NSE enforces strict shareholding regulations as Kenya’s capital markets soar 15 per cent
The NSE urged investors to conduct due diligence when buying or selling its shares—whether for themselves or on behalf of clients—to avoid breaching the prescribed thresholds.
The Nairobi Securities Exchange (NSE) has issued a firm reminder to shareholders, trading participants, and market intermediaries to strictly observe shareholding limits, warning that exceeding these caps could lead to regulatory violations.
In a circular, the NSE reiterated that these limits are outlined under the Capital Markets (Nairobi Securities Exchange Limited Shareholding) Regulations, 2016, which state that an individual or private company may not hold more than 5 per cent of the NSE’s equity, while a public company is capped at 10 per cent. Additionally, trading participants collectively may not own more than 40 per cent of the Exchange’s total equity.
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The NSE urged investors to conduct due diligence when buying or selling its shares—whether for themselves or on behalf of clients—to avoid breaching the prescribed thresholds.
"To support compliance with the Regulations, investors and market intermediaries are kindly requested to notify the Nairobi Securities Exchange PLC of any proposed transactions involving its shares and obtain written confirmation prior to execution. This requirement applies to all investors, including those nearing or exceeding the specified shareholding thresholds," the NSE said.
"The Exchange further advises all parties to review their current and prospective holdings to ensure continued compliance with the applicable regulatory framework."
Impressive rebound
Meanwhile, Kenya’s capital markets staged an impressive rebound in the third quarter of 2025, achieving their strongest performance in four years despite ongoing foreign investor outflows.
According to the Capital Markets Authority (CMA), investors’ paper wealth rose by Sh360 billion over the three months to September, lifting market capitalisation to Sh2.78 trillion from Sh2.42 trillion in the previous quarter. This represents nearly 15 per cent growth, driven by rising share prices across major counters and renewed investor confidence following recent market reforms.
The NSE managed to weather heavy foreign sell-offs, partly triggered by local political unrest as youth staged protests against President William Ruto’s administration, and by global tensions such as the Israel–Iran and Russia–Ukraine conflicts. Foreign outflows climbed sharply to Sh3.84 billion, compared to Sh177 million recorded between April and May 2025.
CMA data shows foreign investor participation dropped to 30 per cent in Q3, down from 46.68 per cent in Q2. However, domestic investors stepped in to fill the gap, pushing overall market turnover up 60 per cent quarter-on-quarter—a reflection of strong local demand and confidence.
“Foreign Investor Participation at the end of Q3 2025 averaged at 30 per cent, a decrease from Q2 2025 at 46.68 per cent. With the market recording an outflow of Sh3.9 billion compared to an outflow of Sh177 million between April and May 2025,” said the CMA in its latest Market Soundness Report.
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