A foreign payments business that wants to operate in Kenya must be authorised by the Central Bank of Kenya (CBK), and the route it takes through the Companies Act shapes what CBK will ask for. This article explains how a foreign-owned applicant is treated under the current National Payment System Regulations, 2014, what the draft National Payment System Bill, 2026 would change, and what a foreign group should prepare before it applies.
Is there a cap on foreign ownership?
We have not found a general cap on foreign ownership of an electronic retail payment service provider in the Regulations. Foreign ownership is instead dealt with through documents and vetting. Regulation 4(2)(n) requires a letter of no objection from the home regulatory authority, recommending the applicant to establish a payment system in Kenya, where the applicant is a subsidiary of a foreign company. Regulation 5(4)(c) lets CBK assess the history, character and integrity of the applicant’s significant shareholders. The Bill’s draft vetting rules are broader still: its definition (clause 2) of a significant shareholder includes a beneficial owner holding ten per cent or more, whether directly or indirectly.
The current route: a Kenyan company with a foreign parent
Regulation 4(2)(a) requires the application to include documents of registration, including the certificate of incorporation and the memorandum and articles of association. In practice that means the usual applicant is a Kenyan-incorporated company, with the foreign group holding the shares. The application is made on Form 1 with the documents listed in Regulation 4(2), and the form’s checklist asks, for any foreign company that is a shareholder, for copies of its certificate of incorporation and share certificate certified by a Notary Public. It also asks for identity or passport copies for all significant shareholders, trustees, directors and senior managers.
The main documents that a foreign-owned applicant should expect to produce are:
- the home regulator’s letter of no objection, recommending the applicant to establish a payment system in Kenya, if the applicant is a subsidiary of a foreign company (Regulation 4(2)(n));
- notarised corporate documents of each foreign shareholder, as the Form 1 checklist requires;
- the Fit and Proper Form for directors, managers and custodial trustees (Regulation 4(2)(i)), with identity documents for significant shareholders as Form 1 requires;
- a tax compliance certificate and a credit rating report (Regulation 4(2)(l) and (m));
- evidence of the core capital required under Regulation 11 and the First Schedule, KES 5 million for an electronic retail payment service provider and KES 20 million for an e-money issuer.
Two practical points follow. First, if the foreign group is not itself regulated, there may be no home regulator to write the letter; the Regulations do not say what CBK accepts in that case, so the applicant should raise it with CBK early. Second, the Kenyan company has to exist, with its directors and shareholders in place, before the application is filed. Our guides to the cost and timeline of setting up a foreign-owned company in Kenya and to opening a bank account for a foreign-owned company cover those steps, and they have to be completed before the application can be filed.
Subsidiary or branch
Under the Regulations the application is built around a company with registration documents, a share register and a board, which is what a Kenyan subsidiary provides. The Regulations neither provide for nor expressly exclude a foreign company applying directly through a registered branch, but the documents they require assume a company. The Bill addresses the point. Clause 7(1) would allow either a company limited by shares registered under the Companies Act or a foreign company limited by shares that has been issued with a certificate of compliance under that Act. If the Bill is passed in this form, a foreign group could in principle apply through a branch. Whether CBK would favour that for a payments business holding customer funds is a separate question, and the draft says nothing on it. We would not plan around a branch route until CBK issues the guidance that clause 79(2) contemplates.
A subsidiary also has practical advantages. Local directors and a local balance sheet make it easier to show the capital requirement is met in Kenya, to open the bank accounts a payment business needs, and to ring-fence liabilities from the group. Capital must be real: the Bill would count only cash or CBK-approved consideration as paid up and excludes shareholder loans and borrowed funds (clause 10(5)). Our article on phasing regulated activities into a Kenyan company discusses whether to place a payments licence in the same entity as other regulated activities.
What changes under the Bill for foreign shareholders
The Bill would add several controls that a foreign group should price in. Every director, significant shareholder, senior officer and trustee must be certified by CBK as fit and proper (clause 11), and CBK may vet a shareholder below ten per cent who appears to have reduced a holding to avoid certification (clause 11(5)). If CBK finds a significant shareholder unfit, that shareholder loses its voting rights and must reduce its holding below ten per cent (clause 11(4)). Any incoming holder of ten per cent or more needs CBK’s prior written approval (clause 58), and no merger or acquisition may proceed without it (clause 57). For a group that expects to sell down or bring in investors, these clauses affect exit and fundraising as much as the initial licence. Our overview of the Bill’s licences and capital sets out the full list.
Preparing the group before filing
A foreign group should map its ownership to the ultimate beneficial owners, because CBK looks through holding companies to the individuals who hold ten per cent or more. It should confirm early who its home regulator is and whether that body will issue a no-objection letter, and how long it takes. And it should plan capital against both the current figures and the Bill’s higher thresholds, as explained in our article on PSP licensing in Kenya today. Clay & Associates Advocates acts for foreign groups entering Kenyan financial services; our financial services team can map the structure and the document list before you file. For overseas remitters, see our note on the money remittance licence under the Bill.
Sources: National Payment System Regulations, 2014, regulations 4, 5 and 11, Form 1 and its document checklist, and the First Schedule (CBK); The National Payment System Bill, 2026, clauses 2, 7, 10, 11, 57, 58 and 79 (CBK); National Payment System Act, 2011 (Cap. 491A).
Frequently asked questions
Does Kenya cap foreign ownership of a payment service provider?
We have not found a general cap in the Regulations. A subsidiary of a foreign company must supply a letter of no objection from its home regulator, and CBK assesses its significant shareholders.
Can a foreign company apply through a branch?
The current Regulations are built around a company with registration documents. The draft Bill, clause 7(1), would allow a foreign company with a certificate of compliance to apply. It is not yet law.
What if the foreign parent has no regulator?
The Regulations do not say what CBK accepts. Raise it with CBK before filing, so the Regulation 4(2)(n) requirement does not stall the application.
Do the foreign shareholder’s documents need notarising?
Form 1’s checklist asks for the foreign shareholder’s certificate of incorporation and share certificate certified by a Notary Public.
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This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.
