Kenya has repealed the fixed statutory ownership cap that has applied to stockbrokers, investment banks and fund managers since 2009, under the newly enacted Capital Markets (Amendment) Act, 2025.
The repealed provisions section 29(4) to (7) of the Capital Markets Act barred any person holding more than 25% of issued share capital, voting rights, board appointment rights, or aggregate dividend and interest entitlements from serving as an executive director or in senior management at a licensed intermediary, with narrow exemptions for regulated or sufficiently diversified corporate shareholders.
In their place, the amendment introduces a new section 29(3A), giving the Cabinet Secretary responsible for capital markets acting in consultation with the Capital Markets Authority the power to prescribe ownership limits through subsidiary regulations. These limits can vary by category of licensed entity, marking a shift toward more risk-tailored regulation rather than a blanket removal of oversight.
A new section 40 provides transitional protection: existing licences and approved shareholding structures remain valid until the new regulations are issued, with the CMA continuing to license under the current framework in the interim.
The practical effect for the market is that acquisitions of controlling stakes in licensed intermediaries are no longer bound by the old one-size-fits-all threshold, potentially easing the path for strategic and institutional investment into the sector. However, with the actual regulations yet to be published, market participants face a period of uncertainty and are advised to build regulatory contingencies into transaction timelines until the new thresholds are confirmed.
Associate, Corporate & Commercial Law
