that- a securities exchange, which has bein licensedunder the Act at the commencement of these Regulations and isdesirous of running a futures market, shall apply to the Authority for anadditional license'for listing futures contraCti under these Regulationsand all the provisions of rhese Regulations shalt also appl/to suchsecurities exchange.
. 4. (l) Subject to compliance with the provisions of the Act andthese Regulations, a person who intends to establish a futures exchangdshall submit an application for licensing to the Authority in Form I Lset out in the First Schedule.
(2) An application under paragraph (l) shall be accompanied by_
(a) copies of memorandum and articles of association, andrules governing the operations of the exchange, which_
(i) is in a form satisfactory to the Authority; and
(ii) restrics the applicant to the business of operating afutures market and services incidenal thercio;
(b) details of trading, clearing and settlement systems_ proposed o be adopted by the applicant;
(c) the prescribed licensingfees set out in tht SccondSchedule;
(d) satisfactory bank rcfercnces;
(e) business fcasibility plan appraiscd by an entity with a
Obligation toobtain a liccnsc.
Application forliccnsing
1470 Kenya Subsdiary Leg,tslatiott, 2(l I -l
Consideratlon forqranl of I tcense
Rules of the
Exchange
proven track recordatld c\Pcrtise in futtlres or dcrivatiycsmarket dcveloptncnt. cstablishment or management; and
(0 such adclitirtnal tlocurnents as the Authority may require .
5. An applicant see king a licensc under regulation 4 shall-
be company limited by shares;
be demutualized:
have a minimum authorized. issucd and paid up equitysharccapital of one billion shillings;
satisl')' requiremcnts rclating to orvncrship andgovernancc structrlrc spccil'icd in thcse Regtrlatitlns;
havc its directors and sharcholdcrs u'ho hold or intend tohold sharcs as l'it and proper persotts as dcscribcd under
section 21A ol the Act;
satisfy the minimum Iiquidnct-rvorth rcqtriremcnts spccificdin these Regulations;
have.a minimum of one hundred million shillings in thc
settlement guaranLee fund bclbre commencemcnt oftrading;
satisfy requisite capability including its financial capacity,functional expertise and infrastructure;
have in its employment, sufficient number of persons
rvith adequate professional and other relevant competenceand experience; and
(j) comply rvith any other conditions as may be specified by
the Authoriry.
6. (l) An applicant seeking an approval to operate a futuresexchange shall establish and adopt futures exchange rules.
(2) The rules adopted under paragraph (l) shall containprovisions on-
(a) clear demarcarion of roles and responsibilities of the
board, chief executive officer and the board statutorycommittees;
powers of the chief executive officer including inemergency situations;
granting of trading rights and non-transferablememberships of the futures exchange;
(a)
(b)
(c)
(d)
(e)
(r)
(g)
(h)
(i)
(b)
(c)
Kenl:a Subsid nry' Legislation, 20 I 3 t47 I
(d) general obligations of the flutures brokers w,ho are itsfutures members;
(e) specifications of the minimum parameters to be disclosedin resptct of futures contracts to be listed w,ith priorapproval o.f the Authority;
(0 clearing and settlement of all trades in futures contractsby the clearing house of the futures exchange;
(g) performance of novation. netting and guarantee settlementof trades;
(h) complete segregation of business accounts of brokersfrom that of their clients and betu,een different clients;
(i) trading including validation of orders on the futuresexchange;
(j) suspension of tlading of any futures contract for the' protection of investors or for the conduct of orderly, andfair trading;
(k) investigation into trading practices and financialtransactions of futures brokers and their clients;
(l) clearing house and designated clearing banks of thefutures exchange;
(m) margining regime, daily marking to market of all openpositions and variation margin call to futures brokers andtheir clients;
(n) methodology for determining the daily and finalsettlement prices;
(o) deliveries through the clearing ho.rse and obligations ofthe brokers;
(p) closing out of futures contracts in case of non-compliancervith the rules of the futures exchange;
(q) mandatory maintenance of a settlement guarantee fundincluding prov isions for-pay-in, pay-out and toppi n g- up;
(r) mandatory maintenance of an investor protection fundincluding provisions for pay-in, pay-out and topping-up;
(s) declaration of an event of default and disposal ofdefaulter's assets under lien or pledge;
(t) arbitration of disputes and provision for appeal to theAuthority by futures brokers and investors; and
(u) any other provisions specified by the Authority.
rading system.
Grant ofprovisionalrpproval.
7. (l) A proposed futures exchange shall'deploy a trading systemwhich bhall be approved by the Authority before such system isimplemented.
(2) The trading system deployed under paragraph ( I ) shall -(a) have an integrated rading, clearing and settlement systems;
(b) have an online screen-based tlading system for providingdirect market access up to the client level via the intemet;
(c) have necessary arrangements to establish connectivitywith brokers and their clients;
(d) have the necessary infrastructure to ensure timely clearingand settlement of trades;
(e) have an adequate risk management mechanism including a
pre-trade check perfornied by the trading system;
(f) be capable of providing real time risk management and
market surveillance tools for moniforing of tradingactivities'of all brokers dnd their clients oh a real timebasis;
(g) provide brokers and their clieris a facility for accessing
both the daily transactions and finarrcial reports includingledgers;
have facility to disseminate information about trades,quantities arid quotes 'in real ,time to at leqst oneinformation ,"niing network which is access)ble toinvestors in Kenya and internationally;
have adequate systems' capacity supported by a business
continuity plan including a dis6ter recovery site;
0) be established and maintained in a way as to ensure that it(k) have any other features.and functionalities specified by
the Authority.
' 8. (l) The Authority may, if the Authority is satisficd that theapplicant has dcmonstrated that it is capable of complying with therequirements under regulations 4, 5, 6 and 7, grant the applicant aprovisional license to operate a futures exchange.
(2) The prbvisional license granted under paragraph (l) shallbevalid foi a pcriod of.six months:
Providcd that thc Authority may, upon sufficient cause
shown by thc applicant, extend thc validity of the provisional licensefor a furthcr period not exceeding three months.
(h)
(i)
Kettya Subsidiarv Legislation, 20 I 3 1173
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9. l'he Authoritl ma1,, belore and after granting a provisionalIicense to an applicant for a l'utures exchange license, make inquiriesand require such lurther information or document to be furnished, asthe Authority considers necessar),.
10. (l)'l'hc Authbrir),may, afrer rhe expirl,of the period forrvhich the provisional liccnse had been grantedunder regulation (g)andil the Authoritl, issatisfied that rhe applicant has complied w,ithregulations .1. -5, 6, 7 and an1, other relevant requirements under theAct, these Rcgulations and any other regulations. rules, guiclelines ornotices issued under the Act, grant a license to the applicant to operatea futures exchange.
(2) A licensed l.utures erchange shall compll, rvith such otherconditions the Authoritl, may, impose, from time to l.ime,
. including conditions rvith regard to-(a) the nature of lutures contracts to be dealt rvith by that
futures erchange; and
(b) approval by the Authority of all futures contracts to belisted by that futures exchange.
ll. A irccnse granted under regulation l0 shall remain validunless suspended or revoked by the Authority in accordance w,ith theAct and these Regulations.
12. A licensed futures exchange shall pay a regulatory fee as setout in the Second Schedule to these Regulations or as may be imposedby the Authority from time to time.
l.l. ( I ) The ALrthority may, by notice in rvriting, rel,oke a fururesexchange license granted under these Rcgulations for non-compliancew'ith the Act or these Regulations and rvith effect from the datespecified in the notice if the futures exchange-
(a) ceascs to comply rv'ith the eligibilitl conditions specifiedunder Regulations -5, 6 and 7;
(b) ccases to operaie a futures market that it has been licensedto operate under regulation l0;
(c) is being u,ound up;
(d) fails to comply rvith any requiremenr of the Act;
(e) fails to comply rvith a direction of the Authorig;
(0 lails to provide the Authority rvith information required bythe Authority;
(g) provides false or misleading information; '
(h) is operating in a manner detrimental to the public interest;or
(i) requests the Authority ro do so.
Power to makernqurrres and callfor rnfbrmatron
Grant of lrcense
Perrod of lrcense
Rcgulatory f'ee.
Revocatron ofI rcense
Effcct of'rcvocation
Networthrequirements.
(2) For the purposes of subsection (1), a futures exchange shaltbe deemed to have ceased to operate its futures market if the futuresexchange has ceased to operate its futures market for more than thirtydays unless the futures exchange has obtained prior lvritten approval ofthe Authority to do so.
(3) The Authority may, by notice served under paragraph. (l),allorv the futures exchange to continue, on or after the date on rvhichthe revocation is to take effect, to carry on such activities affegted bythe revocation as the Authority may specify in the notice for thepurpose of-
(a) closing dorvn the operations of the futures exchange; or
(b) protecting the interests of the public.
(4) The Authority shall not, except rvhere responding to a requestunder paragraph (l) (i), revoke a futures exchange license withoutgiving the futures exchange an opportupity to be heard.
(5) The Authority shall, rvhere the Atrthority revokes the licenseof a futures exchange, cause to be published a notice of that revocationin at least trvo netvspapers of nationrvide circulation in Kenya.
14. A revocation of license under regulation l3 shall noloperateso as to-
(a) avoid or affect any agreement, transaction or arrangemententered into on the futures market operated by the futuresexchange rvhere the agreement, transaction or arrangementrvas entered into before the revocation of the license; or
(b) affect any right, qbligation or liability arising under suchagreem'ent, transaction or arrangement.
PART III-NETWORTH AND OWNERSHIP OFA FUTURESEXCHANGE
15. (l) A futures exchange snall have and maintain, at all times,liquid netrvorth amounts of a type acceptable to the Authority, rvhichshall be adequate in relation to the nature, size and complexity ofbusiness of that futures exchange to ensure that there is no significantrisk that liabilities may not be met as they fall due.
(2) The minimum liquid networrh capital rQquirement for afutures exchange shall be -
(a) an amount equal to one half of the estimated grossoperating costs of the futures exchange for the nexttwelve-month period; or
(b) such other liquid netrvorth amount as may be prescribedby the Authority.
Kenya Subsidiary l*gislation, 201 3 1475
(3) A licensed futures exchange shall have systems and controlsto enable the futures eichange to determine and monitor rvhether itsliquid netrvorth is sufficienr for the purposes of paragraph (l) and theminimum liquid netrvorth requirement ior the purpo-ses of'paragraph(2).
(4) A licensed futures exchange shail submit ro the Authority anaudited liquid netlvorth certificate from the auditor on a quarterly basiswithin thirty days after the end of every quarter.
16. (l) Save as otherrvise provided for in these Regulations, theshareholding or voring rights of any person in a licJnsed fuiuresexchange shall, at all times, not exceed the limis specified in this part.
(2) The shareholding as specified in this pirt shall include anyjnstrument orvned or controlled, directly or indirectty, which providesfor entitlement to equity or rights over equity at any future date.
17. ( I ) At least fifteen percenr of the paid up equity share capitalof a licensed futures exchange shall be held
-by a Kenyan intity.
(D en individual or corporate person shall not-
(a) control or be beneficially entitled directly or indirectly, tomore than trventy five per cent of the issued share capitalor voting righs of a futures exchange;
(b) be entitled to appoint more than trventy_five per cent of theBoard of Directors; or
(c) be entitled to receive more than tlventy_five percent of theaggregate' dividends to be paid in any given financialyear.
(3) Where an applicanr under paragraph (2) is an individual whodoes not meet the requirements of this reguiation, that individual shallc.omply with the requirementsof this regulation rvithin five years fromthe date of issue of a license to operate a futures exchange.
(4) Paragraph (2) of this regulation shall not apply rvhere rheownership structure of a corporate shareholder is sufficiently diverseand no single person holds or controls more than tlventy-five percent ofits shares, votes, directorship appointments or dividend.
_ 18. (l)A person shall not, directly or indirectly, acquire or holdfive per cent or more of theequity shares of a licensed futuies exchangeunless that person has been certified by the Authority as fit and prope-r.
(2) A person who, directly or indirectly, either individually ortogether rvith persons acting in concert, plans to acquire equity shlressuch that the shareholding of that person exceeds five percent of thepaid up equity share capital of a licensed futures exchange, shall seekapproval of the Authority at least rvithin fifteen days prior tn rhsproposed date of acquisition.
Generalconditions.
Shareholding in a
licensed futureexchange
Eligibrlity foracquiring orholdrng shares.
t476 Kenya Subsidiary l,egislation, 20 I 3
(3) A person rvho holds more than five percent of the paid upequity share capital in a licensed futures exchange, shall file a
declaration rvithin fifteen days from the end of every financial )'ear tothe licensed futures exchange, as the case may be, that that person
complies rvith the fit and proper criteria provided in the Act.
(4) A person rvho-
(a) holds five per cent or more of the equity shares of a
licensed futures exchange; and
(b) the Authority has determined that that person does notfulfillthe fit and proper criteria as set out under theAct,shall-
(i) cease to exercise all his voting rights immediatelyupon the licensed futures cxchange being notifiedby the Authority, in rvriting, that the shareholderdoes not fulfill the fit and proper criteria as.setunder the Act; and
(ii) reduce the holding of equity shares to less than fiveper cent of the share capital of the licensed futuresexchange rvithin trvelve months, or such longerperiod as the Authority may determine.
19. (l) Without.prejudice to the provisions of the Act and theseRegulations, a licensed futures exchange shall disclose to theAuthority, in the format specified by the Authority, the ghareholdingpattern of the futures exchange on a quarterly basis rvithin fifteen daysfrom the end of each quarter.
(2) The disclosure under paragraph (l) shall include-
(a) the names of the ten laigest shareholders and the numberand percentage of shares held by each of them;
(b) the names of the shareholders falling under regulations l7and l8 rvho acquires shares in that quarter.
(3) A licensed futures exchange shall monitor and ensurecompliance rvith this Part, at all times.
20.'A licensed futures exchange shall, in addition to therequirements under anyother lalvs in force, maintain and preserve allthe books, iegisters, and minutes of the board meetings, otherdocuments and records for a period of not less than geven years.
PART IV -GOVERNANCE OF FUTURES EXCHANGE
21. (l) The board of a licensed futures exchange shall compriseof-
Drsclosure ofshareholy'ing.
Record keeping.
Compositron ofthe board.
Ken r-a Subsidiary Legislation, 20I3 1477
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(a) shareholder directors;
(b) at least one third public interest directorS; and
(c) chief executive officer of the futures exchange.
(2) A futures broker rvho is a futures member of a futuresexchange or an associate or an agent of that futures broker shall not bea member of the board of any licensed futures exchange.
(3) At least one public interest director shall be present in themeetings of the board to constitute the quorum.
22. (l) A futures exchange shall submit to the Authority thenames of proposed directors for appointment to the Bgard of thefutures exchange thirty da),s prior to their appointment and re-appointment for approval by the Authority.
(2) A public interesr direcror appointed under paragraph (l) shallserve for a fixed term of three years and shall be eligible for re-appointment for one further term of three years.
23. (l) (l) A licensed futures exchange shall not change its chiefexecutive except rvith the prior confirmation, in rvriting, by theAuthority that it has no ob.iection ro the proposed change and subject tocompliance rvith any conditions that may be imposed by tJre Authority.
. (2) A licensed lutures exchange shall, subject to the guidelinesissued by the Authority lrom time to tirne, determine the qualification,manner of appoiqtment, terms and conditions of appointment and otherprocedural lormalities associated rvith the appointment of the chiefexecutive officer.
(3) The tenure under any contract forof a licensed futures exchange shall not beshall not exceed fir,'e years:
the chief executive officerless than three years and
Provided that the tenure of office of the chief executive of alicensed futures exchange may be renerved for one further term.
(4) The chief executive officei. of a licensed futures exchangeshall not-
(a) be a shareholder or an associate of a shareholder of anylicensed futures exchange; or
(b) be a shareholder or an associate of a futures broker:
Provided that the chief executive officer of a licensedfutures exchange may be appointed on the board, but not aechief executive officer of a subsidiary of a ticensed futuresexchange.
(5) The board of a licensed futures exchange may, rvith the priorapproval of the Authority, remove or terminate the appointment of thechief executive officer of the futures exchange-
Conditions ofappotntment ofdrrectors.
Apporntment ofch ref exec utrveofllcer
t478 Kenya Subsidiary kgislation, 2013
Code ofconductfor drrectors and
key personnel
Compensattonand tenure ofkeYpersonnel.
(a) if the chief executive officer fails to comply rvith thearticles of association of the futures exchange; or
(b) to give effect to the directions, guidelines and otherorders issued by the Authority, under the Act or theseRegulations.
(6) The Authority may on its orvn motion, remove or terminatethe appointment of a chief executive officer of a licensed futuresexchange if the Authority considers it fit in the public interest:
Provided that the Authority shall not remove or terminate theservices of a chief executive officer rvithout giving that chief executiveofficer a reasonable opportunity of being heard.
24. (l) Every director of a licensed futures exchange shall abideby the Code of Conduct as set out in Part A of the Third Schedule.
(2) Every director and key personnel of a licensed futuresexchange shall abide by the Code of Ethics as set out in Part B of theThird Schedule.
(3) Every director and key personnel of a Iicensed futuresexchange and its clearing house shall be fit an{ proper persons asprescribed under section 24A of the Act.
(4) The Authority may, if a director of a futures exchange fails toabide by these Regulations, the Code of Conduct or Code of Ethics orin case of any conflict of interest, either upon a reference from thelicensed futures exchange or on its own motion, take appropriate actionincluding removing or terminating the appointment of any director,after providing that director a reasonable opportunity of being heard.
25. (l) A licensed futures exchange shall establish acompensation committee comprising of a majority of public interestdirectors.
(2) The compensation committee established a under paragraph(l) shall-
(a) be chaired by a public interest director; and
(b) establish a compensation policy of all employees of thefutures exchange.
(3) The compensation policy under paragraph (2) (b) shall beapproved by the Authority.
(4) The compensation given to the key personnel shall bedisclosed in the annual report of the licensed futures exchange.
(5) The tenure of key personnel, other than a director, shall be fora fixed period, or urs may be determined by the futures exchangecompensation committee.
