Investment Advisers in Kenya: Ongoing CMA Obligations

Getting a Capital Markets Authority (CMA) investment adviser licence is the start of a regulatory relationship, not the end of a project. The Capital Markets (Licensing Requirements) (General) Regulations, 2025 (Legal Notice No. 197 of 2025) set ongoing duties on financial resources, insurance, reporting, business plans, fees, marketing and the people who run the business. This article sets out what a licensed investment adviser in Kenya has to keep doing after the licence arrives.

Financial resources: adequacy, not a fixed figure

Unlike investment banks, stockbrokers, dealers and trustees, which have minimum paid-up and liquid capital figures under the 2025 Regulations, an investment adviser has no fixed minimum. Regulation 12(3)(c) requires evidence of adequate financial resources to carry on the business, judged against the business plan.

Adequacy is a moving test. A firm that grows its headcount, takes on larger mandates or adds an automated platform needs resources that keep pace. Regulation 15 makes the CMA’s monitoring concrete: an investment adviser files a monthly risk-based capital adequacy report, so a shortfall will show up in the firm’s own returns.

Professional indemnity insurance

Regulation 12(3)(f) requires an investment adviser to hold professional indemnity insurance of not less than KES 500,000. That is a floor. A firm advising on larger transactions should size its cover to the claims its advice could realistically produce, read the policy for exclusions that bite on its actual work, and diary the renewal so that cover never lapses between policy years.

Reporting to the CMA

Regulation 15(1) sets two reporting cycles:

• Monthly: a risk-based capital adequacy report and management accounts, within fifteen days of the end of each month.
• Annual: audited financial statements and audited risk-based capital adequacy reports, within three months of the end of the financial year.

Under regulation 15(2), the financial statements must include the disclosures in the Fourth Schedule, and under regulation 15(3) the CMA may require other financial statements and information by written notice. Missing a monthly return is a visible compliance failure, so the reporting calendar should sit with someone who owns it.

Keeping the business plan current

Regulation 53 requires licensees to submit an updated business plan as soon as reasonably practicable after a material change in their business or operating environment. New service lines, a change of ownership or control, entry into a new market segment, or the launch of an automated advice platform are all candidates. If the change is to automated advice, regulation 14 adds its own platform requirements, covered in our article on licensing robo-advisers in Kenya.

Fees and conditions

An investment adviser pays an annual regulatory fee of KES 100,000 under the Sixth Schedule. Regulation 51 provides that annual fees are payable in full for the year in which the licence is first issued, without pro-rating, and are not refunded if the licence is later revoked, withdrawn or surrendered. Under regulation 50(2), the CMA may impose conditions on a licence and vary them at any time by written notice, so the licence file should include every condition notice received, not only the licence itself. How conditions are first set is covered in our article on CMA approval in principle and licence grant.

The Regulations give licences no fixed term: under regulation 50(4), a licence stays valid unless suspended or revoked under sections 26 and 26A of the Capital Markets Act (Cap. 485A).

Marketing

Regulation 55(1) prohibits marketing securities in Kenya to the general public or a section of it, through advertising, solicitation, invitation or other means, unless the marketer is licensed under the Regulations. A licensed adviser is within the rule for its licensed business. Regulation 55(2) adds a further step for going abroad: a licensed person may not market securities outside Kenya to the public or a section of it without the CMA’s prior written approval.

People

The fit and proper test in regulation 56 applies to directors, the chief executive officer and key personnel throughout the life of the licence, not only at application. New appointments should be checked against the regulation 56(2) factors before they take effect. Regulation 13(c) also requires advisory representatives to have at least three years’ relevant experience and to be members of a professional body, so changes in the advisory team need the same attention. Where individuals give investment advice, firms should also consider whether ICIFA registration applies to them.

A simple compliance calendar

• Monthly, by day fifteen: capital adequacy report and management accounts.
• Annually, within three months of year end: audited financial statements and capital adequacy reports.
• Annually: regulatory fee, professional indemnity renewal, and a review of conditions and the business plan.
• On any change: updated business plan, fit and proper check for new key personnel.

Frequently asked questions

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.