The High Court has rejected an appeal by four former senior executives of micro lender Real People Kenya Limited who sought to block the Capital Markets Authority (CMA) proceedings over alleged misuse of medium-term note proceeds and failure to disclose key information to investors.
- •Justice Benjamin Mwikya Musyoki, sitting at the Milimani Commercial and Tax Division, ruled that CMA’s Ad Hoc Committee acted within its legal mandate.
- •The committee had issued notices to show cause and started hearings into the alleged breaches.
- •The appellants included the former Chief Finance Officer, Chief Executive Officer, Chief Operating Officer, and a board member.
They argued that the committee had no jurisdiction, that the governance code was unenforceable, and that their rights would be violated if the hearings continued.
CMA issued the notices on 19 October 2020 after a preliminary inquiry where investigators found possible violations of the Capital Markets Act and the Code of Corporate Governance Practices for Issuers of Securities. The appellants first challenged the process before the committee. They later appealed to the Capital Markets Tribunal, which dismissed the case on 5 June 2024.
Justice Musyoki found that CMA has powers under Sections 11 and 13B of the Capital Markets Act to investigate licensed entities and their officers. This applies even if the conduct might also be a criminal offence. He also agreed with the regulator that the proceedings did not override the prosecutorial role of the Office of the Director of Public Prosecutions.
Other Issues Raised
The appellants had also claimed that a CMA press release had created bias. They also argued that delays in forming the Tribunal and their exit from the company removed CMA’s authority. The court rejected both claims.
Justice Musyoki stated that CMA’s powers aim to protect investors and maintain confidence in the market. He dismissed the appeal with costs, allowing CMA to proceed with its hearings.
Real People Kenya posted a sharp improvement in its financial results for the year ended December 31, 2024, reducing its net loss by 80% to KSh 19 million from KSh 93 million a year earlier. In July, the micro lender stated it was seeking KSh 300mn to stabilise operations.
