The respondent is a body corporate established under Section 5 of the Capital Markets Act Chapter 485A of the Laws of Kenya (hereinafter referred to as ‘the Act’). The appellants were alleged to have been at the time material to this matter Chief Finance Officer, Chief Executive Officer, Chief Operating Officer and a Board Member respectively of Real People Kenya Limited (hereinafter referred to as ‘the company’) which was indisputably under regulatory jurisdiction of the respondent.
On 19 th October 2020, the respondent issued notices to show cause to the appellants for violation of certain provisions of the Code of Corporate Governance Practices for Issuer of Securities to the Public 2015 and the Capital Markets Act. This was after conducting a preliminary inquiry which some negative findings against the appellants. The notices to show cause claimed that;
The appellants were responsible for misapplication of proceeds of a medium term note in various ways contained in each of the notice to the individual appellant.
The appellants and the company misled investors through omission of relevant information in the information memorandum.
The respondent went ahead and formed an Ad Hoc Committee (hereinafter referred to as ‘the committee’) to investigate these allegations. The appellants challenged the notices to show cause on preliminary legal issues vide letter dated 19 th November 2020 and again on 8 th March 2020. The appellants challenged the proceedings on two fronts; that the committee had no jurisdiction over the matter and that the guidelines they were accused to have violated were not enforceable but mere recommendations. The claimed also that the proceedings before the committee would be a violation of their constitutional rights.
In rulings delivered on 10-03-2021 and 8-03-2021, the committee dismissed the appellants’ objections and ordered that the notices to show cause shall proceed to full hearing. The appellants were dissatisfied with the ruling of the committee and preferred an appeal to the Capital Markets Tribunal which after hearing was dismissed on 5 th June 2024. It is the ruling of the Tribunal which is the subject of this appeal.
The appellants have raised 14 grounds of appeal. Having gone through the record of appeal, the judgment of the tribunal and submissions of the parties, I am satisfied that this appeal can satisfactorily be disposed of by considering the following issues;
Whether the committee had jurisdiction to handle the matters raised in the notices to show cause.
Whether the appellants’ constitutional rights were violated or were under threat of violation by the matter proceeding before the committee.
Whether the tribunal erred in dismissing the appeal.
On the first issue, the appellants have argued that Sections 30D, 30E and 34(b) of the Act create criminal offences over which the committee or the respondent did not have jurisdiction. It is the position of the law that a tribunal or body like the respondent have no jurisdiction to try or prosecute criminal offences. The functions of the respondent and any committees formed under it have no jurisdiction to try criminal offences or impose fines or custodial sentences. In my opinion in order to dispose this issue, this court needs to interrogate whether the committee was in the notices to show cause (hereinafter referred to as ‘the notices’) exercising jurisdiction of criminal nature.
The notices identified areas of concerns as misapplication of the proceeds from medium term notes and misleading investors through omission of the relevant information in the information memorandum and laid down the grounds for which the appellants were being called upon to make representations. The respondent also made it clear that upon receipt of the responses it would make appropriate decisions including enforcement if need be. The notices did not in anyway suggest that the respondent was proceeding to try the appellants for any criminal conduct. In my mind, the notices were dealing with regulatory issues and did not call upon the appellants to answer to any criminal charges. The mere mention that the appellants had violated Sections 30D, 30E and 34(b) of the Act did not in itself translate to conversion of the proceedings before the committee to criminal proceedings. The fact that a particular Section of the law creates an offence does not mean that the actors including regulators in the concerned industry should not touch or deliberate on anything touching on the acts contemplated in the Sections.
I note that, through their advocates’ letter dated 19-11-2020, the appellants in addition to raising the preliminary issues of jurisdiction and enforceability of the code argued that the recommendation in the provisions of the code had been complied with by the directors of the company. This is a substantive issue which did not arise in the appeal to the tribunal neither does it arise here as the committee did not look into it.
