SportPesa is not a minor footnote in East Africa’s corporate story. It is a powerful betting brand that pioneered modern gaming and sports sponsorship across the region. Its rapid growth, bold marketing, and cross-border expansion made it one of the most recognisable brands in the betting industry. Yet behind the commercial success of the brand sat a holding structure that would eventually become the subject of serious shareholder litigation before the UK High Court in Paul Wanderi Ndungu v SPG Limited,   2025 EWHC 3039 (Ch).

Brief Facts of the case

The case arose after a dramatic downturn. In July 2019, Kenya suspended the betting licence of Pevans East Africa Limited, the operating company that generated approximately 98% of the group’s revenue. Practically overnight, the group’s income stream collapsed. The holding company, SPG Limited (formerly SportsPesa Group Limited), faced a genuine financial crisis and risk of insolvency.

In response, the company undertook emergency capital raisings, including a proposed £500,000 increase in share capital. These injections were intended to stabilise the business and avoid collapse. However, the consequence of successive capital raises was significant dilution. One shareholder, Paul Ndungu, saw his shareholding fall from approximately 17% to about 0.85%.

Mr Ndungu brought claims alleging unlawful dilution, breach of pre-emption rights, document falsification, conspiracy, and unfair prejudice under sections 563 and 994 of the UK Companies Act 2006 . He argued that the capital raising process was procedurally defective and oppressive.

The High Court dismissed all claims and entered judgment fully in favour of the defendants. The court accepted that the company was facing a genuine financial emergency. It found that the capital raisings were commercially justified and aimed at avoiding insolvency rather than oppressing minority shareholders. Importantly, although Mr Ndungu’s stake had dramatically reduced, he failed to prove causation. He did not establish that any alleged procedural defects caused him compensable loss, nor did he demonstrate that he had the financial capacity or willingness to participate in the capital raise. Allegations of document falsification and conspiracy were rejected.

On the surface, this was a complete victory for the company and the other shareholders.

Yet for governance professionals, the real lessons lie in what surfaced during the hearing.

The Critical Failure: Mishandling of Pre-Emption Procedures

Even though the claim failed, the court closely examined the company’s governance processes. The spotlight fell on how pre-emption rights were handled, how meetings were convened, how resolutions were documented, and how records were maintained. The fact that the company ultimately succeeded does not erase the governance weaknesses that were exposed.

The most critical issue was the handling of pre-emption procedures. Pre-emption rights are designed to protect shareholders from dilution. Before issuing new shares to outsiders, existing shareholders must be offered the opportunity to subscribe first, unless those rights are properly disapplied. These rights are highly procedural. They require valid board authority, properly drafted notices, strict adherence to timelines, and accurate documentation of acceptances or rejections.

During the dispute, the serving and validity of pre-emption notices became contentious. Questions were raised about whether notices were properly issued and whether the statutory  requirements were strictly followed.

The courts finding were that :

• the DHL envelope, containing the offer letter for issuance of new shares,  was sent to the wrong physical  address, not the Claimant’s address listed in the company’s register of members.
• Even if the address had been correct, the Claimant did not receive the First Offer Letter until 21st November 2019, well after a 1st November 2019 deadline.
• Sending the letter could never comply with Section 562 of the Companies Act , which requires a minimum 14-day acceptance period from the date the offer is sent.
• The letter, sent on or around 21st October 2019, did not meet this statutory requirement.

Even though the claimant ultimately failed to prove causation or loss, the case demonstrates how pre-emption procedures become the central battlefield in dilution disputes. When ownership percentages shift, process becomes everything.

Convening Proper Meetings

The hearing also highlighted concerns around how meetings were organised and conducted. Corporate governance requires compliance with notice periods under the Articles. Directors and Shareholders must receive proper notice. Agendas must be clear. Quorum must be satisfied. Decisions must be formally recorded.

In this instance, Paul Ndung’u alleged that he did not receive notice to the meeting where the initial  issue of capital raising was discussed.

Where meetings are convened informally or without strict adherence to notice procedures, resolutions passed at those meetings become vulnerable to challenge. In high-growth companies, urgency often overrides procedure. A quick call replaces formal notice. A shared understanding replaces documented approval. It feels efficient. Until it is examined in court.

Unsigned or inadequately documented minutes were another governance weakness that came under scrutiny. Minutes are not decorative paperwork. They are evidence of corporate action. Properly signed minutes confirm attendance, declarations of interest, and resolutions passed. When minutes are unsigned or prepared retrospectively, their evidentiary value weakens. In litigation, that weakness can be costly.

Statutory Filing

Regulatory and financial filing practices were also scrutinised. It emerged from the court hearing that the financial statements  for the relevant period 2018 had been improperly prepared . While not the central issue, compliance gaps in statutory filings and financial statements can create an impression of informality. In court, that perception matters. Opposing counsel will highlight every inconsistency to question the reliability of corporate records.

Taken together, these governance weaknesses reflect a pattern common in private companies, particularly startups and founder-led enterprises. When business is thriving, governance often feels secondary. Trust is high. Decisions are quick. Documentation follows later. Sometimes much later.

But when crisis strikes, as it did following the Kenyan licence suspension, governance shortcuts are exposed. Shareholder relationships strain. Dilution becomes personal. Informal understandings are replaced by legal arguments.

Governance Failures and Breach of Directors’ Duties

Governance lapses like improper handling of pre-emption procedures, failure to maintain accurate minutes, and incomplete financial statements can escalate into allegations of breach of directors’ duties. Directors are legally required to act in good faith to promote the company’s success, exercise reasonable care, skill, and diligence, and comply with statutory obligations.

