Corporate M&A

GLOBAL PRACTICE GUIDES

Definitive global law guides offering comparative analysis from top-ranked lawyers Corporate M&A

Kenya Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara Oraro & Company Advocates

practiceguides.chambers.com 2021 KENYA

Law and Practice Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara Oraro & Company Advocates see p.20

CONTENTS

1. Trends p.3 6.6 Requirement to Obtain Financing p.13 1.1 M&A Market p.3 6.7 Types of Deal Security Measures p.14 1.2 Key Trends p.3 6.8 Additional Governance Rights p.14 1.3 Key Industries p.4 6.9 Voting by Proxy p.14 6.10 Squeeze-Out Mechanisms p.14 p.4 2. Overview of Regulatory Field 6.11 Irrevocable Commitments p.14 2.1 Acquiring a Company p.4 2.2 Primary Regulators p.5 7. Disclosure p.14 2.3 Restrictions on Foreign Investments p.5 7.1 Making a Bid Public p.14 2.4 Antitrust Regulations p.6 7.2 Type of Disclosure Required p.15 2.5 Labour Law Regulations p.6 7.3 Producing Financial Statements p.15 2.6 National Security Review p.6 7.4 Transaction Documents p.15

3. Recent Legal Developments p.6 8. Duties of Directors p.16 3.1 Significant Court Decisions or Legal Developments p.6 8.1 Principal Directors’ Duties p.16 3.2 Significant Changes to Takeover Law p.8 8.2 Special or Ad Hoc Committees p.16 8.3 Business Judgement Rule p.17 p.8 4. Stakebuilding 8.4 Independent Outside Advice p.17 4.1 Principal Stakebuilding Strategies p.8 8.5 Conflicts of Interest p.17 4.2 Material Shareholding Disclosure Threshold p.8 4.3 Hurdles to Stakebuilding p.9 9. Defensive Measures p.17 4.4 Dealings in Derivatives p.10 9.1 Hostile Tender Offers p.17 4.5 Filing/Reporting Obligations p.10 9.2 Directors’ Use of Defensive Measures p.17 4.6 Transparency p.10 9.3 Common Defensive Measures p.18 9.4 Directors’ Duties p.18 p.11 5. Negotiation Phase 9.5 Directors’ Ability to “Just Say No” p.18 5.1 Requirement to Disclose a Deal p.11 5.2 Market Practice on Timing p.11 10. Litigation p.18 5.3 Scope of Due Diligence p.11 10.1 Frequency of Litigation p.18 5.4 Standstills or Exclusivity p.11 10.2 Stage of Deal p.19 5.5 Definitive Agreements p.12 10.3 “Broken-Deal” Disputes p.19

6. Structuring p.12 11. Activism p.19 6.1 Length of Process for Acquisition/Sale p.12 11.1 Shareholder Activism p.19 6.2 Mandatory Offer Threshold p.13 11.2 Aims of Activists p.19 6.3 Consideration p.13 11.3 Interference with Completion p.19 6.4 Common Conditions for a Takeover Offer p.13 6.5 Minimum Acceptance Conditions p.13

2 KENYA Law and Practice Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates

1. TRENDS As in many other jurisdictions, there have been efforts to enhance the use of technology to 1.1 M&A Market ensure business continuity. The High Court, The mergers and acquisitions (M&A) market has through a case filed by the Kenya Private Sector been affected by the outbreak of the COVID-19 Alliance Limited, issued orders allowing all com- pandemic, which has had negative economic panies to conduct virtual annual general meet- ramifications that have resulted in a significant ings if they found it impossible to conduct physi- reduction in projected investment, as well as cal meetings in the manner required under their reinvestment of earnings as depicted in the articles of association and the Companies Act. Central Bank of Kenya First Quarterly Review This was as a result of restrictions on physical of 2020. According to the Review, although the gatherings imposed as a result of the pandemic. economy staggered through the first quarter and The court extended the opportunity for virtual recorded a decline of almost 5.7%, some sec- meetings to all companies. It had initially limited tors – such as banking and services – recorded the order to public listed companies through a an increase in growth despite the risks posed by case filed by WPP Scangroup Plc. the pandemic. The Third Quarter Report, however, indicated a recovery in economic activity, The fintech and e-commerce sectors experi- hence, recording an improvement from -5.5% enced increased activity as COVID-19 forced to -1.1%. individuals and businesses to turn to technologi- cal solutions to comply with government direc- East Africa reported about 30 M&A deals in 2019, tives restricting movement and encouraging with Kenya recording the highest number of social distancing. Online marketplace provid- deals (I&M Burbidge Capital, Annual East Africa ers like Masoko, Jumia, Glovo and Kilimall saw Financial Review 2020). In the past 12 months, increased online activity during the pandemic. there has been a noticeable reduction in M&A Fintech companies, most notably Safaricom Plc, deals in East Africa largely due to COVID-19 and experienced a boost in the use of their M-Pesa the political environment, with about 25 M&A product (a mobile phone-based banking ser- deals reported. However, with limited data pub- vice), while banks turned to mobile banking to lished on the same, it is too early to fully ascer- meet the demand for contactless financial solu- tain the unprecedented effects of COVID-19 on tions. the Kenyan M&A market, especially given that some deals are currently pending completion. The Companies (Beneficial Ownership Informa- tion) Regulations, 2020 came into force in Febru- 1.2 Key Trends ary 2020. The Regulations require all companies Kenya has experienced reduced M&A activity incorporated or registered in Kenya to keep a because of the pandemic. Some businesses register of beneficial owners with the relevant that were unable to merge have resorted to joint information relating to the said beneficial own- ventures. Even with this arrangement, some joint ers. ventures have experienced commercial setbacks due to supply chain disruption and suppressed Notably, the COVID-19 pandemic has resulted economic activity, given the general global busi- in increased participation in the affairs of the ness outlook. company by shareholders in the form of shareholder activism. This has more or less been achieved through constant examining of books