The appellants were invited to appear before the committee for the purposes of hearing which in my opinion is a process of inquiry and special investigations of the conduct of the appellants. The respondent gave the terms of reference of the committee as follows;
To consider the inquiry findings and determine the validity of the allegations levelled against individuals involved in the matters.
Give a fair and reasonable opportunity to all the individuals implicated (those served with notices) to be heard and defend themselves on the allegations attributed to them.
Make findings, determinations and impose the appropriate enforcement actions (if any) to be taken against the recipient of the notices.
I find the above terms of reference in tandem with the powers given to the respondent by statute particularly Sections 11(3)(cc), (h), (j), (t) and (w) of the Act which provides as follows;
11. For the purpose of carrying out its objectives, the Authority may exercise,
perform or discharge all or any of the following powers, duties and functions;
(cc) impose sanctions for breach of the provisions of this Act or the regulations made thereunder, or for non-compliance with the Authority’s requirements or directions, and such sanctions may include-
levying of financial penalties, proportional to the gravity or severity of the breach, as may be prescribed:
Provided that the financial penalties shall be recoverable summarily by the Authority as civil debts;
ordering a person to remedy or mitigate the effect of the breach, make restitution or pay compensation to any person aggrieved by the breach;
publishing findings of malfeasance by any person;
suspending or cancelling the listing of any securities or exchange-traded derivatives contracts, or the trading of any securities or exchange-traded derivatives contracts, for the protection of investors;
(h) inquire, either on its own motion or at the request of any other person,
into the affairs of any person which the Authority has approved or to which it has granted a licence and any public company the securities of which are publicly offered or traded on an approved securities exchange or on an over the counter market;
j) conduct inspection of the activities, books and records of any persons approved or licensed by the Authority
(t) trace any assets, including bank accounts, of any person who, upon investigation by the Authority, is found to have engaged in any fraudulent dealings in an issuer and its securities or insider trading;
(w) do all such other acts as may be incidental or conducive to the attainment of the objectives of the Authority or the exercise of its powers under this Act.
Read objectively, the above provisions empower the respondent to investigate conduct of companies, their management, employees and their directors and does not limit the scope of the investigations as long as the same are conducted within its statutory objectives although that does not mean that the respondents shall have jurisdiction to delve into issues that are reserved for courts or other tribunals by statute to the Constitution.
In the same breath Section 13B of the Act provides that;
Where the Authority has reasonable cause to believe, either on its own motion or as a result of a complaint received from any person, that-
an offence has been committed under this Act; or
a director, manager or employee of a licensee, approved person or an issuer or any other person, may have engaged in embezzlement, fraud, misfeasance or other misconduct in an issuer, licensee or approved person in connection with its regulated activity; or
the manner in which a licensed or approved person has engaged or is engaging in the regulated activity is not in the interest of the person's clients or in the public interest, the Authority may in writing depute a suitably qualified person to conduct investigations into the matter on behalf of the Authority.
I do not see any interpretation of the above other than that the Act empowers the respondent to undertake investigations where there are reasons to believe that there is a criminal offence committed by a person under its jurisdiction. In my view this case fits within the provisions of the Section. That does not of course mean that the respondent has powers to impose penalties, fines or sentences as if it is conducting a criminal trial.
In my view since the Act has clothed the respondent with jurisdiction to entertain matters specified in Sections 13B and 11 of the Act, it cannot be said that the respondent has no such jurisdiction. I agree with the holding Paul Kuria Kiore v Kenyatta University (2016) KEHC 7696 (KLR) which has been cited by the respondent thus;
‘ Whereas the disciplinary proceedings may be an inquiry into what may as well amount to a criminal offence, the mere fact that the facts constitute both, does not amount to the disciplinary tribunal constituting itself into a criminal court since a criminal court is not bound by the findings of a disciplinary tribunal whose standard of proof may not necessarily be the same as in criminal cases. In my view the facts giving rise to disciplinary proceedings may well constitute a criminal offence and the Respondent’s Disciplinary Committee is clothed with the jurisdiction to deal with all general offences committed by students in their day to day activities with the only restriction being that the Committee cannot entertain what the University considers as major offences.’
