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REGULATION OF PRIVATE EQUITY AND VENTURE CAPITAL FUNDS IN KENYA IN LIGHT OF THE FINANCE ACT, 2020 | JP Advocates LLP
The Finance Act, 2020 amends the Capital Markets Act to require private equity (PE) and venture capital (VC) firms with access to public funds, primarily from pension funds, to be licensed or approved by the Capital Markets Authority (CMA). The amendment targets PE and VC firms tapping into pension funds, which totaled KES 1.3 trillion as of December 2019, with up to 10% (KES 130 billion) potentially accessible. The CMA is expected to issue regulations to clarify licensing requirements, eligibility criteria, and transition rules for existing firms. The article notes that while the amendment took effect on June 30, 2020, the legal framework for implementation is still incomplete.
A highlight of the draft digital tax regulation, 2020 | JP Advocates LLP
The Finance Act, 2020 introduced a digital service tax (DST) in Kenya, effective January 1, 2021, at a rate of 1.5% of gross transaction value on income from digital marketplace services. The draft regulations specify taxable services, exemptions for licensed financial services and withholding-tax-subject payments, and rules for determining if a user is in Kenya. Tax must be accounted for by the service provider or payment collector, with non-residents required to appoint a tax representative. Non-compliance may result in penalties and restriction from the digital marketplace.
Money market funds: New rules on disclosure, valuation and publication | JP Advocates LLP
The Capital Markets Authority (CMA) has issued new Guidance for Collective Investment Schemes, effective January 1, 2021, addressing valuation, investment performance measurement, and reporting for money market funds. Fund managers must invest only in instruments with a maximum tenor of 13 months, disclose fund documents and fees on their websites, and implement comprehensive valuation policies. Quarterly performance reports must be filed with the CMA and clients within 21 days, including time-weighted returns, benchmark comparisons, and fee disclosures. The Guidance also mandates daily fair value valuation, accrual accounting for income, and compensation for pricing errors.
Operationalisation of disclosure of beneficial ownership information in Kenyan companies | JP Advocates LLP
The Registrar of Companies operationalized the Beneficial Ownership E Register as of October 13, 2020, requiring all companies to maintain a register of beneficial owners under Section 93A of the Companies Act. The regulations define a beneficial owner as any natural person who directly or indirectly holds at least 10% of shares, voting rights, or control. Companies must file the register within 30 days, update changes within 14 days, and can restrict shareholders who fail to provide information, with penalties for non-compliance including fines up to KES 500,000. Beneficial ownership information is confidential, but may be shared with competent authorities like the Kenya Revenue Authority, and raised questions about the low 10% threshold and unclear preparation timelines.