In the Ndungu case, the Claimant argued that the mishandling of pre-emption procedures and failure to prepare accurate financial statements for year  2018 constituted breaches of duty. Even though the court ultimately dismissed these claims, the allegations underscore how governance weaknesses provide the basis for legal challenges.

Conclusion

The key takeaway from Paul Wanderi Ndungu v SPG Limited is nuanced. The court did not find unlawful dilution or unfair prejudice. It recognised the commercial reality of financial collapse and accepted that emergency capital raising was justified. The claimant’s failure to prove causation and loss was decisive.

However, the case shows that even where a company ultimately succeeds in court, governance processes will be dissected line by line. Directors cannot rely solely on commercial justification. They must also demonstrate procedural compliance.

For founders and directors, the message is clear. Financial crisis does not suspend governance obligations. Emergency capital raising must still comply with constitutional requirements. Pre-emption rights must still be respected or properly disapplied. Meetings must still be validly convened. Minutes must still be signed. Resolutions must still be properly recorded.

Governance is not tested when everyone agrees. It is tested when relationships break down.

How Netsheria Helps You Avoid Costly Governance

Netsheria exists to prevent governance breakdowns before they escalate into costly litigation. Rather than treating company secretarial work as a once-a-year compliance task, Netsheria embeds governance discipline into the day-to-day operations of your startup.

Here’s how Netsheria makes a difference for startups:

• Pre-emption compliance: Ensures proper board authority, valid notices, strict timelines, and full documentation.
• Meeting governance: Guarantees correct notice periods, quorum verification, structured agendas, and signed minutes.
• Resolution control: Maintains clear, properly executed written resolutions with documented authority chains.
• Regulatory compliance: Manages timely filing of annual returns, financial statements, and maintenance of statutory registers—removing the hassle so you can focus on growing your business.

Netsheria transforms governance from an afterthought into a strategic operational asset, giving startups confidence, clarity, and peace of mind as they scale.

Author: Susan Agwata,Corporate Commercial  Lawyer.

The post All That Went Wrong in Paul Wanderi Ndungu v SPG Limited: And How Structured Governance Support Can Save You Millions appeared first on Netsheria.

Serving as a nominee director may appear straightforward, after all, you are appointed to represent the interests of a particular shareholder, investor, fund, creditor, strategic partner, or family group.
However, in law, a nominee director is not merely an agent of the appointing party. Once appointed, you become a director of the company, with all accompanying fiduciary duties, personal liabilities, regulatory scrutiny, and governance expectations.

In Kenya, the Companies Act does not create a separate category of nominee directors. You are held to the same legal standards as any other director, and failure to understand this can expose you to significant legal and personal risk.

Before agreeing to such an appointment, here are five critical things to note.

1. Your Legal Duties Are Owed to the Company, Not the Appointing Party

The first and most fundamental principle is that a nominee director’s primary legal obligation is to the company as a whole, not to the shareholder or investor who nominated them.

Under company law (including the Companies Act, 2015 in Kenya), every director owes statutory and fiduciary duties, including:

• Acting in good faith
• Exercising reasonable care, skill and diligence
• Avoiding conflicts of interest
• Acting with the powers given
• Exercising independent judgment

This means that although a shareholder can nominate you, they cannot dictate your decisions, especially where their instructions conflict with the company’s best interests.
If an investor pushes for a decision that harms the company, you must consider your actions in relation to the instruction, even if it creates tension with the appointing party.

Many nominee directors encounter legal trouble because they assume they only owe accountability to the nominating party. In reality, your loyalty is to the company itself, and breaching that duty can lead to personal liability, regulatory sanctions, or even disqualification.

2. You Can Be Personally Liable for Board Decisions

Accepting a nominee directorship exposes you to the same civil, regulatory, and criminal liabilities as any other director.

You may be personally liable for:

• Breach of fiduciary duties
• Wrongful or fraudulent trading
• Approving unlawful distributions
• Negligence in decision-making
• Participating in conflicted or related-party transactions
• Non-compliance with tax, employment, data protection, or AML/CFT laws
• Sector-specific violations in regulated industries such as banking, insurance, capital markets, payments, gaming, crypto, or telecoms

In Kenya, enforcement agencies such as the Registrar of Companies, CMA, FRC, KRA, CAK, and sector regulators can investigate or sanction directors.

If a company collapses, mishandles investor funds, breaches tax laws, or fails in compliance, nominee directors are often among the first individuals required to account for their actions (or inaction).

Before accepting the role, ensure you understand the full scope of regulatory exposure in the relevant industry and jurisdiction.

3. You Must Manage Confidentiality and Information Sharing Carefully

One of the most complex aspects of nominee directorships is information flow.

Nominee directors often assume they can freely update the appointing shareholder on everything happening in the company. But this is a dangerous misconception.

While you may brief the investor, you must not:

disclose confidential information that could harm the company;
share price-sensitive information without proper clearance;
release privileged or board-protected documents;
provide insider information in breach of capital markets laws;
violate NDAs, shareholder agreements, board charters, or statutory confidentiality obligations.

Improper disclosure can result in personal liability, professional sanctions, or criminal exposure.

A prudent nominee director always maintains clear boundaries on what can be shared, how it can be shared, and when.

4. You Need a Clear Appointment Instrument and Protection Mechanisms

A nominee directorship should never be accepted informally or based on verbal assurances.
Proper documentation protects both you and the appointing shareholder.

Key documents include:

✓ Nominee Director Appointment Letter or Agreement

Clarifies your role, mandate, expectations, reporting lines, and independence obligations.

✓ Shareholders’ Agreement

Sets out nomination rights, voting arrangements, conflict management procedures, and removal mechanisms.(Access here)

✓ Indemnity Deed

Provides financial protection against liabilities incurred while acting as a director (except for fraud, gross negligence, or willful misconduct).