3 Law and Practice KENYA Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates

of accounts, financial statements and participa- industries differently, for instance, the financial tion in the development of strategies to avoid the sector has witnessed a reduction of lending to collapse of the business. corporate entities while lending to key sectors such as transport, manufacturing, and commu- 1.3 Key Industries nication has risen due to the strong governmen- The banking, beverages and telecommunication tal measures implemented to curb the spread of sectors have maintained their positions as the the virus. preferred sectors for M&A deals in 2020. Major highlights include the following. According to a survey carried out by the Kenya Private Sector Alliance (KEPSA), the tourism, • The acquisition of Mayfair Bank by the Com- education and entertainment sectors were the mercial International Bank (CIB), the acqui- most affected industries following the lockdown sition of Transnational Bank plc by Access measures and bans on international passenger Bank plc, the acquisition of Jamii Bora Lim- flights, the temporary closure of schools, and the ited by Co-operative Bank Kenya Limited and shutting down of bars and restaurants save for the acquisition of certain assets of Imperial deliveries and takeaway services. Notwithstand- Bank Limited (In Receivership) by KCB Bank ing the impacts on the above-noted industries, Kenya Limited. sectors such as e-commerce, telecommunica- • The National Treasury increased its stake tion, online banking and online entertainment in Consolidated Bank to 93.4% following a reported a significant rise in demand as a result debt-to-share swap deal that saw the conver- of the sedentary life triggered by lockdowns, sion of about KES1.6 billion debt into shares. social distancing and curfew measures. • The merger approvals of the deal between Telkom Kenya Limited and Airtel may come through after a judgment was entered in 2. OVERVIEW OF favour of Telkom Kenya Limited against the REGULATORY FIELD Ethics and Anti-Corruption Commission (EACC); however, the deal appears to have 2.1 Acquiring a Company collapsed due to “challenges experienced in The primary techniques for acquiring a company getting all the approvals required to complete in Kenya are (i) purchasing shares of a targeted the transaction.” business, or (ii) the transfer of assets and lia- • Several notable cross-border deals includ- bilities from a target to the acquirer company. ing the impending increase in East African Acquisition of shares may be effected through Breweries Limited’s ownership in Serengeti a debt-equity swap wherein the investor for- Breweries Limited to 85% to tame competi- goes a debt in exchange for equity in the target tion from AB InBev’s Tanzania Breweries in business. For instance, the National Treasury Tanzania. has recently converted its KES1.6 billion debt holding in Consolidated Bank into equity, thus Industries Particularly Affected by the extending its shareholding to over 93%. COVID-19 Pandemic According to the Central Bank of Kenya Third Regardless of the methodology used, the Quarter Report, the economy contracted by underlying objectives of acquiring a company 1.1% as a result of the shuttering impacts of generally include, among others, improving the COVID-19. The pandemic has affected various performance of the target business, acquiring

4 KENYA Law and Practice Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates economies of scale, entry into new markets and 2.3 Restrictions on Foreign Investments revamping the competitive outlook of the target The foreign investment climate in Kenya is very business. attractive due to the continued simplification of the regulatory framework and procedures, and 2.2 Primary Regulators general improvement of the business environ- The main regulator for M&A in Kenya is the Com- ment for investors. Foreign investors receive petition Authority of Kenya (CAK), established relatively equal treatment to locals, as evidenced under Section 7 of the Competition Act (No 12 through policies such as the establishment of of 2010). The CAK is responsible for, inter alia, the Kenya Investment Authority (KenInvest) and promoting and enforcing compliance with the the enactment of the Foreign Investment Pro- Competition Act, and investigating complaints tection Act (Chapter 518). The procedures for and impediments to a merger. M&A deals of establishing a business in Kenya have also been regional nature attract oversight by the COMESA simplified by embracing technology and elimi- Competition Commission (CCC) and East Africa nating setbacks to attract foreign investments. Community Competition Authority (EAC Compe- tition Authority). While there are no all-encompassing restrictions on foreign investments, there are limited sector- Notably, the acquisition of a company whose specific restrictions on foreign investments, shares are listed on the Nairobi Securities including the following. Exchange (NSE) attracts the scrutiny and approval of the Capital Markets Authority (CMA) in the • The Insurance Act (Chapter 487) requires manner set out in the Capital Markets (Takeovers those undertaking insurance businesses to and Merger) Regulations, 2002 unless exempt- be registered under the Insurance Act, which ed by the CMA. Essentially, the Capital Markets restricts: (Takeovers and Merger) Regulations, 2002 pro- (a) foreign ownership in an insurer to two-third vide the guidelines and rules on takeovers and of the paid-out capital; and mergers while the CMA is mandated to regulate (b) the number of foreigners on the board and develop the Kenyan capital markets through of directors to two thirds of the board the Capital Markets Act (Chapter 485A) and its members. Regulations, the Central Depositories Act and • The National Information Communication the relevant Guidelines. and Technology (ICT) Policy Guidelines 2020 restrict foreign ownership in companies There may also be sector-specific regulators providing ICT services to a maximum of 70%; involved depending on the companies involved otherwise, a licence to provide ICT services in the M&A deal. For instance, the proposed will be denied. merger between Telkom Limited and Airtel Lim- • The National Construction Authority Act (No ited in the telecommunication sector attracted 41 of 2011) provides that any foreigner enter- the approval of the Communication Authority ing into a joint venture or subcontract with (CA). Other sector-specific regulators include a local shall ensure it retains not more than the Insurance Regulatory Authority, the Central 70%. Bank of Kenya and the Energy and Petroleum • Private Security Regulation Act (No13 of Regulatory Authority. 2016) provides that a foreign company shall only be licensed if at least 25% of the shareholding is local.

