When the Capital Markets Tribunal was reconstituted in June 2023 after years of inactivity, the moment passed with little public attention.
Yet within a few years, the tribunal has built a body of decisions that are quietly redefining governance expectations within Kenya’s capital markets.
Before the reconstitution of the tribunal in 2023, disputes arising from regulatory action in the capital markets were largely taken to the courts. These cases were framed as judicial review or constitutional matters, focusing on whether due process had been followed in the course of taking regulatory action.
This kind of oversight, although important, left deeper issues around corporate governance failures, board responsibility and market conduct unexplored.
Unlike the courts exercising judicial review jurisdiction, the tribunal has the mandate to engage with the merits of the disputes. These are the substantive governance issues at the heart of conflicts between regulators and market participants. Its decisions offer emerging guidance on how responsibility is assigned within regulated institutions.
One of the most striking developments is its firm stance on the role of directors in regulated entities. In several cases, directors sought to distance themselves from decisions that attracted regulatory action, arguing that they were not involved in day-to-day operations or had delegated the responsibilities to third parties and management.
The tribunal has consistently rejected this defence and determined that directors of issuers of securities are expected to interrogate management decisions, exercise independent judgment and ensure compliance with regulatory frameworks.
The tribunal has effectively dismantled the notion of the ‘sleeping director’, making it clear that board membership comes with real and accountable responsibility. This thinking extends to senior management.
Additionally, the tribunal has looked beyond job titles and examined the actual influence executives wield within institutions. It recognises that leadership is not defined by formal descriptions alone.
Those who shape decisions, control processes and influence outcomes must also bear responsibility when things go wrong. This focus on substance over form is particularly important in a sector where accountability can easily be diffused. The message is simple but powerful: authority comes with responsibility.
Investor protection has also emerged as a central theme, especially in cases involving collective investment schemes.
Today, over two million investors participate in these schemes, with assets under management growing from about Sh56.6 billion in 2018 to approximately Sh756 billion by the end of 2025. There are now dozens of licensed schemes offering a wide range of investment options. This growth reflects increasing financial inclusion, as more Kenyans turn to professionally managed funds.
The tribunal has underscored fairness, transparency and meaningful investor participation, intervening where investors are excluded or inadequately informed and reinforcing safeguards such as investment limits to curb excessive risk-taking.
These interventions matter. Without strong governance, the scale that makes these schemes attractive can also expose investors to harm.
The tribunal continues to test regulatory actions against standards of fairness by law. This balance between substance and process is critical, ensuring regulators act lawfully and responsibly.
The tribunal demonstrates the value of specialised forums in complex areas like capital markets, where disputes often involve technical, financial and legal issues, complementing the courts by offering focused expertise without diminishing their role.
The continued impact of the tribunal depends on consistency. Specialised bodies work best when consistent. Periods of inactivity, from institutional or administrative issues, can stall governance development, especially during market peaks, as seen in recent large transactions, restructurings, and listings. At such moments, a functioning tribunal is not a luxury. It is a necessity.
Disruptions can push disputes back to the courts, where past cases show procedural issues often dominate, slowing specialised governance decisions. Therefore, sustaining this momentum by ensuring the tribunal’s work continues uninterrupted is critical: strong capital markets rely on trust, built on clear, enforced and widely understood governance.