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CMA reviewing laws

NAIROBI, November 27 – The Capital Markets Authority (CMA) has announced plans to redraft the Capital Markets Act by June 2009, aimed at ensuring better regulation and enhancing surveillance capability.

CMA Chief Executive Stella Kilonzo told Journalists on Thursday that a review of the existing legal framework was already underway and the capital markets regulator had already received feedback from investors.

Ms Kilonzo said the review was necessitated by the changes and sophistication in market products, services and technology, witnessed in the recent decade.

“There have been lots of queries from potential issuers about some of the requirements; for example the issue of whether we should be merit or disclosure-based and whether companies can buy back some of their shares,” she said.

She pointed out that among the issues that have taken centre-stage include reviewing the licensing regime, where it is to be decided whether propositions for the tedious and time-consuming annual licensing scheme would be adopted.

Also to be reviewed will be consideration of a full disclosure regime which would require education and matters such as private placements, specialised products like bonds among others.

“This would mean that if there will be new or specific products to be introduced in the market, the new Act should be able to facilitate their introduction,” she said.

CMA Legal Affairs Manager Rose Lumumba said talks with a leading consultant (International Securities Consultants (ISC)) are in advanced stages and CMA was looking at implementing preliminary recommendations by January 2009.

“The Capital Markets laws and regulations have been regulated piecemeal since the Capital Markets Authority was established in 1989.Since there have been several regulations that have been enacted to regulate areas like   foreign investment, areas like licensing, and may other areas in the market,” Ms Lumumba said.

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The two were speaking to journalists at a press conference where it was announced that the review, co-funded by World Bank and UK department of International Development, would guarantee a comprehensive, up to date regulation framework.  

The review is expected to cover the legal and regulatory framework of the CMA to toe it in line with international best practices.

ISC is expected to work with its local partner, Kaplan & Stratton Advocates in conducting the review which will be conducted in two phases.

Phase one will involve review of the legal and regulatory framework to determine its adequacy and the structure content of the Capital Markets Act; the Central Depositories Act and related subsidiary legislation to determine its competitiveness and enforceability; Review structure of the Authority to determine its autonomy and operational independence in exercising its mandate, amonsgst other, according to Mrs Kilonzo .

“The key output under phase one will be a report on the adequacy of the legal regulatory framework governing capital markets in Kenya highlighting gaps and weaknesses,” Ms Kilonzo said.

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