It had ruffled the feathers of foreign investors looking to set up shop in East Africa’s biggest economy, casting doubt on the competitiveness of the country as an investment destination.
Attorney-General Githu Muigai said the provision did not form part of the original Bills that were submitted to the National Assembly. “From all indications it was inserted at the committee stage. It does not represent the current government policy on foreign investments,” he said.
Kenya has beaten a swift retreat from a new law that makes it compulsory for foreign investors seeking investment to surrender 30 per cent shareholding in their businesses to locals or risk paying a fine of Sh5 million ($48,171).
If enforced, the law would have choked foreign direct investment in the country.
It has now been suspended pending a review in six months after Attorney General Githu Muigai blamed parliament for inserting the clause in the Companies Act 2015, to which President Uhuru Kenyatta assented on September 11.
It had ruffled the feathers of foreign investors looking to set up shop in East Africa’s biggest economy, casting doubt on the competitiveness of the country as an investment destination.
The executive says the move by parliament deviated from the government’s policy on foreign investments.
“This provision did not form part of the original Bills that were submitted to the National Assembly. From all indications it was inserted at the committee stage. It does not represent the current government policy on foreign investments,” he said.
Mr Muigai said the alteration arose during scrutiny by the Justice and Legal Affairs Committee, adding that the controversial provision would remain suspended pending further consultations.
“Under the Act, the AG has powers to suspend the coming into force of any or some provisions of the Act. For the time being and until there has been further consultation on the matter, this particular provision will not be brought into force,” Mr Muigai said.
The EastAfrican has learnt that the Cabinet Secretary for Industrialisation and Enterprise Development Adan Mohamed and representatives from the private sector and the legal fraternity are meeting in Nairobi on November 9 to review the contentious 30 per cent shareholding requirement for foreign companies.
They will also analyse the entire Companies Act 2015 to assess its impact on business operations and time frame for its enactment.