5 Law and Practice KENYA Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates

• The Banking Act (Chapter 488) provides that hand, the acquisition of National Bank of Kenya only banks, financial institutions, the govern- Limited by KCB Bank PLC was on condition that ment of Kenya, foreign governments, state KCB Bank PLC retained 90% of target employ- corporations, foreign companies licensed to ees for at least 18 months. operate as financial institutions in the relevant country and non-operating holding compa- The Second Schedule of the Capital Markets nies approved by the Central Bank of Kenya, (Take-Overs and Merger) Regulations, 2002 pro- may hold more than 25% of the share capital vides that an offeror should submit to the CMA of a financial institution. the takeover offer document, which shall include • The Civil Aviation (Licensing of Air Services) information on the offeror’s intentions concern- Regulations, 2018 provide that an air ser- ing the continued employment of the employees vice licence may only be issued to a Kenyan of the offeree and its subsidiaries. citizen or in the case of a body corporate or a partnership, where at least 51% of the 2.6 National Security Review voting rights in the body corporate or partner- M&A transactions in Kenya do not undergo a dis- ship are ultimately held by the government of tinct national security review. However, the CAK, Kenya, a citizen of Kenya or both. in considering and granting approvals, takes into consideration sound public policy issues such 2.4 Antitrust Regulations as the effect of the transaction on the national Anti-competitive trade practices in M&A are pri- security, health and safety, and market stabil- marily regulated by the CAK through the Com- ity. Furthermore, the CAK is permitted under the petition Act, regulations and several guidelines. merger regulations to consult other government Other regulations, typically applicable in M&A agencies in its review of any merger application. deals of a regional nature, include the CCC and EAC Competition Authority. 3. RECENT LEGAL 2.5 Labour Law Regulations DEVELOPMENTS Kenyan laws are silent on the effect of M&A transactions on employees. In practice, the con- 3.1 Significant Court Decisions or Legal tracts of employment are terminated on account Developments of redundancy subject to compliance with the Recent Court Decisions conditions set out in the Employment Act (No It was apparent from the High Court’s decision 11 of 2007). However, parties to an M&A trans- in Evans Aseto & another v National Bank of action may agree to continue the employment Kenya (NBK) & another; Central Bank of Ken- contracts subject to consultation with and the ya & another (Interested Parties) [2019] eKLR consent of the targeted employees. that although the employment and labour laws do not expressly provide for the treatment of The CAK has in the recent past considered the employees in M&A transactions, the court may effect of M&A on employees before issuing consider a claim on the impact of the transac- approvals for M&A transactions. For instance, tion on employees and award appropriate rem- the CAK approved the merger between Com- edies, only if the particulars of how the individual mercial Bank of Africa and National Industrial employees will be affected by the transaction are Credit on condition that the new entity retained set out in the claim. The Competition Tribunal all the employees for at least a year. On the other in the case of Telkom Kenya Limited & another

6 KENYA Law and Practice Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates

v Competition Authority of Kenya [2020] eKLR • mergers in the carbon-based mineral sec- held that public interest should be considered in tor where the value of the reserve, rights and the treatment of employees to ensure employees associated assets exceeds KES10 billion; and who lose their jobs in a merger can be absorbed • mergers meeting the requirements of the in the market. COMESA Competition Commission Merger Notification Thresholds and two thirds or Legal Developments more of turnover or assets is generated or Competition (General) Rules, 2019 located in Kenya. Through Legal Notice No 176 of 2019, Kenya enacted the new Competition (General) Rules, Mergers not requiring notification/approval of 2019 which introduced several changes to M&A the Authority transactions such as the scope of M&A transac- The following merger transactions shall not tions, merger fees, categories and notification of require notification or approval of the CAK: mergers, restrictive trade practices and merger control. The Rules came into force on 6 Decem- • where the combined turnover or assets of ber 2019 and are summarised below. the merging parties does not exceed KES500 million; Scope of merger transactions • the merger meets the COMESA Competition The Rules exclude several transactions as not Commission Merger Notification Threshold qualifying as M&A transactions, eg, joint ven- and at least two thirds of the turnover or tures (except full function joint ventures), any assets are not generated or located in Kenya; arrangement with creditors that does not result and in a change of control, acquisition of assets in • mergers taking place entirely outside of the ordinary course of business and any acquisi- Kenya and without any local connection. tion wherein the acquirer holds less than 20% of the total shares or voting rights. Mergers requiring exclusion application For mergers resulting in a combined turnover or Categories of mergers assets of between KES500 million and KES1 bil- The Rules introduce three categories of merger lion, an exclusion application must be submitted transactions: (i) notifiable mergers, (ii) merg- to the CAK. Similarly, an application for exclu- ers excluded from notification, and (iii) mergers sion must be made where the firms are engaged requiring exclusion application. in the carbon-based mineral sectors, regardless of asset value. Mergers requiring notification The Rules provide that the following merger Merger fees transactions shall require notification to the CAK: The Rules introduced new filing fees depending on the merger threshold as follows. • mergers resulting in a minimum combined turnover or assets of KES1 billion and turno- • Where the combined value of assets is ver or assets of above KES500 million; between KES0 and KES500 million, there is • mergers where the turnover or assets of the no filing fee. acquirer is above KES10 billion and the merg- • Where the combined value of assets is ing parties are in the same market; between KES500 million and KES1 billion, there is no filing fee.

7 Law and Practice KENYA Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates

• Where the combined value of assets is between the acquirer and the employees under between KES1 billion and KES10 billion, the the same terms and conditions. filing fee is KES1 million. • Where the combined value of assets is 3.2 Significant Changes to Takeover between KES10 billion and KES50 billion, the Law filing fee is KES2 million. See 3.1 Significant Court Decisions or Legal • Where the combined value of assets is above Developments for discussion of the restoration KES50 billion, the filing fee is KES4 million. of the 90% squeeze-out threshold.

Other significant recent legislation Furthermore, companies incorporated or reg- The Companies Act (No 17 of 2015) was istered in Kenya are now required to keep a amended by the Business Laws (Amendments) register of beneficial owners with the relevant Act, 2020 which introduced significant chang- information relating to the said beneficial own- es regarding M&A transactions. Some of the ers as prescribed by the Companies (Beneficial changes included the reinstatement of the 90% Ownership Information) Regulations, 2020 made threshold required for squeeze-out, up from the under the Companies Act. The Regulations 50% threshold previously introduced by the define a beneficial owner as “the natural person Statute Law (Miscellaneous Amendments). who ultimately owns or controls a legal person or arrangements or the natural person on whose In 2019, the Statute Law (Miscellaneous Amend- behalf a transaction is conducted, and includes ments) Act introduced a requirement for consent those persons who exercise ultimate effective of all existing shareholders when transferring control over a legal person or arrangement.” shares in a private company to a new shareholder. Private companies are therefore required to effectively amend their articles of association to 4. STAKEBUILDING reflect pre-emption rights of all existing shareholders. 4.1 Principal Stakebuilding Strategies A shareholder may desire to build its stake in a The Competition (Amendment) Act 2019 also company either to block an impending takeo- sought to clarify the concept of abuse of buyer ver by raising its shareholding to above 10%, power. The CAK has also formulated draft guide- or beyond 90% in order to improve the chances lines on buyer power and is seeking to introduce of an impending takeover offer. However, due The Competition (Abuse of Buyer Power) Rules to legal restrictions – such as the prohibition to deal with issues of buyer power. against insider trading, the requirement for shareholding and beneficial-owner disclosure The Kenya Law Reform Commission, through and the requirement of the consent of all share- the Draft Employment Amendment Bill, 2019, holders in the transfer of shares – stakebuilding proposed an amendment of the Employment in a target entity is a strictly controlled exercise. Act by seeking to introduce Section 15A, which provides that M&A transactions shall not oper- 4.2 Material Shareholding Disclosure ate to terminate the employment contracts of Threshold the employees in the target business but instead All companies in Kenya are mandated to dis- shall continue the contracts as if originally made close members’ shareholding when filing annual returns. In addition, following amendment to the

