Banking & Finance

Banking and finance law governs the flow of capital between lenders and borrowers, and the creation and enforcement of the security interests that underpin that flow. In Kenya, this area is shaped by the Banking Act, the Central Bank of Kenya Act, the Microfinance Act, the Sacco Societies Act, the Land Registration Act (for charges over immovable property), the Movable Property Security Rights Act (for charges over movable assets), and the Insolvency Act, 2015. It is a technically demanding field where the precision of documentation is paramount — a defective charge or an unenforceable guarantee can mean the difference between recovery and a total loss.

Advocates offering this service act for banks, microfinance institutions, saccos, corporate borrowers, and individual borrowers. For lending institutions, they prepare and register the full range of security documents: legal mortgages and charges over land, fixed and floating charges over movable assets, debentures, guarantees, indemnities, and pledges over shares and other financial instruments. Advocates ensure that every security document complies with the relevant statutory requirements for creation, perfection, and registration, and they handle registrations at the land registry, the Registry of Movable Property Security Rights, and the Companies Registry.

Advocates also advise lenders on loan structuring, syndicated facilities, inter-creditor arrangements, and subordination agreements. For complex transactions, they prepare facility agreements that address drawdown conditions, representations and warranties, covenants, events of default, and enforcement mechanisms. The work also covers project finance transactions, where the security package extends beyond the borrower's assets to include assignment of contracts, insurance proceeds, and project revenues.

For borrowers, they review and negotiate loan documentation to ensure that the terms are fair and that the borrower understands the full scope of their obligations. Advocates pay particular attention to financial covenants, default triggers, cross-default provisions, and the lender's enforcement rights. Advocates also act for corporate borrowers in the renegotiation of distressed facilities, the restructuring of debt, and the negotiation of waivers and standstill agreements.

Debt recovery is a natural extension of their finance practice. Advocates act for lenders in the recovery of non-performing loans through the courts, the exercise of statutory power of sale under the Land Act, 2012, the realisation of movable collateral under the Movable Property Security Rights Act, and the enforcement of guarantees. Advocates are mindful of the procedural protections afforded to borrowers — including the requirement for a statutory notice under section 90 of the Land Act — and they ensure that their enforcement actions are legally robust and not vulnerable to challenge.

Regulatory compliance is a further dimension of this practice area. Advocates advise banks and other financial institutions on licensing requirements, prudential regulations, anti-money laundering (AML) compliance, and the reporting obligations under the Proceeds of Crime and Anti-Money Laundering Act. Advocates also monitor developments in the fintech space, including the regulatory framework for digital lending, mobile money, and cryptocurrency, and they advise fintech innovators on the legal and regulatory landscape.