This court is alive to Article 157 of the Constitution which reserves powers of criminal prosecution on the Office of the Director of Public Prosecutions and no prosecution can proceed without his authority or approval. However, I do not think that the process initiated by the respondent amounted to criminal prosecution or investigations. The notices did not make reference to any intention or proposal to carry out the criminal element of the acts or omission in question. It is the appellant who in their response seemed to clothe their conduct with criminality.
In view of the above, I see nothing wrong with the respondent investigating and conducting a hearing of the appellant’s conducts as long as they kept themselves outside criminal process. If the hearing of the notices would reveal a possibility of criminal culpability against the appellants, the committee would be perfectly within its mandate to recommend criminal investigations by the relevant authorities. It is my opinion therefore that it was premature for the appellants to raised the issue of criminal investigations as they did. The appeal would have been justified if the committee had made decisions which were penal in nature.
The appellant has argued that the if the hearing proceeds before the committee, their constitutional rights to a fair hearing would be violated. As observed above, the process the appellants were to undergo was not of criminal nature but rather investigations which may carry identity of criminality which in my view was lawful and in adherence to the statute. The respondent was obviously bound by the Constitution and statutory law to give those it was investigating or prosecuting a fair hearing.
Fair hearing entails and includes giving the subject adequate notice of what they are facing, sufficient opportunity and facilities to present their defence and right to representation. I have looked at the notices and I am satisfied that the appellants were afforded these rights. The notices are clear on what the hearing would be all about and went ahead to inform the appellants that they had a right to be represented by advocates of their choices. They were also given an opportunity to present their defence which they did by having their advocates appear and make submissions. Actually, the appellants have not complained of denial of these constitutional rights. Instead, they claim that they would not be in a position to exercise them.
The process the respondent adopted would. in my view give safeguard to the appellants on their constitutional rights and I do agree with the finding of the Tribunal on this issue. One cannot say that it is only in courts where they can get protection of and opportunity to enjoy their constitutional rights. The committee and any other organ have an obligation to respect and uphold the rights of the persons appearing before them and arguing that they would not sufficiently exercise their rights before the committee was speculative and evasive and of no basis.
The appellants have claimed that the press release by the respondent had prejudiced them and as such the committee could not be expected to give an independent verdict. Having gone through the cited press released, I have formed opinion that it did not make reference to the appellants as it was giving status of the cases against the persons who had submitted themselves to the jurisdiction of the respondent’s empaneled committee. The respondent was reporting a finding which would have been reported by anyone else and unless there is a demonstration that the committee was biased against the appellants, I do not see how the press release would have been a violation of the appellants’ rights.
The fact that the press release referred to the company’s board did not change the fact that each individual was to be tried on their own actions or omissions. Even the notices were clear on the parts or roles played by each of the subject of the hearing. Even if the press release would not have been issued, the decisions would still remain and nothing would have prevented the committee from making references to the decisions. It was the onus of the appellants to distinguish their cases from those already determined. In any case, the committee would not be the final on the issue. The appellants will have a right to appeal the decision to the Tribunal and later to this court if the hearing proceeded in a manner that manifested bias against them.
The appellant has also raised the issue of delay of the matter due to lack of a properly constituted Tribunal and the impossibility of them not getting a fair hearing. They argue that due to passage of time, it will be hard for them to get evidence to enable them defend themselves. We must distinguish a situation where the delay in investigations or hearings is caused by the investigating or presiding agencies and where the matter delays due to intricacies of the proceedings. The appellants were aware that they were required to appear for hearing even before the issues of delay of appointment arose. At that point, they were in a position to gather evidence necessary for their defences.
The Tribunal could not deal with the matter because it had not been properly constituted. The respondent was not to blame for the delay in constitution of the Tribunal as the power to do so lied elsewhere. The fact that some of the persons who were subject of the notices have passed on does not mean that the remaining ones cannot be investigated or prosecuted. The appellants have also raised an argument that a number of the appellants are no longer directors of the company which in my view does not hold water. What matters and is relevant is that they were directors or in position of responsibility at the time of the act or omission in question.
