KENYA FOREIGN INVESTMENTS PROTECTION ACT

KENYA FOREIGN INVESTMENTS PROTECTION ACTSource: International Legal Materials, Vol. 4, No. 2 (MARCH 1965), pp. 241-254Published by: American Society of International LawStable URL: http://www.jstor.org/stable/20689888 .

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241

E A FOREIGN INVESTMENTS PROTECTION ACT

THE FOREIGN INVESTMENTS PROTECTION ACT, 1964

No. 35 of 1964

Date of Assent: 11th December 1964

Date of Commencement: 15th December 1964

An Act of Parliament to give protection to certain approved foreign investments and for matters incidental thereto

ENACTED by the Parliament of Kenya, as follows: ?

1. This Act may be cited as the Foreign Investments Short title.

Protection Act, 1964.

2. (1) In this Act, unless the context otherwise requires? Interpretation.

"approved" in relation to any enterprise, foreign currency, period or proportion, means any enterprise, currency, period or proportion specified in the relevant certificate issued under section 3 of this Act;

"foreign assets" includes foreign currency, credits, rights, benefits or property, any currency, credits, rights, benefits or

property obtained by the expenditure of foreign currency, the

provision of foreign credit, or the use or exploitation of foreign rights, benefits or property, and any profits from an investment in an approved enterprise by the holder of a certificate issued under section 3 of this Act in relation to that enterprise;

"foreign national" means a person who is not a citizer of Kenya, and includes a body corporate not being a body incorporated in Kenya;

"the Minister" means the Minister for the time being responsible for finance.

(2) For the avoidance of doubt it is hereby declared that assets shall not cease to be foreign assets by reason of their

being assets in some other part of the Commonwealth, and that currency shall not cease to be foreign currency by reason

of it being in Kenya as well as in some place outside Kenya :

Provided that in the case of currency, the relevant sum

originates from outside Kenya.



242

No. 35 Foreign Investments Protection 1964

Foreign investors may apply for and be granted certificates.

Amendment of certificata.

3. (1) A foreign national who proposes to invest foreign assets in Kenya may apply to the Minister for a certificate that the enterprise in which the assets are proposed to be invested is an approved enterprise for the purposes of this Act.

(2) The Minister shall consider every application made under subsection (1) of this section and in any case in which he is satisfied that the enterprise would further the economic

development of, or would be of benefit to, Kenya, he may in his discretion issue a certificate to the applicant.

(3) Foreign nationals who have already invested foreign assets in Kenya shall be entitled to the grant of a certificate cm application provided that a certificate may be withheld if the Minister is not satisfied that the enterprise is of benefit to

Kenya.

(4) Every certificate shall state?

(a) the name of the holder; (b) the name and a description of the enterprise; (c) the proportion of the foreign assets invested or to be

invested by the holder to the total assets of the

enterprise, and where the investment consists of the

acquisition of shares or stock in a body corporate, the number or amount and description thereof;

(d) the relevant foreign currency; (e) if the assets have not yet been invested, the value

thereof and the period within which they shall be invested;

(/)such other matters as may be necessary or desirable for the purposes of this Act.

4. The Minister may in his discretion amend a certificate granted under section 3 of this Act?

(a) in any case in which he is satisfied that some other foreign national has succeeded to the interest in the enterprise of the holder of the certificate, by substi tuting for the name of the holder the name of his successor :

Provided that the Minister shall not substitute the name of any person who has acquired the interest of the holder by the expenditure, directly or indirectly, of assets other than foreign assets;

ib) in any case where an interest in the enterprise passes to any other person on the death of the holder;



243

1964 Foreign Investments Protection No< 35

(c) in any case where the name of the enterprise is altered, by substituting the name as so altered;

W) in any case in which new foreign assets are invested or are to be invested in the enterprise by the holder, or the holder has withdrawn or been paid, in accordance

with this Act, any part of his investment by varying the approved proportion in accordance therewith;

(e)in any case where the investment consists of the acquisition of shares or stock of a body corporate, and new shares or stock are acquired otherwise than by the investment of assets which are not foreign assets, by amending the number or amount and the description thereof;

if) with the written consent of the holder of the certificate, by varying the approved foreign currency;

(g) by extending the period during which foreign assets are to be invested; and

(ft) subject to these foregoing provisions and to the written consent of the holder, in such other manner as may be necessary or desirable.