✓ Directors & Officers (D&O) Liability Insurance

Covers legal defense costs, claims, regulatory investigations, and liabilities arising from board service.

The engagement should also address:

how conflicting instructions will be handled;
situations requiring recusal;
your right to independent legal advice;
limits to your reporting obligations;
procedures for resigning in case of ethical or legal conflict.

Professional nominee directors rarely act without these safeguards and neither should you.

5. You Must Understand the Business, the Industry, and the Risks

A nominee directorship is not a passive or ceremonial role. You are legally expected to be informed, active, diligent and competent.

Before accepting the role, carry out thorough due diligence on:

• the company’s structure and governance
• financial health and solvency
• existing debts, disputes, or regulatory investigations
• compliance levels (tax, AML/CFT, licensing, labour, data protection, etc.)
• the industry’s regulatory landscape
• the competence of the board and management
• internal controls and risk frameworks
• conflicts of interest within the ownership structure

Director liability laws increasingly punish ignorance. Courts assume that all directors, not only executive directors, have a duty to understand the business and ask tough questions.

A nominee director who joins a poorly run or non-compliant company may inherit significant personal exposure.

Conclusion

Acting as a nominee director can be professionally rewarding, offering insight into governance, strategy, and investment oversight. But it is also a role that carries significant legal responsibility and real personal risk.

A well-prepared nominee director strengthens both the company and the appointing shareholder.
An uninformed or passive nominee director, however, can become a serious liability, with personal consequences.

The post 5 Things You Must know Before You Act as a Nominee Director appeared first on Netsheria.

In an increasingly interconnected global economy, businesses are no longer confined by national borders. Technology has made it possible for an entrepreneur in Nairobi to serve customers in Lagos, Johannesburg, Dubai, London, and Singapore at the same time. Markets have become global, supply chains are international, and customers transact across time zones without hesitation. In this borderless world, many founders and executives ask a deceptively simple question:

Does It Matter Where I Choose To Incorporate My Business?

For cross-border operating  companies and multinational corporations, the answer is a decisive yes, not only because of legal technicalities, but because the choice of incorporation fundamentally shapes the governance structure, tax exposure, commercial strategy, expansion pathways, dispute resolution mechanisms, investor confidence, and long-term sustainability of the enterprise.

The doctrine of lex incorporationis, particularly for common law jurisdictions remains central to this discussion. This legal principle establishes that the internal affairs of a company are governed by the laws of the jurisdiction in which it is incorporated. No matter where a business operates, hires employees, or sells products, its corporate DNA is tied to its incorporation jurisdiction. This affects everything from the powers and duties of directors, the protection of minority shareholders, the permissible structure of subsidiaries, to the mechanisms for raising capital. Multinational corporations cannot escape these implications through operational flexibility; the incorporation jurisdiction continues to anchor their governance and compliance framework.

Contractual Autonomy

Yet modern cross-border business also heavily relies on contractual autonomy. Through choice-of-law clauses in commercial contracts, multinational companies may select entirely different legal systems to govern their external commercial relationships. A company incorporated in Kenya may choose English law for its supply agreements, Singaporean law for technology licensing, or New York law for financing arrangements. Contractual flexibility, however, does not override incorporation law. Choice-of-law clauses govern the rights and obligations arising from specific commercial arrangements, but they cannot replace the corporate governance obligations created by the incorporation jurisdiction. This interplay between lex incorporationis and contractual choice-of-law regimes creates a unique blend of flexibility and rigidity that multinational enterprises must navigate deliberately.

The Corporate Governance Structure Consideration

Because of this dual structure, the choice of incorporation for cross-border and multinational corporations is neither trivial nor easily reversible. Incorporation determines the legal and compliance regime that regulates corporate governance, financial reporting standards, director liability, corporate social responsibility obligations, and rules on mergers and acquisitions. These factors, in turn, influence whether investors are confident in the corporate structure of the business, whether regulators in host countries accept the company’s legal status without additional scrutiny, and whether the organization can efficiently scale across jurisdictions without facing costly legal bottlenecks.

For example, a company incorporated in a jurisdiction with weak regulatory systems may attract increased scrutiny from financial institutions concerned about anti-money laundering and counter-terrorism financing compliance. Conversely, a company incorporated in a jurisdiction respected for legal predictability and strong governance, such as, UK or the State of Delaware, may experience smoother onboarding in foreign markets, better credit terms, and greater trust in cross-border partnerships. Even where tax incentives are similar, the governance reputation of the incorporation jurisdiction affects investor perceptions, access to funding, and the ability to enter strategic alliances.

Dispute Resolution

In addition, incorporation determines the court system or arbitration framework that will handle internal corporate disputes. For multinational corporations, disputes often arise from issues such as shareholder disagreements, board decisions, executive conduct, or restructuring processes. These disputes, will more often than not be regulated by the incorporation jurisdiction, not by operational or contractual jurisdictions. Therefore, the stability, impartiality, and sophistication of judicial systems matter significantly. This is why many companies avoid jurisdictions with inconsistent court decisions or excessive political interference. Reliable courts reduce uncertainty, one of the biggest hidden costs of doing business globally.

Cross-border regulations further emphasize the importance of incorporation decisions. Many jurisdictions enforce foreign company registration rules, tax compliance obligations, transfer pricing requirements, beneficial ownership disclosures, and sector-specific licensing regimes. A poorly chosen incorporation jurisdiction may complicate compliance in every market the company enters. Conversely, selecting a jurisdiction with modern disclosure systems, digital company registries, transparent beneficial ownership rules, and clear reporting requirements can streamline multinational operations. Efficient incorporation jurisdictions allow companies to focus on their core business rather than bureaucratic complexities.

