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LEGAL ALERT: Digital lenders on the cusp of coming under CBK’s radar with the proposed amendments to the CBK Act.

LEGAL ALERT: Digital lenders on the cusp of coming under CBK’s radar with the proposed amendments to the CBK Act. 150 150 Admin_salclaw

The Central Bank of Kenya (Amendment) Bill 2020 is currently before the National Assembly’s finance committee, with the public participation stage having ended on 11th August 2020. After that, the finance committee will report to the house sitting in plenary on their consideration of the Bill before members of Parliament brace themselves for debating and voting on the same. The Bill aims to arrest the excessive digital lending rates that have entrapped many borrowers and to tame predatory lending. Further, the Bill aims to bring some sanity to the digital lending marketplace as there have been several complaints by members of the public over the unorthodox and humiliating tactics lenders use to pursue debt payment. For example, some lenders contact close family members of the debtors incessantly for them to appeal to the debtors to settle their debt.

A survey conducted by the Star newspaper in 2019 regarding interests charged by some digital lenders in Kenya revealed that a majority of them were charging interest rates as high as 15 percent per month, which translates to an Annual Pricing Rate of 180 percent. This figure is 15 times more than what commercial Banks charge for unsecured loans, with the present average rate being 11.95 percent, according to CBK.

If the Bill is passed, digital lenders will require CBK’s approval to vary their interest rates and to introduce new loan products. While digital lenders do not oppose the idea of regulation, some of them are however, against strict supervision by the CBK as they are not deposit-taking institutions like banks.  Instead, digital lenders consider regulation under the Microfinance Act as a more rational and suitable approach as this law caters for non-deposit taking microfinance institutions.  They also hold that regulation under the Microfinance Act will ensure that digital lenders maintain flexibility in the innovation of loan products as CBK approval will not be required.


Written by Edward O. Sudi

Child maintenance proceedings should not be employed to serve ulterior motives against fathers, court rules.

Child maintenance proceedings should not be employed to serve ulterior motives against fathers, court rules. 150 150 Admin_salclaw

The High Court in (JR. 5 of 2020) has ruled that in Child maintenance disputes, courts are supposed to take into account the financial means of both parents to avoid overburdening and arbitrarily purging either of them. This decision was made after a man who had been jailed for a month on account of failing to honour a court order that required him to pay Ksh. 900,000 towards child upkeep, sued to the High Court at Mombasa on the constitutionality and fairness of the process adopted by the magistrates’ Court in issuing the order. In his judgment, Justice Ogola held that the magistrate, who was the first respondent, acted outside the laid down legal procedure by failing to take heed of section 101 of the Children’s Act. Notably, the said section 101 under subsection 4, mandates courts to conduct inquiries pertaining to the financial ability of persons liable for child maintenance to pay the sums of money they owe.

It was revealed that the man had made an application in the trial court to have an inquiry on the parties’ financial position conducted, which was granted. However, before a report on the parties’ financial position could be presented, the trial magistrate went ahead and declared that the man had intentionally ignored and disobeyed a previous court order before committing him to jail. It is this bizarre turn of events that the judge took utmost issue with, adjudging the magistrate’s decision to proceed in the absence of the financial report to have been irregular, unreasonable, and unfair.

Consequently, the judge expunged the orders of contempt and committal and subsequently directed the Magistrates’ Court to conduct a proper investigation into the man’s financial capability in order to reach a fair arrangement regarding the contributions of both parents towards the minor’s care and upkeep without overwhelming either of them.

Written by Edward O. Sudi

LEGAL ALERT: Why posting or sharing someone else’s nude images could land you in jail

LEGAL ALERT: Why posting or sharing someone else’s nude images could land you in jail 150 150 Admin_salclaw

The High Court’s pronouncement in constitutional Petition Number 206 of 2019, which dismissed Bloggers Association of Kenya’s (BAKE) contention that some provisions of the Computer Misuse and Cyber Crimes Act were unconstitutional, greenlighted the way for the full implementation of this law. To understand the rationale and purpose of this law, section 3 is instructive. Under section 3, the purposes of the Act are to: “i) protect the confidentiality, integrity, and availability of computer systems data and programs; ii) forestall the unlawful use of computer systems; iii) assist in the prevention, detection investigation, prosecution and punishment of cybercrimes; iii) guard the rights to privacy freedom of expression and access to information; and iv) promote international collaboration on matters addressed by this Act.” Briefly put, the Act aims to deter irresponsible, objectionable, and malicious use of the internet by punishing and providing remedial measures for such misbehavior.