5? If, at the time at which a certificate is issued under this Act, any foreign assets or part thereof to which such certificate relates have not been invested in the approved enterprise, they shall be so invested within the approved period, and, if not so invested within that period, the certificate shall be deemed to have been revoked.

6. Nothing in this Act shall affect the obligation of an investor other than an investor from one of the scheduled territories to comply initially with the requirements of the Exchange Control Act.

7. Notwithstanding the provisions of any other law for the time being in force, the holder of a certificate may, in respect of the approved enterprise to which such certificate relates, transfer out of Kenya in the approved foreign currency and at the prevailing official rate of exchange?

(a) the profits, after taxation, of his investment of foreign assets;

(b) the approved proportion of the net proceeds of sale of all or any part of the approved enterprise, either in liquidation or as a going concern; and

Foreign assets to be brought in during approved period.

Compliance with the Exchange

Control Act, Cap. 113.

Transfer of

profits, etc.



244

No. as Foreign Investments Protection 1964

Compulsory acquisition.

Regulations and directions.

(c) the principal and interest of any loan specified in the certificate.

8. No approved enterprise or any property belonging thereto shall be compulsorily taken possession of, and no interest in or right over such enterprise or property shall be compulsorily acquired, except in accordance with the provi sions concerning compulsory taking of possession and acquisition and the payment of full and prompt payment of compensation contained in section 19 of the Constitution of Kenya and reproduced in the Schedule to this Act.

9. The Minister may make regulations or give directions generally for the better carrying out of the purposes of this Act and prescribing the manner in which applications shall be made for certificates under this Act, and the information which shall accompany such applications.

Protection from deprivation of property.

SCHEDULE

Thb Constitution of Kenya

(s. 8)

19. (1) No property of any description shall be compulsorily taken possession of, and no interest in or right over property of any description shall be compulsorily acquired, except where the following conditions are satisfied, that is to say?

(a) the taking of possession or acquisition is necessary in the interests of defence, public safety, public order, public

morality, public health, town and country planning or the development or utilization of any property in such manner as to promote the public benefit; and

(b) the necessity therefor is such as to afford reasonable justifica tion for the causing of any hardship that may result to any person having an interest in or right over the property; and

(c) provision is made by a law applicable to that taking of pos session or acquisition for the prompt payment of full com pensation.

(2) Every person having an interest or right in or over property which is compulsorily taken possession of or whose interest in or right over any property is oompulsorily acquired shall have a right of direct access to the Supreme Court for?

(a) the determination of his interest or right, the legality of the taking of possession or acquisition of the property, interest or right, and the amount of any compensation to which he is entitled; and

(6) the purpose of obtaining prompt payment of that compen sation:

Provided that if Parliament so provides in relation to any matter referred to in paragraph (a) of this subsection the right of access shall be by way of appeal (exercisable as of right at the instance of the



245

1964 Foreign Investments Protection No. 35

Schedule?(Contd.)

person having the right or interest in the property) from a tribunal or authority, other than the Supreme Court, having jurisdiction under any law to determine that matter.

(3) The Chief Justice may make rules with respect to the practice and procedure of the Supremi? Court or any other tribunal or authority in relation to the jurisdiction conferred on the Supreme Court by subsection (2) of this section or exercisable by the other tribunal or authority for the purposes of that subsection (including rules with respect to the time within which applications or appeals to the Supreme Court or applications to the other tribunal or authority may be brought).

(4) No person who is entitled to compensation under this section shall be prevented from remitting, within a reasonable time after (he has received any payment of that compensation, the whole of that payment (freo from any deduction, charge or tax made or levied in respect of its remission) to any country of his choice outside Kenya.

(5) Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of sub section (4) of this section to the extent that the law in question authorizes?

(a) the attachment, by order of a court, of any payment or part of any payment of compensation to which a person is entitled in satisfaction of the judgment of a court or pending the determination of civil proceedings to which he is a party; or

(b) the imp?sition of reasonable restrictions on the manner in which any payment of compensation is to be remitted.

(6) Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of sub section (1) or subsection (2) of this section?

(a) to the extent that the law in question makes provision for the taking of possession or acquisition of any property?