8 KENYA Law and Practice Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates

Companies Act and the introduction of the Com- and who ceases to be interested in such shares panies (Beneficial Ownership Information) Regu- is under obligation to notify the listed company lations 2020, companies incorporated in Kenya of such interest. The Regulations further provide are now obliged to keep (and submit/lodge with that a listed company must, monthly, report on the Registrar of Companies) a register of benefi- the shareholders who cease to have interest in cial owners. This requirement only applies to a their shareholding, all directors holding 1% or natural person who: more of the share capital, and cumulative shareholding of the directors. • owns at least 10% of the issued shares of the company; The Capital Markets (Take-Overs and Mergers) • exercises at least 10% of the voting rights in Regulations, 2002 provide that an offeror shall the company; not sell any voting shares to which the takeover • holds a right, directly or indirectly, to appoint offer relates during an offer period. It further pro- or remove a director of the company; or vides that an offeror, chief executive, and direc- • exercises significant influence or control, tor must disclose the total number and price of directly or indirectly, over the company. all voting shares of the offeror within 24 hours of listing the transaction. The Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002 pre- 4.3 Hurdles to Stakebuilding scribe several disclosure requirements under the Articles of Incorporation and Company First Schedule which include: By-laws Companies in Kenya are at liberty to introduce • the issuer in a public share offering ensur- new rules by amending their articles of asso- ing that the existing shareholders give an ciation or by-laws. This may include introducing undertaking (and disclose in the Information new rules depending on the preference of the Memorandum) not to sell their shareholding shareholders and trending markets strategies. before the expiry of the period of 24 months Although the laws permit some flexibility to intro- following listing; duce a higher reporting standard, the articles of • disclosure of any transfer of shares from or to association or by-laws are subordinate to com- any market segment of a securities exchange; pany laws and regulations so should not contain • continuing obligation by any issuer whose provisions that are contra statute. security is offered to the public to immediately disclose to the public any information Other Hurdles to Stakebuilding likely to have a material effect on the market One of the hurdles to stakebuilding are the reg- activity within 24 hours of listing the issuer’s ulations prohibiting insider trading. The Capital securities; and Markets Act declares insider trading an offence • disclosure in the annual report by any issuer and prohibits the buying and selling of securi- of any substantial sale of assets involving ties by relying on information not available to the 25% or more of the value of the total assets general public. of the issuer. The Companies Act provides for pre-emption The Capital Markets (Licensing Requirements) rights by requiring the consent of all existing (General) Regulations, 2002 require that any per- shareholders when transferring shares in a pri- son with a 3% shareholding in a listed company

9 Law and Practice KENYA Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates vate company to a new shareholder; this is an 4.5 Filing/Reporting Obligations impediment to stakebuilding. The Capital Markets (Derivatives Markets) Regulations, 2015 provides that a derivatives The Capital Markets (Takeovers and Mergers) exchange shall disclose the shareholding pat- Regulations 2002 prohibit the issuance of 25% tern of the exchange every quarter within 15 or more of the share capital of a subsidiary of days from the end of each quarter to the CMA. a listed company, or 10% or more of the share The disclosure should include the names of the capital of the subsidiary that has contributed to ten largest shareholders and the number and 25% or more of the average turnover in the lat- percentage of shares held by each, the names est three financial years of the listed company, of the Kenyan shareholders holding at least 15% without full disclosure. Furthermore, the Regula- of the paid-up equity share capital, the names tions provide that a company that is in control of the individual or corporate person controlling of 25% of the voting share of a listed company not more than 25% of the issued share capital or can only acquire up to five% in any one year in entitled to appoint more than 25% of the board such a listed company up to a maximum of 50%. or receive 25% of the aggregate dividends to be paid. Different sectors also have provisions that may be deemed to be hurdles to stakebuilding. An Beyond making the disclosure, the Regulations example is the Central Bank of Kenya’s limit on provide that the derivatives exchange must ownership of more than 5% of the share capi- retain and preserve all books, registers, minutes tal in a banking or financial institution, unless of the board and other documents for not less exempted under the Banking Act. than seven years.

4.4 Dealings in Derivatives 4.6 Transparency The Capital Markets (Derivatives Markets) Reg- The Capital Markets (Takeovers and Merger) ulations, 2015, permit and regulate dealing in Regulation, 2002 provides that within fourteen derivative markets in Kenya. The Regulations days from the date of serving the offeror’s state- provides for, inter alia, licensing requirements ment, the offeror must submit to the CMA the and duties of a derivatives exchange, approv- takeover offer document which shall include al of derivatives contracts, rules of exchange, information on the offeror’s intentions regarding trading systems, the net worth of a derivatives the continuation of the business of the offeree exchange, ownership of derivatives exchang- and, if so, stating those intention. The offeror es and disclosure of shareholding. Trading is further required to state intentions regarding of futures contracts in the Kenyan market is major changes to be introduced in the busi- facilitated through NEXT (a Nairobi Securities ness, intentions regarding strengthening the Exchange derivative market regulated by the financial position of the offeree, if such plans Capital Markets Authority) and several rules have include merger, liquidation, selling assets or re- been formulated to regulate derivate markets, deploying fixed assets or any major changes in namely, NSE Derivative Rules, NSE Derivatives the structure of the offeree or its subsidiaries. Investor Protection Fund Rules and NSE Deriva- tives Settlement Guarantee Fund Rules. Regulation 4 of the Capital Markets (Take-Overs and Merger) Regulation, 2002 provides that a shareholder who has acquired effective control in a listed company but has no intention of mak-