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Kenya Subsidiary kgishtion, 2013 1479
l
26. A licensed futures exchange shall segregate its regulatorydepartments from other departments in a manner as set out in pirt c ofthe Third Schedule.
27. (l) A licensed futures exchange shall establish independentoversight committees of the board.
(2) The independent oversight committees esrablished underparagraph (l) shall-
(a) be chaired by a public inrerest director; and
(b) address the conflicts of interest in respect of-
(i) the regulation of futures brokers rvho are futurcs membersof that futures exchange;
(ii) futures contracts' design; and
(iii) trading and surveillance funcrions.
(3) A head of department handling the matters referred to inparagraph (2) (b) shall report directly ro the respecrive committee andto the chief executive officer.
, . (a) Any action of a licensed futures exchange against a head.of a
regulatory departmenr specified under paragraph (2) (b) shali besubject to an appeal to the respective committee, within such period asthe board niay determine.
28. (l) The board ofa licensed futures exchange shall establishan advisory committee mandated to advise the.board on non-regulatoryand opeptional matters including product design, technology, chargeiand levies.
(2) The advisory committee established under paragraph (l) shallcomprise of the futures brokers who are futures memberi oi a iicensedfutures exchange.
(3) The chairperson of the board and thechief executive officershall be permanent invitees to every meeting of the advisorycommittee.
(4) The advisory committee shall meet at least four times a yearwith a maximum gap of three months between two meetings
(5) The recommendations of the advisory committee shall beplaced in the ensuing meeting of the board of the futures exchange forconsideration and appropriate decision of the board, and suchregommendations along with the decision of the board on the same,shall be disclosed on the website of the futures exchange.
/t(6) A futures member of a licensed futures exchange shall not be a
member of any other committee of a licensed futures exchange.
Segregation ofregulatorydepartments
Ovcrsightcommittecs.
AdvisoryCommittee.
I 480 Kenya Subs id rurv Le gislation, 20 I -l
Rrsk managementcommrtlee
Apporntment ofcomplianceofficer
Transfer o Ipenaltres
Drsclosure andcorporategovernancenorms
29. (l) A licensed l'utures exchangc shall cstablish a riskmanagement committee comprising of direcktrs and indcpendcntexternal experls.
(2) Thc risk management committee established under paragraph(l) shall-
report to the board;
fbrmulate a detailed risk management polic), rvhich shallbe approved by the board;
monitor the implementation of the risk managcmentpolicy ; and
(d) keep thc'Authoritl' and the board informed on thcimplementation of policy and any del,iation.
(3) The head of the risk management departme nt shall-
(a) be responsiblc for implementation of the riskmanagemenI policy; and
(b) report to the risk managcmcnl. committee and to the chicfexecutive ofl'iccr ol' the futures cxchangc.
30. (l) A licensed futures exchange shall appoint a complianceofficer.
(2) A compliance officer appointed under paragraph (l) shall beresponsible for-
(a) monitoring compliancc by the lutures exchange rvith itsarticlcs ol association, rulcs, thcse Regulations, thc Act,any guidelincs or dircctions issucd thercundcr; and
(b) the redress of inl'estors' gricl,ances.
(3) The compliance officer shall, immcdiately and independe ntly,report to the Authority any non-compliance of any provision stated inparagraph (2).
31. (l)A licensed lutures exchange may impose pcnalties tbrbreach of its rules under these Regulations.
(2) All penalties imposedunder paragraph (l) shall be credited tothe investor protection l'und established by the futures exchange.
32. A licensed futurcs exchange shall comply rvith the disclosurerequirements and corporate governance norms applicable to listedcompanies u,here no specific provisions have been made under theseRegulations.
(a)
(b)
(c)
Ke rtya Subs id iary Le g is lation, 20 I 3 l48l
PART V-DUTITTS OF A FUTURES EXCHANGE .
33. ( l) A licensed futures exchange shall ensure_
(a) a fair, efficient and transparent market in futures contractsthat are traded on its futures market; and
(b) that risks associated *'ith the business and operations ofthat futures exchange are managed prudently.
(2) A futures exchange shall, in discharging its duty underparagraph ( I )-
(a) act in the interest of the public; and
(b) ensure that the inrerest of the pubric prevairs rvhere itconflicts rvith the intqrest of the futures exchange, futuresbrokers rvho are its futures members, shareholdirs or thelnanagement.
(3) A lirtures exchange shail operate its facilities in accordancervith the rules made and approved by' the Authority.
(-l) A futures exchange shall regulate the operations, standar(s ofpractice and business conduct of futures brokers rvho are its futuresmembers and representatiyes or other employees of those futures brokersin accordance rvith the rules, policies, procedures and practices of thefutures erchangc.
(-5) A futures exchange shall fbrmulate and implement appropriateprocedures fbr ensuring thar the futures brokers rvho are iii ruturesmembers arnd rcpresentatives or other empkryees of those futures brokerscompll, rvith the rules of the futures exchange.
(6) A futurcs excha.ge shall presen'e confidentiarity rvith regard toall infbrmatiolr in its possession concerning futures brokers rvho-are itsfuturcs members and their clients, except that suph information may bedisclosed by the futures e.rchange when required.in lvriting to oo so bythe Authority or il' the futures exchange is ordered to do so by a court oflarv.
(7) A lutures exchange shail immediatery notify the Authority ifthe futures erchangc becomes aware-
(a) that any I'utures broker rv'ho is a futures member of the futuresexchangc is unable to comply rvith any rules of the futuresexchange or of any financial resources requirements; or
(b) of a fina,cial irregularity or other matter rvhich, in the opinionof the futures exchange, may indicate that the financialstanding or integrity of a futures broker, rvho is its futuresmember, is in question, or that a futures broker, rvho is itsfutures member, may not be able to meet itslegal obligations.
Dutres of futuresexchange
1482 Kenya Subsidiary lzgislcttion, 20 I 3
Facilrtres to be 34. A futures exchange shall at all tirnes provide and maintain-marntained by a
fututes exchang" (a) adequate and properly equipped premises;
(b) competent personnel rvho are appropriately trained for the
duties they perform and in the requirements of allapplicable legislation; and
(c) automated trading system rvhich meet the requirementsunder regulation 7 and pre-approved by the Authority forthe conduct of its business.
Futurescxchange 35. (l) A licensed futures exchange shall provide such assistanceto assrst to the Authority as the Authority may require for the performance ofAulhontv
the functions and duties of the Authority.
(2) Any assistance provided under paragraph ( l) may include-
(aj furnishing of such returns and the provision of such
books and other information relating to the htrsiness ofthe futures exchange;
(b) information in respect of trading in futures contracts; or
(c) any other specified information as the Authority mayrequire for the proper adniinistration of its functionsunder the Act.
PART Vt - SEJ F- REG TJLATORY ORGANIZA]'ION
Self'- regulation 36. A futures axchange shall have-
(a) a procedure and appropriate system of exercising self-regulation oyer its futures members;
(b) a code of conduct for its futuresmembers;
(c) adequate trading surveillance and compliance capacity;and
(d) a procedure for dispute resolution.
Futuresexchangc J7. A futures exchange shall, as a condition for a license totoov3rsceits operate a futures market, implement a system of self- regulation rvithmembers.
respect to futures brokers, lvho are its futures members, and shallensure the day to day management of trading, clearing settlement,delivery and all other activities of futures brokers , lvho are its futuresmembers, are in accordance rvith-
(a) the rules of the futures exchange approved by theAuthority;and
Kenya Subsidiary Legislation, 20 t3 1483
(b) larvs, regulations and guidelines relating to futurescontracts issued by the Authority.
PART VII-ACCOUNTS AND AUDIT
38. (l) A licensed futures exchange strall keep proper books ofaccounts and records of income and expenditure, assets and liabilitiesand all other transactions of the futures exchange.
(2) A licensed futures exchange shall, as soon as practicableafter the end of each financial year, prepare a slatement of accounts ofthe futures exchange for the financial year, including a statement ofcomprehensive income and a statement of financial poJition.
(3) A licensed futures exchange shall submit the statement ofaccounts prepared under paragraph (2) to its auditors for audit.
(4) The Auditors shall prepare a report on the accounts and sendthe report to the futures exchange.
(-5) A licensed furures exchange shall, immediately upon receiptof auditor's report under paragraph (4), send a copy of the r'eport and'acopy of the statement of accounts to the Authority.
(6) The Auditors report shall include-
(a) the opinion of the auditor, rvhether the statement ofcomprehensive income for the financial year to rvhich thereport relates gives a true and fair vierv of the surplus ordeficit of the futures exchange; and
(b) a statement rvhether, in the opinion of the auditor, thestatement of financial position for the financial yeargives a true and fair viel of the futures exchingefinancial affairs at the end of that financial year.
(7) The auditors shall have a right of access at all reasonabletimes to the books, accounts, vouchers and othei records and areen-titled to require from the employees of the futures exchange suchinformation and explanations as they consider necessary ior theperformance of their duties as the auditors.
39. The Authority may, rvhere the Authoriry is satisfied that it isin the public interest to do so, appoint, in writing, an auditor, at theexpense of the licensed futures exchanle, to examine, audit, and report,either generally or in relation to any matter, on the books, accounts andrecords of the futures exchange.
40. (l) A licensed futures exchange shall, rvithin four monthsafter the end of its financial year, submit to the Authority an annualreport.
Accounts andaudit
The Authoritymay appoint anauditor.
Annual rcport.
t484 Kenya Substdiart' Legtslation, 20 I 3
(2) The annual report submittecl under paragraph ( I ) shall
include-
a description of the activities undertaken by' the futures
exchange in that financial Year;
the resources including financial, technological and
human resources that the futures exchange had available,
and used, in order to ensure compliance rvith its
obligations and, in particular, the obligation of the futures
e^change to ensure that the futures market operates in a
fair, efficient and transparent manner,
(c) an anallsis of the extent to u'hich the futures exchange
considers that the activities undertaken, and resources
used have resulted in full compliance rvith all of the
obligations of the futures exchange under these
Regulations and the rules of the futures exchangc;
(d) the audit report as required under these Regulations; and
(e) any' other information and statements as thc Authorityma1 specifl'.
(a)
(b)
Ket,"e Subsidiart Legtslation, 201 3 l-+85
FIRST SCHEDULEForm I (r''t(l))
APPLICATIQN FOR A I-ICENSE TO CONDUCT THE BTJSINESS OF AFLITURES EXCHANGE
Application is made for a futures exchange license under the Act and the following aremade in respect thereof:
Note:
If space is insufficient to provide details, please attach annexure(s). Any annexure(s)should be identified as such and signed by the signatory of this application.
Information provided should be as at the date of application or renewal.
[. Name of the Company...... ..........Limited2. Registered office.
3. Date of incorporation... ...
4. Address...
5. E-mail.
I 6. Location, address and telephone number of principal office..
7. Location, address and telephone number ofbranch offices
8. Details of capital structure:
(a) Nominal/authorized capital (KSh.)..
(b) Number of shares
(c) Paid-up capital (KSh.)...
9. Shareholders (please attach list)
Name Address and telephonenumber
Number ofshares held
10. (a) Directors (please attach a list)
Name Identity:ard/Passpor
t number
Date ofappointment
Date ofBirth
Permanent
address and
telephone
number
Academic or
professronalqualification
Number ofshares held inthe company
1486 Kenya Subsidiary lzgislation, 201 3
(b) Secretary
Name...
Address...
Institute of Certified Secretaries of Kenya RegistrationNo......
(c) Chief Executive Officers and other key personnel
I l. Particulars ofother directorship (s) ofthe directors and secretary
12. Particulars of shares held by the directors and secretary in other companies.
Name ldentity cardor Passport
number.
Date olappointment
Date ofbirth.
Permanentaddress and
telephonenumbcr
Academic andprofessional
qualifications
Numbcr olsharcs held
in thccomDanY.
13. Has the applicant or any of its directors, secretary or members of senior managementat any time been placed under receivership, declared bankrupt or compounded with ormade an assignment for the benefit of his creditors in Kenya or elsewhere? YesNo. If"Yes", give details
14. Has any director, secretary or key personnel of the applicant been a director of a
company that has been:
(a) denied any license or approval under the Capital Markets Act or equivalent in anyother jurisdiction: YesNoIf Yes, give details.
(b) a director of a company providing banking, insurance, financial or investmentaCvisory services whose license has been revoked by the appointing authority:YesA.lo. If Yes, give details..
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Ke n,-a S ub s id iar 1- k g i s lat io n, 20 I 3 t487
(c) subjected to any form of disciplinary action by any professional body of which theapp!icant or any of its director was a member? YesArlo. if yes, give details....... ...
15. Has any court ever found that the applicant, or a person associated with the applicantwas involved in the violation of the Capital Markets Act or Regulations thereunderor equivalent law outside Kenya? YesAllo. If Yes, give details..
16. Is the applicant or a person associated with the applicant is subject to any proceedingsthat could result in a "yes" answer to question l5? yesNo. If "yes" give details......
17. (l) is the applicant, any shareholder, director or secretary of the applicant a member<rr director of a member company of any securities exchange, futures exc lange orcornmodities exchange? YesNo. If "yes" give details.
(2) have any ofthe above persons been-
(a) refused admission as a futures member of any securities organization? YesNo. ifYes, give details...
(b) expelled from or suspended from trading on any securities organization? Yes6o ifYes, give details.
subjected to anyYes, give details
other form of disciplinary action by any stock exchange? YesNo if
I 8. Business references:
Name Address Telephone number(s) Occupation
19. Profile of the chief executive officer and key personnel in the applicantcompany
(c)
1488 Kenya Subsidiarv Legislation, 20 I 3
20. List of office facilities of the applicant......
2l.Anyotheradditional informationconsideredrelevanttothisapplicant........................
We...... ..........(Director)... ....... (Director)and.... ....(Secretary) declare that all the informationgiven in this application and in the attached documents is ttue and correct.
Dated this... .....day of....... ......20....
Signed:
..) Director
......) Director
....) Secretary
Note:
l.The following shall be submitted witti the application for a license:
(a) memorandum and articles of association;
(b) certificate of incorporation;
(c) feasibility plan complying with regulation a Q)@) of these regulations;
(d) rules of the proposed futures exchange containing provisions in compliancewith the matters detailed under regulation 3 of these regulations;
(e) details of the proposed trading system complying with the requirements ofregulation 7 of these Regulations;
(0 staternents of the unaudited accounts for the period of accounting year endingnot earlier than six months prior to the date of application and audited annualaccounts for the preceding two years (in case of application of license);
Kenya Subsidiary Legislation, 20 I 3 I 489
a declaration by directors as to whether after due enquiry by them in relation tothe interval between the date to which the last accormts have been made and adate not earlier than fourteen days before the date ofapplication-
(i) the business of the company has, in their opinion, been satisfactorilymaintained;
(ii) they have, in their opinion, arisen any circumstances adverselyaffecting the company's trading or value of its assets;
(iii) there are any contingent liabilities by reason ofany guarantees given bythe company or any of its subsidiaries;
(iv) there are, since the last annual accounts, any changes in publishedreserves or any unusual factors affecting the profit of tho company orany of its subsidiaries;
a declaration by persons authorized as prescribed to accompany the applicationform; and
application fee.
SECOND SCHEDULE (rr.4(2) (c), l2)
LICENSING AND ANNUAL FEES FOR FUTURES EXCHANGES
Application fees... . ... .........KSh. 2,500.00
Licensing fees... . ... ........KSh. 2,500,000.00
Annualregulatory fees..... .....KSh.2,500,000.00
THIRD SCHEDULE(n. 2a, 26)
PART A
Code ofconductfor the directors on the board
l. Meetings and minutes.
Every director ofthe licensed futures exchange shall-
(r.24(t)
(a) not participate in discussions on any subject matter in which any conflict ofinterest exists or arises, whether pecuniary or otherwise, and in such cases thesame shall be disclosed and recorded in the minutes of the meeting;
(b) not encourage the circulation of agenda papers during the meeting, unlesscircumstances so require;
(e)
(h)
(i)
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r+90 Kenva Sttbsitliort' Lag,islutton. 20 I 3
(c) offer their comments on the draft minutes and ensure that the salne are
incorporated in the final minutes;
(d) insist on the nrinutes of the previous meeting being placed fbr approval insubsequent mecting;
(e) endeavor to have the date of next meeting flxed at each board nteeting inconsultation with other nrernbers of the board,
(i) endeavor to crlsure that in case all the itenrs ol'the agenda of a rneeting were
not covered for want of time, the next rnecting is held within fifteen days
for considering the remaining itenrs.
2. Code of Conduct for the public interest directors.
(a) ln addition to the conditions stated in Paragraph (i) above, public interest
directors of the licensed futures exchange shall, endeavor to attend all the
board nreetings and they shall be liable to vacate office if they remain absent
for three consecutive meetings of the board or do not attend seventy fivepercent of the total meetings of the board in a calendar year'
(b) Public interest directors shall rneet separately. at least once in six months toexchange viervs otr critical issues.
3. Strategic planning.
E,very director of the licensed lutures exchange shall'--
(a) participate in the formulation and execution of strategies in the best interest
of the licensed lutures exchange and contribute towards pro-active decisionrnaking at the board level;
(b) give benefit of their experience and expeqtise to the Iicensed futures
exchange and provide assistarrce in strategic planning and execution ofdecisions.
4. Regulatory compliarrces.
Every director of the licensed futures exchange shall-
(a) endeavor to ensure that the licensed futures exchange abides by all theprovisions of the Act and regulations framed thereunder and the circulars,directions issued by the Authority from time to time;
(b) endeavor compliance at all levels so that the regulatory system does not
suffer any breaches;
tc) endeavor to ensure that the licensed futures exchange takes steps
commensuratd to honour the time limit stipulated by Authoriry forcorrective.action;
(d) not support any decision in the meeting of the board which may adverselyaffect the interest of investors and shall report forthwith any such decision
to the Authority.
