licensing Crowdfunding Platforms in Kenya.

The Capital Markets Authority Investment Based Crowdfunding Regulations, require that to be eligible for licensing an applicant for a crowdfunding platform operator license shall be.

1. A company limited by shares
2. Have a minimum paid-up capital of Kes 10 Million
3. Pay an application fee of Kes 10,000
4. Hold liquid capital reserves equivalent to at least Kes 10 million or 8% of the company’s liabilities, whichever is higher
5. Upon approval pay a Licensing and annual regulatory fees of Kes 200,000.

The CMA regulations provide that "A person shall not establish, maintain or operate an investment based crowdfunding platform unless that person is duly licensed as a crowdfunding platform operator by the Authority."

Kazi Legal on crowdfunding in Kenya.

Crowdfunding Licensing requirement in Kenya.

Any person or entity who intends to be a crowdfunding platform operator shall apply to the Authority for licensing in the form set out in the First Schedule accompanied by the following

1. Certified copy of certificate of incorporation.
2. Evidence of its financial soundness and capital adequacy confirming the financial position of the company including
   • audited financial statements
   • management accounts
   • certified bank statements
3. Rules for the operation of its business setting out the planned activities and conduct of its platform users
4. Details of the organization structure and profiles of the directors, management and other key personnel
5. Evidence of adequate human resources with adequate knowledge and competence on crowdfunding business
6. A business plan that includes financial projections
7. Detailed information of the crowdfunding website or application to be used including system capacity and security measures and evidence of its functionality
8. Proposed procedures to verify the completeness, correctness and clarity of the information of the issuer and investment hosted on the platform.
9. Business continuity and disaster recovery plan
10. Adequate risk management framework that includes details of its fraud detection and prevention measures
11. Data protection policy in compliance with the relevant laws
12. Policy on prevention of anti-money laundering and terrorism financing
13. Record keeping procedures including audit trail for daily operations to meet emergencies

Eligibility for licensing as a crowdfunding platform operator in kenya.

To be eligible as a crowdfunding operator in Kenya the applicant must show the following.

1. A company limited by shares
2. Minimum paid up share capital of Kenya shillings five million
3. Minimum liquid capital of Kenya shillings ten million or eight percent of its liabilities, whichever is higher
4. Capacity to operate an orderly, fair and transparent market in relation to the securities or investment instruments issued through its platform
5. Has as its directors and key personnel determined as fit and proper persons as prescribed under section 24A of the Act
6. Has demonstrated that the platform to be used has the adequate functionality, capacity and security measures necessary for the conduct of its business
7. Has demonstrated ability to manage any risks associated with its business and operations
8. Has demonstrated ability to take appropriate action against any person in breach including directing such persons to take any necessary remedial measures;
9. Has robust rules to guide operations of the crowdfunding activities
10. Has sufficient financial, human and other resources for the operation of its crowdfunding platform

Rules of the crowdfunding platform operator in Kenya shall provide

1. Criteria for on boarding its users including issuers and investors
2. Procedure for transfer of proceeds for each funding round and monitoring of the proceeds
3. Code of conduct and ethics for its users including misconduct and proposed penalties
4. General obligations and liability of its platform users
5. Rules and procedure for their trading facility
6. Proposed communication policy
7. Cyber security, backup systems and disaster recovery mechanisms for the platform
8. Protection of investors and public interest
9. Promotion of fairness and transparency in the market
10. Management of conflicts of interest that may arise including disclosures to be made where the crowdfunding platform operator or its employees participate in a crowdfunding transaction
11. Promotion of fair treatment of its platform users
12. Resolution of disputes and provision for appeal to the Authority
13. Fees and associated costs to be charged to the crowdfunding platform user

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