The appellants have made submissions that the Tribunal went out of its way to discuss irrelevant matters by making decisions based on researches which are not applicable to our laws. They specifically faulted the Tribunal for engaging in an academic exercise of reviewing various papers and international laws in arriving at its decisions. A Tribunal, court or institutions cannot be confined to what is local or be found to deviate from a case simply because they have made reference to other comparative jurisdiction unless they apply foreign jurisprudence which materially contradict our laws or constitutional epithets.
On the enforceability of the guidelines, I cannot agree more with the finding of the committee on this where it cited Section 25A (1) of the Act thus;
‘Without prejudice to any other provision of this Act, the Authority may impose the following sanctions or levy financial penalties in accordance with this Act, for the breach of any provisions of this Act, the regulations, rules, guidelines, notices or directions made thereunder, or the rules of procedure of a securities, commodities or derivatives exchange, by a licensed or approved person, issuer, employee or a director of a licensed or approved person or employee director of a issuer as provided under section 11(3)(cc)’
The powers donated by the Act are meant to ensure that the respondent is able to inspire confidence in the capital market by protecting investors. The respondent is the regulator of the market and it has statutory authority to formulate codes of conduct and other market guidelines and unless the same have been found unconstitutional, they remain enforceable by the regulator. The appellants have not made any prayer for that finding and the court would not go into that area. In Cementia Holdings Ag & Another v Capital Markets Authority & 3 others (2014) KEHC 8066 (KLR), Honourable Justice Isaac Lenaola (as he then was) held that;
‘The provisions of Section 11 would show that CMA has the powers to regulate capital markets generally and it also has powers to ensure that the security market is orderly, fair and efficient. It is the best judge of the operations of those it has licensed and to confirm whether the licensees are acting in accordance with the regulations as laid down.’
The upshot of the above discussion is that I find no merits in this appeal and the same is hereby dismissed with costs to the respondent.
Dated, signed and delivered at Nairobi this 31 st day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Miss Atim for the appellants and Mr. Paul Kamara for the respondent.
On 19 th October 2020, the respondent issued notices to show cause to the appellants for violation of certain provisions of the Code of Corporate Governance Practices for Issuer of Securities to the Public 2015 and the Capital Markets Act. This was after conducting a preliminary inquiry which some negative findings against the appellants. The notices to show cause claimed that;
The appellants were responsible for misapplication of proceeds of a medium term note in various ways contained in each of the notice to the individual appellant.
The appellants and the company misled investors through omission of relevant information in the information memorandum.
The respondent went ahead and formed an Ad Hoc Committee (hereinafter referred to as ‘the committee’) to investigate these allegations. The appellants challenged the notices to show cause on preliminary legal issues vide letter dated 19 th November 2020 and again on 8 th March 2020. The appellants challenged the proceedings on two fronts; that the committee had no jurisdiction over the matter and that the guidelines they were accused to have violated were not enforceable but mere recommendations. The claimed also that the proceedings before the committee would be a violation of their constitutional rights.
In rulings delivered on 10-03-2021 and 8-03-2021, the committee dismissed the appellants’ objections and ordered that the notices to show cause shall proceed to full hearing. The appellants were dissatisfied with the ruling of the committee and preferred an appeal to the Capital Markets Tribunal which after hearing was dismissed on 5 th June 2024. It is the ruling of the Tribunal which is the subject of this appeal.
The appellants have raised 14 grounds of appeal. Having gone through the record of appeal, the judgment of the tribunal and submissions of the parties, I am satisfied that this appeal can satisfactorily be disposed of by considering the following issues;
Whether the committee had jurisdiction to handle the matters raised in the notices to show cause.
Whether the appellants’ constitutional rights were violated or were under threat of violation by the matter proceeding before the committee.
Whether the tribunal erred in dismissing the appeal.
