Business Type: Investment banks are full-service capital market firms that provide a wide range of services including advisory on offers of securities to the public, corporate financial restructuring, takeovers, mergers, privatization of companies, and underwriting of securities. They are non-deposit-taking institutions that can also engage in the business of stockbroking, dealing, fund management, and portfolio management services.
Licensing Requirements: Must be incorporated as a company, provide un-audited accounts for the period ending not earlier than six months prior to application and audited accounts for the preceding two years, submit a detailed business plan, have paid-up share capital of not less than KES 250 million, maintain shareholders’ funds not below KES 250 million at any time, maintain liquid capital of thirty million or eight percent of total liabilities (whichever is higher), and ensure minimum paid-up share capital remains unimpaired and is not advanced to directors or associates.
Government Fees: Application fees are approximately KES 250,000, with annual renewal fees of around KES 150,000.
Timeline: The approval process typically takes 90 days or longer due to the comprehensive nature of investment banking activities and the high capital requirements.
Limitations: Investment banks must meet high capital and governance standards, implement robust risk management frameworks, comply with advisory and underwriting regulations, maintain adequate liquid capital ratios, and ensure proper segregation of different business lines.
Penalties: Violations may result in license revocation, fines up to KES 5 million, public censure, suspension from specific activities, and criminal prosecution for fraudulent activities or market manipulation.
Enforcement: The CMA conducts comprehensive oversight including inspections, reviews of transactions, fit-and-proper tests for directors and key management, monitoring of capital adequacy, and enforcement of disclosure requirements.