I
Kettva Subsidiary kgislation, 20 I 3 t49t
5. General responsibility.
Every director ofthe licensed futures exchange shall-(a) place priority for redressing investor grievances and encouraging fair trade
practice so that the licensed futures exchange becomes an engine for thegrowth of the futures market;
(b) endeavour to analyze and administer the licensed futures exchange issueswith professional competence, fairness. impartiality. efficiency andeffectiveness;
(c) submit the necessary disclosures/statement of dealings in futures contractsas required by the licensed futures exchange from time to time as per theirrules or articles of association:
(d) unless otherwise required by law, maintain confidentiality and shall notdivulge/disclose any information obtained in the discharge of their dury andno such information shall be used for personal gains;
(e) maintain the highest standards of personal integrity, truthfulness, honestyand fortitude in discharge of their duties in order to inspire publicconfidence and shall not engage in acts ,d iscreditable to theirresponsib ilities;
(0 perform their duties in an independent and objective manner and avoidactivities that may impair, or may appear to impair, their independence orobjectivity or official duties;
(g) perform their duties with a positive aftitude and constructively support opencommun ication, creativ ity, ded icat ion, and compassion ;
(h) not engage in any act involving moral turpitude, dishonesty, fraud, deceit,or misrepresentation or any other act prejudicial to the administration of thelicensed futures exchange.
PART-B
Code of Ethics for direclors and key personnel of Futures Exchunge
G.2aQ)
The 'Code of Ethics' for directors and key persortnel of the licensed futuresexchange, is aimed at improving the professional and ethical standards in thefunctioning of licensed futured exchange thereby creating better investor confidence inthe integriry of the futures market.
l. Objectives and underlying principles.
The Code ofEthics for directors and key personnel ofthe licensed futures excfangeseeks to establish a minimum level of business/professional ethics to be followed bythese directors and key personnel, towards establishing a fair and transparentmarketplace. The Code of Ethics is based on the following fundamental principles:
(a) Fairness and transparency in dealing with matters relating to the futuresexchange and the investors;
\
1492 Kenya Subsid iary Lzgislation, 20 I 3
(b) Compliance with all laws/ rules/ regulations laid down by regulatoryagencies/ licensed futures exchange;
(c) Exercising due diligence in the pbrformance of duties; and
(d) Avoidance of conflict of interest between self-interest of directors/ keymanagement personnel and interests of licensed futures exchange andinvestors.
2. Ethics committee.
For overseeing implementation of this Code, an ethics committee shall beconstituted by every licensed futures exchange under the respective board.
3. General standards.
Directors and key personnel shall endeavor to promote greater awarenessand understand ing of eth ical responsib il ities;
Directors and key personnel, in the conduct of their business shall observehigh standards of commercial honor and just and equitable principles oftrade;
(c) The conduct of directors and key personnel in business life should beexemplary which will set a standard for other members of the licensedfutures exchange;
(d) Directors and key personnel shall not use their position to give/get favorsto/from the executive or administrative staff of the futures exchange,technology or service providers and vendors of the licensed futuresexchange;
(e) Directors and key personnel shall not commit any act which will put thereputation ofthe Iicensed futures exchtnge, injcopardy; and
(0 Directors, committee members and key personnel of the licensed futuresexchange, should comply with all rules and regulations applicable to thefutures market.
4. Disclosure oTdealings in Futures ContraDts by key personnel of the Futures Exchange.
.Key personnel of the licensed futures exchange shall disclose on a periodic basis asJdetermined by the laws, regulations, guidelines, rules relating to the futures markets
(which could be monthly), all their dealings in futures contracts, directly or indirectly,to the board/ ethics committee/ Compliance Officer.
5. Avoidance of conflict of interest.
(a) No director of the board or member of any committee of the licensedfutures exchange participate in any decision making/adjudication in respectof any person lmatter in which he is in any way, directly or indirectly,concerned or interested.
(a)
(b)
Kettya Subsidiary Legislation, 20 I 3 t493
(b) Whether there is any conflict of interest or not in a matter, should bedecided by the board.
6. Role of the Chairperson and directors in the day to day functioning of the futuresexchange or clearing corporation.
(a) The chairperson and directors shall not interfere in the day to dayfunctioning of the licensed futures exchange and shall limit their role todecision making on policy issues and to issues as the board may decide;
(b) The chairperson and directors shall abstain fiom influencing the employeesof the licensed futures exchange in conducting their day to day activities;and
(c) The chairperson and directors shall not be directly involved in the functionof appointment and promotion of employees unless specifically's'o decidedby the board.
7. Acccss to information.
(a) Directors shall call for information only as partpf specific committees or as
may be authorized by the board.
(b) There shall be prescribed channels through which information shall moveand further there shall be audit trail of the same. Any retrieval ofconfidential documents/ information shall be properly recorded.
(c)
(d)
All such information, especially which is
shall be kept confidential and not be usedgain.
non-public and price sensitive,for any perSonal consideration/
Any information relating to the business/operations of the licensed futuresexchange, which may come to the knowledge of directors/ key personnelduring performance of their duties shall be held in strict confidence, shallnot be divulged to any third party and shall not be used in any mannerexcept for the performance of their duties.
Misuse of position.
Directors/ committee members shall not use their position to obtain business or anypecuniary benefit in the organization for themselves or family members.
Ethics committee to lay down procedures.
The ethics committee shall lay down procedures for the implementdtion ofthe code and prescribe reporting formats for the disclosures required underthe code.
(b) The compliance officer shall execute the requirements laid down by theethics committee.
While the objective of this Code is to enhance the level of market integrity and investorconfidence, it is emphasized that a written code of ethics rnay not completely guaranteeadherence to high ethical standards. This can be accomplished only if directors and key
9.
(a)
t494 Ken r-a Subsidiarv kgislation, 20 I 3
personnel of the licensed futures exchange commit themselves to the task of enhancingthe fairness and integriry of the system in letter and spirit.
PART-C (r.26)
Meqsures lo ensure segregalion o/ regutatory depqrtmenls
In order to ensure the segregation of regulatory departments, every licensed futuresexchange shall adopt a "Chinese Wall" policy which separates the regulatory departmentsof the licensed futures exchange from the other departments. The employees in theregulatory departments shall not communicate any information concerning regulatoryactivity to any one in other departments. The employees in regulatory areas may be
physically segregated from employees in other departments including with respect toaccess controls. In exceptional circumstances employees from other departments may be
given confidential information on "need to know" basis, under intimation to the
compliance officer
Made on the l8th June' 2013' HENR' RorrcH,
Cabinet Secretary for the Nalional Treasury.
LEGAL NoTICE NO. I09
THE PUBLIC PROCUREMENT AND DISPOSAL ACT,2OO5
(No.3 of2005)
IN EXERCISE of the powers conferred by Section 140 of the Public Procurementand Disposal Act, the Cabinet Secretary for Treasury makes the following Regulations:-
THE PUBLIC PROCUREMENT AND DISPOSAL (AMENDMENT) REGULATIONS,2013
citation. l. These Regulations may be cited as the Public Procurement andDisposal (Amendment) Regulations,2013.
2. The Public Procurement and Disposal Regulations, 2006 andPublic Procurement and Disposal (Amendments) Regulations, 2009 inthese regulatio.ns referred to as "the principal Regulations", areamended by inserting the following new regulations immediately afterregulation 94-Rcporting on public 96. In order fulfil the requirements of sectioncontractawards a6(l) of the Act, every procuring entity shall on
quarterly basis submit to the Authority informationof all public contract arvards as directed by theAuthority.
6. Regulation 8 (3Xa) of the principal'regulations is amended bydeleting and substituting therefore the following nerv paragraph-
(a) maintain and update bi-annually standing lists ofregistered tenderers required by the procuring entitythrough a pre-qualification process and submit the resultsto the Authority for consolidation within fourteen daysfrom date of notification.
Kenya Subsidiary lzgislation, 20 l3 t19s
-1. Regulation l0(2Xd) ot-the principal Regulations is amended bydeleting and substituting therelbre the foilorving nerv paragraph_
(d) approve the comrncncement of the procurement process afterth^e. annual procuremcnt. plan is approved by thi accountingoflficer, and rvhere applicabre by ihe board bf directors or asimilar body and upon satisfaction that sufficient funds tomeet the obrigations of the resurting contract are refrected inits budgetary estimates, or the evidence of the availability ofsuch sufficient funds before making an arvard is provided.
. -5. Regulation l7 of the principal regulations is amended hyadding the fol lorvin g sub-regulation -
( I I ) The rolc of rhe obscrvers shall be _
(c) to observe .rvhether the procurement proccedings have
been carried out in accordance rvirh Seition 2 of ihe Actand prepare a report;
(d) the reporr prepared under sub_regulation (a) shallsimultaneously be submittcd to the accounting officer andthe Authority rvithin fburteen days flr; date ol.notification of arvard.
6. Regulation l6 of the principal rcgulations is amended bydeleting and substituting therefor the follorvirig nerv paragraph _
- .(l). Forcach procurement, the procuring entiry shalr estabrish anEvaluation, Inspection and Acceptahce & N"egotiations committeeforthe purposes of carrying out the evaluation of-the tende^ o, profurui,or negotiations or inspection and acceptance of goods, i"ort, oiserv ices.
(2) A committee established under paragraph (l) shall consist of achairman and at leasr three other membirs:ali uppoint"a
-Uj tfr"
accounting officer or the head of the procuring entity 'uponrecommendation by the procurement unit.
(3) No person shall be appointed under paragraph (2) if suchperson is a member of the tender committee of ttre pricurinj
"ntity.
---'
(4) In tender evaluations, the committee established under sub_paragraph (l) shall be responsible for_
(d) the technicar evaruation of the tenders or proposars receivedin strict adherence to the compriance and evaruation criteriaset out in the tender documents;
(e) commitree established under paragraph (l) perfonming theevaluation rvith all due diligincJurA *ittin a perio"A oififteen days after the openingbf the tenders;
Evaluation,Ncgotiations,lnspcction andAcccptanceCommittcc
t196 Kenya Subsidiary Legislation, 20 I 3
(0 the financial evaluation of the tenders or proposals receivedin strict adherence to the compliance and evaluation criteriaset out in the tender documents or request for proposals; and
(g) performing the tender evaluation rvith all due diligence.
(5) Each member of the committee shall evaluate independentlyfrom the other members prior to sharing his or her analysis, questions
and evaluation including his or her rating rvith the other members ofthe committee.
(6) Llnder tto circumstances may any member of the committeecnter into direct communication rvith any of the tenderers participatingin a tender or proposal that such evaluation committee is considering.
(7) An evaluation committee shall prepare a report on the anall'sisof the tenders received, and f,inal ratings assigncd to each tender and
submit the rcpclrt to the tender committec.
(8) l-hc report preparcd under paragraph (7) shall include -
(f) thc rcsults of the preliminary el'aluation, rvith reasons rvhy
any tenders or proposals rvere rejected;
(g) thc scores arvarded by each evaluator for cach tender orproposal;
(h) a summary of the relative strengths and rveakncsses of each
tender or proposal;
(i) the total score for each tender or proposal; and
0) a recommendation to arvard thc tender to thc lorvestevaluated tendcrer or to thc' person rvho submitlcd the
proposal rvith the highest total score.
Inspcctionand 7. Regulations 17 of the principal regulations is amended byacccptance deleting and substituting therefor the follorving nerv paragraph -
A committee established under regulation 6 of these Regulationsshall immediately after delivery of the goods, rvorks or services -
(i) inspect and rvhere necessary, test the goods received;
0) inspect and revierv tfie goods, lvorks or services in orderto ensure compliance rvith the terms and specificationsof the contract;
(k) accept or reject, on behalf of the procuring entity, the
delivered goods, rvorks or services;
(l) ensure that the correct quantity of has been received;
/
Ketryct Subsidrur.t, Le!:rslutton, 20 I -l t197
(m) cnsurc that thc goods, rvorks or serviccs mcct thctcchnical standards dcl'incd in the contract.
(n) cnsure that the goods, *,orks or sen,iccs have hccndclivcred or complctcd on timc, or that any dclay hasbccn ncltcd;
(o) cnsure that all rcquircd manuals or documcntation havcbcen reccived; and
(p) cnsure issuance ol' intcrirn or complction ccrtil'icates orgoods rcceived notcs, as apprcrpriatc and in accorclanccn'ith thc contract.
8. Rcgulation 20 (5) of'the principal rcgulations is arnendcd bydeleting and substituting thcrcfbr the follorving ncw paragraph atrdadding the lblIorving sub-rcgulations-
(5) 'l'he consolidated annual procuremcnt plan shall bc pre parcdby thc procurcment unit and approvcd bl,both thc tcndcr cornmittcc,the hcad of the procuring entitl'and w'hcre applicablc b1,thc board ol'dircctors or a sirnrlar bodl'.
(6)'l'hc approval ol thc plan in sub-regulation (.5) by thc tcrrdcrcclmmittce shall bc dccrncd to includc approval ol'all altcrnativcprocurcment methods as rcquircd urrder scction 29(.1) ol'the Act.
9. Rcgulation 21(4) ol' thc principal Regulations is amcndcd bydclcting and substituting thcrcfor the lbllo*'ing nc\\' paragraph -
'l'he procuring cntity shall allow' the candidates a[ least sevcndays to preparc and submit thcir applications to bc pre-quali['icd.
10. Regulation 3 I is arncndcd by adding thc l'ollorving sub-rcgulation -
(c) thc cumulative valuc ol all contract amcndments shall notincrcase the total contracl. pricc by morc than trvcnty' fivcporcent from thc original contract sum.
I l. Regulation 36 ol' the principal Rcgulations is amendcd by,
dcleting and substituting thercfor thc follorving nerv paragraph -
For thc purposcs of scction 7l(c) of thc Act, the minimum periodof time bctrvecn advertisement and dcadline lor submission ofinternational tenders shall be trventy one days.
12. Rcgulation 39 ol' the principal Regulations is amended. bydeleting and substituting thcrcfor thc follou,ing nov paragraph-
(l) Pursuant to scction -56 (2) oi the Act. procuring entity maycharge a l'ee not exceeding one thousand shillings for hard copies oftender documents.
I)rocurc rtte n L
plannrng
Prcqual r frcatrondocumcnl.s
Varrallons tocon trac I \.
'l'inrc lor lnternatlonatcndeflng
Fee for tenderdocuments
t498 Kenya Subsidiarv Lzgislation, 201 3
(2) In arriving at the fee payable under paragraph (l), a
procuring entity shall only have regard to the costs related to printing,copying, and diStribution or of converting the documents intoelectronic form.
(3) No fee shall be charged rvhere the tender documents are-(a) obtained electronically;
. (b) for invitations for expression of interestt or
(c) for invitations f,or pre-qualification.
(4) Where tender documents are sold, the procuring entity shallallorv potential tendcrers to inspect the documents, prior to purchasingthe document.
13. Regulation 40 of the principal Regulations is amended bydeleting and substituting therefor the follolying new paragraph-
The minimum time for the preparation of national open tendersfor the purposes of section -5-5 ( l) of the Act shall be a period offourteen days.
14. Regulation 4l (3) of the principal Regulations is amended bydeleting and substituting therefore the follorving nerv paragraph-
(3) The tender security to be provided under section 57 of the Actshall be in any of the follorving forms only-
Timc for prcparrngnational tcndcrs.
Tcndcr sccurity.
Pcriod for cvaluationof tcndcrs.
hoccdurc forrcstrictcd tcndcring.
cash;
a bank guarantee;
such insurance company guarantee as may be approved bythe Authority;
a letter of credit; or
guarantee by a deposit taking microfinance institution,Sacco society, the Youth Enterprise Development Fundor the Women Enterprise Fund.
l-5. Regulation 46 of the principal Regulations is amended bydeleting and substituting therefore the following new paragraph-
(l) A procuring entity shall, for purposes of section 66 (6) of theAct, evaluate the tenders rvithin a period of fifteen days after theopening of the tender.
(2) Where a tender is complex, and/or has attracted a highnumber of tenderers, the accounting officer or head of a procuringentity.may extend the period for lender evaluation to a further periodrvithin the tender validity period but not exceeding thirty more days.
16. Regulation 5a(5) of the principal Regulations is dmended bydeletigg and substituting therefore the following new paragraph-
The minimum time for the preparation of tenders for the purposesof section 73 of the Act shall be a period of seven days.
(a)
(b)
(c)
(d)
(e)
Kenya Subsidiary l,egislation, 201 3 1499
17. Regulation 55 is is amended by deleting and substituting Rcqucstfortherefor the follolving nerv paragraph - - proposals.
(l) -A procuring entity that conducts procurement using therequest for proposals method pursuant to section 76 of the Act shill besub.iect to the procurement thresholds set out in the First Schedule.
(2) The notice inviring expressions of interest prepared by theprocuring entity pursuant to section 78 of the Act shall give aminimum period of seven days for tenderers to submii tteirexpressions of interest.
(3) Invitation of expressions of interest may not apply rvhere thetender committee of a procuring entity has expressly approved-
(a) direct Request for Proposals;
(b) direct procurement or Single Source Selection:(c) restricted tendering; or(d) request for quotations
18. Regulation G4 (l) is amencied by adding the following sub- Uscof spccia[yregulation - pcrmittcd procc<lurcs.
(d) Where competitive negotiations are critical for achievingvalue for money in the procurement of specialized goods,rvorks or services.
19. Regulation 66(2) of the principal Regulations is amended by Notification of thc'deleting and substituting therefor the following new paragraph -
- award.
A procuring entity shall notify an unsuccessful tenderer inlvritipg and shall in the same letter provide reasons as to lvhy thetender, proposal or application to be pre-qualified was unsuccessful.
20. Regulation 73 of the principal Regulations is amended by Modcof fitingdeleting and substituting therefore the follorving new paragraph-. rcqucsts.
(l) A request for revierv.under the Act shall be made in FormRB I set out in the Fourth Schedule of the principal Regulations.
(2) The request referred do i, purugruph (l) shall-
(a) state the reasons for the complaint, including any allegedbreach of the Act or Regulations;
(b) be accompanied by such statements as the applicantconsiders necessary in support of its request;
(c) from the date of the occurrence of the breach complainedof rvhere the request is made before the makins of anarvard or the notification under sections 67 or g3 oinct &made within-
r 500 Kentrt Srtbstdiart' Legislation, 20 I -l
(i) tcn calendar days if procurement proceeding is a
national tcndcr; or
(ii) tcn uclrking days if procurement proceeding is an
intcrnational tender.
