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 investment bank licensing in Kenya requires under the 2025 Regulations.

The Governing Regulations and Authorised Functions

Investment banks are licensed under Part IV of the Capital Markets (Licensing Requirements) (General) Regulations, 2025 (Legal Notice 197 of 2025), in force from 11 December 2025. Regulation 17 provides that an investment bank is a non-deposit taking institution that may carry out any or all of the following: advisory services on public offerings, restructurings, takeovers, mergers, acquisitions and privatisations, and corporate finance; stockbroking; dealing; promoting or arranging the underwriting or issuance of securities; fund management; investment advisory services and contractual portfolio management; and market making. Market making is expressly listed as an authorised function. A licensed investment bank may apply for admission as a trading participant of a securities exchange if it meets that exchange’s eligibility requirements.

Licences already in force continue until revoked, but regulation 58 gives licensed persons twelve months from commencement, that is until 11 December 2026, to meet any additional requirements the new Regulations impose.

Documentation Requirements

Under regulation 16, an application is made on Form 1 with the fees in the Sixth Schedule and must be accompanied by:

• the certificate of incorporation and the memorandum and articles of association;
• audited financial statements for the preceding two years where applicable, and unaudited statements for a period ending not earlier than six months before the application;
• a business plan containing the particulars in the Second Schedule;
• evidence of paid-up share capital of at least one hundred and fifty million shillings;
• anti-money laundering, know your client and counter-financing of terrorism procedures as prescribed by the Authority;
• the chief executive’s qualifications and experience, proposed operating systems and infrastructure, and the securities exchange’s written confirmation that the applicant will be admitted once licensed.

Capital Requirements

Regulation 19 requires paid-up share capital of at least Kshs. 150,000,000 at all times during the licence period, shareholders’ funds (paid-up capital and reserves) 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. The paid-up capital must be unimpaired and may not be advanced to directors or associates. That is three times the stockbroker capital threshold. Applicants should not budget for a separate “deployable capital” requirement on top of these figures; the Regulations state the financial requirements in the terms above.

Business Plan and Governance

The business plan should cover management structure, board composition, shareholding structure, the chief executive’s competencies, financial projections, the operating and IT systems, the external auditor, premises and staffing. Board composition and key personnel are also assessed under the CMA’s corporate governance rules for market intermediaries, which expect an independent board, qualified finance and audit personnel, risk and compliance functions, and a board charter tailored to the business. Applicants should map their board and staffing against those rules before filing. Directors and key personnel should be ready to provide references, CVs, fit and proper forms and police clearance certificates.

Scope of Activity: Why This Sits Above Stockbroking

An investment bank licence permits a broader scope of activity than a stockbroker licence. Underwriting in particular exposes the bank to real financial risk, since an underwriter commits to purchasing securities that are not fully subscribed, and the capital requirements are calibrated to that exposure rather than to the agency-only risk profile of a stockbroker. A firm should map its intended activities against this scope carefully. Applying for the full licence when the business plan is closer to stockbroking creates an unnecessary capital burden, while under-scoping the application risks a later variation once the business grows into other activities.

Common Application Pitfalls

Beyond meeting the capital figures, applicants often underestimate the monthly reporting duty. Under regulation 20, an investment bank must submit monthly risk-based capital adequacy reports and management accounts within fifteen days of each month end, and audited financial statements within three months of its financial year end. Another common issue is a business plan that describes investment banking in general terms without specifying which of the underwriting, advisory or dealing functions the applicant will perform from day one. Financial projections that assume underwriting revenue without a credible pipeline also draw scrutiny, since the CMA is assessing whether the applicant can sustain its capital position, not just meet the threshold on day one.

Ongoing Obligations After Licensing

An investment bank must maintain its capital, shareholders’ funds and liquid capital thresholds continuously and should expect closer supervisory attention given the capital involved. The governance documentation submitted at application, especially the board charter and risk management framework, should reflect how the institution actually operates day to day.

Fees

The Sixth Schedule sets, for an investment bank, an application fee of Kshs. 20,000, a licensing fee of Kshs. 250,000 and an annual regulatory fee of Kshs. 250,000.

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 to stockbroker licensing for a lighter-capital comparison and our overview of Capital Markets Authority licensing in Kenya for the full landscape.