The Privatisation Bill, 2023
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Proposed
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Public Review
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Debate
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Executive
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Final
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Establishment of the Privatisation Authority
Establishes the Privatisation Authority (Section 8) as a body corporate responsible for advising the government on privatisation, facilitating policy implementation, and executing specific privatisation proposals in accordance with the approved programme.
60-Day Parliamentary Ratification Window
Under Section 21, the Cabinet Secretary must submit any approved privatisation programme to Parliament for ratification. Parliament is required to make a decision within sixty (60) days of receipt, failing which the programme is deemed ratified after ninety (90) days.
Three Approved Methods of Privatisation
Restricts the methods of privatisation (Section 28) to:
- Initial Public Offering (IPO) of shares;
- Sale of shares by public tender; and
- Sale resulting from the exercise of pre-emptive rights.
Any other method must be determined by the Board and approved by the Cabinet Secretary.
KSh 5 Million Penalty for Falsifying Valuation Info
Under Section 63, any person who falsifies material information, provides false or misleading valuation details, or inappropriately discloses insider information commits an offence. Upon conviction, they face a fine of up to KSh 5 million, imprisonment for up to two years, and payment of an equivalent amount of the gain made or loss incurred.
Dispute Resolution via a New Review Board
Establishes the Privatisation Review Board (Section 47) to hear objections and appeals from persons aggrieved by determinations of the Authority. Aggrieved parties may lodge objections within 15 days, with further appeals permitted to the High Court (Section 46).
Bill No.
No. 22 of 2023
Gazette No.
Supplement No. 76 of 2023
Sponsor
Kimani Ichung'wah
Background
The Privatisation Bill, 2023 seeks to repeal the Privatisation Act, 2005 (No. 2 of 2005) to address administrative bottlenecks and improve the efficiency and competitiveness of Kenya's public resources. The legislation aims to encourage more private sector participation in the economy, shift service delivery where feasible, reduce demands on government resources, and deepen the capital markets.
Key Amendments
- Institutional Overhaul: Repeals the Privatisation Commission and replaces it with the Privatisation Authority (Section 8).
- Streamlined Formulation: Directs the Cabinet Secretary for the National Treasury to formulate the privatisation programme, conducting targeted stakeholder consultations with experts, affected employees, and members of the public (Section 18 & 19).
- Exclusions: Specifies that this Act does not apply to county government privatisations, balance sheet reorganisations that do not dilute public shareholding, or secondary market share sales (Section 4).
New Obligations
- Valuation Requirements: Section 33 mandates that the Authority undertake a formal valuation for each public entity scheduled for privatisation, to be performed by a qualified independent person.
- Operational Restrictions: Once an entity is scheduled for privatisation, it is prohibited from letting assets dissipate, incurring new liabilities outside the ordinary course of business without written approval from the Cabinet Secretary, or making new capital investments without approval (Sections 34-36).
- Record Keeping: Scheduled entities must keep up-to-date business records, maintain a register of all fixed assets, and document all legal obligations (Section 38).
- No Credit on Sales: The National Government or public entity undergoing privatisation is strictly prohibited from extending credit or providing financing for the purchase of its shares (Section 37).
Penalties
- General Offences: Section 63 details strict penalties for individuals who falsify or omit material information in a privatisation proposal, provide misleading details that affect valuations, or disclose confidential insider information. Offenders face a fine not exceeding KSh 5 million, imprisonment for up to two years, and must repay an amount equivalent to any gain made or loss incurred.
Transitional Provisions
- Assets and Liabilities Transfer: All rights, obligations, assets, and liabilities of the former Privatisation Commission vest immediately in the newly created Privatisation Authority (Section 67).
- Lapse of Old Schemes: Any ongoing privatisation of entities originally published under Gazette Notice No. 8739 of 14th August 2009 shall lapse upon the commencement of this Act (Section 68).
- Staffing: Employees of the former Commission are transitioned to the new Authority under the same terms and conditions of service (Section 70).
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