(d) be submittcd in thrcc bound copies and a soft cop)', pages
ol' rvhich shalI bc collsectttivel1' nttmberecl;
(c) bc accompaniccl hy rton-rcfttndahlc lees set out the Second
Scheduleof tlrese Rcgulations.
(3) Irvcr)'requcst for reviov shall bc l'ilcd w'ith thc Sccretary'olthc Revie rv Btlard ttpon paymellt ol'thc requisitc fees'
(-l) 'l'he Secre tar) shall ackntlrvledge I'iling.of thc request forrcl ie r.t'.
Norrficarronol l'rlrirg 21. Rcgulation 7-l (.1) ol'thc princiltal Rcgulatitlns is amcnded by
o[rcque\r dclcting and substituting thcrcfore thc lollow'ing rrerv paragraph -lpon bling scrvccl rvith a notification ol'a requsst, the proctrring cntitl'shnl I -
(a) notil'y the Secrctary immcdiatcly of thc names and contact
dctails of all partics to thc reviov,
(b) w'ithinl'ivc clay's or sttch lesser period as may be stated by
thc Sccrctary in a particultlr casc, submit to the Secretary a
rvrittcn mcmorattdum of response to thc reasons for thc
requcst togethe r ivilh such documents as the Secretary may
spccily.
't'hc Frrsr Sche<lutc 22.'l-he First Schedule ol'the principal regulations is amended by
dcleting and substituting thergl'or w'ith thc First Schedule ol' these
Rcgulatitlns.
't'he Fourth Schedutc 2.1. I)art II of the Fourth Schcclule of the principal regulations is
amended by deleting and substituting *'ith thc Second Schedule to
thcse Regulatitlns'
Madc on the l8th June, 20 13.
HENRY ROTICH,
C ab i nc t S e c r e tar 1- .fo r t he N at io na I T r e as u r y'
Kent'a Subsidiarv Legislation, 201 3 r.50 t
Lecel NorrcE No. I l0
THE CUSTOMS AND HXCISE ACT
(Cap.172)
IN EXERCISE of the po$,ers conferred b1, secrion 234 of theCustoms and Ercise Act, the Cabinet Secretary to the National'f reasurl, makes the fol lorvin g Regu lations: -
, THE CTISTOMS AND EXCISE (EXCISABI-E GOODSMANAGEMENT SYSTEM) REGULATIONS, 20 I 3
I These Regulations may be cited as the Customs and Excisc(Excisable goods Managemenr Sysrem) Regulations , ZOl3.
2. In thesd Regulations, unless the conte\t othenvise requires_
"authorised officer" means an officer authorised by.theCommissioner to perform any act under these Regulations;
. "compounded spirit" means spirit ready for consumption as abeverage and put up for retail;
"contractor" means a person appointed by the commissioner tosupply, install, and maintain the System;
^ "Excisable goods management system" in these Regulationsreferred'to as "the System" includes excise stamps, track and tracesystem, production accounting system and .related softrvare andhard rvare;
^ "im.porter".means a pcrson registered as an importer by thecommissioner to import excisabre goods specified un<ter iheseRegulations;
"Manufacturer" means a manufacturer ricensed to manufacturegoods specified in these Regulations;
"package" means packet, bottle or similar retail unit of excisablegoods specified in these Regularions;
"printer" means a person appointed by the Commissioner toprint and supply excise stamps; and
3. Every package of excisable goods, except motor vehicle,manufactured in or imported into Kenya shall be affixed rvith an excisestamp of a type and in a manner specified by the Commissioner.
4. Every excise stamp required to be affixed under regulation 3shall be of such specifications as-
(a) to deter counterfeiting;
Cltatron
lnterprctatton
Excisable $oods to beaffixcd with excisestamps
Features of thc excisestamp
I
I 502 Kenya Subsidiary lzgislation, 20 I 3
(b) to facilitate tracking of the stamps and excisable goods alongthe supply chain;
(c) to enable accounting for the production of excisable goodsmanufactured or imported ; and
(d) to facilitate any,persons in the supply chain to authenticatethe stamps and excisable goods.
Excisc stamps fcc. 5. ( l) Manufacturers and Importers shall purchase excise stampsfrom the Commissioner at a prescribed fee.
(2) The fee prescribed by the Commissio.ner under paragraph ( I ),shall not exceed the cost of the stamps and the maintenance costs of theSystem.
(3) The revenue from the sale of excise stamps shall be retainedby the Commissioner for financing the System.
Rcgistration. 6. (l) The Commissioner shall register importers of anyexcisable goods specified under these Regulations subject to suchconditions as he may deem necessary.
(2) A person shall not manufacture or import excisable goods forlvhich anexcise stamp is required to be affixed in accordance with these
Regulations, unless that person is licenced or registered by the
Commissioner.
Application for cxcisc 7 . ( I ) A manufacturer or importer shall apply to thestamPs
. Commissioner for excise stamps in the prescribed format.
(2) An application made under subparagraph (l) shall be
submitted to the Commissioner atleast ninety days prior to themanufacture or importation of the goods.
(3) A manufacturer or importer shall pay for excise stamps uponapproval by the Commissioner.
(4) In case of imports; the Commissioner may require evidenceof importation before delivery of excise stamps.
(5) Despite subparagraph (4), the Commissioner may, subject tosuch conditions as he may specify, allow delivery of excise stamps toa person before importation.
Forccast of 8. (l) The Commissioner may require a manufacturer or importerconsumption' to provide, at least 120 days before tlie beginning of every financial
year, a forecast of quantities of excise stamps which the manufacturersand importer intend to use in the subsequent year.
(2) A manufacturer or importer shall bear the cost of the excisestamps procured under the forecast and not used.
Kenya Subsidiary Leg islation, 20 I 3 r 503
^ 9 (l) Subject to the lalv regulating public procurement, the Appointmcnts.Commissioner shall appoint a suitable person to -
(a) print and deliver excise stamps;
(b) develop and install the System; and
(c) install any other related.systems.
. (2) A person appointed under paragraph (l) shall not print anyexcise
.stamps required under these Regulaiions unless requested byCommissioner.
10. (l) The Commissioner may, where necessary and subject to Delivcry of cxciscsuch conditions as he may impose, require the printer io deliver excise stamps.
stamps directly to a manufacturer, or importer,.
(2) The printer shall notify the Commissioner of the quantity andtype of the excise stamps supplied under paragraph (l) ivithin'suchperiod as the Commissioner mdy require.
r r . ( r ) Excise sramps shail be affixed on excisabre goods - lll;i""J:j:H "(a) in case of locally manufactured goods, in the production
slamps'
faci I ity immed iately after packaging ;
(b) in the case of imported goods, in a ptace approved by theCommissioner lvithin seven days upon clearance fromCustoms for home use;
1c) in any other case, at a place appointed by the Commissioner.
. 12. Despite paragraph (lxb), the Commissioner may allowexcise . stamps on imported excisable goods to be affixed in theproduction facility in the exporting country subject to such conditionsas the Commissioner may specify.
13. (l) Manufacturers or importers shall return unused excise Rcturnorrransfcrcstamps to the Commissioner when- cxcisc stamps.
(a) they stop manufacturing;
(b) there are defects in the excise stamp sheets or reels;
(c) tliey fail to import;
(d) the excise stamps are declared out of use by theCommissioner;
(e) the Cabinet Secretary for finance exclude the products frcmthe'requirements of these Regulations;
l-50-1 Kettta Subsrcliart' Leg,islatton, 20 I -l
Allow ancc I'orrvastage anddarrragcs
Transfer of cxctscstal ps
lnstallatrgn of the
System
Composltlon the
System,
Marking of productpackagcs.
(2) Erccpt for thc stamps rctrlrned undcr paragraph I (a) and (h)'
thc Corntnissiuner shall rcfuncl, within sixty days. thc l'ces paid on thc
rcturncd c\cisc stalnPS.
l-1. (l) Darrragcd c\cis0 stalnps shall bc prcscrvcd for vcril'ication
b1 att utrthoriscd tll'l'iccr.
(2) Whcre ir tnanufacturer ol importcr cannot account tor the
e\cisc statnps issucd to him b1 thc Commissioner, the Commissigner
shall cornptrtc excisc dutl' n,.,4 othcr ta\cs on the unaccounted excisc
starnps btiscd on thc highcst cxcisc rate of crcisc dutl', I'alue and
volume o['cxcisablc goods manufactured or imported by the person'
(3) In computing c\cise duty on account of the unaccounted
cxcisc stalnps, the Commissioncr shall allou' a \\'astage and damages
not exceeding onc percent of the isstred stamps.
l-5. (l) A manttlacltlrer or importcr lnay, w'ith prior approval ofthc Comrnissioner, transfer cxcisc stamps in stock to another
manutacturing unit owned by thc sarne mantlfacttlrer or importer'
(2)'Ihe ('ommissioner shall prcscribc the procedtrre and
condition for lransler and accoul.lting ol' e\cise stamps under this
paragraph.
(3) A manufactttrer or ilnporter rvho transfcrs excise stamps
rvithout prior approval ol thc commissioner commits an offence'
16. A rnanufacturer or importer o[ excisable goods specified in
these Regulations shall facilitate theinstallation ol' the System in their
production or import facilities in accordance rvith the provisions ofthese Regulations.
17. The System installed under relulation l6 shall be composed
of-
excise stamps authentication and validation equipment;
devices for identification and association of each package
rvith individual excise stamp;
production accounting equipment;and
devices for the control, registration, recording and
transmission of data on the quantities of excisable goods torhe Commissioner.
18. (l) The Commissioner may require that the excisable goods
be marked by the System on each package and in a visible place, as
appropriate for the type of package, by a process of printing rvithindelible security ink, rvith codes that enable authentication, productionaccounting and track and trace of excisable goods.
(a)
(b)
(c)
(d)
Kenya Subsi.diary lzgislation, 20 I 3 1505
19. The installation, integration, preventive and corrective Intcgration.
lnaintenance procedures of all the equipment comprising the System atthe manufacturers or importers' premises shall be done by anauthorised contractor under the supervision of an authorised officer.
20.The Commissioner shall be responsible for - ffr".j:#;:, *o
(a) defining the functional, secuilty and fiscal controlrequirements to be observed by the contractor indeveloping the System;
(b) supervising and monitoring the process of installing theSystem.
21. (l) The System shall be installed on all production lines at Installationofthe manufacturers or importers premises corresponding to each cquipmcntand
packaging machine end laUelling machine; _dcviccs'
(2) The System for management of imports shall be irlstalled in amanner prescribed by the Commissioner.
22. (l) The manufacturers and'importers shall be notified in Noticcof insallation.writing by Commissioner at least thirty days in advance regarding -
(a) requirements for the equipmenr ro f*ilio* use of System;
(b) the adaptive features required, on each production line;
(c) the connectivity features and operating environment for theinstallation and operation of computers and other equipmentcomprising the system;
(d) the starting date of instdllation of the System.
(3) Manufacturers or importers shall be responsible for the cost.of excise stamps applicators, adjustments and adapAtions of their:quipment and premises necessary to install the System on eachproduction line.
(4) Where a manufacturer or importer is required to carry outadjustments or provide information required by the Commissioner forthe installation of System, the manufacturer or importer shall carry outthe adjustments or provide the information at least seven days beforethe starting date for installation of the System.
23. During the installation of the System, the manufacturer or Manufacturcrmdimporter shall make production lines available in operating conditions. importr to rvdil
production lincs.
U. (l) After conclusion of the installation on each production Scrling ofcquipmcntline, the contractor shall list in a specific format the pieces of rnd dcviccs.
equipment making up the System, one copy of which shall be deliveredto the'manufacturer and the other to the Commissioner.
1.506 . Ke t t )'u S u b s,lyl _4-y:lllyl]91!(2) 'l'hc authoriscd ol'l'icershall sccure System, in the prcscnce ol'
thc contractor and manufacturcr, b1, using sccurity seals.
Manufacturerand 2-5. (l) The manufacturer or importer shall report inopcratiyel1o_o'_::l: "0'n production lines, rvithin twenty-four hours of occurrence to thc
;:fi:1|ff,,"", tlommissioncr rvho shall secure the lines using a security seal andregister the action in the Sysrem,
(2)'l'hc production lincs ref'erred paragraph (l) shall rlot resumeoperation e\cept rvith the authority ol'the ('omrnissioncr.
26. (l) A manufacturer or importcr shall be responsiblc florconscrvation and security, ol'thc S),stem installed in their premiscs.
(2) Manul'acturcr or importcr shall report any' operating lailure ortamper ol' thc sccurity seals rvithin trventy-four hours.
Effcctivc datc for use 27.'l'he Commissioncr shall, through a public nohce in at leastof Svstcm trvo daily newspapers rvith national circuiation, declare the date rvhen
the Systcm shall come into eff'ect.
Preventiveand 28. (l) -l'he prcyentiye and corrective maintenance of thc System
1'],T:1",: " shall be pcrfbrmed b), thc contractor, under supen'ision of authorisedmarntcnalrce olSystcm ol I lcer'
(2) 'l'he contractor shall provide to the Commissioner the list oftechnicians authorised to carry out installation and maintenance of theSystern.
Sccurrty ofeq u l pnrent.
Advancc rcports onnerv brands ctc
29. Manufacturer or importer shall-
(a) declare to Commissioner packages and labels of brandsmanufactured or imported including those for export andduty free;
(b) declare to the Commissioner, at least thirty days in advancethe start of production of new brands of goods or any changein the graphic art of existing ones, together rvith thecorresponding packages and labels;
(c) apply at least thirty days to the Commissioner for installationor removal of the System, as the case may be, in theoccurrence of the follolving events-
(i) reactivation of inoperative production lines;
(ii) deactivation of production lines;(iii) ntaintenance and reallocation of production lines;(iv) installation of new production lines; And
(v) acquisition or sale of industrial machinery andequipment.
larkingofdutyfree 30. (l) All packages of duty free or export excisable goods!11T" *d specified in these'Regulations shall bear distinct markings to enableoackascs.
track and trace.
Kettva Subsid tarv Leg,iskttion, 20 I -l I 507
(2) 'l'hc material rvrapping the package fbr rvholesalc purposesshall bc printcd-
(a) in thc casc o[ exports, the countrl, ol'final destination; or
(b) in casc of cxcisable goods lor consumption in Kcn1,a, ..FOR
TISE IN KENYA'':
in case ol'excisable goods lbr sale to Duty-flrce shops, orDiplomatic shops, "Dtl'IY FREE"; and
in the casc of ercisable goods lbr consumption by KenyaDclencc Forces, "KENYA DEFI:NCII FORCES".
31. ( l) Excisable goods-
(a) manufacturcd for export, Kcnya Dcf'cnce F-orces or dcliverctjto a duty free shop;
(b) importcd or purchased from a dury free shop by privilegedpersons and institution listed in the'l'hird Schedulc to thcAct;
(c) rvith approval ol the Cornmissioner ol Custorns, imported.intoKenya as samples or by international mail, rvith nocommercial value.
shall be exempted from the requirement of excise stamps.
32. A manufacturer, importer, distributor, retailer or any otherperson involved in the supply chain ofexcisable goods, shall verify andauthenticate the stamps and excisable goods before admitting them intheir premiscs or in any rvay handle the goods.
33. (llA person shall nor-(a) import any excisable goods on rvhich an excise stamp should
be affixed rvithout being registered rvith the Commissionerin accordance lvith these Regulations;
(b) fail to maintain excise stamp register or records as theCommissioner may prescribe;
(c) fail to afTix an excise stamp on the package of excisablegoods in such secure manner as the Commissioner mayprescribe;
(d) print over or deface an excise stampaffixed on a package;
(e) knowingly submits a return that is incorrect;
(0 fail to furnish any information that the Commissioner mayrequire;
(c)
(d)
Exemption fiomexcrsc stamps.
Vcrrfication of'stamps.
Prohibitron andoffcnccs.
i
Il
be in possession of excisable goods on which the excise
stamps have not been affixed and which are not exempted
under these Regulations;
attempt to acquire or acqu.ire an excise stamp withoutauthority from the Commissioner;
counterfeit, or print, make or in any way create an excise
stamp without the authority of the Commissioner;
be found in possession of an excise stamp printed, made orin any way acquired without ttrc authority of the
Commissioner;
(k) be found in possession of, convey, distribute, sell, offer forsale or by way of trade cxpose excisable goods withoutaffixing excise stamps in accordance with these Regulations'
.",,1?i#':'#X,T':"*"il;ff l$::::"""'.',"'HljXffi :Tll,:l]than one hundred thousand shillings and not more than one million fivehundred thousand inittings or to imprisonment for a t€rm not exceeding
three years or, to both.
Gcncnl pcnelty. 34. A person who commits an offence under these Regulationsfor which no specific penalty is providcd is liable, on conviction, to afine not less than one hundred thousand shillings and not more than one
million fivb hundred thousand shillings or to imprisonment for a termnot exceeding three years or, to both.
Scizur! of strnps, 35. The Commissioner shall seize excise stamps, equipment andcquipmc,nt end goods, goods whcre_
(a) excise stamps are-(i) counrcrfeircd;
(ii) subject to return and.manufacture or imporrcr fails to doso; or
(iii) found in the possession of pcrsons other than to whomthcy have becn zupplicd.
G) the equipmcnt or plant is u,ed in the Fanufacture ofoounterfeit cxcise starnps ;
(c) the goods-
(i) bcar counterfeitcd cxcise stamps;
(ii) bcar excise stamps affixed in a manncr not consistentwith guidclincs prescribcd by thc Commissioner;
(iii) do not bear cxcisc stamps as required in accordancewith thesc Regulations.
(e)
(h)
(i)
0)
Ke nya Su b s idiary Le g is tation, 20 I 3 1509
36. Any excisable goods, stamps anil e4uipment which are seizedunder these Regulations shall be disposed ln a manner that theCommissioner considers fit.
37. The Customs and Excise (Excise Duty Stamps) Regulations,2008 are revoked.
Made on the l8th June, 2013.
