Investment Bank Licensing in Kenya: CMA Capital and Governance Requirements

An investment bank licence from the Capital Markets Authority (CMA) sits at the top of the capital thresholds among CMA-licensed market intermediaries, reflecting the scope of activity involved: underwriting, corporate finance advisory, and securities dealing at institutional scale. This article sets out what the licence requires.

Documentation Requirements

An application is made on Form 1 under Part IV of the Capital Markets (Licensing Requirements) (General) Regulations, 2025, accompanied by a certified certificate of incorporation and certified memorandum and articles of association permitting the investment banking business, together with six months of unaudited accounts plus two years of audited accounts where relevant. The 2025 Regulations also expressly permit investment banks to engage in market-making activities, a function not provided for under the 2002 framework, alongside the traditional corporate finance, advisory, broking, dealing, and underwriting functions. Existing investment bank licences remain valid, but licensees have until 11 December 2026 to comply with any new requirements.

Capital Requirements

Under the Capital Markets (Licensing Requirements) (General) Regulations, 2025, an investment bank must show paid-up share capital of at least Kshs. 150,000,000, shareholders’ funds of at least Kshs. 150,000,000, and liquid capital of at least the higher of Kshs. 50,000,000 or 8% of total liabilities. This is three times the stockbroker capital threshold. It is also a reduction from the Kshs. 250,000,000 paid-up capital figure required under the repealed 2002 Regulations, part of a deliberate recalibration: the 2025 Regulations lowered the investment bank entry threshold while raising thresholds for some other categories, such as fund managers.

The separate Kshs. 250,000,000 “deployable capital evidence” concept that appeared in the 2002-era checklist does not appear in the 2025 Regulations. Applicants should not budget for a distinct deployable capital requirement on top of the paid-up capital and liquid capital figures above; the 2025 framework consolidates the financial requirements into the paid-up capital, shareholders’ funds, and liquid capital figures stated in this article.

Business Plan and Governance

The business plan must cover management structure, board composition, company secretary details, shareholding structure disclosure under section 29(5) of the Capital Markets Act, directors’ declaration, the name and competencies of the chief executive, three-year financial projections, the operating and IT system in place or planned, external auditor, premises, and staffing. Board composition follows the same structure applied across CMA-licensed intermediaries: a minimum of three directors, at least a third natural persons and at least a third independent and non-executive, no more than a third close relations of one another, a non-executive chairman, and no director holding more than two directorships in market intermediaries unless they are subsidiaries or holding companies of each other.

Staffing must cover the chief financial officer, risk management officer, compliance officer, and internal audit function required under the Corporate Governance Regulations, with the chief financial officer and internal auditor both required to be ICPAK members and the internal auditor barred from also serving as compliance officer. A board charter confirming the board’s strategic and risk oversight responsibilities, delegating specific matters to management, and providing a conflict-of-interest code of conduct completes the governance package.

Supporting Documentation

The application also requires two letters of business reference, one letter of bank reference, comprehensive CVs for directors and key personnel, duly executed Fit and Proper forms, and valid certified police clearance certificates.

Scope of Activity: Why This Sits Above Stockbroking

An investment bank licence typically permits a broader scope of activity than a stockbroker licence, extending to underwriting new securities issues, advising on mergers and acquisitions, structuring corporate finance transactions, and often securities dealing on the firm’s own account in addition to agency broking. This breadth is precisely why the capital bar sits where it does. Underwriting in particular exposes the bank to real financial risk, since an underwriter commits to purchasing securities that are not fully subscribed by the market, and the CMA’s capital requirements are calibrated to that exposure rather than to the lighter agency-only risk profile of a pure stockbroker. A firm considering an investment bank licence should map its intended activities against this scope carefully, since applying for the full licence when the actual business plan is closer to stockbroking creates an unnecessary capital burden, while under-scoping the application risks having to seek a variation later once the business grows into activities the original licence did not contemplate.

Common Application Pitfalls

Beyond meeting the capital figures, a common issue we see is applicants underestimating how the 2025 Regulations’ monthly risk-based capital adequacy reporting obligation (due within 15 days of each month-end) changes ongoing compliance burden compared to the annual reporting that applied under the 2002 regime. Another common issue is a business plan that describes investment banking activity in general terms without specifying which of the underwriting, advisory, or dealing functions the applicant actually intends to perform from day one versus later, which makes it harder for the CMA to assess whether the proposed governance and staffing genuinely match the scope of the business. Financial projections that assume underwriting revenue without a credible pipeline or track record backing that assumption also tend to draw scrutiny, since the CMA is assessing whether the applicant can realistically sustain the capital position it is proposing, not just whether the opening balance sheet meets the threshold on day one.

Ongoing Obligations After Licensing

An investment bank must maintain its capital, shareholders’ funds, and liquid capital thresholds continuously once licensed, not only at the point of application, and must report material changes in directors, shareholders, or key personnel to the CMA. Given the scale of capital involved, investment banks tend to face closer ongoing supervisory attention than smaller intermediaries, and the governance documentation submitted at application, particularly the board charter and risk management framework, should reflect how the institution actually operates day to day rather than functioning as a static compliance document produced once and filed away.

Application Fee

Under the 2025 Regulations’ Sixth Schedule, an investment bank application attracts a fee of Kshs 20,000, a licensing fee of Kshs 250,000, and an annual regulatory fee of Kshs 250,000. This corrects an earlier Kshs 2,500 figure drawn from CMA’s checklist pages, which had not been updated to reflect the new fee schedule at the time of our research.

Why the Capital Bar Matters in Practice

The combination of the Kshs. 250,000,000 paid-up capital requirement and the separate Kshs. 250,000,000 deployable capital evidence requirement means an investment bank application is not a realistic route for an undercapitalised entrant hoping to grow into the threshold over time. Both figures need to be demonstrated at application stage, not built up afterward, which is a meaningful difference from lighter-capital categories such as stockbroking or money management, where the licence can more plausibly be a growth vehicle. Promoters should treat the capital-raising exercise as a precondition to filing rather than something to run in parallel with the CMA review.

How This Fits the Wider CMA Framework

Investment banking is a section 23(1) licence category, alongside stockbrokers, dealers, fund managers, and investment advisers. See our guide on stockbroker licensing for a lighter-capital comparison, and our overview of Capital Markets Authority licensing in Kenya for the full landscape.

How We Can Help

Clay & Associates Advocates advises investment bank applicants on structuring the capital, governance, and documentation package the CMA requires, and on scoping the licence application correctly against the applicant’s actual intended activities. Contact our regulatory and compliance team to discuss an application.

Sources: Capital Markets (Licensing Requirements) (General) Regulations, 2025 (Legal Notice 197 of 2025), Part IV; Capital Markets (Corporate Governance) (Market Intermediaries) Regulations, 2011.