Business Type: Collective investment schemes (CIS) are entities constituted as companies, trusts, or other legal entities prescribed by the Authority to mobilize savings in financial assets and enhance access to capital markets by small investors. They include mutual funds, unit trusts, investment trusts, special funds, and other specialized collective investment schemes. CIS offer professional management, economies of scale, and diversification of portfolios and risks. As of June 2025, total assets under management in CIS exceeded KES 596 billion, reflecting strong investor confidence and demand for professionally managed investment products. CIS are regulated under the Capital Markets (Collective Investment Schemes) Regulations, 2023.
Licensing Requirements: Must provide draft incorporation documents, memorandum and articles of association of the promoter and proposed fund manager, a business plan, one bank reference and two professional or business references, appoint a corporate trustee licensed under Regulation 31 of the Capital Markets (Collective Investment Schemes) Regulations, 2023, appoint a custodian (must be a bank or financial institution approved by the Authority), raise a minimum of KES 25 million (for investment companies), and provide proof of having raised the minimum amount before registration.
Government Fees: Application fees are approximately KES 100,000 to KES 150,000, with annual renewal fees of around KES 80,000 to KES 100,000.
Timeline: The approval process typically takes 60 to 90 days, accounting for the review of trust deeds, fund manager qualifications, custodian and trustee appointments, and compliance with CIS regulations.
Limitations: CIS must appoint approved trustees and custodians, comply with investment restrictions and diversification requirements, provide regular disclosures to unitholders, maintain proper governance structures, and adhere to valuation and pricing rules.
Penalties: Violations may result in suspension of new subscriptions, license revocation, investor compensation claims, fines, public censure, and prosecution for fraud or mismanagement.
Enforcement: The CMA monitors CIS operations, reviews compliance with investment restrictions, audits governance structures, ensures proper valuation of units, and protects investor interests through regular oversight.