HENRY ROTICH,Cabinet Secretary for the NationalTreasury.
Disposd of forlcxcisc strmps a
scizcd goods.
Rcvocrtion of I84of 2008.
LEGAL NoTIcE No. I I I
THE INSURANCEAgT
(Cap. $7)IN EXERCISE of the powers conferred by section 169 (6) of the
Insurance Act, thg cabinet secretary to the Nitional rreasury makerthe following Rules: -THE INSURANCE (INSURANCE APPEAI-S iTSUNAL) RULES,. 2013
l. These Rules may be cited as the Insurance (Insurancc AppealsTribunal) Rules, 2013.
2. In these Regulations, unless the context otherwise requires_
"appeal" means an appeal to the Tribunal;
_ "appellant" means the person entering an appeal, the advocate orduly authorized agent of that person;
"Chairman" means the Chairman gf the Tribuflat appointed assuch under section 169(2) of the Acq
"Company" means the Kenya Reinsurance Corporation Limited;
"member" *.t, u person appointed as a member of the Tribunalunder section 169(2) ot rhe Acq
"memorandum" means a memoragdum of appeal presented underrulel0 of these Rules;
"Secretary" means the Secretary to the Tribunal af;pointed underrule 6 (l) of these Rules;
"Tribunal" means the Insurance Appeats Tribunal establisneounder iule 4.
3. Nothing contained in these Rules shall linlit or otherwisc affcct Sqving of thcthe. power of the Tribunal to make such orders as inay bc neircssary for tnhcrcnt Powcr.
te ends of justice or to prevent the abuse of the process of tn" thcTribunal.
lribunal.' 4
Citrtion.
Intcrprctation
I 510 Kenya Subsidiarv Izg islation, 20 I 3
[:stabl rshrncnl ol' the'l'ribunal agd'l'cnurcol'Ol'llcc
Powers o l' lheCharrman.
Trrbunal Secretary.
.1. (l) There shall be estahlished a'l'ribunal to bc knorvn as the
Insurance Appeals Tribunal for the purposc of hearing appeals under
thc Act.
(2)'thc Chairman ancl mcmhcrs of the l'ribunal appointed undcr
scction 169(2) of thc Act slrall hold ol'l'ice lor a tcrm of three ycars brrt
shall hc cligiblc lbr rc-appointmcnt I'or onc f urther term ol'three years.
(3) A pcrson shall not bc qualified to be appointed as the
Chairman or a membcr of thc 'l'rihunal or if already appointed shall
hccotnc disqtralil'icd il'-
(a) hc is a clirccttlr. ol'f iccr, cmployee or shareholder. rvhether
<Jirectly or inclircctly, ol'an insurcr, broker, Medical
Insttrancc Providcr. insuratrcc agcnt or any other member ol
the insttrancc indttstrY;
(b) has hecn adjudicated bankrttpt, applics to take the benefit ofany larv for thc relief of bankrupt or insolvent debtors,
compounds rvith his creditors or makes an assignment of his
remuncraticln for thcir benefit;
(c) has previously becn involvcd in the management o[ an
insurer that has collaPsed.
(4) A membcr of the Tribunal may at any time resign his officeby notice in rvriting addrcsscd to thc Cabinet Secretary.
(-5) 'l'hc Cabinct Sccretary' may canccl the appointment of the
Chairman tlr amcmbcr ol' thc l'ribunal on the ground of his infirmity,incapacity or misbchaviour, or il' a rnember is absent from three
consecutive rnectings of the Tribunal rvithout leave of the Tribunal'
(6) Subjcct to these Rules, the 'I'ribunal may act notrvithstanding
a vacancy in its membership, and the presence 6r participation of a
person not entitled to be present or participate in the proceedings of the
l'ribunal as a member shall not invdlidate the proceedings.
-5. ( l) The Chairman shall have the porver to give directions for-(a) furnishing of further particulars and supplementary
,statements;
(b) liling and exchange of documents;
(c) framing of issues ; and
(d) ofher directions as areflecessary to enable the parties toprepare for the hearing or to assist the Tribunal todetermine any issue.
(2) The Chairman, in matters before the Tribunal, shall have the
same powers as vested in the Registrar of the High Court and shall
exerciie the porver, mutatis mutandis, in accordance lvith the Civilfrocedure Rules.
6. (l) The Cabinet Secretary shall appoint a person with relevant
experience and competency in lalv, insurance, actuarial science,
finance or economics as a Secretary to the Tribunal.
Ken "-a
Subsid iarv k gislation, 20 I 3 t.5lt
I
I
(2) Sub.iect to thc Rules ol'confidcntialiry, the Secretary shall, inmattcrs relating to appcals to thc 'l'ribunal and procedure therefore,
99mply rvith any gcncral and spccial dirccrions larvfully givcn by theChairman.
(3)-l'hc Sccretar),shall, hy noticc in thc (iaz_crtc, publish hisaddrcss lbr thc prcscnr.ation of scrvicc ol'documcnts lbr thc pr-rrposes o['these Rulcs, and shall in thc samc tnanncr puhlish any chinge in thataddrcss.
7. (l) Every appcal under scctiorr 146 ol'thc Act by an insurcraggricvcd hy a rcl'usal ol thc (bmpany unclcr that section shall beentered b1, prescntation o[ a memorandum ol' appeal, togcther rvithsuch nurnber of copics as ma), bc ncccssary, to the Secrctary.
(2) Evcrl appcal undcr scction 173 ol' the Act by a pcrsonaggricvcd by a decision of thc Commissioner under that scction, shallbe entcrcd by prescntation of a mcmorandum o[ appeal, togcthcr rvithsuch number of copies as may bc neccssary, to thc Secrctary.
8.'Ihc fces prcscribed by the Ministcr under sccrion 169 (6) (a)shall be as sct out in the Schedule to thcse Rulcs.
9. In cxercising its funcrions, the 'Iribunal shall'have powcr toprescribe the forms and any ol.her documents as it may deem necessary.
10. A mcmorandum of Appcal shall be signed by thc appcllantand shall set lbrth concisely under distinct hea<js, n
jniberedconsecutively, the grounds of appcal rvithout any argument ornarrati ve.
ll. (l) Each copy of a mcmorandum shall be accompani.ecl by astatement signed by the appcllant sefl.ing out precisely all the facts onrvhich the appeal is based and referring specifically to any documentaryor other evidence which it is proposed to adduce at the hearing of anappeal, and there shall be annexed to the statement of facts a copy ofthe decisions appealed against and any other document referred to uponrvhich the appellantproposes to rely on as evidence at the hearing of theappeal.
. (2) The f'ee for presentation of a memorandum shall accompanythe memorandum and shall be paid in favour of the principar Secritaryto the Treasury.
12. Within three lvorking days after the prescntation of aMemorandum, the Secretaryshall transmitto the Commissioner or theCompany, as the case may be, a copy of theMemorandum, thestatement of facts and any otherdocuments annexed thereto.
13. (l) Where the Commissioner or the Companydoes not acceptany of the facts of the appellant, the Commissioner or the Company , i,the case may be,shallfile rvith the Secretary a statement of facis withinfifteen days after service thereof under rule 12, together with suchnumber of copies as may be necessary and the provisions of rule I Ishall mutatis mutandis apply to that statement of facts.
(2) At the time of filing a staremenr of facts u4der paragraph (l),the Commissioner or the Company, as the case may be, shail serve a
Proscrrtatron ol'appca ls
Fces
Forms
Menrorandum ol'Appeal
Memorandunr to bcaccompanred byappellant's Statementand fees
Service ofMemorandum onCommssioner
Commissioner'sdeahng withMemorandum.
t5t2 Ke nya Sub sidiary Le I is latio n, 20 I 3
copy thereof together with copies of any documents annexed thereto'
upon the appellant or any other interested party'
(. ; If the Commissioner or the Company, as the case may be,
does not desire to file a statement of facts under this rule, the
Commissioner or the Company shall forthwith give written notice to
that effect to the Secretary and to the appellant, and in that case the
commissioner or the company shall be deemed at the hearing of the
appeal to have accepted the facts set out in the statement of facts of the
appellant.
Noticc to Chairman 14. (l) The Secretary shallforthwithafter receipt of the
9_f Mgrno-ryfum lnd Memorandum notify the Chairman of the receipt.
Hcaring Notice. '
(2) The Chairman shall, after the CommissiQner or the Company'
as the'case may be, has filed a statement of facts or has notified the
secretary that he or the company does not intend to do so, fix atime,
date and place for themeeting of the Tribunal for the purpose of hearing
e apPeal.
Intcrim reJief andIntcrlocutoryapplication.
Arircndmcnt ofMcmorandum ofAppcal..
(3) The Secretary shall cause such notice of the time, date and
olace of the meetine to be served on the appellant and the
bommissioner or the C-dmpany, as the case may be.
(4) The Secretary shall cause to be supplied to each member ofthe Tribunal a copy of the notice of hearing altd of all documents
received by him from the parties to the appeal'
. (5) Untess the parties to the appeal otherwise agree, eac-h party'shall
be entitled to noi less tban seven days' notice of the time, date and
place fixed for the hearing of the appeal.
15.'(l) The appellant may make application to the Secretary that
Oe Tribunal suspinds operation of a -decision of the Company or
Commissioner whicl h r' rbject'of appeal.
(2) The Tribunal may determine the application on the basis ofwritten presentation if the parties to the proceedings in the_Tribunal
agree in writing or it may direct the parties or any interested party to
appear before it.
(3) The Tribunal shall notify th'e parties and the interested parties
of its determination giving a statement of its reasons'
(4)Allinterlocutoryapplicationsmadeto-theTribunalshallbein
.such form as may be diricteti by the Tribunal,,signed by qe.applicant''his
advocate or aduly authorised agent, supported by an affidavit'
(5) A party served with an application ras directed by the
Tribuni, mayfile a Replying Affidavit or Grounds of Opposition'
(6) The Tribunal shall have the power !o hear any Party who
disires to be heard despite failure to file Replying Affidavit or Grounds
of Opposition.
16. (1) An appellant may file with the Secretary a notice ofamendment of the MCmorandum at any time before the hearing'
Kenya Subsidiary l,egislation, 201 3 l5l3
(2) Leave to amend the Memorandum-
(a) shall not be granted unless the Commissioner or fheCompany, as the case may be, has been afforded anopportunity to make representation on the proposedamendment;
(b) may be granted on such terms, including terms as to costs asthe Tribunal thinks fit.
(3) Where the Memorandum of Appeal is amended, the Secretaryshall immediately notify any party or inrerested party to the appeal.
(4) The Commissioner or the Company or any other interestedparty may amend any response rvhere the Memorandum of Appeal hasbeen amenCed rvithin such time as may be directed by the Tribunal.
17. At the hcaring of an appeal the follorving procedure shall beobserved -
(a) the Commissioner or the Company, as the case may be, shallbe entitled to be present or to be represented;
(b) the appellant shall state the grounds of his appeal and maysupport it by any relcvant evidence:
Provided that, except rvith the consent of the Tribunal and uponsuch terms as it may determine, the appellant may not at the hearingrely on any grounds of appeal other than a ground stated inr theMemorandum and may not adduce any evidence of facts or documentsunldss those facts have been referred to in, and copies of thosedocuments have been annexed to, the statement of facts of theappellant;
(c) at the conclusion of the statement and evidence on behalf ofthq appellant the Commissioner or the Company, as the casemay be, shall be entitled to make such submissions,supported by such relevant evidence, as may be necessary tosupport his case, and the provisions of the proviso tosubparagraph (b) shall applymutatis mutandis to evidence offacts and documents to be adduced by the Commissioner orby the Company.
(d) the appellant shall be entitled ro reply but may not raise anynerv issues or arguments in the reply;
(e) the Chairman or any member of the Tribunal shall beentitled at any stage of the hearing to ask such questions ofthe appellant or the Commissioner or the Company, as thecase may be, or any rvitness examined at the hearing as heconsiders necessary to the determination of the appeal;
(0 a rvitness called and examined by either party may be cross-examined by the other party to the appeal and, if so crossexamined, may be re-examined;
(g) a lvitness called and examined by the Tribunal may be crors-examined by either party to the appeal;
Procedure at heartng
of appeal.
I
\\
l-514 Kenya Subsidiary Legislation, 20 I 3
Adrrussrbrlrtl,oldocunlcnts
Sottrng asrdc
ludgcnrcnl. ordcr orawardWrthdrawal ofappcal or opposrtron
Costs.
Appeal to the HighCourI
(h) the 'l'ribunal may adjourn the hearing ol the appeal for theproduction of further evidence or for other good cause, as itconsidcrs necessary, on such terms as it n'lay detcrmine;
(i) the dccision of the Tribunal shall be by a majority;
0) the proccedings of the hearing shall be maintaincd and thedccision of the l'ribunal recorded therein.
(2) I'he l'ribunal may, lor good and sufficient cause, and inparticular w'herc ncccssar)' or expedie nt in circumstances wherepublicity rvould pre.iudice the interests of justice, excludc from itsprocccdings pcrsons other than the partics thereto and their legalrcprcscn tal.iv es.
(3) In matters of procedure not Eloverned by these Rules or theAct, the 'Iribunal may determine its own procedure.
Itl. Iixccpt rvherc thc Tribunal in any partiiular case otherwisedirects or rvhcrc any party to the appeal ohjects, copies of documentsshall bc adrnissiblc in evidencc:
Providcd that the-l'ribunal may at any time dircct that the originalshall hc produced nonvithstanding ihat a copy has already heenadrnittcd in cvidcnco.
19. A .ludgcment, order or award made e.r-parfe under. theseRulcs rnay, on application, be set asidc on such terms as may be just.
20. ( l) 'l'he appellant may rvithdrarv an appeal, and theC-'ornmissioner or C-ornpany may rvithdrarv its opposition to an appeal,at any time bclbre thc hearing by giving notice in rvriting to theSecrctary and the Sccretary5hall transmit the notice to the other party.
(2) At thc hearing, thc appellant may give notice to the 'l'ribunal
that it desircs to rvithdrarv the appeal in rvhichcase such appeal shall bedcerncd dismisscd and thereupon the Tribunal shall bring the hearing toa closc rvith such ordcrs as may bc just and accordingly notify partiesto thc appcal.
(3) At the hearing, the Commissioner or Company may givenotice that it desires to rvithdrarv itsopposition to the appeal andthereupon continue rvith thc proceedings rvithout the opposition.
21. The costs of an appeal shall be costs in the discretion of theTribunal and shall be taxed by the Registrar of the High Court in thesame manner as the bills of coSts in the High Court.
22. (l) Any party to the proceedings of the Tribunal rvho isdissatisfied rvith the de'cision of the Tribunal, if it involves a questionof larv, shall appeal to the High Court rvithin one month from the datethe decision is conveyed to him and the decision follorving such appealshall be final.
(2) The Chiel'Justice may make Rules governing the making ofappeals arising from the decision of the Tribunal and providing for thefees to be paid, the scale of costs of any such appeal, and the procedure'to be followed therein, and until such Rules are made, and subject
II
Kettt-u Subsitltur.t, L,cgrslotitn, 20 l-l t-5 l5
thcrcto, r.hc pr,visions olrhe ('i'ir Proccdurc Act shail appry,as iI thcrnattcr appcalccl against \\'crc a dccrcc ol'a subordinatc couit txcrcisin,original .juriscliction.
-.-'- -'-'-'""'b
23"I'hc 'l'ribunal shiril-causc to hc kcpt ancl mainr.aincd a re gistcr9n.
ull. disputcs or appcars rc|crred to thc 'r'ribunar c.nr.aining' ttrclbllow,ing parliculars-
(a) thc narncs o['thc partics;
(b) thc appcal nurnhcr;
(c) datc ol'l'iling lhc appcal;
(d) thc rclicl'sought; and
(e) thc l'inal dctcrmination or order antl thc datc thcrcol'.
21. (l) 'l'hc principal rcgistry ol'thc 'l'ribunal shall bc at Nairobi.(2) 'l'hc 'l'rihunal rnal cstahrish such othcr suh-rcgistrics at such
othcr placcs as arrd rvhcn it dccms ncccssar) .
25. ( | ) All thc procccdings pcncling htlorr: thc .l.ribunalimrncdiatcll, bclorc thc c,,r,n"ni..cnt oi thcsc Rules may bec,ntinucd and c.ncludccl as it'thcy had bccn commcnccd undcr Lr byvirtuc ol'thcse Rulcs.
(2) li'c11,dccrcc, ordcr ur arvard ol'thc'l'ribunal *,hichimrncdiatcly hclilrc thc comrncnccrncnI of thcsc Rulcs had not bcencxccutcd or crrlrlrccd shall hc cxccur.ccl .r cnlbrccd in lhe samc manncras il'it \!'crc A dccrcc or urclcr ol'thc'l'ribunal madc in accorclancc rvithtltcsc Rulcs.
26. 'l'hc lnsurancc (lrsrrrancc Appcars 'r-ribunar) Rurcs of l9g8arc rcvokcd.
SCIIEDULE (r.8)
(-up 2l
Rcgistcrs
Re grslncs
Savtngs l)rovrsrons
Rcvocatlon 0l'l. N 542lt 988
Filing /bcs: KSh.
(a) Filing of Memorandum of Appeal(b) Fiting 6f Defence(c) Filing of inrerlocutory applications(d) Presentation of Statements of Facts(e) Filing of Affidavit(0 Certification of Documents (per page)
10,000t,0001,000500500300
Madc on thc I 8th Junc, 201 3.
HENRY RO'TICH,Cabittet Secretary for the National Treasury.
l5r6 Kenva Subsidiary kgislation, 2013
Crtation
Sub Lcg
LEGAL Norrce No. I l2
THE CAPITAL MARKETS ACT
(Cap.485A)
lN EXERCISE of the porvers conferred by section l2 (l) of theCapital Markets Act, the Cabinet Secretary to the National Treasurymakes the follorving Regulations: -
THE CAPITAL MARKETS (LICENSING REQUIREMENTS)(GENERAL) (AMENDMENT) REGULATTONS, 20 I 3
l. These Regulations may be cited as the Capital Markets(Licensing Requirements) (General) (Amendments) Regulations, 20 I 3.