Conclusion

The choice of incorporation for cross-border and multinational corporations is far more significant than it may appear. Incorporation lays the legal foundation for governance, investor relations, dispute resolution, regulatory compliance, and global expansion strategy. Contractual choice-of-law clauses may offer flexibility, but they cannot replace the central role that lex incorporationis plays in determining the corporate identity and obligations of the business. In a world where compliance demands are rising and investor expectations are increasingly shaped by governance standards, choosing the right incorporation jurisdiction is a strategic imperative.

 How We Help You

Netsheria stands at the forefront of supporting companies through this decision, offering expert guidance, integrated compliance support, and a governance-first approach that empowers businesses to expand globally with confidence.

Authour: Susan Mwango Agwata/CEO-Netsheria

The post Beyond Borders: Why the Choice of Incorporation Still Determines Corporate Strength appeared first on Netsheria.

The registration of trusts in Kenya is regulated by the Trustees (Perpetual Succession) Act. Recent amendments to this Act, introduced through the Statute Law (Miscellaneous Amendments) Act 2024 that was signed by President William Ruto on April 26, 2024, have brought about a significant change to improve the functionality and governance of trustee operations. This alert will focus on the major amendment involving the transfer of trust registration services to the Business Registration Service (BRS). 

Following this amendment to the law, the BRS together with the Ministry of Lands, Public Works, Housing and Urban Development, issued a Public Notice dated 22nd May 2024 notifying the public that, effective Wednesday 22nd May 2024, the State Department of Lands and Physical Planning shall cease receiving applications for registration and incorporation of trusts. 

For this reason, all new trust applications and related transactions shall be submitted to the BRS offices located at 316 chambers, 16th floor, 2nd Ngong Avenue, effective Monday 3rd June 2024.  

In conclusion, the transfer of trust registration services from the Ministry of Lands, Public Works, Housing, and Urban Development to the BRS marks a pivotal step towards enhancing the efficiency and governance of trustee operations in Kenya.  

This transition, effective from June 3, 2024, mandates that all new applications and related transactions be directed to the BRS offices. Stakeholders are encouraged to familiarize themselves with the new procedures to ensure a smooth transition and continued compliance with the updated regulatory framework. 

Please get in touch with the Netsheria team for any clarifications and assistance on the above by contacting us on +254 716209673 or via  email.

The post Alert: Transfer of Registration of Trusts from Ministry of Lands, Public Works, Housing and Urban Development to Business Registration Service (BRS) appeared first on Netsheria.

Introduction

An affidavit is a formal written statement of fact, declared to be true by the person making it. This document is sworn under oath or affirmation, signifying that the deponent acknowledges the truthfulness of the contents under penalty of perjury. Affidavits are frequently utilized in legal proceedings, serving as evidence to support various claims or statements. 

Validity of an affidavit

The creation and validity of an affidavit is hinged on a crucial procedural requirement; that the deponent must swear to the truthfulness of their statements in the presence of a person who has the legal authority to administer such oaths. This authority figure, often referred to as a commissioner of oaths or a notary public in some jurisdictions, is responsible for overseeing the swearing process. Their role ensures that the affidavit is not only a truthful account but also one that has been duly sworn in accordance with legal standards. 

Affidavits in Kenya

In Kenya, a commissioner for oaths serves the role of authentication and swearing of affidavits. The presence of this official when the affidavit is sworn verifies the truthfulness of the deponent’s claims. This verification process involves the commissioner for oaths confirming the identity of the deponent, ensuring that the deponent understands the significance of the oath, and witnessing the signing of the document. 

The importance of this procedure cannot be overstated, as it lends a layer of legal credibility to the affidavit, enabling it to be used as reliable evidence in court or other legal contexts. The affidavit, therefore, becomes a powerful legal document that can substantiate claims, support motions, and provide a sworn statement of facts in various legal situations. 

Legal Framework 

1. The Oaths and Statutory Declarations Act (Cap 15): 

• This Act provides the primary legal basis for the administration of oaths and the making of statutory declarations in Kenya. It specifies who is authorized to administer oaths, including commissioners for oaths, magistrates, and judges. 

• The Act also details the format of affidavits and statutory declarations, including the required language and the attestation clause.
  

2. The Civil Procedure Act (Cap 21) and The Civil Procedure Rules, 2010: 

• These laws govern the procedural aspects of civil litigation in Kenya, including the use of affidavits as evidence in civil cases. 

• Order 19 of the Civil Procedure Rules specifically deals with affidavits, providing guidelines on their content, filing, and use in court proceedings. It includes provisions on who may swear an affidavit, the necessity of personal knowledge or the basis of the information contained in the affidavit, and the requirement for affidavits to be properly endorsed by a commissioner for oaths. 

3. The Evidence Act (Cap 80): 

• The Evidence Act governs the admissibility of evidence in Kenyan courts, including affidavits. 

• The Act addresses the circumstances under which affidavits can be admitted as evidence, emphasizing their use in instances where oral testimony is not possible or practical. 

4. The Notaries Public Act (Cap 17): 

• This Act outlines the role and responsibilities of notaries public in Kenya, who are also authorized to administer oaths and attest affidavits, similar to commissioners for oaths. 

• It details the appointment, duties, and powers of notaries public, ensuring that affidavits and other sworn documents are handled with legal authority and integrity. 

In summary, the legal framework for affidavits in Kenya is a composite of statutory provisions, procedural rules, and judicial interpretations that collectively ensure affidavits are used effectively and legally within the justice system. This framework ensures that affidavits serve their purpose as reliable and credible pieces of evidence in legal proceedings. 

