The Capital Markets (Amendment) Act 2025 (Act No. 26 of 2025) removed the shareholding caps that had governed control of stockbrokerages, investment banks, fund managers and derivatives brokers in Kenya for over two decades. Assented to on 21 November 2025 and commenced on 11 December 2025, the amendment repeals section 29(4) to 29(7) of the Capital Markets Act (Cap 485A) and replaces the fixed thresholds with a new discretionary power for the Cabinet Secretary. Anyone licensed by, or seeking a licence from, the Capital Markets Authority (CMA) in these categories needs to understand what actually changed, because the popular framing of this reform as a “foreign ownership” measure is not accurate.
What section 29 used to say
Before the 2025 amendment, section 29(4) of the Capital Markets Act capped “control” of a stockbroker, investment bank, fund manager or derivatives broker at 33⅓% of the shareholding. A separate rule, section 29(5), barred anyone holding more than 25% from being appointed to key personnel positions in the licensee without CMA approval. Neither provision distinguished between Kenyan and foreign shareholders. The cap applied identically to a Nairobi-based investor and an overseas one; it was a concentration-of-control rule, not a nationality rule. Confusing the two is the single most common misreading of this area of law, and it matters because a client asking “can a foreign investor buy 100% of our brokerage” is asking a different question than “can any single shareholder, foreign or local, control more than a third of the company.”
What the 2025 amendment actually does
The Capital Markets (Amendment) Act 2025 repeals section 29(4) to 29(7) in their entirety. In their place, it inserts a new section 29(3A), which gives the Cabinet Secretary, acting in consultation with the CMA, the power to prescribe shareholding limits by regulation for each category of licensed intermediary. In practical terms, Parliament has removed the fixed 33⅓% and 25% figures from the Act itself and handed the CMA and Treasury the discretion to set category-specific limits (or none at all) through subsidiary legislation instead.
As of this writing, that discretionary power has not yet been exercised. No regulations have been gazetted under the new section 29(3A) prescribing fresh shareholding limits for any category of market intermediary. The immediate legal effect of the amendment is therefore a removal of the old caps rather than the introduction of new ones. A stockbroker, investment bank, fund manager or derivatives broker is not currently subject to a statutory shareholding ceiling under section 29, pending whatever the Cabinet Secretary eventually prescribes.
Where the “foreign ownership” question actually lives
The rule most relevant to foreign investors buying into the Kenyan capital markets is not section 29 at all. It is the Capital Markets (Foreign Investors) Regulations 2002, as amended by Legal Notice 113 of 2015. Those regulations govern foreign participation in companies listed on the Nairobi Securities Exchange, and since the 2015 amendment they have permitted up to 100% foreign ownership of listed issuers by default, subject to any sector-specific restriction elsewhere in law (for example in the Insurance Act or the Banking Act for cross-holding purposes). That regime is untouched by the 2025 amendment. The two frameworks answer different questions: the Foreign Investors Regulations address how much of a listed company a non-Kenyan can hold; the (now-repealed) section 29(4) addressed how concentrated control of a market intermediary could be, regardless of the nationality of the controlling shareholder.
What licensees and investors should do now
For existing stockbrokers, investment banks, fund managers and derivatives brokers, the practical question is whether any shareholding or governance restriction still applies to a proposed transaction. Until the Cabinet Secretary prescribes new category-specific limits, section 29 itself imposes none. That does not mean a transaction is unconstrained. Change-of-control transactions in CMA-licensed entities generally still require prior CMA approval under other provisions of the Act and the Licensing Requirements and Fees Regulations, independent of the shareholding percentage involved, and the CMA retains its general “fit and proper” review of controllers and key personnel. Anyone structuring a share transfer, a new capital injection, or an exit in a licensed intermediary should confirm the current approval requirements with the CMA directly rather than assuming the repeal of section 29(4) removed all oversight of ownership changes; it removed the numerical cap, not the approval process.
Investors and boards should also watch for the regulations the Cabinet Secretary is empowered, but not yet required by any published timeline, to make under section 29(3A). Once category-specific limits are prescribed, they could reintroduce caps similar to the old 33⅓% figure, set different limits for different categories of intermediary, or leave certain categories uncapped altogether. Until then, structuring decisions should be made on the basis of the law as it currently stands, not on an assumption about what a future regulation might say.
How We Can Help
Clay & Associates Advocates advises CMA-licensed intermediaries and investors on shareholding structures, change-of-control approvals and regulatory compliance under the Capital Markets Act. Our guide to foreign ownership and market entry in Kenya’s financial services sector covers the broader ownership rules that continue to apply alongside this reform, and our overview of change-of-control approvals for licensed financial services businesses sets out the approval steps that remain unaffected by the section 29 repeal. Contact our Regulatory & Compliance practice to discuss how the amendment affects a specific transaction or licence.
Sources: Capital Markets Act (Cap 485A), section 29; Capital Markets (Amendment) Act 2025 (Act No. 26 of 2025); Capital Markets (Foreign Investors) Regulations 2002, as amended by Legal Notice 113 of 2015.
Frequently asked questions
Does the 2025 amendment mean foreign investors can now own 100% of a Kenyan stockbrokerage?
Not directly. The repealed section 29(4) capped control by any shareholder, Kenyan or foreign, at 33⅓%; its removal lifts that cap for everyone pending new regulations, but is a separate question from the foreign-ownership rules in the Capital Markets (Foreign Investors) Regulations, which already permitted up to 100% foreign ownership of NSE-listed issuers since 2015.
Is there currently a shareholding limit on CMA-licensed intermediaries?
No statutory percentage limit currently applies under section 29, because the provisions that set one were repealed and no replacement regulations have yet been gazetted under the new section 29(3A).
Do I still need CMA approval to acquire a controlling stake in a licensed intermediary?
Yes. Change-of-control approval requirements under the Capital Markets Act and the CMA’s licensing regulations are separate from the section 29 shareholding cap and were not affected by its repeal.
When will the Cabinet Secretary’s new shareholding regulations be published?
No date has been announced. The Cabinet Secretary’s power under section 29(3A) is discretionary and has not yet been exercised as of this writing.