2. Regulation 2 of the Capital Markets (Licensing Requirements)(General) Regulations (hereinafter referred to as.,the principalRegulations") is amended by inserting the foilorving nerv definition inproper alphabetical sequence-
"liquid capital" in relation to a licensed entity, means the amountrvhich the liquid assets of a licensed entity exceed its liabilities, as maybe prescribed by the Authoriry;
3. Regulation l6of the principal Regulations is amended bydeleting paragraphs (3), (4) and (-5) and substiruring therefor rhefollorving nerv paragraph-
"(3) A stock broker shall maintain a liquid capital ofthirty million shillings or eighr per cenr of its total liabilitiesrvhichever is higher."
4. Regulation l7 of the principal Regulations is amended-
(a) in paragraph (2), by deleting subparagraph (b); and
(b) by deleting subfaragraphs (a), (5) and (6) and subsrirutingtherefor the following nerv paragraph-
"(4) A deale'r shall maintain a liquid capital of thirtymillion shillings or eight per cent of its total liabilities,rvhichever is higher."
5. Regulation 30 of the principal Regulations is amended bydeleting paragraphs (4), (5) and (6) and subsrituting therefor thlfollowing new paragrhph-
"(4) An invesrment adviser shall maintain a liquidcapital of one million shillings or eight percent of its totalliabilities, whichever is higher, and a fund manager shallmaintain a liquid capital of five million shillings or eightpercent of its total liabilities, whichever is higher."
Kett.\'ct Su b s d iar,- Le g is latio n, 20 I 3 t5t'7
I
\
\
6. Regulation M of the principal Rcgulations is amended bydeleting subparagraphs (3), (a) and (5) and substiruring therefor thefollorvi ng nerv subparagraph -
"(4) An investment bank shall maintain a liquid capital of, thirtymillion or eight per cent of its total liabilities, rvhichever is higher."
7. Regulation 4-5 o[ thcprincipal Regulations is amended by-
(a) deleting paragraph (2) and substituiing thcrefor thcfollorving nerv paragraph -
"(2) An applicant shall be-
(a) a bank licensed under the Banking Act;
(b) an investment bank or a fund manager;
(c) an insurance company liccnsed under the InsuranceAct; oi
(d) any other person rvho meets the requirements of thisPart and approved by thc Authority,
and rvho shall demonstrate effective capacity and expertise in dealingin securitics."
(b) inserting the follorving nelv paragraph immediately afterthc nerv paragraph (2)-
"(3) An applicant under paragraph (2) shalldcmonsl.ratc el'l'ective capacity and expertise in dealing insec u ri ti es. "
(c) renumbering paragraph (3) as (4).
8. Regulation 46 of thc principal Regulations is amended by-
(a) deleting par4graph (dXiii);
(b) inserting the follorving ncw paragraphs (c) and (d)immcdiately after paragraph (b)-
"(c) evidcnce ol' the minimum paid up share capitalprescribed by the Authority;
(d) evidence of the minimum financial resources andfinancial capability prescribed by the Authority;"
(c) renumbering paragraphs (c) and (d) as (e) and (f),respectively.
9. The principal Regulations are amended by'deleting regulation47.
Cap 488
Cap 487
1.5 t8 Kent'a Subsidiarv Legislation. 20 I 3
10. Regulation 4tiof thc principal Regulations is amendcd -(a) by delcting paragraph (l) and substituting rhercflor
Ibllorving nerv paragraph -"( l) An authorized securitics dcalcr shall be-
rcstrictcd to dcaling in [ired incomc sccuriticsrvhelher listcd on an approved exchange or not;
entitled to trade on behall'of others as rvell as ontheir orvn account in such segrnent; and
required to implement necessary operal.ional,trading and settlcment procedures and systemsnecessary to minimize settlement and counter partyrisk and manage conflicts of intcrest.
(b) by adding the follorving new paragraph immediately afterparagraph (2)-
(3) An authorized securities dealer shall comply rvith theprovisions on client accounts, conduct of business, prohibited dealingsand associations and investment requirements and appointment ofcustodian relating to stockbrokers, stockbroking agents, dealers,investment advisers and fund managers and payment of transaction andinvestor compensation fees relating to stockbrokers and dealers as setout in these Regulations, rvhere applicable.
I l. Regulation 49 of the principal Regulations is amended byinserting the rvords "in addition to the requirements specified underregulation 48(3)" immediately before the rvord "every".
12. The principal Regulations are amended by deleting regulation50 and substituting therefor the follorving nerv regulation-
Rcportofdcalinc 50. (l) Every authorised securities dealer shalltransactions. )-'"-,.-.' -------.-- -.--"---.:--'-'."":"'in respect of all its transactions in securities, rvhetheror not such securities are traded on an approvedexchange, submit to the Authority-
monthly reports and accounts tvithinfifteen days of the end of each calendarmonth;
the
(a)
(b)
(c)
(a)
(b)
(c)
quarterly reports andfifteen days of the endquarter;
half yearly reports and
accounts rvithinof each calendar
accounts lvithin I
Kenva Subsid;arv Legislation, 201 3 l-s l9
thirty days ol the end of each half year;
(d) audited annual accounts rvithin threemonths follorving the end of, theauthorized securities dealer financial year;and
(d) a financial stqlement complying rvith thedisclosures prescribed under the FourthSchedule ol these Regulations.
(2) The Authority may require such other lormof financial statement as it may from time to timespecify.
(3t 1'hc reports referred ro irt paragraph (l)shall include particulars on the-
type of securities;
total value of securities traded in terms ofsales and purchases during the relevantperiod; and
(a)
(b)
L
I
\
(c) average yield of rhe roral value ofsecurities traded.during the relevantperiod.
13. Regulation 57 of the principal Regulations is amended byadding the follbrving nerv paragraph immediately after paragrap-h(d) - (e) transfer not resulting in any change in beneficial
olvnership othenvise than for purposes of regulation57(c), (d) or section 3 t ( tA)(ii) of the Act.
14. Regulation 58 of the principal Regulations is amrnded byinserting the follolving proviso immediately after the sentence-
"Provided that a private transfer under regulation 57(a)shall be subject ro the prevailing prescribed brokeragecommission."
15. The Principal Regulations are amended by deletingregulation 59 and substituting therefor the following n"*regulation -Applicationfor 59. (l) Where it is intended to effect a private
ll[?J:'of a private ransacrion of a listed securiry under regulation 57 (a),
(b) and (e), a srockbroker representing the proposed
1520 Kenya Subsidiarv Legislation, 201 3
transferee shall assess, endorse and submit a rvrittenapplication rvith the required information and
supportinB documenls-
in the case of certificated securities, tothc securities exchangc w'here the
security is listed, and
in the case o[ immobilized securities, to
thc central depository at w'hich the
security is immobilized,
stating rcasons rvhy the proposed transaction iscligible to bc transl'errcd in a private transaction.
(2\ Where an application iS made underregulation -57(a) or (b), the securities exchange or a
central dcpository, as the case maybe, shall notify thestockbroker n'ithin seven days of receiving theapplication rvhcthcr thc securitics exchange or thecentral dcpository objects to the private transaction ornot, al'tcr cxamining and satisiy'ing itself that theproposed transl'cr is cligiblc fbr consideration as.aprivate transaction in accotdancc rvith these
Rcgu lations.
(3) 'l-he securitics cxchange or a centraldepository, as the case maybe, shall, upondetermination oi any application made underregulation -57(a) or (b), approve and simultaneouslynotify the Authority that the appliiation complies rvithregulation -57 (a) or (b).
(4) The sccurities exchange or the centraldepository shall, upon receipt of an application madeunder rcgulation -57(e), lbrrvard the applicationtogether rvith its recommendations to the Authority forapproval.
(-5) 'the securities exchange and the centraldepository shall 'jointly submit to the Authority,guidelines for approval in respect of the processingrequirements of a private transfer under regulation.57(a) and (b).
(6) The guidelines stipulated undersubparagraph (5).3 shall apply to all stockbrokers.
l6.The Second Schedule of the principal Regulations is amendedin Part III-
(a)
(b)
I
i
Iicrr rir .Srr/r rrr/ t t r r v l.e,q i t lu t it t t r, 2( ) I -l
(ir) br irtscrlirrg tltc lollorvirrg uc\\ l)arug,ritllh intrrrcrliirtcll irl'tcrpirltrrir;llr (cl) -
(rltl) [ssttcr ol rcsirlrurl lrrctl irtctlrtrc sccuritics-circh liastAl'ricitn l'urtncr Slirtc rcgrrlirlrlr irpllrovirtg tltc issttcshlll rcccivc lrn cc;trirl slrarc ol'llrc cvalrrltion I'cu ol'O.l(/( ol tlrc iirlrrc ol'tltc ol.l'cr suhiccI to u
rturrirrrrrrrt ol tlrc locirl currcnc) c(privillcnl toUnitctl Stirtcs ol Arncricl tlollars 2(X).(X)0 attrl lt
nrirtrrrtrrnr ol llrc locirl currcnc) cc;ttirirlcn( to IJttitctlStrrlcs ol Arrtcricir tlollitrs 20. (XX).
( lr) 111 1;11 1"1'lrlllr (i)
(r) bl dclctins subparar.rrirplr (i) anil substitutrng tlrcrclorthc lilllorving rre w subpru'iutraph
1.52 I
(i) trirnslcr in scttlcrncul ol'iur c\tltc ol' lr rlcccirsctl
l)crson or il trilnslr; r notrcstrlting irr lr cluutgc irt
bcncliciirl orvncrshipo(hcrrr rsc tlrirrr lirr
l)rrrl)osc\ ol (ii) urrtl (iii)llclort.
KSh. I ,.5(X) l)craplllicatiou (irrcltrrlingilr) irlllllicuti0n rcliltittgto ir llor(lillio ol'sccrlri tics), llrov iclttl lltltrvlrcrc thc lotul valrtc ol'sccrtrilios in thc
lplllicirtirln is hclotvKSh. 10,(XX), no l'cc
shtll trc payahlc.
(ii) ll1,'11111 11o thc lolloivirrg ttctv 1>rrlviso irtrtncdiatclyirl'lcr strb;lirnrgrllllr ( ii).-
'Srrlr.icct to u ttturinttttn ol' KSh. l(X),(XX)".
\
t522 Kenva Subsidiarv lzgislation. 20 I 3
17.;the Fifth Schcdule ol'thc principal Rcgulations is amended by inserting the
follorving nerv item immediatcly after item 3-
4. Private Transf'er I'ees
Made on the lSth June, 2013.HENRY ROTICH,
Cbbinet Secretary for the Nqtional Treasury.
Regulation 57 (a)
fees levied at2.lo/o ofthe valuc oftransaction (beingprcscrrbed brokcragect>mmission) rvherctransaction valttc rs
bclorv Kshs. 100. 000(subject to a
maximum of l.-57o)
and shared as
tbllorvs-
BROKERS &INVESl'MENl'I]ANKS.
NSE CDSC
('crtrfrcated
Sccu ri ti cs
55%' 45Vo NII
lrnrnobilrizcdSccuritrcs
55Vo NIL J5a/o
Rcgulatron -57(b) or(e) Kshs. 1.500 pcrapplication(including an
application relating toa portfolio ol'securities), (providedthat rvhere the totalvalue of securities inthe application rs
belorv Kshs. 101000,
no fee shall be
payable) and sharcdas follorvs-
Ccrtrl'rcatcdSecrtrrties
55?o 45o/0 NII
Irnrnohrliz-cdScculrtrcs
55o/o NII $qc
Regulatron -57 (c)...... Transfer anstng out of the rc-organlsatron ol the share caprtal of a llste(thrt dnpc ll in,'hanoe nf hencfrciel r .h chere canital O lq,
(rrercentasc o[ the nominal value of the sharcs) and payable to the Authority
Reorrlation 57 (cl or Id) A nv olher tmnsfer lhnt resrrlts in chanse of henefrcial interest in th(
shares capital of a listed company, including any transfer under a take-over scheme, merger ol
acqrrisition, approved by the Authority at0.54o (percentage of the market value of the shares) anc
oavable to the Authoritv.
Kenya Subsidiary kgislation, 201 3 1523
LEGAL NOTICE NO. I I3
THE CAPITAL MARKETS ACT
(Cap.485A)
IN EXERCISE of the porvers conferred by section 12 ol the
Capital Markets Acq the Cabinet Secretary to the National Treasurymakes the follorving Regulations: -
THE CAPITAL MARKETS (SECURITIES) (PUBLIC OI.FERS,I-ISTING AN D DISCLOSURES) (A MENDMENT) REGU LATIONS,
20r3
l. (l) ]'hese Rcgulations may be cited as the Capital Markets ShortTirtc(Securities)(Public Ol'l'crs, l,isting and Disclosures) (Amendment)Regulations 2013.
2. Regulition 2 of the Capital Markets (SecuritiesXPublic Offers, Sub.tcgListing and Disclosurc) Rcgulations (hereinafter referred to as "theprincipal Regulations") is amended by inserting the following nerv
dcflinitions in propcr alphabetical sequencc-
"lhst Al'rican Partncr State regulator" means thc regulator in an
East Al'rican Community member statc charged rvith the supervision ofthc capital markcts; and
"regional fixed income securitics" means fixed income securitiesissued under rcgulation 7(l)(d).
3. Thc principal Regulations are amended by inserting the
follorving nerv regulation immediately after Regulation 6A-
[]ook buildrng 68. A person proposing to offer its securities to thepublic or a section of the public may use a bookbuilding process to determine the price for the offerof securities in accordance with the requiiements set
out in the Eighth Schedule to these Regulations.
4. Rcgulation 7 of the principal Regulations is amended inparagraph (l) by adding the following new subparagraph immediatelyaftcr subparagraph (c)-
(d) lvith respect to regional fixed income securities to be
issued rvithin the East Africhn Community, the issuer
complies rvith the eligibility requirements as set out inPart B of the Second Schedule.
5. 'l'he Sebond Schedule to the principal Regulations is amended-
by --(a) inserting the expression
"Second Schedule"; and
(b) inserting the follorvingPart A-
"Part A" immediately afterthe title
nerv Part immediaiely after the new
\
I 521\c11 1' y-51r b y t
1l i u r.t.'
_ l.a g i t.l u t i t t n, 201 -l
l,Alt'l t] r.7( lXd)
I. RF.QLIII{F,Ml1N'l'S lioR ISSI'lAN('F. OF RF.(.iIONAL FIXF'l) lN('OMh"SF,('I.JRI IIiS
Iit,IC I BI I,I'I'Y 1'O ISSTJ F]
l:lrgrbiliry to rs\uc An offer ol' f rxccl irrcornc securitics approl'ed fbr issue in ntore than otte
juriscliction irr L.last African Conrrrrurtity shall be considered as a regional
ol'fcr of frxctJ incotne securitics arrd shall corrrply rvith the relevant
rcgulations, rurles or guictclines attachittg ttt issuers o{'securities to tlteptrblic in any jurisdiction in rvlticlt tlte issue has bee n rnade'
Approrirl crrtrty l'hc issuer slrall clcct a prirrrary juriscliction irt rvhiclt tlte isstrcr slrall Iodge
the prospcctus.'l'hc issucr shall sirrrultarteously'subntit the prospL'clLls to
thc rcgrLlators ol'otlrcr jurisclictions u'lriclt the isstrcr proposcs to raise-
capital tbr approval, 'Ihe prtlccdurc lor approval is as set oLlt ill itellt II oftltis Part'
ISSUI'Rtssrrcr 'l'lre issucr shall be an cntity'irrcorporated or rcgistercd as a lbreign entity
in alljurisdictiotts where the ofl'cr is to be ntade.
Incorporatiottsl lrl u s.
Shurc ('flpitrl
Nct Asscts
I'}rol'itability
Exemption ofSPVs
Whcrc the issuer is uot a conlpany, thcn the issuer shall be duly
cstablished ttttder a writtert larv or recognized under an internatiorral
treafy.
The nrininruut paid-up share capital slrall be the local currency equivalent
of Un ited States ol' Arrterica do I larstt50'000.
'['he net assets shall be tfie local currency equivalent of United States ofAmerica dollars 1,700,000.
All sovcrcign lrorrowers, qtrasi-sovcreign borrowers and treaty
orgarrizations are exentpted fionr the share capital and net assets
requ irern ents.
An issuer, other than a special purpose vehicle, shalI be required to have
reported profits in at least two of the previous three years preceding the
offer.
Provided that-
the regulatory authorities shall retain the discretion to
grant a waiver in circumstances where decline inprofitabiliry is not considered to be a cdnsequence of the
fundamentals of the comPanY'
A special purpose vehicle without a track record may raise capital and
such special purpose vehic[e shall be subjected to disclosure requirements
on performance projections, risk factors and mitigations and on the
I
Kert.y'et Srtbtitliur.t' Legi.tlution, 2() I .l
availability ol financial inlbrmation to assess any projections made.
An issuer that is an SPV shall be cligible for approval to rnakc otl'ers toinstitutional or sophisticatcd investors but not unrcstrictcd offcrs to thcpub lic.
ISST,JE'Ihe minimum size of a regional fixed incomc security issuc shall be thclocal currency equivalent of United States of Arnerica dollars850,000.
An issucr may raisc funds in any jurisdiction in the region withoutrestriction on the jurisdiction wherc procceds arc to be uscd subjcct todisclosure of that fact in thc information mcmorandum and subjcct toobtaining the neccssary exemptions on exchange controls, if rcquircd.
An issuer shalldctcrminc thc currcncy or currencies [or the issue.
An issucr may sccure crcdit enhancemcnt:
Provided that whcrc crcdit enhanccment is to be provided, thefoll<lwing rcquiremcnts shal I apply-
- In the casc ofa guarantcc:
-the guarantor shall hc a bank, duly liccnsed non-bank financialinstitution, or recognized intcrnational llnancial institution;
-a lettcr ol no objcction shall bc provided by the crcdit enhancer'sprimary regulator (other than in the case of an internationalfinancial institution);
-thc guarantor shall be rcquired to havc a valid crcdit rating,
l'hc Authority may prcscribc any conditions or inlbrmation requircmentsapplicablc to any other [orm of credit cnhanccment.