On the first issue, the appellants have argued that Sections 30D, 30E and 34(b) of the Act create criminal offences over which the committee or the respondent did not have jurisdiction. It is the position of the law that a tribunal or body like the respondent have no jurisdiction to try or prosecute criminal offences. The functions of the respondent and any committees formed under it have no jurisdiction to try criminal offences or impose fines or custodial sentences. In my opinion in order to dispose this issue, this court needs to interrogate whether the committee was in the notices to show cause (hereinafter referred to as ‘the notices’) exercising jurisdiction of criminal nature.
The notices identified areas of concerns as misapplication of the proceeds from medium term notes and misleading investors through omission of the relevant information in the information memorandum and laid down the grounds for which the appellants were being called upon to make representations. The respondent also made it clear that upon receipt of the responses it would make appropriate decisions including enforcement if need be. The notices did not in anyway suggest that the respondent was proceeding to try the appellants for any criminal conduct. In my mind, the notices were dealing with regulatory issues and did not call upon the appellants to answer to any criminal charges. The mere mention that the appellants had violated Sections 30D, 30E and 34(b) of the Act did not in itself translate to conversion of the proceedings before the committee to criminal proceedings. The fact that a particular Section of the law creates an offence does not mean that the actors including regulators in the concerned industry should not touch or deliberate on anything touching on the acts contemplated in the Sections.
I note that, through their advocates’ letter dated 19-11-2020, the appellants in addition to raising the preliminary issues of jurisdiction and enforceability of the code argued that the recommendation in the provisions of the code had been complied with by the directors of the company. This is a substantive issue which did not arise in the appeal to the tribunal neither does it arise here as the committee did not look into it.
The appellants were invited to appear before the committee for the purposes of hearing which in my opinion is a process of inquiry and special investigations of the conduct of the appellants. The respondent gave the terms of reference of the committee as follows;
To consider the inquiry findings and determine the validity of the allegations levelled against individuals involved in the matters.
Give a fair and reasonable opportunity to all the individuals implicated (those served with notices) to be heard and defend themselves on the allegations attributed to them.
Make findings, determinations and impose the appropriate enforcement actions (if any) to be taken against the recipient of the notices.
I find the above terms of reference in tandem with the powers given to the respondent by statute particularly Sections 11(3)(cc), (h), (j), (t) and (w) of the Act which provides as follows;
11. For the purpose of carrying out its objectives, the Authority may exercise,
perform or discharge all or any of the following powers, duties and functions;
(cc) impose sanctions for breach of the provisions of this Act or the regulations made thereunder, or for non-compliance with the Authority’s requirements or directions, and such sanctions may include-
levying of financial penalties, proportional to the gravity or severity of the breach, as may be prescribed:
Provided that the financial penalties shall be recoverable summarily by the Authority as civil debts;
ordering a person to remedy or mitigate the effect of the breach, make restitution or pay compensation to any person aggrieved by the breach;
publishing findings of malfeasance by any person;
suspending or cancelling the listing of any securities or exchange-traded derivatives contracts, or the trading of any securities or exchange-traded derivatives contracts, for the protection of investors;
(h) inquire, either on its own motion or at the request of any other person,
into the affairs of any person which the Authority has approved or to which it has granted a licence and any public company the securities of which are publicly offered or traded on an approved securities exchange or on an over the counter market;
j) conduct inspection of the activities, books and records of any persons approved or licensed by the Authority
(t) trace any assets, including bank accounts, of any person who, upon investigation by the Authority, is found to have engaged in any fraudulent dealings in an issuer and its securities or insider trading;
(w) do all such other acts as may be incidental or conducive to the attainment of the objectives of the Authority or the exercise of its powers under this Act.
Read objectively, the above provisions empower the respondent to investigate conduct of companies, their management, employees and their directors and does not limit the scope of the investigations as long as the same are conducted within its statutory objectives although that does not mean that the respondents shall have jurisdiction to delve into issues that are reserved for courts or other tribunals by statute to the Constitution.