10 KENYA Law and Practice Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates ing a takeover offer is required to make a public 5.3 Scope of Due Diligence announcement immediately after having served Scope of Due Diligence the notice in writing to the target company, NSE In Kenya, the scope of due diligence (conducted and CMA. to identify potential defects in a deal or obtain relevant information for valuing a negotiated business combination) generally depends on 5. NEGOTIATION PHASE factors such as whether the deal is cross-border, the type of acquisition (whether public or private) 5.1 Requirement to Disclose a Deal and the structure of the deal. Notwithstanding Generally, the obligation to disclose a deal this, most negotiated business combinations begins with the offeror. Under Regulation 4 of the undergo proper due diligence with most target Capital Markets (Takeovers and Merger) Regula- companies willing to deposit all the relevant tion, 2002, an acquirer is obliged to announce its information requested by the buyer in the data proposed offer through a press notice and serve room in order to escape the many indemnities a notice of intention to the target company, NSE and warranties normally requested as a result of and CMA, within 24 hours from the resolution non-disclosure. of its board to acquire effective control of the target company. Thereafter, the acquirer is to Impact of the Pandemic serve the target company within ten days of the Following the outbreak of the pandemic, most date of notice of intention, its statement of the investors extended due diligence to investigate takeover scheme which shall not be amended the impact of the pandemic on the target busi- or withdrawn without the prior written consent ness supply chain, employees, existing insur- of the CMA. ance, ability of the target business to perform and the target’s continuity plan. The target’s disclosure obligation kicks in after receiving the acquirer’s statement of takeover Investors have also experienced challenges with scheme whereupon the target shall inform the review of physical documents or visits to the tar- relevant NSE and the CMA and announce the get business to ascertain the information pro- proposed takeover within 24 hours of receipt of vided by the target business since the pandemic the acquirer’s statement. has inhibited movement and physical contact.

Private companies are under no obligation to 5.4 Standstills or Exclusivity disclose a deal; hence most bids remain private. Standstill and exclusivity agreement between However, such transactions ultimately become parties must be demanded or concluded within available to the public following the approval and the legal frameworks. Any violation may, at the publication by the CAK in the Kenya Gazette. very least, render a transaction void if not attract- ing penal sanctions. For instance, the Compa- 5.2 Market Practice on Timing nies Act provides for an opt-in resolution whose Market practice in Kenya regarding the timing consequence is to render void any agreement of disclosure generally follows the legal require- which places a restriction on the transfer to the ments noted in 5.1 Requirement to Disclose acquirer of shares in the target during the offer a Deal. period or restricting the transfer to any person of shares in the target at any time during the offer

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period when the acquirer holds more than 75% days and the acquirer is required to inform the percent of the voting shares. CMA and the NSE and make an announcement by way of a press notice of the acceptance and Regulation 32 of the Capital Markets (Take- consequent change in structure within ten days Overs and Merger) Regulations, 2002 prohibit after the closure of the offer period. the suspension of trading of shares during a takeover unless the suspension is necessary to The CAK has a period of up to 60 days to decide enable the target to disclose information regard- on an application for approval, although in prac- ing the takeover offer or as directed by the CAK tice they take one to two months. On the other to obtain material information on the offer. hand, an application for exclusion takes approxi- mately 14 days. On the other hand, the CCC has 5.5 Definitive Agreements a period of up to 120 days to make a decision on The Capital Markets (Take-Overs and Merger) application for approval upon receipt of a merger Regulations, 2002 require the terms and condi- notification from the merging parties. tions of a tender offer for a public listed company to be in writing. Furthermore, the takeover notice There are no applicable timelines regarding pri- should stipulate the conditions of the takeover vate offers. The exact duration will depend on offer, including conditions relating to -accept the complexity of the transaction, scope of due ances, listing and increase of capital. diligence and the time taken to obtain the relevant statutory approval. While private companies may enter into definitive agreements specifying the terms and con- Effect of Measures Taken to Address the Pan ditions of the tender offer, the Competition Act on the Deal-Closing Process allows for both verbal and written offer for sale. In response to the COVID-19 pandemic, the gov- However, most investors prefer to have a defini- ernment of Kenya imposed measures such as tive written agreement documenting the terms lockdowns, curfews, restrictions on gathering and conditions. and social distancing requirements. The remote working and shift patterns caused by these anti-pandemic measures have caused delays in 6. STRUCTURING getting approvals from the relevant authorities. Regulators have transitioned to online filings for 6.1 Length of Process for Acquisition/ efficiency and to ease delays. However, this ini- Sale tiative has also experienced teething problems, Within 14 days of serving the statement, the which has caused further delays in deal-closing. offeror should submit to the CMA the takeover document for approval. Subsequently, the CMA Gathering restrictions and social distancing is required to approve the document within 30 measures have prevented physical shareholder days or any other time as determined by it sub- and board meetings, therefore forcing compa- ject to advising the acquirer. Within five days of nies to seek permission from the courts to hold approval, the acquirer should serve the takeover virtual or hybrid meetings. Companies have also document on the target business following which been forced to amend their articles of associa- the target business shall circulate the document tion to accommodate virtual and hybrid meet- to its shareholders within 14 days. The offer shall ings. remain open for acceptance for a period of 30

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6.2 Mandatory Offer Threshold being received, the offer shall specify a date not As noted in 3.1 Significant Court Decisions later than 30 days from the date of service of or Legal Developments, the Companies Act the takeover offer or such later date as the CMA allows an investor to compulsorily acquire the may in a competitive situation or in special cir- remaining minority shareholding only if it has cumstances allow as the latest date on which already acquired or has contracted to acquire the offeror can declare the offer to have become 90% in value of the shares of the takeover target. free from that condition.

The Capital Markets (Takeovers and Mergers) The CMA, through the Capital Markets (Takeo- Regulations, 2002 outline occasions where a vers and Mergers) Regulations, 2002, has sought person is assumed to have a firm intention to to restrict the use of offer conditions by providing make a bid for a takeover. Such occasions are that the offer shall not be conditional upon the where they: offeree approving or consenting to any payment or other benefit being made or being given to • hold more than 25% of the shares, though any director of the offeree or to any other person less than 50% of the voting rights, and that is deemed to be related to the offeree, as acquires more than 5% of the voting rights in compensation for loss of office or as considera- the company; tion for, or in connection with, their retirement • hold at least 50% of the voting shares and from the office. acquires additional voting shares; • acquire a company having effective control of 6.5 Minimum Acceptance Conditions a listed company, whether directly or indirect- Regulation 8(3) of the Capital Markets (Takeovers ly (which should be considered conjunctively); and Mergers) Regulations, 2002 provides that an or offer may be conditional upon the offeror receiv- • acquire at least 25% of a subsidiary that ing acceptances for a minimum percentage of has contributed at least 50% of the general shares. An investor may prefer 90% accept- turnover, in the previous three financial years, ance to allow them to exercise the compulsory of the company. acquisition rights under the Companies Act. Or at least 75% to allow them to pass any special 6.3 Consideration resolutions relating to the company. In Kenya, cash, shares or a combination of the two are permitted as a means of payment. 6.6 Requirement to Obtain Financing The Capital Markets (Take-overs and Mergers) Regulation 22 of the Capital Markets (Takeovers Regulations, 2002 require the offeree to issue a and Mergers) Regulations, 2002 provides that statement indicating whether the shares are to the acquirer is under an obligation to demon- be acquired for a consideration wholly or partly strate and satisfy its financial adviser that the in cash, the timelines and method of payment. takeover offer will not fail due to insufficient financial capability. Furthermore, when providing 6.4 Common Conditions for a Takeover an offer document, the acquirer is mandated to Offer include therein a statement satisfying all share- Regulation 15 of the Capital Markets (Takeovers holders who wish to accept the offer and show- and Mergers) Regulations, 2002 provides that ing that the offer will not fail due to the acquirer’s where the offer is conditional upon acceptances insufficient financial capability. in respect of a minimum percentage of shares