Notwithstanding that an issuer has madc a regional fixed income securityoffer, the issuer, may, at any time, raise an additional amount in any oneor more jurisdictions in accordance with a further pricing supplementupdating the disclosures in the rcgional information mcmorandum, ln allevents, where a green sho6 option is availablc, it shall be made to allcountries where the offer has been made available,
FTNANCTAL DTSCLOSURE REQ.UtREMENl'S
Where an issuer has a track record, the following financial statemcntscomplying with International Financial Reporting Standards for the threeyears preceding thc offer shall be required-
-Audited accounts not morc than six months old at the time of theoffer;
-Where the audited accounts are more than six months old they shallbe supported by management accounts.
-Management accounts shall be prepared to a date wrthin one month
t.525
lssuc sizc
I)cnotrinutiott ol'Ol'lcr andnpplicution ol'
Iunds uutsidc tltc
,iurisrlictiort rv ltcrcl ttnds arc ratsctl,
('rcditF,n hn ncc ntc tt t
Arlditionul offers,
FlnrncinlStltsmentDisclosurc
I
\
1526 Kenya Subsidiary I-egislation, 201 3
of the date of the offer.Financial Ratios The financial ratios requirements applicable to national fixed income
securities offers shall not be applicable to regional fixed income securities
offers.
Cash florvprojcctions.
Disclaimcrstatcmcnt.
Listrng.
An issuer shall provide proforma financial statements which cover a
period of not less than three years from the date of issue or where the
fixed income securiry has a shorter maturity period, the life of that fixedincome security.
All prospectuses for regional offers of fixed income securities shall
contain the following statement on the front page-
"As a matter of policy, the approving regulators assume no responsibilityfor the correctness of any statements or opinions made or reports
contained in this prospectus. Approval of the issue or listing is not an
indication of the merits of the issuer or of the securities"
Listing shall be mandatory for all regional offers of securities which are
to be offered to the public or a section of the public:
Provided that this requirement shall not apply to offerstargeted at institutional, sophisticated or professional
investors.
An issuer who is not eligible for listing may be approved to issue itssecurities to sophisticated, institutional or professional investors and the
securities may be approved for trade on regulated Over the Counter(OTC) markets.
"An institutional", "a sophisticated" or "a professional" investor means
for the purposes of iegional fixed income securities -
(a) any person (icensed under any securities legislationapplicable in the East African Community region:
(b) any autfiorized or a recognized scheme by any securitieslegislation applicable in the East African Community region;
(c) an individual, either alone or with any of his associates on ajoint account, having proven liquid assets in excess of an
amount as may be prescribed from time to time, or itsequivalent in any foreign currency;
(d) any company or partnership having proven liquid assets inexcess of an amount as may be prescribed from time to time,or its equivalent in any foreign currency.
Trading,clcaring An issuer of regional fixed income securities shall comply with theand scltlcmcnt' requirements relaiing to trading, clearing and settlement on iny exchange I
\I
Ke nya Su b s icl iary Leg i slation, 20 I 3 t527
on which its securities are traded or in line with the rules for the relevantOTC market as well as those of any central depository through which itssecurities are cleared and settled.
An issuer of regional fixed income securities shall maintain a valid credit Crectrt Ratrngs
rating for so long as the issue remains outstanding:
Provided that where an issuer has no track record or where thedebt is to be funded froni revenue from a specific project ordesignated cash flows, then the credit rating shall be in respect ofthe project or performance projections.
Only a credit rating agency with a publicly available Code of Conductguiding its ratings practices and which is in compliance with InternationalOrganization for Securities Commissions (IOSCO) Code of ConductFundamentals for Credit Rating Agencies (CRA) shall be eligible toprovide credit rating reports:
Provided further th'at a credit rating agency which complies withthe IOSCO CRA code Shall not be required to be registered in
.any East African Community jurisdiction to be eligible toprovide credit rating reports.
All Information Memoranda for regional offers of fixed income'securitiesshall include a cautionary statement with words to the effect that-
"A credit rating is not a recommendatiqn to apply for the securities onoffer or an assurance of performance of the offer or or the issue andinvestors should exercise due diligence and use the rating only as one ofthe considerations in making their investment decision."
An issuer of regional fixed income securities shall in respect of any issuer Professionat
of securities comply with the following requirements relating to Partres.
professional parties.
Transaclion Arranger, Sponsoring Stockbroker or Plucing Agenl:
Appoint a transaction arranger, placing agent ora sponsoring stockbrokerwho shall be a corporate body licensed to carry out such function by atleast one East African Communiry Partner State regulator dnd hasaffiliates in all regional jurisdictions where the security will be issued.
Accountant's reporl
Appoint a reporting accountant for the issue who shall be in compliancewith all the requirements of their professional bodies. The reportingaccountant shall be a firm registered in any East Africa Communitycountry with affiliates in all East African Community countries.
Legal Opinion
Appoint a legal adviser who shall be in compliance with all, therequirements of their professional bodies. The legal advisers shall be a
firnr rcgistcrccl irr arry I:ast Afiicarr Coruntuttitv cotlttll\ rvitlr al'l rliates itt
all East Aliican Conttttultity cotlntrics.
l' u.t' i ttg u n tl llt' c' t' iv i rrg, Bu rt k
Appoirrt payirrg nrrcl rccciving banks rlltich shnll lrc [ritttks liccrtscd irl thc
Irasr Aliicrirr C'orrrrrrunity countrics w'lte't'c titttds ltrc [rcitrg ritisctl. 'l'ltc
isstrcr slra I I clctcrttt irtc tltc rttrtrtbct' ol' rccc'iv iltg [ritlrks'
('rrrrlrrruous An issucr ol'a regional llxcd incoutc scctrrity sltitll [rc rcqtrircd to cottlPlrdiscltrrttrc rvith thc continuous disclosurc otrligatiorrs npplicirtrle to ot'l'r"rs ot't'ixcd(lhlrgitlr()rr\
irrcorrrc sccrrlitics irr all .lurisdictiorts itt rvhich it Itns raisr'd caPititl liottt
tlrc ptrblic.
Where thc rcgiorral ljxcd inc0urc sccurity is listctl oll ollc oI llloIc
sccuritics cxcharrgcs or is trirclcd on uny rcgttlrttcr.l rttittkct rvithirt thr.'liitst
Atiican ('orrrrrrunity lcgiou, it shall coruply rvitlt tltc col'llilltlotls
obli-eati0ns iurposcd lly that sc.crrritics cxcltartgc or lllilrkct,
'l'5e issucr is ellligcd to avnil to irrvcstots irr all.irrristlicliorts itt rvlticlt tlte
issucr lras ritiscd capitirl. nll rclcvurtt iulbrnration lilt'propct'lppritisitl trl'thc l'irrancial positiorr ol'thc isstrcl in nrr cl'lcctivr"' rutrl tintcly l'l'lllllllcr.
'l'he tttitttcrs strbjcct to contittttotts rcporting ittclttr'lus'
-updatcs on rtttittg rcpol'tsi
-intcrittt I rnattcial reportittgl
-irucl itccl l'inanc iul rcPorts.
l)cnutriss, An issucr wlro firils to courply witlr the cotllinttotls disclostrrc otrligatiorts,ncluding larilure to provide arry reqrrircd intirrtttatiotl to all iltvestors
simultancously. is liablc t'or [rreach ol'tltc c()tltilltlotls rcportirtg
obligations in any jurisdictiorr irr whiclr suclt otnissiort occtll's itttd tltc
applicablc sanctions shall apply'
l)ispulc rcsolurit)n,l'he law in f'orcc in tlrc juriscliction whcre fl catlsc ot'itctiott ariscs sltall
apply in case of'a cl ispute lretween an investor ilnd illl itttctttlediitry ot
betwecn irn issucr and an intcrrnediary. l'hc ittlorntation tttcntorattdtttn
shall spccity thc applicable law and rrrode ofl dispute resolution rvltcre tt
dispute involvcs the isstter aRd all invcstor,
[)nymenrot' Evaluation l'ccs shall trc paid at thc tinte of applicatiott to tltc prirnarycvnluutionfecs regulator, lt shall be the duty oIthe primary regulatot'to transf'cr to thc
other regulators their share ol'the evaluation t'ees paid. ln the event of a
rejection, thc issucr shall forl'eit twenty live pcr ccnt of tltc evaluation f'ec
paid,
i
II
It.
I
,(crr ltr .\rrlr,rlr I t u r v l,a g t ; I u t r r t t t, 20 I -l l-529
lN ITORMAI'ION MLMORAN DU M AI'PROVAI- PROClrl)[ j I{l: ljOI( ISSt IANCI:OIr Rt(; IONA L F'l X F.D INCOMI: SI-CI.J I{l l'l l:S
l-he issucr shall submit. for approval. a drali ittlbrnratrort tnenrorattduntacconrpanied by an evaluation fce to all l:ast Aliican Parlrrer Statc regulators in
which it inlends to raise capitalindicating thc jurisdictiorr that thc issucr desires
to be the primary approving jurisdiction (printar;" rcgulator)
Where an application has hccr] ltidged that is inconrple'te or unnrcrrlorinus rrb
initrc as a regiorral llxcd rnconrc securitl,, thc prinrary rcgulator shall hal'c thcdiscretion to rejcct the applic.rtion in wholc and infclrur the otltcr resulators ofsr.rch rejcction and thc rcasons thcreol'. In the event of a rcjcctron and thc issuerwishes to proceed urth the issuance. the issuer shall be rccluircd to lodgc theapplication alicslr irr all _turrsdictions and bc liable to pay an) application.costsattaching tltcrcto.
l:ach rcgulator shali apply rhe eligibility and disclosure recluiretttcrrts lbrissuarrcc ol rcgional fixed incorne sccurities for purposes of'assessirrg the
applicatiorl.
ln thc event tlrat any regulator sceks to intcrpret the applicabilitl ot' anyprovision ot' the eligibility and disclosure requirements, that regulator shallotiicially conrnunicate with all other regulators to determine the manner lnrvhich that matter willbe addressed and the rnajority opinion sllall prevail.
Where a rcgulator has communicated with the other regulators in accordancewith paragraph4, the reguli.tors consulted shall revert within five working dayso[the receipt of communication and the final position shall be communicated tothe issuer within ten days and copied to all regulators.
The other regulators shall submit any comments on the infbrmationmernorandum to the primary regulator for consolidation for communication tothe issuer. Where the primary regulator proposes to exclude certain mattersfrom communication to the issuer, it shall communicate its intention to the otherregulators, which action shall be subject to the timelines for communicationunder paragraph 5.
1'he primary regulator shall, upon completion of its reView, submit the same forconsideration and approval by its relevant authority in accordance with its
applicable procedures for approval of offers to the public:
Provided that the submission shall not be made later than five working daysfollowing the receipt of the complying document from the issuer.
8. In the event of an approval, the primary regulator shall issue a letter to all otherregulators communicating its approval and confirming that the issue complieswith the regional criteria.
9. ln the event of the grant of an approval of the issue, the primary regulator shallprovide a copy of the letter of approval and details of any conditipns imposed on
that approval to all the other regulators. This approval will not be
2
5.
6.
l 530 Kenya Subsidiary l,egislation, 20 1 3
cotnmunicated to the issuer pending circulaticin and determination by the otherregulators.
10. Upon receipt of a copy of'the approval letter from the primary regulator, everyregulator which is in receipt of the information memorandum shall submit thefinal Information Memorandum together with the primary regulator's approvalletter to their respective authorities for consideration and determination:
Provided that such submission shall not be made later than five workingdays following the receipt of the primary regulators decision as per theapproval timetable set out in item III of this Part. .
In the event that approval is declined, the primary regulator shall provide a copyof the reasons for such decision to all other regulators for their consideration.The primary regulator shall speciff where the approval has been withheld forreasons other than those in the criteria set down for regional issues. Where arejection occurs for reasons other than failure to comply with the regionalguidelines, the other regulators shall retain full statutory discretion to approve orreject the application placed before it notwithstanding any approval or rejectionby the primary regulator.
For the purposes of coordination, the approving regulators shall engage with anylisting exchange in their jurisdiction to ensure compliance by the issuer with anyreporting and disclosure obligations issued by the regulator and the securitiesexchange.
In so far the issuer has raised capital in a particular jurisdiction, the relevantregulator shall be responsible for the supervision of that issuer in respect of thatissue.
14. Where an imbalance in information disclosure occurs, the regulators shallcoordinate any action with any relevant securities exchanges or tradingplatforms on which the securities in question are traded to mitigate the negativeimpacts of such information asymmetry on investols.
15. Any changes or interpretations made to this Schedule or the Approval Procedureshall be published by all the jurisdictions.
III. APPROVAL TIMETABLE
T: Complying application lodge$ with all the regulators.
T+ l0: All comments from regulators lodged with the primary regulator.
T + l5: All areas for consultation for interpretation resolved.
T+ 20: All issues communicated to the issuer.
Y (date issuer reverts with complying documents) + l0: Primary regulator boarddetermination (primary board may approve with conditions) and issues leter ofcomfort.
Y+ 15: All other regulator's board determination (decisions may be conditionalindicating matters to be addressed).
Y+ l7: Communication of regulator's decision to issuer.
"day" means a business day.
I l.
12.
13.
Kenya Subsidiary kgislation, 2013 l53 t
6. The principal Regulations are amended by inserting thefollorving new Schedule immediately after the Seventh Schedule-
EIGHTH SCHEDULE (r.68)
REQUIREMENTS FOR OFFER OF SECURITIES USING A BOOKBUILDING PROCESS
PART I
PRELIMINARY
l. "Book building" means a process undertaken by which a
demand for the securities proposed to be issued by an issuer iselicited and built up and the price of such securities is assessedfor the determination of the quantum of such securities to beissued.
. "Book building portion" refers to the pool of securities that willbe available for offer and allotment to the participating entitiesthrough the book-building process and which haye beensegregated from the securities to be.offered at a fixed price.
"Book runner" refers to the primary coordinator of the bookbuilding process in debt and equity offers.
"Participating entity" means a professional investor asprescribed by the Authority.
"Regulations" means the, Capital Markets (Securities) (PublicOffers, Listing and Disclosures) Regulations, 2002.
PART II_BOOK BUILDING PROCESS
2. 'The portion of securities offered to the public that are to be Bookbuildingportionavailable for the book-building process shall be identified as the"book building portion" in the information memorandum.'
3. The balance of securities constituting the offer to the public, 'Fi*ed price portionexcluding the book building portion, shall be separatelyidentified as fixed price portion in the informationmemorandum.
4. A complying information memorandum shall be lodged with Approvat of thcand approved by the Authority prior to the opening of the book information
building process and shall disclose, in addition to all other mcmorandum
requirements:
(l) the size of the issue and the amounts to be raisedthrough.the book buildiag and fixed price portions;
(2) .the criteria for bid consideration and selection in the
l\.12
.\,'po,IliltcIl ol lllchr tk ttlrrrcl
('trcrrl,rtrorr olItl()rnl,t(l(|nntctt rrandttrtt
)
Rccords ol ordcrs ort 7book htttldtttu ltor lrrrrr
[)ctCnnrn,lll(rn ()l lltcol lcr prreq
l'rrcc lur thc oll'e rshall bc thc sanrc
lssucr to uttsrrreadcq uatearrangcnlenls arenrade to securepaynrcnt
Allotnrcnt lbr thebook burlding portroncategory.
Responsrbrlrty of thebook runner.
Securities to be
off'ered through bookbuildrng
pncc'9.
10.
A crt t rr .lrri.r, rc I t tt rt Lt g r t I tt I r r t t t. 2 ( ) I -l
book [rtrrldins l)r(x'css;(.!) thc tlrrratiorr ol tlrc book builcling l)crio(l;
(-+) lhc rrclhorl and ltnlccss ol bicliling:
r.5 t llrc narrres iln(l addrcsscs ol' thc [)(x)k nulncr orsr rrtlrcatc tncltrbcrs ()pcrating thc biclcling tcrrnirlrls lirr\ul)nltttt)!l hirl\
I'ror rtlctl tlrc rrtlirrrntrllon tne ln()riul(lutn shall bc altpror crlpcnilrrrr.r rrrclusiorr ol tllc l)ncc ol'thc ol'l'cr and thc qu.ultunl ()l\ccuritic\ to bc rssucrl.
l'hc llook runtrer \hilll hc rrorninittccl lrr the issucr l'ronr anlotrg\tl)crs()r)s \\h() ilrc rlUirllltcrl t() ircI as transitcttotl aclriscrr ttrtrl:lrall bc itlcntilicd ils sl,tch irr tlrc inlilrrnation lnclnorarrtlrrrrr.
'l'ltc inlorrrration rncrnorandutn al)pro\ ccl b1 thc Authorrtr :hllltrc errculutcrl ht thc trottk runrrcr kt thc participatirrg elltittc\ln\ rtirrg olll'rs lor tlrc sccuritics in rcsltcct ol'thc hook builtlrrrgportitrn.
'l hc [r,rok :"unncr ()l) rcceil)t ol'thc ordcrs shall nraintair) a rcc()r(lrrl'lll thc particiltirting cntitics'nttncs and tlrc nunrber ol:ccurrlics orclcrcd and thc pricc at n hich thc l)articipatillS cntit\is ollcrirrg to suhscribc to sccurities undcr thc book builrlirrgl) l'( )cCsS.
Al thc closc ol'thc bouk burlding l)criod and lirllorving a revic\\ol thc orclcrs rcccivccl in accordancc rvith the critcria cliscloscdirr lhc inlirrnrirlion tncrnorundutn, thc book runncr ancl thc issucrslrirll tlctcrrninc thc pricc at rvhich thc securities shall bc ol'fercdto thc public.
I hc issuc pricc fi)r the book building porl,ion and I'ixedl)ortion catcllorics slrall bc lhc satnc.
'l'hc issue r ancl book rullne r shall ensurc that adcqualeilrrangctncnts lbr lirtrds arc rnadc by all participating enlities tosr.rpport any ol't'crs lodged during the book building proccss.Thc naturc ol' the arrangement rcquired of participating entitiesshall bc discloscd in the inlormation lnetnoratrdum.
