ALN is committed to championing investment in Africa. Member firms in Kenya, Uganda, Tanzania and Ethiopia have contributed to the latest edition of the African Private Equity and Venture Capital Association (AVCA) Legal and Regulatory bulletin which focuses on legal developments and emerging trends over the last several months that affect private equity activity in Africa. Our contributors highlight various changes in merger control, restructuring, private equity and venture capital funds, among other topics. Read more.
Amendment of the Commercial Code of Ethiopia
The current trends of liberalisation in Ethiopia are indicators that sectors like finance and telecom will be open to foreign investment. These trends coupled with the establishment of a capital market will bring many opportunities that may attract foreign investors.
The opening of a capital market brings with it opportunities for private equity investors to have an assessment of the Ethiopian market. Moreover, private equity firms will have the possibility of trading equity in an open market. Read more.
Regulation of Investments by Pension Funds and other Investors into Private Equity in Kenya
Drawing the line between investors who need protection and those who do not is inevitably more art than science, especially where offers often cut across corporates and individuals with different income and expertise, but a pension fund operating under its own pensions regulator should not be subject to the same regime. In seeking to define and draw the line between those investors who are sufficiently knowledgeable and those who require a regulator’s protection, it is increasingly important for the CMA to work with stakeholders such as the East Africa Venture Capital Association and the African Venture Capital Association, as well as private sector groups to ensure that the development of the existing regulatory framework encourages investment while ensuring public protection when required. Read more.
UBO Compliance: Emerging Issues for Private Equity and Venture Capital Funds in Kenya
In 2021 Kenya adopted regulations mandating the disclosure of ultimate beneficial owners (UBOs) for entities registered in the country. The UBO regulations are far-reaching in their scope and have important operational and tax implications for portfolio companies and investments held by private equity and venture capital investors in the East African region.
Kenyan portfolio companies need to establish a process of compliance with the beneficial ownership requirements and identify relevant beneficial owners, and consider tax advice in relation to possible thin capitalisation or transfer pricing implications of existing arrangements. Read more.
Trends Emerging from Kenya’s Insolvency Regime
Private equity and venture capital firms are often concerned about potential exposure to any financial or non-financial liability arising from investee insolvency. In general, Kenyan corporate insolvency is grounded in the concept of limited liability, a fundamental principle of corporate law that a company has separate and distinct legal personality from its directors and shareholders. Read more.