Securities and Capital Markets Law in Kenya: A Guide to CMA Compliance

Capital markets Kenya CMA compliance requirements are set out in the Capital Markets Act (Cap 485A), administered by the Capital Markets Authority (CMA), with the Nairobi Securities Exchange (NSE) as the principal market for trading listed securities.

The framework underwent its most significant overhaul in two decades through 2025, and any business raising capital, distributing capital markets products, or operating as an intermediary in Kenya needs to understand both the underlying Act and the new regulations that now sit beneath it.

Capital Markets Kenya CMA Compliance: Licensing Requirements

Section 23(1) of the Capital Markets Act requires anyone intending to carry on business as a stockbroker, dealer, investment bank, fund manager, investment adviser, or authorised depository to hold a valid CMA licence.

Section 23(2) separately requires anyone operating a securities exchange, registered venture capital company, collective investment scheme, central depository, or credit rating agency to obtain the Authority’s approval. Carrying on any of these businesses without the relevant licence or approval is itself an offence, independent of any other misconduct.

The 2025 Licensing Overhaul

The Capital Markets (Licensing Requirements) (General) Regulations, 2025 came into force on 11 December 2025 and repealed the 2002 licensing regime in its entirety.

This is not a minor update: it replaces a framework built for clearly delineated, exchange-centric intermediaries with an activity-based, risk-supervised model designed for digital distribution, automated advice, and alternative trading systems.

Existing licensees have a grace period until 11 December 2026 to comply with the new requirements, and all licences issued under the 2002 regime remain valid in the meantime.

The 2025 Regulations introduce several licence categories that did not previously exist. Broker-Dealers are a new hybrid category permitted to act as both stockbroker and dealer, including trading on their own account, which stockbrokers remain prohibited from doing.

Over-the-Counter platforms, previously unregulated, must now obtain a CMA licence to facilitate trading of listed or unlisted securities directly between parties outside a central exchange.

Intermediary Service Platform providers, being digital applications that aggregate, market, and distribute capital markets products and services, are captured for the first time, as are robo-advisers, since the definition of “investment adviser” now expressly extends to platforms providing automated, algorithm-driven advice with little or no human supervision.

Custodial services have been elevated to a standalone licence requiring the custodian to be a bank licensed under the Banking Act or another licensed financial institution, and trustees, whether acting for debt instruments or collective investment schemes, now sit under a single unified licensing regime.

Procedurally, the 2025 Regulations introduce an approval-in-principle stage. An applicant who satisfies most requirements can receive in-principle approval valid for six months, during which it may build systems and recruit staff, but it cannot commence operations until full licensing is granted. This replaces the previous all-or-nothing process and gives new entrants a clearer runway.

Capital requirements have also been revised upward for most categories, fund managers facing the steepest increase, and licensees are now required to submit monthly risk-based capital adequacy reports to the CMA rather than relying solely on periodic financial statements.

Investment banks have gained an additional authorised activity: market-making, which was not expressly provided for under the 2002 framework and signals the CMA’s intent to deepen liquidity in the local market.

Capital Markets Kenya CMA Compliance: Public Offerings and Disclosure

Separately from intermediary licensing, anyone offering securities to the public in Kenya, or seeking a listing, falls under the Capital Markets (Public Offers, Listings and Disclosures) Regulations, 2023, which took effect on 15 December 2023 and repealed the equivalent 2002 regime.

These Regulations apply whether or not the issuer is seeking a listing, and the CMA is the competent authority for approving any public offer.

They sharpened the distinction between a public offer and a private offer, a point that had generated repeated interpretive disputes under the old rules, and they require every securities exchange to maintain two market segments for both equities and fixed income, the Main Investment Market Segment and the Small and Medium Enterprises Market Segment, each with its own eligibility and disclosure thresholds.

Listed companies have also been required, since 15 December 2024, to designate a compliance officer responsible for supervising the company’s adherence to the Act and the 2023 Regulations. The Regulations additionally codified newer market mechanisms, including provisions on special purpose acquisition companies, green bonds, and green-shoe options, that had no clear home under the 2002 rules.

A prospectus, information memorandum, or listing statement under the 2023 Regulations must contain everything an investor would reasonably require, and reasonably expect to find, to make an informed assessment of the issuer’s assets, liabilities, financial position, profits and losses, and prospects.

Where a significant new matter arises after a listing statement is prepared, or a significant inaccuracy is identified, the issuer must publish a supplementary listing statement on its own motion. Inaccurate or misleading prospectus statements expose the issuer to the risk of investors rescinding their subscription and claiming damages.

Appeals Against CMA Decisions

A licensing refusal, revocation, or other adverse decision by the CMA is not the end of the road. Section 35A of the Capital Markets Act establishes the Capital Markets Tribunal as an independent forum for appeals against the Authority’s decisions, giving licensees and applicants a statutory route to challenge a refusal or revocation without going straight to judicial review in the High Court.

For a business that has invested months in a licence application, particularly one navigating the classification questions raised by the 2025 Regulations’ new digital licence categories, knowing this avenue exists, and the procedural timelines that apply to it, is part of managing the regulatory risk of the application from the outset rather than only after a refusal lands.

Capital Markets Kenya CMA Compliance: Enforcement and Penalties

The CMA’s enforcement toolkit includes regular audits and inspections, mandatory reporting obligations, market surveillance, fit-and-proper assessments of directors and key management, and review of financial statements and capital adequacy. For serious breaches, the Authority may impose fines of up to KES 5 million, with the actual penalty varying according to the severity and nature of the violation, and it may refer the more serious cases to the Office of the Director of Public Prosecutions for criminal prosecution, which can carry both imprisonment and further fines on top of the CMA’s own sanction.

Initial licensing applications typically take between 30 and 120 days depending on the complexity of the category sought, and a standard application fee of KES 2,500 applies on top of any category-specific fees introduced by the 2025 Regulations.

Capital Markets Kenya CMA Compliance: Practical Guidance

For an existing licensee, the practical task between now and 11 December 2026 is a gap analysis against the 2025 Regulations, covering licence category, revised capital adequacy thresholds, governance arrangements, and whether the business now falls within a newly regulated activity such as an OTC platform or an automated advisory service that previously sat outside the perimeter.

For a fintech or digital platform entering the market for the first time, the more material question is often whether the platform’s functionality brings it within the definition of an Intermediary Service Platform, an OTC platform, or a robo-adviser at all, since the consequence of getting that classification wrong is operating an unlicensed capital markets business.

For an issuer planning a public offer or listing, early engagement with the 2023 Regulations’ disclosure requirements, and early appointment of a compliance officer where the entity will be listed, avoids the kind of late-stage scramble that delays an offer timetable.

Navigating capital markets Kenya CMA compliance requires ongoing attention to regulatory notices, particularly following the 2025 overhaul which introduced revised capital requirements and new conduct rules for investment banks and fund managers.Clay & Associates Advocates advises capital markets intermediaries, issuers, and fintech platforms on CMA licensing strategy, regulatory classification under the 2025 Regulations, and public offer and listing compliance under the 2023 Regulations.

If your business is affected by the licensing overhaul or is planning to raise capital in Kenya, we can help you work out where you stand under the new framework before the compliance deadline does it for you.

Affected by the 2025 capital markets licensing overhaul? Contact Clay & Associates Advocates for a CMA compliance strategy session. Book a Consultation

For tailored legal advice on this matter, speak with our financial services legal advisory team at Clay & Associates Advocates. We advise businesses and individuals across Kenya on Financial Services matters from our offices at Nextgen Mall, Nairobi.