4 April 2013

Kenya: CBK Seeks to Compel Banks to Name All Shareholders

THE Central Bank is seeking powers to compel holding companies of banks to disclose the identity of their true owners including nominees.

CBK has published guidelines for bank's non-operating holding companies that among others provide that the banking regulator is free to obtain ownership information from any of a bank's shareholder.

This is for purposes of ascertaining or investigating into the control of shareholding or voting power in the approved non-operating holding company.

Such a shareholder will be required to disclose whether they hold any share in the approved non-operating holding company as beneficial owner or as nominee. If they hold the share as nominee, to indicate as far as they can, the person for whom they holds the share (either by name or by other particulars sufficient to enable that person to be identified) and the nature of his interest.

The regulations, for which the CBK is seeking public input, provide guidance on the acquisition of control of banks by non-operating holding companies.For instance, the formation of a non-operating holding company seeking to acquire more than 25

per cent of an institution's paid up share capital must be approved by the CBK. Also requiring CBK's approval is the acquisition of a subsidiary bank or any action that causes a bank to become a subsidiary of a non-operating holding company.

Additionally, a non-operating holding company granted approval by the CBK shall be required to pay an approval fee of Sh1 million and thereafter pay an annual fee of Sh500,000 to the CBK.

According to the guidelines, all persons seeking to become significant shareholders and senior officers of any non-operating holding company must complete the requisite fit and proper forms and be vetted as suitable persons by the CBK.

"No person shall become a significant shareholder of an approved non- operating holding company without first obtaining the approval of the Central Bank of Kenya," states a part of the new regulations.

In addition, a non-operating holding company shall not be allowed to transfer more than five per cent of its share capital to an individual or an entity except with the prior written approval of the Central Bank.

The guidelines prohibits a holding company from granting any credit facility except to any company within its non-operating holding companies group. Further , drectors of a such a holding company are discouraged from engaging in activities that can result in a conflict of interest.

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