The Capital Markets Authority (CMA) is the statutory regulator for Kenya’s capital markets under the Capital Markets Act (Cap 485A). Any person seeking to deal in securities, manage collective investment schemes, advise on investments, or operate a securities exchange in Kenya must obtain a CMA licence before commencing operations. Unlicensed operation is a criminal offence and the CMA actively prosecutes non-compliant actors.

The Capital Markets Act Framework

The Capital Markets Act establishes the CMA and grants it powers to license, supervise, and regulate participants in Kenya’s capital markets. The Act is supplemented by the Capital Markets (Licensing Requirements) (General) Regulations 2002 and the Capital Markets (Collective Investment Schemes) Regulations 2001. The Capital Markets (Amendment) Act 2023 introduced enhanced provisions on digital securities, REITs, and the regulatory sandbox for fintech innovation.

Categories of CMA Licence

Dealer (Stockbroker) Licence

A dealer licence is required by any person buying or selling securities on behalf of clients through a securities exchange. Dealers must be NSE members and maintain minimum paid-up capital of KES 50 million. The licence requires a compliance officer and annual audited financial statements filed with the CMA.

Investment Adviser Licence

Any person who, for consideration, advises another on the value of securities or the advisability of investing in, purchasing, or selling any security must hold an investment adviser licence. Minimum capital requirements and fit-and-proper criteria apply to all principals and directors.

Fund Manager Licence

A fund manager licence is required to manage collective investment schemes, pension funds, or pooled investment vehicles. Obligations include segregation of client assets, daily NAV reporting, and maintaining minimum paid-up capital of KES 10 million.

Collective Investment Scheme (Unit Trust) Approval

Unit trusts must obtain CMA approval before offering interests to the public. The approval process requires submission of a prospectus, appointment of a trustee and fund manager, and compliance with the CMA’s investment policy and disclosure requirements.

Real Estate Investment Trust (REIT)

REITs are regulated under the Capital Markets (REITs) (Collective Investment Schemes) Regulations 2013. Kenya recognises two types: the Income REIT (I-REIT) distributing rental income, and the Development REIT (D-REIT) financing real estate development.

CMA Licence Application Process

Applications are submitted to the CMA with a certified Certificate of Incorporation, Memorandum and Articles, business plan, compliance manual, CVs and IDs of all directors, evidence of minimum capital, and application fees. Processing takes 60 to 90 days for complete applications. All directors, 10% shareholders, and key management undergo a fit-and-proper assessment against Kenyan and international databases.

Ongoing Compliance Obligations

CMA licensees must renew annually, file audited accounts within four months of each financial year end, notify the CMA of material changes to business or ownership, comply with continuing disclosure requirements, and maintain minimum capital adequacy at all times. The CMA’s enforcement arm conducts regular examinations; breaches attract administrative penalties, licence suspension or revocation, and criminal prosecution.

CMA Regulatory Sandbox

The CMA Regulatory Sandbox under the Capital Markets (Regulatory Sandbox) Regulations 2019 allows fintech innovators to test capital markets products in a controlled environment for 12 months under relaxed requirements. Successful graduates may apply for a full CMA licence. The sandbox has been used by digital bond platforms, robo-advisers, and tokenised securities innovators.

For regulatory compliance advice on CMA licences and capital markets law, our team provides end-to-end advisory from structuring through to licence grant. CMA guidance is available at the Capital Markets Authority website. Businesses in financial services must understand CMA licensing requirements before launching.