The Capital Markets (Amendment) Bill, 2025
Status Timeline
Proposed
Active now
Public Review
Pending
Debate
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Executive
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Final
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Statutory Shareholding Caps Removed
The Bill deletes subsections (4), (5), (6), and (7) of Section 29 of the Capital Markets Act. This repeals the rigid statutory limits that restricted individuals or corporates from:
- Controlling or holding more than 33.3% of the issued share capital or voting rights in a stockbrokerage, investment bank, fund manager, or derivatives broker (or 25% in the case of listed companies).
- Appointing more than one-third of board members (or one-quarter for listed companies).
- Receiving more than 33.3% of aggregate dividends or interest on shareholder loans (or 25% for listed companies).
New Regulation-Making Power for Shareholding Limits
The Bill inserts a new subsection (3A) into Section 29, empowering the Cabinet Secretary, in consultation with the Capital Markets Authority, to make Regulations prescribing shareholding limits for different categories of licensed or approved businesses under the Act. This shifts the regulation of ownership structures from rigid statutory provisions to a more flexible, regulatory-based framework.
Bill No.
No. 30 of 2025
Gazette No.
Supplement No. 100 of 2025
Sponsor
Kimani Ichung'wah
Background
The Capital Markets (Amendment) Bill, 2025 addresses regulatory rigidities within the Capital Markets Act (Cap. 485A). Currently, Section 29 of the Act enforces strict statutory ceilings on individual and corporate ownership, board representation, and dividend distribution rights for licensed capital market institutions such as stockbrokerages, investment banks, fund managers, and derivatives brokers.
By removing these hard caps from the primary statute, the Bill aims to attract significant capital from larger investors who may have been deterred by the statutory restrictions on control and ownership. This change is intended to increase liquidity, support market expansion, and enhance the overall ease of doing business in Kenya's capital markets.
Key Amendments
Amendment of Section 29 of Cap. 485A
The Bill alters Section 29 of the Act through two main changes:
- Repeal of Subsections (4), (5), (6), and (7): These provisions placed strict limits on shareholding and control in market intermediaries. Under the repealed subsections, direct or indirect ownership was capped at 33.3% for standard market institutions and 25% for listed companies, with corresponding caps on board seats and dividend payouts.
- Insertion of Subsection (3A): This new provision transfers the authority to restrict or set limits on ownership to the executive. It authorizes the Cabinet Secretary, in consultation with the Capital Markets Authority, to draft Regulations prescribing shareholding limits tailored to specific categories of licensed or approved businesses.
New Obligations
Compliance with Regulatory Shareholding Limits
Market intermediaries, including stockbrokerages, investment banks, fund managers, and derivatives brokers, will no longer be bound by the static statutory caps under the main Act. Instead, they will be required to comply with the shareholding limits and structures that are subsequently prescribed in the Regulations established by the Cabinet Secretary and the Capital Markets Authority.
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