(i) in satisfaction of any tax, duty, rate, cess or other

impost;

(ii) by way of penalty for breach of the law, whether under civil process or after conviction of a criminal offence under the law of Kenya;

(iii) as an incident of a lease, tenancy, mortgage, charge bill of sale, pledge or contract;

(iv) in the execution of judgments or orders of a court in

proceedings for the determination of civil rights or

obligations;

(v) in circumstances where it is reasonably necessary so to do because the property is in a dangerous state or injurious to the health of human beings, animals or plants;

(vi) in consequence of any law with respect to the limitation of actions; or



246

No. 35 Foreign Investments Protection 1964

Schedule?(Contd.)

(vii) for so long only as may be necessary for the purposes of any examination, investigation, trial or inquiry or, in the case of land, for the purposes of the carrying out thereon of work of soil conservation or the conservation of other natural resources or work relating to agricultural development or improvement (being work relating to such development or improvement that the owner or

occupier of the land has been required, and has without reasonable excuse refused or failed, to carry out),

and except so far as that provision or, as the case may be, the thing done under the authority thereof is shown not to be reasonably justifiable in a democratic society; or

{b) to the extent that the law in question makes provision for the taking of possession or acquisition of?

(i) enemy property;

(ii) property of a deceased person, a person of unsound mind or a person who has not attained the age of eighteen years, for the purpose of its administration for the benefit of the persons entitled to the beneficial interest therein;

(iii) property of a person adjudged bankrupt or a body cor

porate in liquidation, for the purpose of its admini stration for the benefit of the creditors of the bankrupt or body oorporate and, subject thereto, for the benefit of other persons entitled to the beneficial interest in the property; or

(iv) property subject to a trust, for the purpose of vesting the property in persons appointed as trustees under the instrument creating the trust or by a court or, by order of a court, for the purpose of giving effect to the trust.

(7) Nothing contained in or done under the authority of any Act of Parliament shall be held to be inconsistent with or in contra vention of this section to the extent that the Act in question makes

provision for the compulsory taking possession of any property or the compulsory acquisition of any interest in or right over property where that property, interest or right is vested in a body corporate, established by law for public purposes, in which no moneys have been invested other than moneys provided by Parliament; and nothing contained in or done under the authority of any law made by a

Regional Assembly shall be held to be inconsistent with or in contra vention of this section to the extent that the law in question makes

provision for the compulsory taking possession of any property or the compulsory acquisition of any interest in or right over any pro perty where the property, interest or right is vested in a body cor

porate, established by law for public purposes, in which no moneys have been invested other than moneys provided by that Regional Assembly.



247

RULES OF PROCEDURE Rules of procedure for granting a "Certificate of Approved Enterprise".

Application received by Treasury who will consult with? Section I.

(a) Ministry of Agriculture in regard to investments in Agriculture Schemes; or

(b) Ministry of Commerce and Industry in regard to Industrial Schemes; or

(c) Ministry of Information and Tourism in regard to an investment designed to promote the Tourist Industry; or

(d) Ministry of Natural Resources in regard to an investment in industry under his control, e.g. timber and paper manufacture.

The Treasury will process and grant certificates in respect of purely financial investments or loans, made to Insurance Companies, Banking Organizations, Hire Purchase Companies, Unit Trusts, etc.

Note.?"Certificates of Approved Enterprise" will not normally be granted in the following cases but applications will nevertheless be considered on their merits: ?

(a) Speculative investments, such as a person purchasing a share of a public com pany quoted on the Nairobi Stock Exchange.

(b) Investments which are not of economic value. The change of ownership of an existing building or business; would not qualify unless it could be proved that the business or building was being purchased for expansion.

(c) Merchanting organizations.

All applications must be supported by adequate proof that the funds which are Section 2. the subject of the investment will be remitted to Kenya.

All intending investors are advised to consult the Treasury in regard to the possi- Section 3.

bility of obtaining a "Certificate of Approved Enterprise" before the investment is made, the investor should not anticipate the issue of a "Certificate of Approved Enterprise".

Any investor whp receives a "Certificate of Approved Enterprise" will also be Section 4. entitled to receive a certificate for presentation to his own Government to obtain that

Government's guarantee for the investment, e.g. American investors can obtain an

investment guarantee from the American Government.

Investments that already have been granted "Approved Status" under the Exchange Section 5. Control Act (Cap. 113) may obtain a "Certificate of Approved Enterprise" in respect of their past investments, but will not get an additional certificate for future invest ments unless the investment is approved in accordance with section 6.