Types of Affidavits 

In Kenya, affidavits serve various purposes and are categorized based on their specific uses and the contexts in which they are required. Here are some common types of affidavits used in Kenya: 

1. Affidavit of Service: 

This affidavit is used to confirm that legal documents have been served to the parties involved in a case. It includes details such as the date, time, and manner of service, as well as the identity of the person served. This is commonly used during civil proceedings and is provided for in the Civil Procedure Rules. 

2.Affidavit of Means: 

This affidavit is used to disclose an individual’s financial status. It is often required in family law cases, such as divorce or child support proceedings, to assess an individual’s ability to pay maintenance or support. 

3. Affidavit of Loss: 

This affidavit is used to declare the loss of important documents, such as a national identity card, passport, or title deed. It typically details the circumstances of the loss and is often required to obtain a replacement document. 

4. Affidavit of Identity: 

This affidavit is used to confirm an individual’s identity, often required when there are discrepancies in personal information or when formal identification documents are not available. 

5. Company Affidavits. 

Company affidavits include; affidavit for lost or damaged share certificate, affidavit for surrender of shares 

6. Affidavit of Birth: 

This affidavit is used to attest to the details of a person’s birth, especially in cases where an official birth certificate is not available. It can be required for various administrative or legal purposes, such as school enrollment or obtaining identification documents. 

7. Affidavit of Marriage: 

This affidavit is used to declare the details of a marriage, including the date and place of the marriage. It can be required for legal processes such as applying for spousal benefits or immigration purposes. 

8. Affidavit of Consent: 

This affidavit is used to indicate that a person has given their consent to a particular action or agreement. It is commonly used in family law cases, such as when a parent consents to a child’s travel or adoption. 

These are just but the few types of affidavits applicable. Each type of affidavit serves a specific function and must be tailored to meet the legal requirements of the situation for which it is intended. The preparation and use of affidavits in Kenya must adhere to the legal standards set out in the relevant statutes and procedural rules to ensure their effectiveness in legal proceedings and validity in the specific purpose. 

Please get in touch with the Netsheria team for any clarifications and assistance on the above by contacting us on +254 716209673 or via  email.

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Introduction 

Vide Legal Notice No. 44 of 2024, the Ministry of Interior on 11th April 2024 confirmed that the National Assembly had approved the Computer Misuse and Cybercrime (Critical Information Infrastructure and Cybercrime Management) Regulations, 2024 (the Regulations). This enactment is in pursuit of aligning with the Constitution, the Statutory Instruments Act of 2023, and the Computer Misuse and Cybercrimes Act of 2018 (the Act). 

The Regulations, provide a robust framework to ensure the protection of critical information structures as well as monitor, prevent, detect, and respond to cybersecurity threats within Kenya’s cyberspace. 

Notable Aspects

The Regulations emphasize the importance of building cybercrime capacity and capabilities by the public, government institutions, businesses, and private entities to improve readiness and elevate the priority of cybersecurity measures. The following are the key highlights of the Regulations to ensure enhanced cybersecurity operations management: 

1. Establishment of Cybersecurity Operation Centres mandated to protect, monitor, detect, analyze, respond, and report on cybersecurity incidents and threats. 
2. Enforce Critical Information Infrastructure protection measures that support essential sectors such as banking, telecommunications, energy, and transport. 
3. Establishment of special cybercrime desks with trained personnel at every police station in Kenya. 
4. Requirement for the conduct of annual cyber-risk assessment and business impact analyses by all critical information sectors including services, products, business operations, and processes. 
5. Recovery and business continuity plans when a disaster occurs. 
6. Methods for tackling scams, identity theft, hacking, and online fraud in cyberspace and IoT. 

To ensure an understanding of the above highlights, this article will delve into the key propositions captured in the Regulations that will help in navigating the everchanging cybersecurity space. 

Sector Implications

To sustain effectiveness, the Regulations will greatly affect the following stakeholders: 

1. The general public will benefit from the guidelines on cybersecurity responsibilities and rights. 
2. Owners of critical infrastructure will be tasked with adhering to stringent security measures and reporting requirements outlined in the Regulations. 
3. Internet Service Providers and Cybersecurity Service Providers must align operations with the Regulations to ensure compliance and enhance the overall security posture of the nation. 

National Cyber Protection Framework: Enhancing Cybersecurity in Kenya

Under the guidance of the National Computer and Cybercrimes Coordination Committee (the Committee), established under the Act, the government is set to implement a robust National Cyber Protection Framework to strengthen cybersecurity capabilities support educational initiatives, and promote information sharing. This would entail creating national cybersecurity training and capacity building, establishing a detailed cyber-defense strategy, and developing a trusted network or system for information sharing. 

The Committee will also undertake collaborations with public bodies research institutions private sector and international organizations toward the development of training programs, create standards, conduct research, and develop policies. For instance, in establishment of the National Cybersecurity Certification Standards, will ensure compliance with security requirements and develop operational standards for security automation. This will mandate the Committee to maintain an up-to-date database for certified cybersecurity institutions and professionals to ensure transparency and credibility. This will be done through the creation and adoption of reference materialism checklists and policy frameworks to sustain continuous monitoring in a bid to minimize risks associated with information technology systems used by the government. 

Additionally, the Committee will be instrumental in researching emerging technologies providing practical cybersecurity approaches, formulating administrative guides, and measuring the impact of training programs. 

With the framework in place, it will ensure a secure cyber environment and improvement of cybersecurity practices promote continuous learning, and help Kenya foster collaborations to combat cyber threats effectively. 