Part 3 of the Act spells out the computer and cyber offences and the punishment they attract. They include: i) unauthorised access; ii) access with intent to commit further offence; ii) unauthorised interference; iii) unauthorised interception; iv) unauthorised disclosure of password or access code; v) cyber-espionage;  vi) false publications; vii) child pornography;  viii) computer forgery; ix) computer fraud; x) computer fraud; xi) cyber harassment; xii) cybersquatting; xiii) identity theft and impersonation; xiv) phishing; xv) interception of electronic messages or money transfers, xvi) willful misdirection of electronic messages; xvii) cyber terrorism; xviii) inducement to deliver electronic messages, xix) intentionally withholding message delivered erroneously; xx) unlawful destruction of electronic messages; xxi) wrongful distribution of obscene or intimate images; xxii) fraudulent use of electronic data; xxiii) issuance of false e-instructions.

Interestingly, unlike ordinary criminal offences, the Act extends criminal liability to corporations under section 43.

Notably, mental disposition is an integral ingredient for criminal liability to be established in many of the listed offences above. For example, it is not sufficient that a person has merely caused loss of property to another person by interfering or manipulating any data stored in a computer for them to be convicted for the offence of fraudulent use of electronic data under section 38. Instead, the accuser must satisfy that the accused knowingly altered or manipulated the data, leading to the accuser losing their property. On the flip side, some offences will be established without the mental aspect. Such is the case in section 37, where a person who transfers, publishes, or distributes obscene or intimate images of another person through computer data transfer systems shall be guilty on conviction and liable to a fine not exceeding Ksh. 200,000, or imprisonment for a maximum period of two years, or both.

Additonally, the Act creates the National Computer and Cybercrimes Coordination Committee, which is principally charged with exercising an oversight role in matters relating to computer misuse and cybercrimes. This oversight role is very expansive as to include providing the government with advice touching on the security dynamics of blockchain technology, critical infrastructure, mobile money, and trust accounts.

Written by Edward O. Sudi



Police and the state in general, are empowered to conduct investigations in a bid to solve crime and bring criminals to book. Indeed, members of the public are required to comply with summons requiring their attendance at police stations for the purpose of investigations. Tellingly, failure to honour requisitions for attendance at police stations without a plausible excuse is an offence. Similarly, showing up at a police station and refusing to respond to the questions that may be legitimately asked or untruthfully responding to them amounts to an offence. However, a person is under no obligation to respond to questions that may tend to expose him/her to a criminal charge or penalty. This exemption springs from the constitutional right to refuse to give self-incriminating evidence afforded to a person involved in a criminal inquiry.
Crucially, a police officer who seeks to record a statement from a person against whom a criminal charge may be preferred or who is already facing a criminal charge MUST WARN such a person that the statement they will make may be used as evidence against them. If such a person forfeits their right to remain silent after being warned and moves on to record a statement, then any admissions they make in their statement may be legally used against them in a criminal trial. Although admissions need not be given voluntarily as the Supreme Court observed, confessions, on the other hand, MUST be procured through express consent from the person providing it. To this end, it must be appreciated that despite all confessions being admissions, not all admissions are confessions. The difference lies in the effect either of the two would have in a criminal case.
A confession would automatically return a guilty verdict because it is an express and explicit acknowledgement of guilt by an accused person. Further, there are strict rules to be followed in order for a confession made in a police station to be accepted in court. Conversely, an admission is an acknowledgement by an accused person of a matter (s) relevant to a criminal charge, which may give the impression that the accused is guilty. Since an admission only insinuates that the accused is guilty, it cannot, by itself, be used to render a conviction; other evidence is hence required to support an admission. Therefore, it follows that an incriminating revelation made voluntarily by a suspect or accused person to police officers in the course of investigations would be treated as an admission if such a revelation is not recorded in strict compliance with the Evidence Act so as to be regarded as a confession under law. This position, which was reiterated by the Supreme Court, is an effort to strike a balance between the rights of persons under a criminal inquiry, and the rights of the public to peace and security . So that, the constitutional mandate of security agencies to maintain/restore peace and security is not hampered by the rights of persons under criminal inquiry, and vice versa.