"Certificate of Approved Enterprise" will be issued in the following circumstances within the discretion of the Minister for Finance : ?

(i) (a) All investments that have already received "Approved Status".

(6) All investments in sterling which would have received "Approved Status" had the Exchange Control Act not been restricted to the Non-Sterling Area.

(ii) Funds provided to the undermentioned Institutions either by way of capital or loans : ?

(a) Banks.

(b) Investment Companies. (c) Insurance Companies. (d) Building Societies.

(e) Hire Purchase Companies. if) Unit Trust Companies.

Section 6.

Existing Investments.

Financial Institutions.



Manufacturing Industries.

Oil Industry.

Tourist.

Agriculture.

Building.

Miscellaneous.

(iii) (a) New industries, provided their production can be absorbed in East Africa or exported.

(b) Investments in existing industries that require expansion.

(iv) (a) Oil Refining. (b) Distribution of oil.

(v) Investments made to increase the Tourist Industry such as: ?

(a) Hotels, Motels, Safari Lodges.

(b) Safari and Fishing Clubs where daily/temporary membership may be obtained.

(c) Air Charter Companies.

(d) Travel Agencies.

(e) Any other business designed to promote the Tourist Industry.

(vi) Investments made to increase the Agricultural potential of a farm or estate. Investment guarantees will not be granted to effect a change of owner, the new investor will have to draw up a development programme to expand the Agriculture Scheme he intends to purchase, that expansion scheme will have to receive the Ministry of Agriculture's approval.

(vii) Investment guarantees will be given for : ?

(a) New Multi-storey Buildings to provide Offices, Flats and Shops.

(b) New Housing Schemes.

(c) New Hotel Buildings, etc., connected with the Tourist Industry.

(viii) Investment guarantees will be given in respect of any undertaking not men tioned above which provides employment for a substantial number of un

employed and thereby relieves the unemployment problem in Kenya.

6th October 1964.



249

K/FIPA. 1 FORM "A"

(to be used for investment in an

EXISTING enterprise)

APPLICATION FOR CERTIFICATE OF APPROVED ENTERPRISE Foreign Investments Protection Act, 1964

To: The Permanent Secretary, The Treasury, P.O. Box 30007, Nairobi, Kenya.

Sir,

I, the undersigned, hereby apply for a certificate to the effect that the enterprise described hereunder, in which my assets have been/are to be invested, is an approved enterprise within the meaning of the above Act.

A.?Details of the Applicant

1. Full name. Write the name of the foreign investor.

2. Permanent posta) address . . State the address to which

. correspondence can be directed.

3. Nationality.

B.?Details of the Enterprise

4. Title. State the name of the enterprise

. . in which the investment has been /is to be made.

5. Location . The area within which the

.?. enterprise is established.

6. Description.,. FuU details of nature and type

.'? ?. of enterprise.

7. Capital Structure . . Give full details of the authorized

.?. . and issued capital of the

.??????'.*enterprise in

Note.-?This statement must be corroborated by a certificate in suitable form Kenya,

by the auditors to the enterprise.

8. (a) For an enterprise incorporated in Kenya state?

(i) Registration No.(ii) Date of registration.

(b) For an enterprise incorporated outside Kenya state?

(i) Country of Incorporation.

(ii) Kenya Registration No.and Date.



250

C?-Details of the Investment State amount 9. Foreign assets invested._ and forni in which the ? ?.?.?..

investment was

made/is to be '

made and the dates.

10. Proportion of applicant's foreign investment to total investment

11. If the investment is/is to be in the form of Shares or Stock, give full details of

number, amount and type.

12. The foreign currency in which the investment was/is to be made

Note.?This statement must be supported by acceptable documentary evidence such as a banker's certificate, etc.

13. Period within which the foreign assets are to be fully invested.

14. Name and address of Kenya Bankers

D.?General

15. Any other relevant information which might assist in consideration of the applica tion (note should be given here of any Treasury (Exchange Control) reference by

which approved status has previously been granted).

DECLARATION I,. hereby

declare that the details stated above are, to the best of my knowledge and belief, correct.

Date. Signature of Applicant.

FOR OFFICIAL USE ONLY

Application received . Reference No.. Initials

Banker's Certificate . Auditors Certificate .

Registration Certificate.

Approved/Not Approved. Initials.Approved Certificate No.

Issued on.

