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2 | LEGAL NOTES | MAY 2013

Editor’s Note


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Table of Contents

Editorial Team


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“The legislative challenge notwithstanding, the Government seeks to maximize opportunities to improve the livelihoods of Kenyans and avert mineral and oil resources turmoil experienced in other countries.“


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“Today, within a single day, and with only 51,000 Fbu (approximately USD32) in fees, it is possible to register a business in Burundi”


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Four easy steps to register a business


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“For some breaches the fines imposed may be as high as ten percent (10%) of annual turnover, in addition, the penalty for breach of the Act in some instances may extend to imprisonment.“


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Guest Column


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“From 2010 to 2012, the GCCC did not prosecute any case and did not lead any investigation seriously for fear of the process being unwound. Ultimately, investigative work was carried out by local prosecutors who had no expertise to investigate corruption�


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Guest Column

CHARLES OMANGA Managing Principal co@horizonafrica.com

HORIZON AFRICA FIRM DETAILS: Horizon Africa Capital is a boutique mergers and acquisitions (M&A) advisory firm headquartered in Nairobi, Kenya. Horizon’s primary activities are M&A advisory, capital raising and corporate financial brokerage in SubSaharan Africa. Horizon has expertise in a number of sectors including energy, real estate, technology, heavy and light manufacturing, hospitality, aviation and agro-processing. Horizon has cultivated a strong global network of private equity firms, family investment offices, development finance institutions and commercial banks from which it routinely draws upon to identify investment opportunities and potential investors for transactions in Africa. Horizon is a member of Global M&A, a global association of M&A advisors and represents the association in over 8 countries in Africa. Horizon is also closely associated with ALN.

GDP RISING FROM USD1.7 BILLION TO USD 15 BILLION MIDDLE CLASS RISING FROM 355 MILLION TO 1.1 BILLION

AFRICA RISING


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Oil and gas, infrastructure, energy Healthcare and pharmaceuticals, IT and telecommunications, steel and cement manufacturing

Housing development boom, infrastructure development.

Pyramid of Opportunities


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UPSIDE High returns Consistent long term growth opportunity

DOWNSIDE High Risk High cost of doing business

Upside and Downside

“In this Africa, if you are building your business to sell it, you are running it well.”


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Regulatory Restrictions Realities of emerging markets

Market Size Lack of market depth

Funding Expertise Time

Barriers to raising capital


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Concluded DTAs (Botswana, Lesotho, Madagascar, Mozambique, Namibia, Rwanda, Senegal, Seychelles, South Africa, Swaziland, Tunisia, Uganda, Zambia, Zimbabwe) Awaiting Ratification (Congo, Egypt, Kenya, Nigeria)

Awaiting Signature (Ghana, Gabon, South Africa*) *treaty renegotiated and awaiting signature

Mauritius DTA Snapshots


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OTHER KEY LEGISLATION RECENTLY ENACTED

1

The Public Private Partnerships Act, 2013- The Act provides for the participation of the private sector in the financing, construction, development, operation or maintenance of infrastructure or development projects of the Government through concession or other contractual arrangements as well as the establishment of the institutions to regulate the implementation of project agreements on development projects.

2

The Civil Aviation Act, 2013 – it overhauls the Civil Aviation legislation in Kenya.

3

The Partnerships Act, 2012- it came into force in August 2012 and provides for the governing of partnerships. However, the Act does not govern Limited Liability Partnerships, corporate bodies and foreign limited partnerships, which are regulated by separate statutes.

4

Kenya Deposit Insurance Act, 2012- it provides for the establishment of a deposit insurance system and for the receivership and liquidation of deposit taking institutions. Commencement date shall be by notice.

5

The Proceeds of Crime and Anti-Money Laundering (Amendment) Act, 2012- The main object of this Act is to amend the Proceeds of Crime and Anti-Money Laundering Act to expand the definition of “monetary instruments” to include cheques and other negotiable instruments.

6

Finance Act, 2012- The Act amends various existing laws and the law relating to various taxes.

7

The Capital Markets (Amendment) Act, 2012- Its object is to amend the Capital Markets Act by giving the Capital Markets Authority powers to authorize any person to exercise the powers of the Authority as an investigator, to provide clarity in the existing provisions that relate to the sharing of information with other regulatory bodies and to provide the criteria which the Authority shall apply when determining whether a person is “fit and proper” for purposes of the Act.

