Lawyers want businesses facing licence cancellation be given at least 45 days to defend themselves ALN Kenya (Anjarwalla & Khanna) Principal Associate Kabu Karanja /DOUGLASS OKIDDY Corporate lawyers are concerned over proposed changes to Kenya's banking and competition laws warning that it grants regulators excess power, creating a tougher and expensive businesses regime.
Corporate law firms Anjarwalla & Khanna and Bowmans expressed concern that the proposed amendments to the Competition (Amendment) Bill and Microfinance Bill, could expose businesses to exploitation if not backed by further laws. In submissions to the Parliamentary committee on finance, the two firms argued that the laws would expand the powers of the Central Bank of Kenya (CBK) and the Competition Authority of Kenya (CAK) without adequate safeguards to protect businesses.
The firms while supporting stronger regulation, warned that some of the proposed powers are too broad and could create uncertainty for investors and companies. They argued that businesses need clear rules and fair processes when regulators take enforcement action.
Anjarwalla & Khanna Principal Associate Kabu Karanja, argued that CBK should not be allowed to enter business premises without court approval except in emergencies as proposed in the Microfinance Bill. "We are proposing amendments which are geared towards balancing the CBK's need to act decisively to protect the public while also protecting the rights of businesses that are being investigated," said Karanja.
The law firm proposed that the regulator should first obtain a High Court warrant before inspecting premises that do not belong to licensed financial institutions. It also said businesses should be given more time to respond before their licences are revoked and that CBK officials should not be protected from legal action in cases involving gross negligence, abuse of power or violations of constitutional rights.
The firm also wants businesses facing licence cancellation to be given at least 45 days to defend themselves instead of the 28 days proposed in the Bill, arguing that closing a financial institution affects employees, customers and the wider financial system. Bowmans, on the other hand, argued that the Competition Authority is being given powers that go beyond stopping anti-competitive behaviour and could allow it to interfere in normal business contracts and negotiations.