Business Type: Fund managers are entities that manage collective investment schemes (such as unit trusts and mutual funds), registered venture capital companies, and pension funds. They pool investor funds and invest them in diversified portfolios on behalf of unitholders or shareholders.
Licensing Requirements: Must be incorporated as a company, provide a detailed business plan, have paid-up share capital of not less than KES 10 million, maintain shareholders’ funds not below KES 10 million at any time, ensure minimum paid-up share capital remains unimpaired and is not advanced to directors or associates, maintain working capital not below 20% of prescribed minimum shareholders’ funds, limit unsecured advances to directors/associates to not more than 10% of prescribed shareholders’ funds, ensure bank overdraft does not exceed 20% of paid capital, and manage portfolios with an aggregate maximum value exceeding KES 10 million.
Government Fees: Application fees are approximately KES 150,000, with annual renewal fees of around KES 100,000.
Timeline: The approval process typically takes 60 to 90 days, accounting for the review of investment strategies, governance structures, and compliance with fund management regulations.
Limitations: Fund managers must appoint a custodian and trustee for the funds they manage, comply with investment restrictions and diversification requirements, provide regular reporting to unitholders and the CMA, implement robust governance and risk management frameworks, and ensure transparency in fee structures.
Penalties: Violations may result in suspension from managing funds, license revocation, investor compensation claims, fines up to KES 5 million, public censure, and prosecution for fraud or mismanagement.
Enforcement: The CMA conducts regular audits of fund managers, reviews investment portfolios for compliance with regulations, monitors performance and fee disclosures, and ensures proper governance structures are in place.