In the same breath Section 13B of the Act provides that;
Where the Authority has reasonable cause to believe, either on its own motion or as a result of a complaint received from any person, that-
an offence has been committed under this Act; or
a director, manager or employee of a licensee, approved person or an issuer or any other person, may have engaged in embezzlement, fraud, misfeasance or other misconduct in an issuer, licensee or approved person in connection with its regulated activity; or
the manner in which a licensed or approved person has engaged or is engaging in the regulated activity is not in the interest of the person's clients or in the public interest, the Authority may in writing depute a suitably qualified person to conduct investigations into the matter on behalf of the Authority.
I do not see any interpretation of the above other than that the Act empowers the respondent to undertake investigations where there are reasons to believe that there is a criminal offence committed by a person under its jurisdiction. In my view this case fits within the provisions of the Section. That does not of course mean that the respondent has powers to impose penalties, fines or sentences as if it is conducting a criminal trial.
In my view since the Act has clothed the respondent with jurisdiction to entertain matters specified in Sections 13B and 11 of the Act, it cannot be said that the respondent has no such jurisdiction. I agree with the holding Paul Kuria Kiore v Kenyatta University (2016) KEHC 7696 (KLR) which has been cited by the respondent thus;
‘ Whereas the disciplinary proceedings may be an inquiry into what may as well amount to a criminal offence, the mere fact that the facts constitute both, does not amount to the disciplinary tribunal constituting itself into a criminal court since a criminal court is not bound by the findings of a disciplinary tribunal whose standard of proof may not necessarily be the same as in criminal cases. In my view the facts giving rise to disciplinary proceedings may well constitute a criminal offence and the Respondent’s Disciplinary Committee is clothed with the jurisdiction to deal with all general offences committed by students in their day to day activities with the only restriction being that the Committee cannot entertain what the University considers as major offences.’
This court is alive to Article 157 of the Constitution which reserves powers of criminal prosecution on the Office of the Director of Public Prosecutions and no prosecution can proceed without his authority or approval. However, I do not think that the process initiated by the respondent amounted to criminal prosecution or investigations. The notices did not make reference to any intention or proposal to carry out the criminal element of the acts or omission in question. It is the appellant who in their response seemed to clothe their conduct with criminality.
In view of the above, I see nothing wrong with the respondent investigating and conducting a hearing of the appellant’s conducts as long as they kept themselves outside criminal process. If the hearing of the notices would reveal a possibility of criminal culpability against the appellants, the committee would be perfectly within its mandate to recommend criminal investigations by the relevant authorities. It is my opinion therefore that it was premature for the appellants to raised the issue of criminal investigations as they did. The appeal would have been justified if the committee had made decisions which were penal in nature.
The appellant has argued that the if the hearing proceeds before the committee, their constitutional rights to a fair hearing would be violated. As observed above, the process the appellants were to undergo was not of criminal nature but rather investigations which may carry identity of criminality which in my view was lawful and in adherence to the statute. The respondent was obviously bound by the Constitution and statutory law to give those it was investigating or prosecuting a fair hearing.
Fair hearing entails and includes giving the subject adequate notice of what they are facing, sufficient opportunity and facilities to present their defence and right to representation. I have looked at the notices and I am satisfied that the appellants were afforded these rights. The notices are clear on what the hearing would be all about and went ahead to inform the appellants that they had a right to be represented by advocates of their choices. They were also given an opportunity to present their defence which they did by having their advocates appear and make submissions. Actually, the appellants have not complained of denial of these constitutional rights. Instead, they claim that they would not be in a position to exercise them.
The process the respondent adopted would. in my view give safeguard to the appellants on their constitutional rights and I do agree with the finding of the Tribunal on this issue. One cannot say that it is only in courts where they can get protection of and opportunity to enjoy their constitutional rights. The committee and any other organ have an obligation to respect and uphold the rights of the persons appearing before them and arguing that they would not sufficiently exercise their rights before the committee was speculative and evasive and of no basis.
