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 section 29 of the Capital Markets Act and Part V of the Capital Markets (Licensing Requirements) (General) Regulations, 2002, 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.
Capital Requirements
An investment bank must show paid-up share capital of at least Kshs. 250,000,000, evidence of that minimum paid-up share capital, shareholders’ funds of at least Kshs. 250,000,000, and liquid capital of at least the higher of Kshs. 30,000,000 or 8% of total liabilities. This is five times the stockbroker capital threshold, and reflects the scale of underwriting commitments and corporate finance exposure an investment bank can take on.
Beyond the balance sheet requirements, the applicant must separately evidence financial capability or investment capital of a minimum of Kshs. 250,000,000 in cash or in a portfolio of securities and listed shares. This is distinct from the paid-up capital and shareholders’ funds figures above; it is a demonstration of deployable capacity specifically, not just accounting capital on the balance sheet.
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, the most common issue we see is applicants treating the Kshs. 250,000,000 deployable capital evidence as satisfied by the same funds already counted toward paid-up share capital. The CMA checklist lists these as separate line items, and in our experience reviewers expect the application to demonstrate both distinctly rather than assume one figure covers both requirements. A second 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
The CMA’s current investment bank checklist states an application fee of Kshs. 2,500, consistent with the stockbroker checklist and with the fee schedule we confirmed when researching online forex broker licensing. This appears to be the standard application fee across most CMA licence categories following the 2023 fee amendment, rather than a figure unique to investment banks.
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 Act, section 29; Capital Markets (Licensing Requirements) (General) Regulations, 2002, Part V; Capital Markets (Corporate Governance) (Market Intermediaries) Regulations, 2011; Capital Markets Authority, Investment Banks compliance checklist.