Remarks :



251

K/FIPA. 2 FORM

" "

(to be used for investment in an

PROPOSED enterprise)

APPLICATION FOR CERTIFICATE OF APPROVED ENTERPRISE Foreign investments Protection Act, 1964

To: The Permanent Secretary, The Treasury, P.O. Box 30007, Nairobi, Kenya.

Sir,

I, the undersigned, hereby apply for a certificate to the effect that the proposed enterprise described hereunder, in which my assets are to be invested, is an approved enterprise within the meaning of the above Act.

A.?Details of the Applicant

1. Full name . . Write the names . of foreign

?* . investors.

2. Permanent postal address. State the address to which

.**. correspondence can be directed in Kenya.

3. Nationality.

B.?Details of the Enterprise

4. Title.. *. State the name of the enterprise . in which the investment is to be made.

5. Location . The area within which the

.'. enterprise is to be established.

6. Description. Full details of nature and type

. ? ? "

of enterprise.

7. (a) Proposed Capital Construction . . Distinguish between *loan, . debenture,

. preference v ? 1

' .

* . ? and ordinary.

(b) Programme for Issuing Capital. Terms of loan to be stated.

(c) Subscription by : ? Give names

(i) Foreign Nationals . ??S?T* . addresses '

. . together with (li) Kenya Citizens .,. amounts and

Categories . in 7 (a).



252

State whether (d) Methods of subscription . cash, machinery, and materials,

.?.

semi-finished

goods, provisions of patented ., processes, technical .

services, etc., by subscribers in 7 (c) (i) and (?).

8. Proportion of applicant's foreign investment to total investment

9. The foreign currency in which the investment is to be made_ Describe fully 10. Objects of the enterprise. . in the initial stages and .

subsequently.

E.g., increase H. Anticipated benefits to the economy. of exports of

saving of .

imports, new technical

'.

progress, .

employment of local labour, etc.

12. Estimated annual turnover and profits during first, second and third years of operation.

13. Period within which the foreign assets are to be fully invested

14. Name and address of Kenya Bankers

C.?General

15. Any other relevant information which might assist in consideration of the applica tion .

DECLARATION

I. hereby declare that the details stated above are, to the best of my knowledge and belief, correct.

Date. Signature of Applicant.

Important Note : ?

Any certificate issued under section 3 of the Act, as a result of this application, is

liable to be revoked unless?

(a) satisfactory documentary evidence is produced within the period stipulated, regarding receipt of the foreign assets;

(b) particulars of the Kenya registration of the enterprise are lodged with the

Treasury as soon as registration is effected.

FOR OFFICIAL USE ONLY

Application received . Reference No. Initials

Registration particulars received .

Banker's Certificate . Auditors Certificate .

Approved/Not Approved. Initials.Approved Certificate No.

Issued on.



253

K/FIPA. 3

CERTIFICATE OF APPROVED ENTERPRISE Foreign Investments Protection Act, 1964

Certificate No.

To:

Sir,

Reference your application . .

In accordance with section 3 of the Foreign Investments Protection Act, 1964, the undermentioned certificate of approved enterprise is issued.

1. Name of Holder . .

2. Name and Description of Enterprise .

3. Total Investment of Enterprise: Sh.of which

(a) Amount of Foreign Investment :

(i) Capital : (See (b) below). Sh.

(ii) Loan : . Sh. is acknowledged.

(b) The Capital of Sh.has been recognized by the

issue of. Shares of Sh.each in your favour.

4. The Foreign Investment is recognized as having been made in.currency.

5. The foregoing certificate is issued subject to your complying with the General conditions specified hereunder.

(1) This certificate is issued subject to a certificate being received in due course from your Kenya Bankers certifying that the money has been received from outside

Note.?

Kenya.

(2) Loan interest at the rate of

years payable on., per cent is agreed for.

.of each year.

Note.?Residents of. the non-scheduled territories are required to comply with the Exchange Control Act (Cap. 113).



254

K/FIPA. 4

CERTIFICATE OF APPROVED ENTERPRISE

Foreign investments Protection Act, 1964

Addendum No. Certificate of

Approved Enterprise No.

T?:.

Sir,

Receipt is acknowledged of your Bankers certificate dated.

wherein it is certified that the sum of Sh.has been

received in Kenya from.

A copy of this certificate has been sent to your Bankers for their information.



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