The appellants have claimed that the press release by the respondent had prejudiced them and as such the committee could not be expected to give an independent verdict. Having gone through the cited press released, I have formed opinion that it did not make reference to the appellants as it was giving status of the cases against the persons who had submitted themselves to the jurisdiction of the respondent’s empaneled committee. The respondent was reporting a finding which would have been reported by anyone else and unless there is a demonstration that the committee was biased against the appellants, I do not see how the press release would have been a violation of the appellants’ rights.
The fact that the press release referred to the company’s board did not change the fact that each individual was to be tried on their own actions or omissions. Even the notices were clear on the parts or roles played by each of the subject of the hearing. Even if the press release would not have been issued, the decisions would still remain and nothing would have prevented the committee from making references to the decisions. It was the onus of the appellants to distinguish their cases from those already determined. In any case, the committee would not be the final on the issue. The appellants will have a right to appeal the decision to the Tribunal and later to this court if the hearing proceeded in a manner that manifested bias against them.
The appellant has also raised the issue of delay of the matter due to lack of a properly constituted Tribunal and the impossibility of them not getting a fair hearing. They argue that due to passage of time, it will be hard for them to get evidence to enable them defend themselves. We must distinguish a situation where the delay in investigations or hearings is caused by the investigating or presiding agencies and where the matter delays due to intricacies of the proceedings. The appellants were aware that they were required to appear for hearing even before the issues of delay of appointment arose. At that point, they were in a position to gather evidence necessary for their defences.
The Tribunal could not deal with the matter because it had not been properly constituted. The respondent was not to blame for the delay in constitution of the Tribunal as the power to do so lied elsewhere. The fact that some of the persons who were subject of the notices have passed on does not mean that the remaining ones cannot be investigated or prosecuted. The appellants have also raised an argument that a number of the appellants are no longer directors of the company which in my view does not hold water. What matters and is relevant is that they were directors or in position of responsibility at the time of the act or omission in question.
The appellants have made submissions that the Tribunal went out of its way to discuss irrelevant matters by making decisions based on researches which are not applicable to our laws. They specifically faulted the Tribunal for engaging in an academic exercise of reviewing various papers and international laws in arriving at its decisions. A Tribunal, court or institutions cannot be confined to what is local or be found to deviate from a case simply because they have made reference to other comparative jurisdiction unless they apply foreign jurisprudence which materially contradict our laws or constitutional epithets.
On the enforceability of the guidelines, I cannot agree more with the finding of the committee on this where it cited Section 25A (1) of the Act thus;
‘Without prejudice to any other provision of this Act, the Authority may impose the following sanctions or levy financial penalties in accordance with this Act, for the breach of any provisions of this Act, the regulations, rules, guidelines, notices or directions made thereunder, or the rules of procedure of a securities, commodities or derivatives exchange, by a licensed or approved person, issuer, employee or a director of a licensed or approved person or employee director of a issuer as provided under section 11(3)(cc)’
The powers donated by the Act are meant to ensure that the respondent is able to inspire confidence in the capital market by protecting investors. The respondent is the regulator of the market and it has statutory authority to formulate codes of conduct and other market guidelines and unless the same have been found unconstitutional, they remain enforceable by the regulator. The appellants have not made any prayer for that finding and the court would not go into that area. In Cementia Holdings Ag & Another v Capital Markets Authority & 3 others (2014) KEHC 8066 (KLR), Honourable Justice Isaac Lenaola (as he then was) held that;
‘The provisions of Section 11 would show that CMA has the powers to regulate capital markets generally and it also has powers to ensure that the security market is orderly, fair and efficient. It is the best judge of the operations of those it has licensed and to confirm whether the licensees are acting in accordance with the regulations as laid down.’
The upshot of the above discussion is that I find no merits in this appeal and the same is hereby dismissed with costs to the respondent.
Dated, signed and delivered at Nairobi this 31 st day of July 2025.
B.M. MUSYOKI
JUDGE OF THE HIGH COURT.
Judgment delivered in presence of Miss Atim for the appellants and Mr. Paul Kamara for the respondent.