On 22 November 2018, the Capital Markets Authority (CMA) and the National Council for Law Reporting (NCLR) unveiled a digest of court decisions that have shaped how Kenya’s capital markets are regulated and enforced.
The publication, titled Digest of Decisions on Capital Markets, brings together 27 cases drawn from a 10-year period between 2008 and 2018. The rulings are grouped into seven categories: civil cases, civil appeals, constitutional petitions, judicial review applications, miscellaneous applications, civil suits and criminal cases.
Among the decisions highlighted is Peter Muthoka vs CMC Holdings Ltd and 12 others, a case that established the CMA’s ability to recommend the appointment of an interim board to run a listed company when investor confidence needs to be restored.
Another featured matter is Capital Markets Authority vs Jeremiah Gitau Kiereini, where the court affirmed that the regulator has a dual role: it can investigate directors of listed companies and also take enforcement action against them.
The digest also records rulings that did not favour the regulator. In Republic vs Benard Mwangi Kibaru Criminal Case No 1337 of 2008, decided on 25 November 2010, the court held that an employee who attends board meetings and later sells shares is not guilty of insider trading if the decision was based on information already in the public domain.
Mr Kibiru was an employee of the now cash-strapped Uchumi Supermarkets. He headed the Buying and Merchandising Department and attended Uchumi board meetings by invitation.
He sold his 111,400 shares on 26 April 2006, and that transaction led to the insider trading charge.
CMA chairman James Ndegwa said the digest is meant to help market players, legal practitioners, magistrates, judges, judicial officers, law students and other stakeholders understand the body of law that has developed around the sector.
He said the publication will be updated as local jurisprudence continues to expand. Paul Muthaura, the CMA chief executive, said the authority expects the digest to help clear up myths and misconceptions about how capital markets operate.
Some of the decisions included in the compilation are still the subject of appeals.