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6.7 Types of Deal Security Measures a period of six months from, and including, the In Kenya, the law does not prohibit deal security date of the offer. measures such as break fees, non-solicitation provisions and match rights if such measures The Capital Markets (Takeovers and Mergers) are disclosed in the takeover document as well Regulations, 2002 also provide that an offeror as the notice of intent. Other than the afore- who has acquired 90% of the target’s voting mentioned security measures, there are no new shares pursuant to the offer is required to make contractual considerations as well as changes an offer to the remaining shareholders to acquire that have impacted the length of interim periods their shares at a purchase price that is the higher during the pandemic. of the prevailing market price or the price offered to other shareholders. 6.8 Additional Governance Rights In the event that a bidder does not seek com- 6.11 Irrevocable Commitments plete ownership, other additional governance It is common practice to require the members of rights include rights to pass ordinary and written the target business to give an undertaking. For resolutions in shareholder-reserved matters, to instance, an issuer will normally ensure that the nominate board members and to exercise pow- existing shareholders give an undertaking (and ers in key decisions such as appointment of disclose this in the information memorandum) senior management. Additionally, CMA’s Code not to sell their shareholding before the expiry of of Corporate Governance Practices for Issuers the period of 24 months following listing. of Securities to the Public, 2015 requires the boards of a company to ensure that all shareholders are treated equitably, whether minority 7. DISCLOSURE shareholders or foreigners. 7.1 Making a Bid Public 6.9 Voting by Proxy Generally, for a takeover of public company, an The Companies Act, under Section 114, per- acquirer is obliged to announce its proposed mits a shareholder to appoint a proxy to attend offer by press notice and serve a notice of a meeting on behalf of the shareholder, speak intention to the target company, NSE, CMA and and even vote. The relevant shareholder must Monopolies and Prices Commission, within 24 give notice of appointment of the proxy before hours from the resolution of its board to acquire the meeting is held. effective control in the target company. Further- more, the target is under a continuous report- 6.10 Squeeze-Out Mechanisms ing obligation to announce or publish by way In Kenya, a squeeze-out mechanism is provided of a cautionary announcement, any informa- for under Section 611 of the Companies Act. tion which could lead to material movements in Details of this mechanism can be found in 3.1 the price of shares if at any time the necessary Significant Court Decisions or Legal Devel- degree of confidentially has been breached or opments. cannot be maintained.

Pursuant to Section 612, such notices may only In relation to a private deal, private companies be given for three months from, and including, are under no obligation to announce, hence most the day after the last day of the offer period or bids remain private. However, such transactions ultimately become available to the public follow-

14 KENYA Law and Practice Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates ing the approval and publication by the CAK in 7.3 Producing Financial Statements the Kenya Gazette. The Capital Markets (Takeovers and Mergers) Regulations, 2002 require bidders to submit a 7.2 Type of Disclosure Required takeover statement to the target business indi- Takeovers and mergers of public entities typi- cating a summary of the latest audited financial cally call for disclosure of material information, statement including the balance sheet, cash flow inter alia: statement, income statement, statement of the changes in equity, earnings per share before and • the identity of the target business and the after the takeover. acquirer; • type and the total number of voting shares of The CAK also requires parties to a merger (when the target business; filling a merger notification form) to provide their • details of the existing or proposed agreement; audited financial statements for the last three and years. • conditions of the offer including acceptances, listing and increase of capital. Sector regulators like the Central Bank of Kenya may also require parties to a merger to provide There is also disclosure of financial statements their audited financial statements for the regula- wherein the acquirer must disclose the balance tors’ review. sheet, income statement, statement of changes in equity, cash flow statement and earnings per The Capital Markets Authority Rules, 1992 pro- share, details of arrangements made to secure vide that accounts, pro-forma and financial payment or transfer of shares, and proportion of statements must be prepared in accordance shares being swapped where necessary. with International Financial Reporting Stand- ards (IFRS) and a statement should be provided Pursuant to the Companies Act, a private com- that the accounts and the balance sheet were pany cannot transfer shares to a new share- prepared as per the IFRS. Part XXV of the Com- holder without the consent of the existing panies Act, 2015 also makes provision on how shareholders allowing the existing shareholders a company’s financial statements and director’s to exercise their pre-emption rights. Hence, the reports should be prepared. company must disclose details of a transaction before transfers are made to a third party. The Institute of Certified Public Accountants of Kenya (ICPAK) requires that all financial state- Regulatory bodies like the CAK also require ments must be prepared in accordance with parties making an application for approval of a IFRS. transaction to provide basic and other related information on the transaction. This includes 7.4 Transaction Documents copies of a signed sale and purchase agree- An applicant seeking approval of a takeover ment, audited financial statements for the last must meet the threshold for disclosure required three years duly signed by the board of directors by various regulators such as providing details and certified public accountant, latest annual of any agreement entered, or proposed to be reports and board resolutions. entered into, and the cost, as well as details of the proposed merger and the relevant shareholding and identity of the acquirer.