Critical Information Infrastructure

Under the Act, Critical Information Infrastructure (CII) entails systems or data deemed essential for national security and public welfare located within Kenya. If disruption of such a system would result in interrupting sensitive services such as energy and health services, hence adversely affecting the Republic’s economy, causing massive casualties or fatalities, disrupting the money market significantly, and severely impacting national security including military and intelligence operations, it will be classified as CII.  

As such, the Regulations mandate owners or operators of CIIs and related sectors to conduct cyber risk assessments and business impact analyses within twelve (12) months of the Regulations’ commencement to identify and prioritize potential internal and external threats to all products, services, business processes, and functions. To ensure this, the Director of the Committee must inform the systems owner or operator of the designation of their infrastructure as CII within seven days. This directive will require the owner or operator to conduct risk assessments annually, develop incident response plans, implement suitable security measures, and ensure personnel are adequately trained in security best practices. The owner can also apply in writing to the Director for a system to be declared as CII and receive feedback from the Director within seven days. Significant changes to CII must be notified to the Director in advance such as plans to locate critical information outside Kenya which require the Committee’s approval in compliance with security standards. 

The Regulations provide that CII must be protected with access restricted to authorized personnel. To ensure adherence and effective follow-up, a Chief Information Security Officer (CISO) must be appointed by the owner to oversee periodic reviews and awareness programs are conducted. Their presence is vital in ensuring a backup system is maintained to help information retrieval in case of loss as well as integration with other infrastructures once safety standards are met.  

Cybersecurity Operation Centres

They will include: 

1. Critical Information Infrastructure Cybersecurity Operations Centres (CIICOC), 
2. National Cybersecurity Operations Centre (NCOC), and 
3. Sector Cybersecurity Operations Centres (SCOC). 

The CIICOC will undertake real-time monitoring, detection and investigation of threats to critical infrastructure, reporting to both national and sector centres. SCOC will focus on sector-specific threats and reporting to the national centre and the NCOC will serve as the primary point for national cybersecurity monitoring and investigation. Once these operations centres are in place, their main function in aiding the coordination of the collection and analysis of cyber threats through submission of monthly briefs and annual compliance reports to the committee to evaluate adherence. They shall also monitor, analyze and collect information in real time, analyze and test malware, detect, monitor and prevent threats, respond to and manage incidences, vulnerability management, act as an alert system and detect intrusion. 

Cyber Crime Reporting 

In the event of a cybersecurity threat or incident, owners of critical information infrastructures will be required to facilitate investigations, mitigate the impacts of the incidents according to set cybersecurity standards and report these incidents to relevant Sectoral Cybersecurity Operations centres within a stipulated timeframe. This reporting will specify the type and description of the threat, attack or disruption along with relevant evidence such. These reports will be submitted electronically or physically to the Committee using CMCA 7 to ensure detailed reporting.  

With the establishment of computer crime and cyber crime desks manned by appropriately trained personnel at every police station, these will handle the reception, assessment and escalation of cyber threats and incidents. With personnel receiving specialized training in cybersecurity and digital forensics, public awareness campaigns will be conducted towards sensitizing the citizens and organizations on the role of the cybersecurity desks and reporting methods. 

Most importantly, anonymous reporting channels will allow disclosure of cyber incidents or crimes without fear ensuring that such reporting is done in the public interest and based on reasonable belief in the veracity of the information. As such, the Regulations emphasize on implementation of the Data Protection Act 2019 when processing of personal data under the Act. 

Conclusion 

Safeguarding the nation’s digital infrastructure remains key for Kenya to mitigate cyber threats and ensure a secure digital space. Investing in advanced technologies and solutions, promoting a culture of cybersecurity awareness and fostering public-private partnerships will go a long way to ensure resilience and bolster economic growth. By integrating robust regulatory frameworks and fostering collaboration between stakeholders, the Regulations aim to safeguard critical information infrastructure, bolster cybersecurity defenses and reduce cyber incidents whilst in effect operationalizing the mandate of the Computer Misuse and Cybercrimes Act. 

The post Overview of the Computer Misuse and Cybercrime (Critical Information Infrastructure and Cybercrime Management) Regulations, 2024 appeared first on Netsheria.

Introduction 

The Trustees (Perpetual Succession) Act is a vital piece of legislation that provides for the incorporation of trusts, ensuring the perpetual succession of property. The recent amendments to this Act, as part of the Statute Law (Miscellaneous Amendments) Act 2024, signed by President William Ruto and gazetted on April 26, 2024, introduce significant changes aimed at enhancing the functionality and governance of trustee operations. This article delves into the specific amendments and their implications. 

Analysis of the amendments to the Act

Prior to the recent amendments, establishing a Trust involved executing a Trust Deed, which then required stamping and subsequent registration at the Lands Registry in accordance with the Registration of Documents Act. This process ensured that the Trust was legally recognized and enforceable.  

However, with the introduction of the amendments, the procedure for registering a Trust has undergone a significant change. The responsibility for the registration of Trusts has now been transferred to the Registrar of Companies. This shift aims to streamline and simplify the procedures involved. With the functions of the registrar of companies now available via e-citizen, this is a step in the right direction by promoting and embracing technology in this critical process.  

Process of registration

The amendment stipulates that the trust registration application form, as specified as in the first schedule, must be submitted along with requisite documents capturing the details of the proposed trust, proposed settlor, trustees and/or enforcers and details of the subject matter property. 

The amendment also removes the requirement by a trust to submit a common seal together with its regulations for its custody and use for registration purposes. 

Conclusion 

What we can draw from the latest amendment is that the registration of a trust is now under the Registrar of companies as opposed to the previous position where the registration was undertaken at the Lands Registry in accordance with the Registration of Documents Act. 

