Capital Markets and Securities Regulation
This domain tests public offers, listing, intermediaries and continuous disclosure. The exam distinguishes CMA approval from NSE admission and tests whether exemptions are assumed rather than analysed.
Public offers and listing
- An offer to the public requires a CMA-approved prospectus or information memorandum; misleading statements attract civil and criminal liability.
- Exemptions such as private placements or certain rights issues are narrow and must be documented; exemption from a prospectus is not exemption from securities law.
- NSE segments include the Main Investment Market Segment, Alternative Investment Market Segment and Growth Enterprise Market Segment; admission is separate from CMA approval.
- Listed issuers owe continuous disclosure, periodic financial reporting, directors' dealings notification and corporate governance obligations.
Intermediaries and products
CMA licenses dealers, investment advisers, fund managers, CIS, REITs and derivatives participants. Conduct rules cover suitability, conflicts, advertising and client assets. Takeovers of listed companies are governed by the takeovers regime, including mandatory-offer triggers.
Worked example
A company wants to raise KES 2 billion from 150 high-net-worth investors and 50 employees. Because the offer is to the public, a CMA-approved prospectus is normally required; the private-placement exemption cannot be assumed merely because investors are wealthy. If structured as a restricted private placement, the issuer must document the exemption, limit marketing and still comply with any continuing obligations if listed.
Traps
Equating NSE admission with CMA approval; assuming private placement is automatic; ignoring ongoing disclosure after listing; forgetting directors' liability for misleading prospectus statements.