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The CAK requires parties to a merger (when fill- lation 9 of the Capital Markets (Takeovers and ing a merger notification form) to provide basic Mergers) Regulations, 2002) to exercise their and other related information such as hard cop- independent judgement and issue a circular to ies of a signed sale and purchase agreement, shareholders indicating whether or not they rec- audited financial statements for the last three ommend the acceptance of the takeover offer. years duly signed by the board of directors and Furthermore, Regulation 7(5) requires directors certified public accountant, latest annual reports to circulate to their shareholders (within 14 days and board resolutions. Nevertheless, an appli- from the date of receipt of the approved takeo- cant (pursuant to Section 20 of the Competi- ver document) the approved document together tion Act) may make a claim of confidentiality on with the independent adviser’s circular. In addi- the basis that disclosure will adversely affect its tion, directors are under the duty to appoint an competitive position or that the disclosed infor- independent adviser who shall be responsible mation is commercially sensitive. for providing independent advice necessary for making an assessment as to the merits of The COMESA Competition Commission requires accepting or rejecting the takeover offer. parties applying for approval to provide certain information including, inter alia, the agreement Generally, directors’ duties are owed to the com- between the parties, annual reports, financial pany and only the company can enforce them statements, board and shareholder resolutions unless a shareholder pursues such enforcement and list of shareholders and directors of each on behalf of the company through a derivative party. action. Any fiduciary duty that a director may owe to a shareholder, or all stakeholders, will The Capital Markets (Takeovers and Mergers) arise from statute as seen above or material rep- Regulations, 2002 prescribe the information to resentations between them wherein the director be disclosed in transaction documents which undertakes the responsibility to act on behalf of includes, inter alia, the offeror’s identity, terms the shareholder in a transaction such as disposal of the offer and all information required by the of shares. shareholders and their directors. 8.2 Special or Ad Hoc Committees Whether or not a private company should estab- 8. DUTIES OF DIRECTORS lish special or ad hoc committees in a business combination is a matter generally dealt with in 8.1 Principal Directors’ Duties the company’s articles of association. It is not The general duties of directors are provided mandatory under Kenyan law for a private com- under the Companies Act, common law and pany to establish special or ad hoc committees. principles of equity and include, inter alia, the However, it is considered good corporate prac- duty to (i) avoid conflict of interest; (ii) act in tice for the board of directors in public compa- good faith; (iii) not to accept benefits from third nies to establish relevant committees and del- parties; (iv) exercise independent judgement; (v) egate specific mandates as may be necessary in exercise reasonable care, skill and diligence; and order to avoid an instance of conflict of interest (vi) declare any interest in a transaction. and ensure fairness.

Nonetheless, during a takeover, directors of the Where some directors have a conflict of interest, target entity are expressly required (under Regu- Regulation 10 of the Capital Markets (Takeovers

16 KENYA Law and Practice Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates

and Mergers) Regulations, 2002 permits the • outlook of the industry in the next 12 months; board of directors to appoint an independent • whether the acquirer holds any voting shares adviser. in the target business; and • details of any transfer of voting rights dealt 8.3 Business Judgement Rule with within six months before the start of the Courts have generally upheld the business offer period. judgement rule to shield directors from scrutiny and or liability by presuming that the said 8.5 Conflicts of Interest directors have acted within their powers, hon- Kenyan courts have considered and ruled on estly, in the interest of the company and on an cases concerning directors’ and managers’ con- informed basis. The rationale in upholding this flicts of interest. For instance, the High Court in principle has been to prevent interference with Ruth Ruguru Nyagah v Kariuki Chege & another the management of companies as well as avoid- [2020] eKLR, where the director privately sub- ing the risk of needlessly diverting the attention mitted a bid which was evaluated alongside a and energies of corporate officers and directors bid of the company to which she was a director, as was so held in Isaiah Waweru Ngumi and held that “the two companies were competing 2 others v Muturi Ndungu [2016] eKLR. Since for award of the same tender which definitely the Companies Act, Capital Markets Author- created a situation where the company’s busi- ity Rules, 1992 and the relevant regulations ness interests conflicted with those of the plain- and governance codes mandate directors to tiff’s private company at a time when the plaintiff undertake takeover situations in good faith, in was still a director of the company.” the interest of the company and by exercising independent judgement, courts will ignore the The duty to avoid conflict of interest in any principle of the business judgement rule only if transaction conducted by the director or man- the derivative claim brought against the directors ager is extensively provided for under, inter alia, sufficiently particularises the duty breached so the Companies Act, Capital Markets (Takeovers as to create reasonable doubt as to whether the and Mergers) Regulations, 2002 and the CMA directors deserve protection under the rule. Guidelines on Corporate Practice by Public List- ed Companies, 2015. 8.4 Independent Outside Advice The Capital Markets (Takeovers and Merg- ers) Regulations, 2002 permit the directors to 9. DEFENSIVE MEASURES appoint an independent adviser, who may be an investment bank or a stockbroker licensed by 9.1 Hostile Tender Offers the CMA, in order to avoid conflict of interest by Hostile takeovers are permitted in Kenya. They the directors or provide advice which shall form are not, however, common. the basis of an informed assessment regarding offers. The independent advisor is mandated to 9.2 Directors’ Use of Defensive clarify in its advice (a circular to the directors), Measures inter alia: Under Kenyan law, directors are prohibited from frustrating takeover offers after contact with the • the acquirer’s intentions regarding the con- offeror or receiving the notice of intention of tinuation of the target’s business; takeover. Regulation 27 of the Capital Markets • acquirer’s justification for the proposed offer;

17 Law and Practice KENYA Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates

(Takeovers and Mergers) Regulations, 2002 pre- 9.4 Directors’ Duties cludes the directors of the target business from: Any defensive measures adopted by the directors must be exercised in good faith and in the • issuing any authorised but unissued shares; interest of the company to promote the success • issuing or granting options on any unissued of the company and ultimately benefit share- shares; holders. However, care must be exercised to • creating/issuing or permitting the creation or ensure that these duties do not conflict with the subscription of any shares; restrictions imposed under the various laws with • selling, disposing of, acquiring or agreeing to respect to frustrating a takeover offer that has sell the assets; and been communicated and received by the target • entering into or allowing contracts that are business. not in the ordinary course of business. 9.5 Directors’ Ability to “Just Say No” However, the Companies Act allows companies While directors may advise shareholders to to pass opt-in resolutions which render void any reject an offer, they are obliged (pursuant to their agreement which restricts the transfer to the duty to act in good faith and exercise independ- acquirer of shares in the target business during ent judgement) to consider, assess and give the the offer period or restricts the transfer to any reasons informing their advice or opinion to the person of shares in the target business at any shareholders. Thus, directors cannot “just say time during the offer period. no”.

