Category: LexBytes

The Landlord and Tenant Bill 2021 (“the Bill”) seeks to consolidate all the laws on residential and commercial tenancies and to ensure regulation of the rental sector in Kenya. It applies to both residential and business premises (with some exceptions) and proposes various provisions including establishment of tribunals, limits on rent increases, termination notices, among others. On rent increases, the Bill provides that rent can only be increased after 12 months for residential premises and 24 months for business premises. The landlord also has to give a 90-day notice for the increase in rent to be valid. On termination notices, the Bill provides that, unless there is a breach of covenant by the tenants or the term of the tenancy has expired, landlords have to give at least 24-month notice of termination for business premises and 12-month notice for residential premises. The Bill was published in February 2021 and is still undergoing review in Parliament.

The Draft National Insurance Policy: Possible Review of the Insurance Legal Framework in Kenya – The National Treasury recently published the Draft National Insurance Policy (“Draft Policy”), dated March 2021, following a decline in the performance of the insurance industry in the recent years. The National Treasury notes the high levels of underwriting losses which is a big threat to the insurance industry and its role as a sustainable risk management tool in Kenya. The Draft Policy was therefore developed with the main objective of creating a vibrant and competitive financial sector through the development of a fair, safe, customer-centric, competitive and stable insurance industry. It aims at addressing the challenges that hinder the development of the industry including: low level of public awareness on insurance products and services; low penetration rate and coverage; concentration of insurance in main urban areas; slow adoption of technology by the industry; low contribution of life insurance in the overall insurance industry business; limited underwriting capacity of the insurance industry; gaps in the legal and regulatory framework; relatively poor financial performance by most of the general insurance companies and poor perception about the insurance industry. If the Draft Policy is adopted, it is likely to prompt the review of insurance laws, regulations and guidelines.

Validation of Nairobi Block 110 Title Deeds: Final chance for affected plot owners to verify their ownership details – The Ministry of Lands and Physical Planning (the “Ministry”) recently suspended land transactions involving Nairobi Block 110 title deeds following several complaints of fraudulent land transactions. The

purpose of this suspension is to enable the Ministry review and verify the ownership details of all the properties registered under the Nairobi Block 110 register. In this regard, the Ministry will conduct an exercise to validate the ownership details of all affected plot owners from 24th May 2021 to 4th June 2021 at the Survey of Kenya offices in Ruaraka. Affected plot owners are required to present the following documents for review: (i) certified copies of title deeds, grants, transfers and sale agreements, (ii) certified copies of share certificates and payment receipts issued by Thome farmers, and (iii) certified copies of identification documents including National ID, KRA PIN Certificates for individuals and certified copies of Certificate of Registration, CR12 and KRA PIN Certificate for companies/institutions. These documents should be submitted in sealed envelopes.

The Finance Act, 2022 (“the Act”), published on 23rd June, 2022 introduced various changes to several statutes, amongst them, the Income Tax Act, Chapter 470 Laws of Kenya. Section 15 of the Act has amended Section 34(1)(j) of the Income Tax Act by increasing the tax on Capital Gains from 5% to 15%. Consequently, the sellers of land will now be required to remit 15% of the gains from such sale of land as Capital Gains Tax. While this increase could be a move to align the national tax rate to the regional CGT rates, and increase revenue collection in the local property sector, it is noted that this increase could slow down real estate transactions involving the sale of land. This CGT increase will take effect from 1st January, 2023, as provided in Section 1 of the Act.

Derivative Action is a form of protection afforded by the existing legal regime to minority shareholders in a Company. The Companies Act, 2015 allows a member of a company to institute a legal action and/or seek remedy on its behalf. This remedy is available to minority shareholders who desire to challenge harsh conduct, if any, by the majority shareholders and is aimed at enhancing accountability. In the past, a Derivative Action could only be brought under certain instances and exceptions e.g. where the company had acted ultra vires, in instances of fraud by the majority shareholders etc. This was the case because only the Company, being a separate legal entity from its members, could institute claims for any wrongs it had suffered. Currently however, derivative claims may be instituted in instances of acts or omissions that involve negligence, default, breach of duty or breach of trust by a director or any other member of the company.

On 31st March 2022, the Office of the Data Protection Commissioner (ODPC) issued a press notice notifying the public that the Regulations on the Registration of Data Controllers and Processors will come into effect from 14th July 2022. The Regulations inter alia, set out the requirements and procedures for registration as a data controller, data processor or both. Following this announcement, data controllers and processors will now be required to register as such with the ODPC on/around 14th July, 2022.

On 4th May 2022, the Capital Markets Authority (“CMA”) published the Draft Capital Markets (Public Offers & Listing of Securities) Regulations, 2022 (“draft Regulations”) inviting the general public and stakeholders for comments pursuant to section 12A (3) of the Capital Markets Act. The draft Regulations seek to repeal the existing Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations 2002 (“existing Regulations”) which are deemed as being overly prescriptive, outdated and onerous thus hindering the growth of the capital markets in Kenya. The draft Regulations seek to address the pertinent shortcomings in the existing Regulations in a bid to encourage more listing of securities while also ensuring the protection of investors.

The Sectional Properties Act 2020 (“the current SPA”) was passed to address the challenges under the former Act and to align the law on sectional properties to the current land laws and the Constitution of Kenya. The salient features of the current SPA include: the requirement that owners of sectional units be responsible for any rates, rent or taxes; the establishment of the Corporation (body responsible for managing the common areas) and the responsibility of the Lands Registrar in its establishment; the duties and powers of the Corporation and the review of existing long-term leases to ensure that they are properly georeferenced and that the geo-referencing has been approved by the Survey of Kenya. The current SPA is intended to ease the registration and the management of the sectional properties and consequently encourage investment in sectional properties in Kenya. However, it is yet to be observed whether the new provisions will remedy the delays in the registration of units under the sectional properties regime. Further, the requirement that all long-term leases should be reviewed is expected to inconvenience many owners and developers who are required to have completed the review process by 28th December 2022.

On 21st March 2022, Central Bank of Kenya (CBK) issued a press notice notifying the public that the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 (the Regulations) are now operational. The Regulations were published via Legal Notice Number 46 of March 2022. The Regulations seek to address concerns raised by the public given the recent significant growth of digital lending particularly through mobile phones. Pursuant to the Regulations, all Digital Credit Providers (DCPs) are now required to be licensed by CBK. Notably, the Regulations expressly prohibit a DCP from using threats, obscene or profane language, accessing customer’s phone book or contacts list, making unauthorized or unsolicited calls or message to the customer’s phone contacts and other contacts, et cetera, in the course of debt collection. All existing DCPs are required to apply to CBK for a license by 17th September 2022 or cease operations.

The office of the Attorney General published Guidelines to assist public and private entities in the Preparation of Procedures for the Prevention of Bribery and Corruption (“the Guidelines”). The Guidelines were published following the enactment of the Bribery Act, 2016 (“the Act”), and should be read together with the Act.

The Act widened the scope of the fight against bribery and corruption by extending the fight to the private sector. Prior to the enactment of the Act in 2016, the law against corruption only targeted the public entities and state organs thus detaching itself from the realities of the expanded private sector. The Anti-Corruption and Economic Crimes Act, 2003, defines corruption as any act of bribery, fraud, embezzlement or misappropriation of public funds, abuse of office, breach of Trust, and an offence involving dishonesty in connection with any tax, rate or levy imposed by any written Act or law.