8

Public Finance Management Act 2012 - This Act came into force in August 2012 and is aimed at providing for the effective management of public finances by the national and county governments; and the different responsibilities of government entities and other bodies under the new devolved government structure.

9

County Governments Act, 2012- It provides for county governments’ powers, functions and responsibilities to deliver services under the new devolved government structure.

10

The Prevention of Terrorism Act, 2012- The principal object of the Bill is to establish a legal framework for the detection, prevention and investigation of terrorist acts.


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KEY RULES AND REGULATIONS ENACTED

1

The Energy (Complaints and Disputes Resolution) Regulations, 2012 The Regulations apply to any person who has a complaint or a dispute regarding any licences, permit, contract, code, conduct, practice or operation of any party or any matter regulated under the Energy Act.

2

The Mining (Local Equity Participation) Regulations, 2012- These regulations require every mining licence to have as a pre-condition that every mining right has a component of local equity participation amounting to at least 35%.

3

The Petroleum Regulations, 2012- These regulations intend to, inter alia, regulate the pricing and importation of petroleum.

4

The Regulation of Wages (Agricultural Industry) (Amendment) Order, 2012 - These Regulations came into operation on 1st May, 2012 and amended the basic minimum consolidated wages in the agricultural sector.

5

The Merchant Shipping (Safe Manning) Regulations, 2012-These Regulations provide standards to be satisfied by officers and other seafarers of any description in order to be qualified.

KEY PROPOSED LAWS WHICH ARE YET TO BE ENACTED

1

The Mining Bill, 2012- This Bill intends to govern mineral exploration, prospecting, mining and dealings in minerals in Kenya. When enacted into law, it will repeal the existing Mining Act, Cap 306.

2

The Value Added Tax Bill, 2012- This Bill intends to review and update the law relating to value added tax and to provide for the imposition of value added tax on supplies made in or imported into Kenya


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KEY JUDGEMENTS AND RULINGS

1

Mohamed Balala & 10 others v the Attorney General, Commissioner of Lands and 6 others [2012] eKLR - the High Court held that the requirement for presidential consent to be obtained by persons wishing to acquire or dispose beach-front plots in Mombasa was unconstitutional  as it contravened the Constitution of Kenya which prohibits discrimination in any form.

2

Attorney General v Mohamud Mohammed Hashi & 8 others [2012] eKLR - the Court of Appeal held that Kenyan courts have jurisdiction to try suspects of piracy allegedly committed in the Indian Ocean beyond Kenya’s territorial waters on the high seas.

3

Samuel G. Momanyi v The Hon. Attorney General & Another (2012) eKLR- The High Court held that section 45 (3) of the Employment Act is unconstitutional. Section 45 (3) provides that only an employee who has been continuously  employed by his employer for a period of at least 13 months shall have the right to complain that he has been unfairly terminated.

4

Republic v Registrar of Titles, Nairobi Registry & 3 others [2012] eKLR- The High Court ruled that the Registrar of Titles has no power to revoke a land title and reiterated that the validity of a title document can only be pronounced by a court of law.

5

Commercial Bank of Africa v Paul Imison & another [2012] eKLR- Justice A. Mabeya held that it would be unlawful for a bank to increase commission, late payment charges or other bank charges on money owed to it by its customer where such an increment does not have the prior approval of the Minister for Finance as provided for under section 44 of the Banking Act which states that: “No Institution shall increase its rate of Banking or other charges except with the prior approval of the Minister”. The Court further observed that a charge would be illegal or unlawful if it is not contractual.

6

Sonia Kwamboka Rasugu V Sandalwood Hotel & Resort Limited T/A Paradise Beach Resort & another (2012) eKLR – The High Court held that detention on the ground of non-fulfillment of a contractual obligation is unlawful and awarded the petitioner Kshs. 800,000.00 as damages for having been detained without her consent at Paradise Beach Hotel.

7

Fredrick Gitau Kimani & another v Attorney General & 2 others (2012) eKLR -The High court held that it is a violation of a disabled person’s right to be retired before the age of 60 years, due to the disability, contrary to the Persons with Disabilities Act which enhances the retirement age of persons with disabilities from 55 years to 60 years.

CONCLUSION The activity in Kenya’s legal environment is evidently gaining momentum, as new laws are enacted, and as persons become more enlightened about their constitutional entitlements. Look out for further editions of Legal Notes for updates on ongoing developments.


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Guest Column


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