J'he infbrmation memrtrandum shall indicate one clate ofallotmcnt rvhich shall bc dcerncd date of'allotmcnt I'or the boththc book building and fixcd price portions.
I-lrc book runner shall have prirnary responsibility for the.bookbuilding process.
An issuer may offer up to one hundred per cent of the off'ersecurities through a book building process subject, rvhereappropriate, to compliance rvith eligibility requirements relatingto listing.
ll.
t2.
13.
Kc tt t'u Su b s trl t urv l,c.g t t lrt I tr ttt. 2 ( ) I .l t5.l.l
l.l. 'l'he irrlornratiorr rncrnorandtrrn ma1' prcscribc a l'ltxlr pricc or att Intltc.tlton ol'llurtr
rrrtlicatir c l)ricc bancl hlr thc book huilcling proccss ancl shall prtcc ttr prtcc brtntl
givc tlre basis lilr thc rlclcrrnination ol'thc satnc.
l-5. ()n establishrncnt ol thc <ll'l'cr pricc, thc (plantuln ol sccuritics to l)clcrrnrnltron ()l'lhc
hc ol'l'crccl shall bc clctcrrnirrcrl bascd on tlrc issuc sizc rlivirlccl nttttthcr ttl \cctrrrlrc\
h1 thc prrcc *,hich has becn tlctcrrnirrcd ltr hc .llcrctl
l6 No inccntivc. rvhcthcr in cirsh or kincl, shall bc paid to ittvcstors No t)arlrLrtrirtron
to parlicipatc in thc book building pr()ccss or thc ol'lcr tll rrrccrrlr\e\
sccrr ri t ics.
l1 On tlctcrrnirrirtron ol' cntitlcrncnts in thc book builcling procc\\ (unttttutttculton ol'
thc rrtrrnbcr ol sccurrtrcs rvhich cach participating clltit) is lo hc allocitlton ltr
all0catcd shall trc comr-nur)lcatccl lo thc rcspcctivc pilrliciputins parlre rl)atrnB crrlrlrc\
cntrl\ w'rlhir) 2-l ltours artd ir rclurtt on all allocatiorts shlll bc
rnatlc to tlrc Authoritl w'ithin thc santc pcriod.
Iu. 'ilrc inlirrrnati<ln rncrnrtrantltrrrt contirirtittg all clisclosurcs l(currlrltrorr ol lhc
rcr;urrccl trnclcr thcsc rcgulatiorrs inclrrclirrg thc pricc rtrtcl thc lltral tttl.rtttittttttt
rrurnbcr ol'sccuritics ol'l'crcil sltall bc icgistcrcrl rvith thc lil:'iilXlll,::ll,i""I{cgistrar ol ('ornplrrtics. { ,,rrrp,rrrrc,
I'AIt'I' III AI)I)I'I'IONAI, I)IS('I,OSIIRI:S
19. 'l.hc lollorr rng arlditronal clisclostrrc rcrlrrircrncrrts slrlll hc rnirtlc .\tldtlrott.rl
irt thc inlilrrnltiott tnctnoritrtcltrrn: dtscl.stttcs
(I) 'l'hc particulars ol's1 nclicatc tnctnbcrs tll tltc lrortk rtttlllcrrvhcrc lnorc thirn onc book runrtcr is irllptrintcrl.
I)rovitlccl that lhc rights, ohligittittns ittttl rcsltorrsibrlrticsol'cach shall bc clcl'inccl in a hinding agrccrncnl.
(2) 'l'hc lirllorving statcrncnt shitll hc givctr trnclcr thc'basislirr issuc pricc:
"'l'hc issuc pricc lras bcgn rlctcrmirred h1 thc issucr inconsultation w'ith thc book runncr, tln thc basis of'asscssrncnI ol' dcrnancl l'rorn thc participating cntiticslbr thc ol'l'crccl sccuritics by rvay ol' htxlk-huilding."
(3) 'l'hc lirlkrrvinB acc()unling ratios shall bc givcn undcr thchasis lilr issuc pricc lor cach of thc accttunting pcriodslirr rvhich thc I'inancial inlbrrnation is givcn rvhcrcapplicablc:
(a) Harning pcr share, prc-issuc, l'or thc last live ycars, as
adjusted for changcs in capital.
(b) Price earning ratio (I'}/lr), pre-issuc and comparisonthcrcof rvith indusl.ry IYE rvhcrc availablq
(c) Avcrage rctunl on nct-rvorth in thc last l'ivc years.
1534 Kenya Subsidiary Legislation, 20 I 3
Procedure tbrbiddrng
20.
(d) Net-Asset value per share based on last balance sheet.
(4) The accounting ratios disclose{ in the informationmemorandum shall be calculated after giving effect tothe consequent increase of capital on account ofcompulsory conversions outstanding, as rvell as on theassumption that the options outstanding, if any, tosubscribe for additional capital shall be exercised.
PART V_PROCEDURE FOR BIDDING
The method ,and process of lodging of offers during the bookbuilding process shall be subject to the following:
(l) Bidding during the book building period shall be openfor at least 3 days.
(2) Bidding shall be conducted on an electronically linkedtransparent system of computer ferminals.
Provided that the Authority may, in rvriting, authorizebidding to be conducted otherrvise than on an electronicsystem on a case bY case basis.
(3) The syndicate members shall ensure that at least one
electronically linked computer terminal is available forpurposes of bidding at all locations rvhere bids may be
submitted.
(4) All locations rvhere bids may be lodged shall be
specified in the information memorandum.
(5) Investors shalt place their bids only through the
syndicate members rvho shall be responsible forcnsuring that bids are only accepted from participatingentities.
(6) The investors shall have the right to revise their bids inline rvith the procedure to be prescribed in the
information memorandum.
Provided that rvhere the Authority has authorizedbidding to be conducted otherwise than on an electronicfacility, investors shall not have rights to revise theirbids.
(7) Bidding form-(a) There shall be a standard bidding form to ensure
uniformity in bidding and accuracy ofinformation.
(b) The bidding form shall contain informationabout the investor, the price and the number ofsecurities that the investor wishes to bid for.
(c) All bidding forms shall be serially numbered.
(d) The bidding form shall be dated and ttme
Kenya Subsidiary lrgislation, 201 3 I 535
21.
stamped prior to being issued in duplicate andsigned by the investor and countersigned by thesyndicate member, with one form retained bythe investor and the other by the book runner orthe syndicate member.
(8) At rhe end of each day of the bidding period the demandshall be displayed graphically on the computer terminalsfor the information of the syndicate members as rvell asthe investors and a record mainrained by the book runner.
PART VI_ALLOCATION AND ALLOTMENT PROCEDURE
In case of an under subscription in any category, theundersubscribed portion may be allocated to the bidders in theother categories in accordance rvith the allocation policydisclosed in the information memorandum.
The allocation of securities to investors under the book buildingportion shall bc determined by the issuer and the book runner iiaccordance rvith criteria explicitly set out in the informationmemorahdum.
Following the book building process-.
(l) The offer period lbr the fixed price portion, shall openrvithin -5 working days fiom the date of closure ofbidding; and
(2) The fixed price offer shall remain open for a period of atleast l0 rvorking days.
24. The investors rvho have participated in the book buildingprocess shall not bc barred from participating in the fixed priceportion of the ol'fer.
PART VII-MAINI'ENANCE OI. BOOKS AND RECORDS
25. The issuer shall open r.rvo different accourits for collection ofapplication moneys, one for the book building portion and theother for the fixed price portion category.
26. A final bbok of demand showing the result of the allocationprocess shall be maintained by the book runner.
27. l'he book runner, any syndipate member, participating entitiesand other intermediaries involved in the book building proc€ssshall maintain adequate records on the book building process.
28. The Authority shall have the polver to inspect the records,books and documents relating to the book building procdss.
Made on the lSrh June, 201 3.
HENRY ROTICH,Cabinet Secretary for the National Treasury.
Allocatron in case ofunder subscrrption.
Allocatron crrteria tobe disclosed
Perrod oflixcd priceoffer.
lnvestors elrgrble tomake applicatron inlixed price oller
Separate collectionaccounts
Book runner tomarntain the result ofthe allocation process
Records to bemaintained
Augority's power tdinspect records
22.
23.
t 5.1(r
(-tt,rlr()tl
l.N -5U/l0t I
Kcttlv Sttbtttlturt l,e,gtsluttrttt. )()I -l
l.t-.r;nt. N(lt't('l Nrl I l-ll'l{l: l't IIll.l(' l'l{( X t tRl:Ml:N'l n Nl) l)lSI{)Sn l- A("1'
(,\'rr. .1 r.,/ 2(X).5 )
lN l:Xl:R('lSIr ol'thc p()\\crs c()trl'crrc(l [r1 sccti<ln l-10 ol'thcJ'rrhlrc l)roetrrcnrcnl urrtl I)rsltosal Act. thc ('irbinct Sccrctar) to thcNirtirrlrirl'l'rcustrr\ nrtrkcs thc. l ol lorr i ns lLcgrrlatirlns:
'llll'. I'lllll.l('l'RO('trRl:Ml:N'l'ANl) l)lSl'OSn l. (l'>Rlrl-'llRliN('11A N I ) l{ ES 1-.1{V A'l'lON S) ( n M IrN l) M l:N'l') R l-.( i t I l .A'l'l( )N S. 20 I 3
I 'l'hcsc l{cgulatiorrs rnal bc cilcrl trs rhc l'ublic l'rocurcrncrrland l)isposal (Antcntlrncutl llcgulirtiorrs. 20 l.l.
2. Rcgulation 2 ol'thc l'rrhlic l'rocurcntcnl and l)isl)osal(l'rclcrcncc arrcl Rcscrr ilti()ll\) l{cgtrl.rliorrs. 20 1 I . in llrcsc Rcgulalionsrcl'crrctl to irs "thc;rrincipal Ii,cg,rrlutions". is amcnrlctl b1 inserting thcIollorr ing ncrr clcl'initions in llro;tcr alltlrabctical sciltrcncc
"l'rrrniturc" irrclrrclcs scrccrrs. lirctl bcrrch cutrchcs, g,arclcrrlrrrnrturc, rr artlrobcs arrcl Iight l'rrrrriturc:
.1. 'l'hc princrpal l{csulutiorrs ilrc irrncnclccl b1 clclctingrcgulation(tantl strbslitutirrg thcrclirr thc lirllt;rving ncrv rcgulatiorr -
6. (l) Small tlr rnicro cntcr;trisc rtr a tlisarlvunlagcdgroup w'ishing to ltarticipatc in ltublic procurcnrcnt shallappll' I'or rcgistration rvith rhc Natirlrral 'l'rcasurr or thcrcspcctivc count) lrcusurl N'ith rr hich thcl opcralc and arclocatccl in thc lilrnt scl out irr tlrc ljirst Schcdulc t() thcscRcgu lutions.
(2) A!l'lists ol' rcgistcrc(l cntcrpriscs I'rour lhcnational and courrll'lcvcls shall hc subnrittcd to thcAu(hority lilr consolidation and pubtication.
4. 'l-hc principal Rcgulations arc arncndcd by dclcting rcgulationl2 ancl substituting thcrclbr thc l'ollou'ing nov rcgulation-
12. I-irr purposcs ol'scction 39(+Xd) ol'thc Act. publiccntitics shall grant crclusivc prcl'crcncc lo localcontractors o[t'cri n g-
(a) rnotrlr velriclcs, plant and cquiptncnt that arcasscmhlecl in Kcn1,a;
(b) ctlnstruct.ion , material and othcr matcrialtusecl in thc trtrnsmission and conduction ol'clcctricity ol'rvhich such matcrial is madc inKcnya; .
(c) I urniture, tex tilcs. litodstul'l's and o(hcrgoods rnadc or locally available in Kcnya.
Kenya Subs idiary I-e gislation, 20 I 3 t537
5. The principal Regulations are amended by deletingregulation l3 and substituting thercfor the following new regulation -
13. For the purposes of section 39(8)(aXii) of the Acr,the threshold below which exclusive preference shallbe given to citizen contractors, shall be the sum of-
(a) one.billion shillings for procurements in respectof road works, construction materials and othermaterials used in transmission and conductionof electricity of which the mateoial is made inKenya;
(b) five hundred million shillings for procurementsin respect of other works;
(c) one hundred million shillings for procurementsin respect of goods; and
,(d) fifty miltion shillings for procurements inrgspeci of services.
6. The principal Regulations are amended by deleting rcgulation'19 and substituting therefor the following new regulation -
19. (l) For. the purpose of ensur[ng maxirnumparticipation of citizen contractors, disadvantaged groups,small and micro- enterprisesin public procurement, procuringentities may unbundle goods works and services in practicablequantities pursuant to section 3l (7) of the Act.
(2).For greater certainty; a procuring entity in unbundlingprocurements in paragraph (l), may be lot goods, works orservices in quantities that arg riffordable to specific targetgroups participating in public procurement proceedings.
7. The principal Regulations are amended by inserting thefollorving nerv Regulations immediately after regulation 30-
Budgctary 31. (l) A procuring entity shall allocate at leastRcscrvations' thirty percent of its fro"u.iment spend for thepurposes procuring goods, works and sdrvices frommicro and small enterprises owned by youth, womenand persons rvith disability.
(2) For the purpose of implementing paragraph( I), a procuring entiry shall implement therequirement through its budgets, procurement plans,tender notices, contract alvards and submit quarterlyreports to the Authority.
Qualification for 32. For the purpose of benefiting from
lJ:jilff"il:r".".. pr"["r"rce and reservations schenes, atr e4'terpriseolvned by youth, lvomen or persons rvith disabilitiesshall bea legal entity that-
I
i
1538 Kenya Subsidiary Le g islation, 20 I 3
Facilitation forfinancing of localpurchasc or scrviccordcrs.
Prompt paymcnts forpcrformed contracts.
(a) is registered with the relevant governmentbody; and
(b) has at least seventy percent membership ofyouth, women or persons with disabilitiesand the [eadership shall be one hundredpercent youth, women and persons withdisabil ity, respectively
33. A procuring entity Shall facilitate financingol enterprises owned by youth, women or persons
with disabilities that have been awarded contracts, by
authenticating their notifications of tender awards
and local purchase or service orders and
subsequently entering into an agreement with the
relevant financing institution with conditlons that
shall include paying the contracted enterprise
through theiraccount opened with the financier'
34.(l) For the purpose of ensuring sustainedgrolvth for enterprises owned by youth, women orpersons with disabilities, procuring entities shall
make prompt payments for all performed contracts
through electronic media where possible and shall
not delay beyond thirty days.
(2) Where delay is inevitable, a procuring
entity shall make at least fifty Percent Part-paymentand shall give a written explanation for the delay to
the enterprises referred to in paragraph (l)'
(3) Where delay of payments for worksperformed are likely to happen, a procuring entitymay facilitate invoice discounting arrangements witha financial institution for the purpose of advahcing
credit to the affected enterprises stated in paragraph(l).
Sourcinqsupplics to 35. For th.e purpose of ensuring SustainablecitizcncontractorsbY promotion of local indUstry, a procuring entity shall
lntf'Ital:nat haue in its tender documents a mandatoryrenocrcrs.
requirement as a preliminary evaluation criteria forall foreign tenderers participating in internationaltenders to source at least forty percent of theirsupplies from citizen contractors prior to submitting'a tender.
Made on the lSth June, 2013.HENRY ROTICH,
Cabinet Secretary for the National Treasury.
t
I
Kenya Subsidiary kgislation, 20 I 3 I 539
LEGAL NoTICE No. I I5
CAPITAL MARKE-IS ACT(Cap.485A)
IN EXERCISE of the powers conferred by section l2 ( I ) of theCapital Markets Act, the Cabinet Secretary to the National Treasury,makes the follolving Regulatibns;-
CA PITA L MA RKE-TS (CORPORAT E GOV ERNA N CE) ( MA RK ETINTERMEDIA RIES) (A MENDMENT) REGU LATIONS, 20 I 3
l. This Regulations may be cited as.the Capital Markets Ciution.(Corporate Governance) (Market Intermediaries) (Amendment)Regulations, 201 3.
- 2. Regulation 3 of the Capital Markets (Corporate Governance) Sub.rrg.(Market Intermediaries) Regulations.(hereinafter referred to as',theprincipal Regulations" is amended in paragraph (l)(b) by inserting theword "third" immediately after the lvord .,one".
3. R.egularion 4 of the principal Regulations is amended bydeleting paragraph (b) and substituting rherefor the following newparagraph-
"(b) has undergone a relevant trainihg on corporategovernance:
Provided that a market intermediary shall engure thatany person appointed as a director undergoes corporategovernance training within six months of appointment."
4. Regulation 13 of the prirrcipal Regulations is amended inparagraph (2)(f) by deleting_the word "with" appearing inxnediatelyafter the lvord "compliance". '
5. Regulation 15 of the principal Regulations is amended bydeleting .paragraph (3) and substituting therefor the following newparagraph -
"(3) The shareholders of a-.market intermediary shallensure that the market intermediary'applies to the Authoiity forapproval of any acquisition or transfer ,if the acquisition ortransfer resulrs to a person being entitled to exercise control ofover iive per{ cent or more of the share capital of thatintermediary."'
6. Regulation 17 of the principal Regulations is amended inparagraph (l) (f) by deleting the words "by presenting relevant boardpapers".
t
I
7. Regulation 20 of theparagraph (4) by deleting thetherefor the expression " 17 (2)."
8. Regulation 36 of rheparagraph (l) by-
principal Regulations is amended in
.expression "16(2)" and substitu(ing
principal Regulations is amended in
(a) deleting the rvord, "il1s5e" ; and
(b) inserting the expressions "13, l5(5), 18, 21,22,23'24 (6)
and 30"-immediitely after the rvord, "r€gulations"'
Made on the l8th June,20l3'HENRY ROTICH'
Cabinet Secretary for the NationqlTreasury'
pRtt rrED AND PUBUsHEo 6v rHe covenNMENT PRINTER' NAIItoBI