At Netsheria International, we pride ourselves for having a wide variety of skillsets, resources and expertise to meet your needs in matters related to trusts and subsequent incorporation. Kindly visit our website where you can access our services at the click of a button. You can also reach out to us via email on or call us on +254 741 296 087 for any questions or guidance regarding this topic or any other legal queries you may have. 

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Introduction

This is the legal process of anticipating and arranging for the disposal of the property of a deceased person (“Estate”). It entails the process of formally designating who will receive one’s assets and handle estate responsibilities after the person’s death or legal incapacitation. Estate planning primarily helps to manage uncertainties in the administration of the deceased or incapacitated persons’ estate.

Purpose of estate planning

An effective estate plan is drafted to consider how a person’s estate will run in the event of his/her death or incapacity by taking various circumstances into consideration. These involve the degree to which probate or legal proceedings over his/her property can be avoided, what one wants to happen to their property upon his/her death, the financial well-being of his/her family, and how to eliminate or minimize estate taxes.

Avenues of estate planning

There are various methods of estate planning and these include:

1. Estate planning with wills– a will entails the last testamentary statement of a person seeking to distribute their property before death. It is the most common form of estate planning as it gives one freedom to distribute their estate however he/she likes.
2. Estate planning using a trust– this is where one creates a trust and transfers the ownership of all, or a position of, his/her property to it. There are different forms of trusts, the choice of which depend on the estate owner’s intentions.
3. Creation of a living trust– this is a trust that involves three parties namely the creator, trustees and beneficiaries.  One can determine when assets are passed on to a beneficiary during his/her lifetime as this does not need to be immediately upon one’s death. A living trust is revokable when the creator is alive but becomes irrevocable upon his/her death. Trusts can also have exemptions from Capital Gains Tax and Stamp Duty for assets being transferred to a registered family trust, making them convenient towards ensuring tax efficiency over the estate property.
4. Power of attorney– this refers to the power given by a signor to a signee to manage the property on their behalf while alive. It is revoked upon death of a signor.
5. Dispositions- one can pass his/her property absolutely to whomever he/she wishes while alive. In law, such scenarios tend to occur through gifts, nominations and appointments which all involve designations of beneficiaries.

Conclusion

Effective estate and succession planning gives one control of how they would want his/her assets and wealth to be distributed and held including in the case of a trust on a long-term basis.

At Netsheria International, we pride ourselves for having a wide variety of skillsets, resources and expertise to meet your needs in matters related to trusts and subsequent incorporation. Kindly visit our website where you can access our services. You can also reach out to us via email  or call us on +254 741 296 087 for any questions or guidance regarding this topic or any other legal queries you may have.

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Introduction

Estate planning entails the process of disposal of one’s assets in a structured manner that goes beyond the determination of who will benefit from the property. As such, one may need to consider whether it is appropriate in his/her circumstances to set up a trust as a form of estate planning in his/her lifetime and transfer some of his/her assets into the trust during his/her lifetime and/or after death.

Purpose of trusts

The main aim of estate planning is to reduce the uncertainties as to what fate would befall one’s estate upon death. Trusts can be extremely useful instruments in the long-term planning of the ownership and management of one’s private and business assets and estate as they provide certainty on the eventual ownership of the property during and after his/her life.

Creation of trusts

In Kenya, trusts serve as an alternative to disposing of an estate through writing a will. Setting up a trust revolves around an arrangement creating a relationship between the following key parties:

1. the person transferring his assets into the trust during his lifetime as ‘the settlor’
2. the appointed persons to hold the property for the benefit of a third party, ‘the trustee(s)’; and
3. the third parties receiving benefit of the property transferred as the ‘beneficiary’

Trusts are created through the execution of a Trust Deed as the instrument governing the relationship between the settlor and the trustee. Acting as the ‘constitution’ of the trust, almost akin to memorandum of association or articles of association of a company, it spells out the objects of the trust, properties held under the trust, power of trustees and the particulars of the administration of the trust. It serves as proof of the beneficial ownership of properties in the trust.

Once drafted and executed, the trust deed is required to be registered at the registrar of companies (owing to the Statute Law (Miscellaneous Amendments) Act, 2024 that amended the Trustees (Perpetual Succession) Act) to give the trust legal validity. The trust deed provides certainty of the beneficial ownership of the property owned as it clearly defines and easily identifies them. Certainty in the objects of the trust also makes the reason for the formation of the trust easily identifiable. Once payment of stamp duty is made, the trust can be registered and incorporated. The trust thus obtains a separate legal status, can own property in its own name, enter into contracts and carry out its activities as a separate and distinct legal entity.

Types of Trusts in Personal Estate Planning

There are several types of trust structures which an experienced lawyer can give advise on to determine which best suits one’s needs.

1. Family trusts – these are trusts in which the settlor appoints trustees manages and distributes the wealth and income out of the trust based on the changing circumstances and needs of the different family members. As a safeguard, a settlor can appoint an enforcer or protector of the trust who is a person who he trusts, who knows the family well, who can supervise the trustees and ensure the trustees carry out their duties properly. During the lifetime of the settlor, the settlor can be a protector and he can be a beneficiary as well. Family trusts can either be living trusts or testamentary trusts and may have charitable or non-charitable aspects.
2. Irrevocable trusts – these are trusts established with the express power of revocation. Where the trust provides for express power of revocation, but the settlor does not exercise the said power during their lifetime, the trust will be considered an irrevocable trust.
3. Non-Charitable trusts – these are trusts that do not have beneficiaries. They are set up for a specific legal purpose which, whether charitable or not, should be capable of fulfilment. They also have explicit provisions providing for the disposition of surplus assets of the trust upon its termination.
4. Charitable trusts – these trusts are established to be beneficial to the general public and may focus on human rights, environment, education and religious issues among other areas of public focus. They must be discretionary where although the trustee has total discretion in both the income and capital of the trust, they must act in the best interests of the beneficiaries while exercising their discretion. A charitable trust registered in Kenya can pursue its objectives in Kenya or any other jurisdiction. The trustee has the power to defer distribution for a period not exceeding the duration of the trust.

