Business Type: Investment advisers are market professionals who undertake analysis and research on capital markets securities and advise investors on such securities in return for a commission. They provide financial advice but do not handle client funds directly.
Licensing Requirements: Must be incorporated as a company, provide a detailed business plan, have paid-up share capital of not less than KES 2.5 million, maintain shareholders’ funds not below KES 2.5 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 ensure the aggregate maximum value of all clients’ portfolios managed does not exceed KES 10 million.
Government Fees: Application fees are approximately KES 50,000, with annual renewal fees of around KES 30,000.
Timeline: The approval process typically takes 30 to 45 days, making it one of the faster licensing processes due to lower capital requirements and limited scope of activities.
Limitations: Investment advisers cannot handle client funds directly, must provide clear disclosures to clients, comply with codes of conduct, avoid conflicts of interest, and are limited in the total value of portfolios they can manage (capped at KES 10 million).
Penalties: Violations may result in license revocation, fines, public censure, and prosecution for providing misleading advice or breaching fiduciary duties.
Enforcement: The CMA enforces disclosure requirements, reviews compliance with conduct codes, and monitors the scope of advisory activities to ensure advisers stay within their authorized limits.