9.3 Common Defensive Measures Besides the actions detailed in 9.2 Directors’ 10. LITIGATION Use of Defensive Measures, the directors may resort to advising shareholders to reject a takeo- 10.1 Frequency of Litigation ver offer irrespective of the circular provided by Generally, litigation in connection with M&A the independent adviser. The directors may also deals in Kenya is not common. Nevertheless, resort to unnecessary litigation battles to frus- we note that there are instances where stake- trate the offer or increase costs. However, such holders, such as employees of a target business, advice must be in the interest of the company have sought injunctive relief against a proposed otherwise the directors will not be shielded by merger pending a court determination on the the business judgement rule. effect of a proposed merger on their terms and condition of service. Parties to a merger may also We note that since the pandemic, most compa- challenge the conditions imposed by the CAK by nies have generally resorted to legal advice as filing a claim before the Competition Tribunal. a defensive measure by seeking a professional For instance, in Telkom Kenya Limited & another legal opinion on the existing vulnerabilities that v Competition Authority of Kenya [2020] eKLR should be dealt with. Other measures taken (the first case to be heard before the Competi- include increased engagement of shareholders tion Tribunal) the parties to a proposed merger in developing the company’s strategic plan and (Telkom and Airtel) successfully challenged the conducting due diligence in the preparation of conditions imposed by the CAK. any impending takeover.

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10.2 Stage of Deal 11. ACTIVISM Litigation may arise at any stage depending on the parties. For instance, litigation involving pri- 11.1 Shareholder Activism vate companies typically arises once the infor- Shareholder activism is not firmly established mation regarding the deal is published or made in Kenya. However, Kenyan law encourages known to the public. An example is the case of shareholder activism by allowing shareholders Evans Aseto & another v National Bank of Kenya to scrutinise books of account and contracts, (NBK) & Kenya Commercial Bank (KCB); Cen- participate in voting and inspection and institute tral Bank of Kenya & another (Interested Parties) derivative actions on behalf of the company. [2019] eKLR, in which the petitioners instituted the case following a publication of the offer 11.2 Aims of Activists made by KCB on 18 April 2019 to acquire all the Shareholder activism is yet to be firmly estab- shares of NBK by way of a share swap. lished in Kenya. It is, however, not uncommon for a shareholder to pressure a target business 10.3 “Broken-Deal” Disputes into entering into an M&A transaction. At the In the pending merger between Telkom and Air- very least, shareholders are generally willing to tel, the Competition Tribunal, in Telkom Kenya accept a transaction likely to increase their rev- Limited & another v Competition Authority of enues. Kenya [2020] eKLR, held that any conditions imposed by the CAK should be reviewed and or 11.3 Interference with Completion assessed by establishing whether the conditions Shareholders may interfere with the completion imposed are aimed at (i) enhancing the welfare of transactions by seeking redress through their of the Kenyan people, (ii) preventing unfair and minority voting rights and the relevant institu- misleading conduct, and (iii) promoting and pro- tion, such as the CAK, Competition Tribunal and tecting effective competition in the market. courts. However, any claim brought on behalf of the company must be introduced as a deriva- The Tribunal observed that where the CAK tive action. Some examples include the failed imposes conditions on a merger, the burden takeovers of Express Kenya and Unga Group shifts to the CAK to demonstrate with cogent Plc, in which the minority shareholders of both evidence that the conditions are justified oth- public listed companies rejected the deals due erwise the Tribunal will not review the condition to poor pricing. on appeal. A notable example of interference by activists is Finally, the decision clarified that the “failing firm the merger between CBA Group and NIC Group doctrine” established under the Merger Guide- (to form NCBA) in which activist Okiya Omtatah lines applies strictly as a defence to an otherwise filed a suit in 2019 blocking the merger citing the anti-competitive merger, hence should not be National Treasury’s secretive decision to exempt applied post-merger as was done by the CAK. the merger from tax. However, the case was not successful and the two banks merged to form NCBA Bank Kenya Plc.

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Oraro & Company Advocates is a full-service, have proven experience in bringing commercial market-leading African law firm established in awareness to every transaction. It cuts across 1977 with a strong focus on dispute resolution several sectors, with extensive involvement in and corporate and commercial law. The firm’s buyouts, corporate restructuring, incorporation corporate and commercial practice deals with and company registration, joint ventures, pre- both private and public corporations on sub- paring and reviewing commercial agreements, stantive transactions. It is well positioned to private equity and M&A. The team has been in- provide strategic, business-oriented legal ad- volved in some of Kenya’s most complex M&A vice on complex, domestic, cross-border and in the financial services sector, including acting multi-jurisdictional transactions in emerging for National Bank of Kenya Limited in the takeo- and developed markets. The corporate and ver of 100% of the company’s shares by Kenya commercial practice comprises lawyers who Commercial Bank Group PLC.

AUTHORS

Jacob Ochieng is a partner in Cindy Oraro is a partner in Oraro & Company’s corporate Oraro & Company’s commercial and commercial practice group. practice. Cindy specialises in With over 12 years’ experience, corporate/M&A, energy, he has advised both local and infrastructure and projects. Over international corporates on the last nine years, she has commercial contracts, corporate advisory, advised local and international clients in corporate restructuring, M&A, privatisations various matters, including corporate and infrastructure projects. Jacob is regarded restructuring, M&A and energy. In 2014, she as one of the leading corporate/M&A lawyers was awarded a Commonwealth Professional in Kenya. He is an advocate of the high court in Fellowship at Hogan Lovells LLP and was Kenya and a member of the East African Law further awarded a Power Africa Fellowship in Society and the Law Society of Kenya. 2019 at Shearman & Sterling LLP, where she practised with their project development and project finance teams. Cindy is a member of the East African Law Society, the Law Society of Kenya, the International Bar Association and Legal and Businesswomen for Africa.

20 KENYA Law and Practice Contributed by: Jacob Ochieng, Cindy Oraro, Sheila Nyakundi and Paul Kamara, Oraro & Company Advocates

Sheila Nyakundi is an associate Paul Kamara is a lawyer in the corporate and commercial specialising in dispute practice group of Oraro & resolution, with a strong focus Company. She specialises in on arbitration and insolvency. He commercial contracts, due is also involved in Oraro & diligence, M&A, corporate Company’s corporate practice restructuring and reorganisations from target and has been engaged in due diligence sectors such as construction, financial exercise, project finance advisory, restructuring services, and manufacturing and industry. and institutional and statutory reforms Sheila has advised both local and international concerning PPP laws. Kamara is an avid clients. She is a member of the East African researcher and knowledgeable in arbitration, Law Society, the Law Society of Kenya and the insolvency, construction, energy and data Commonwealth Lawyers’ Association. protection. He was part of the teams that were involved in drafting Kenya’s Privacy and Data Protection Policy and Bill and that prepared a desk study for UNEP on woodfuel biomass production and utilisation in Africa.

Oraro & Company Advocates

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