Advantages of setting up a trust

The primary objective of a trust is to create or preserve wealth for future generations. Its notable advantages include:

1. The major advantage of such a trust is that no probate and administration and therefore no court process will be required to follow upon a settlor’s death. This is because once the assets will have been transferred to the trust, the same are no longer considered as part of the settlor’s estate. This reduces the chances of family disputes over the assets, ensures there is continuity of ownership and that there are no delays in terms of use of assets. Beneficiaries can be identified as named persons or a category of persons, such as children and grandchildren
2. The settlor can use it as a wealth management and succession planning tool such that the trustees would invest and manage the assets and would make distributions of income to the beneficiaries based on the beneficiaries’ needs
3. The settlor may also be a beneficiary of a trust they have created thereby benefiting from the property in the share he/she deems fit
4. Family trusts offer protection for family members with special needs or medical conditions
5. Trusts offer tax and other efficiencies experienced as a result of having a family trust structure
6. Trusts safeguard against spendthrift beneficiaries by imposing conditions on access to the trust ensuring responsible financial management
7. Any disgruntled dependant or creditor would not be able to claim against the assets vested in the trust as they do not form part of the settlor’s estate on his/her death
8. On a divorce, the assets vested in the trust would not be subject to matrimonial proceedings and thus would not be subject to division and
9. Generational wealth is guaranteed as a family trust can hold and protect wealth forever if the trust is managed accordingly.

Conclusion

Effective estate and succession planning is important as it gives you control of how you would want your assets and wealth to be distributed and held including in the case of a trust on a long-term basis. A legal adviser can give effective solutions depending on your circumstances to achieve your wishes. Whether your circumstances are simple or complex, at the very minimum it is important to have a written will in place.

At Netsheria International, we pride ourselves for having a wide variety of skillsets, resources and expertise to meet your needs in matters related to trusts and subsequent incorporation. Kindly visit our website where you can access our services at the click of a button. You can also reach out to us via email or call us on +254 741 296 087  for any questions or guidance regarding this topic or any other legal queries you may have.

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Introduction

Technological change remains one of the most important advancements affecting businesses both negatively and positively. It enables entrepreneurs to run their operations effectively and efficiently while leveraging on the challenges brought about by the same advancements that render some technologies obsolete.  

As such, most startups are actively engaged toward improving their brand, business names, technologies and inventions aimed at improving the efficiencies of running their business.  Different types of intellectual property mechanisms can be applied to safeguard these different aspects. 

1. Trademarks

Basically, a trademark is a word or a combination of words, letters, signs, designs, expressions, numbers, symbols or logos.  

They protect such word, phrase, symbol or design that identifies with the source of a product. It can be use by startups to ensure the business name, its design and word combinations in the preferred name is protected from use by other businesses. Ideally, it safeguards against confusing the consumers of a particular brand from other products seeking to use the same brand to advance themselves while also ensuring the owner fully benefits from their ingenuity. 

Registering a trademark confers exclusive ownership and safeguards the owner from infringement through use of the mark by third parties. The Kenya Industrial Property Institute (KIPI) is mandated with the registration of trademarks in Kenya. 

2. Copyright

This is an exclusive right to distribute, reproduce or perform in public an original, artistic or literary works. 

It is aimed at protecting the creative or intellectual work of the owner. Copyrights are applied for photographs, music, forms of art hence ensuring the authors or owners rights over their use is protected. To use such works, one has to seek permission of the owner and is usually expected to proffer royalty payments in return. 

The statutory noy in charge of enforcing copyright in Kenya is the Kenya Copyright Board – KECOBO. It organizes the collection of royalties for copyright holders and fines persons and businesses that infringe on copyright. A copyright owner can transfer ownership of their copyright to another via assignment which is only valid when registered with KECOBO. 

3. Patents

A patent features the exclusive right to use or sell an invention. It can be a new product or process that offers a new way of doing something or a solution to a problem.  

It prevents anyone from making, using or selling the patented invention hence ensuring that the patent owner benefits directly from the use of their invention by third parties. 

Patent rights belong to the inventor(s) and can be registered under one or more individuals jointly where two or more individuals have jointly contributed to an invention. They are registered by the Kenya Industrial Property Institute (KIPI) either personally or with the assistance of a licensed patent agent who advises and assists inventors with patent applications. 

4. Industrial Design

This is the right to the exclusive use of the outward appearance of a product. 

It enables a producer to have special designs of their product to distinguish them form products of competitors. 

Primarily, an industrial design is only registerable if it is novel, has not been disclosed to the public prior to its application for registration and the design does not offend public order or morality. Registration is done at the Kenya Industrial Property Institute (KIPI) personally by the applicant or represented by an agent. If applicant is not the creator, the application should be accompanied with a statement justifying their right to registration of the design. 

Conclusion 

While intellectual property is divided into industrial property, copyrights and plant breeder’s rights, its protection generally prevents or blocks competitors from duplications, helps one acquire transfer rights such as licensing and ensures protection of standards. Read more on Intellectual property.

For assistance on your intellectual property registrations, disputes and general advisory reach out to Netsheria International LLP or call us on 0741296087 and we will guide you in making informed decisions, maximizing returns on your works and effecting timely registrations to ensure compliance with your IP obligations. 

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