Way forward: It is best for any person subjected to police investigations, who fears that the information they may disclose will cast them in the bad light of being viewed as the culprits, to choose to remain silent on that aspect.

Prepared by Ochwaya E. Sudi
Advocate of the High Court of Kenya



The Kenya Revenue Authority, has informed the public that it is in the process of simplifying the Stamp Duty payment process on land transactions on the Itax System and thereby expediting the payment process.


Following the changes, it will no  longer be conditional to present a Capital Gains Acknowledgement Slip before stamp duty payment is processed, as had been the case before. This reform is expected to improve the ease of doing business by creating efficiency in the process and promoting investments.


TAKE NOTE that transfer of property still attracts Capital Gains Tax which is payable by the transferor on or before the 20th day of the following month in which the transfer is effected.


Be advised accordingly





The outbreak of Coronavirus is impacting global markets, trade and commerce. Quarantine and travel measures have begun to impact local businesses and the supply chains supporting them. Many businesses may thus seek to rely on force majeure clauses or other contractual rights for relief from the performance of certain obligations due to the impact of the Coronavirus outbreak.
What is force Majeure
Force majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes like war, natural disasters, terrorist attacks Etc that interrupt the expected course of events and restricts parties from fulfilling their obligations under the said contracts.
What does your force majeure clause actually say?
There is no single “standard” force majeure clause. Just because your business may include force majeure clauses in its contracts does not mean they are necessarily all uniform. Since the virus is a relatively new phenomenon, it is unlikely that any force majeure clauses would explicitly refer to the event of a Coronavirus outbreak. Thus the party relying on the clause will still likely need to prove that the force majeure event was not “reasonably contemplated” by the parties when making the contract, and that the event is “beyond the reasonable control” of the party seeking relief.
How can you seek / prevent relief for force majeure?
The onus is on the party seeking to rely on the force majeure clause to prove that the force majeure event has prevented, hindered, delayed or affected the performance of the contract. Generally, if a force majeure event occurs, performance of certain obligations within the contract will be suspended for a specified period of time (for example, until the Coronavirus outbreak is contained or its consequences on the contract parties come to an end). In some cases, a suspension of obligations may not be viable and parties may seek to terminate the contract entirely.
Is notice required?
Force majeure clauses vary in their notice requirements. Some require notice within a certain timeframe of the occurrence of an event of force majeure, whereas others only require prompt or “reasonably” prompt notice. In the context of the coronavirus pandemic, is notice required upon WHO’s declaration the coronavirus outbreak a pandemic? Was it when a travel ban was entered? Was it when a local lock down measures were enacted?
What if there is no force majeure clause?
If there is no force majeure clause one can rely on the doctrine of frustration which means that events beyond their control may occur which frustrate the purpose of their agreement, or render it very difficult or impossible, or as even illegal, to perform obligations under a contract.
Understanding Your Contract
Be sure to fully understand what the contract requires for one declare a force majeure event. Many force majeure provisions include procedural requirements the claiming party must abide by in order to effectively enforce the provision, including notice requirements.

By Eugene Sudi



a. What is Prenuptial Agreement
A Prenuptial Agreement or “Prenup”is a written agreement that establishes the property and financial rights of each spouse in the event of a divorce. It sets out the terms of ownership of assets, how to treat future earnings in a marriage, control of the property of each and how the property will be divided in case of divorce.
b. Necessity
1. The divorce rate in our country has been rising steadily over the past 3 decades so divorce is now an acceptable reality.
2. Many people enter marriage with some debt, and their partners may want to protect themselves from those financial problems if the marriage ends.
3. Increased number of financially independent women who may want to protect their financial interest in a marriage.
4. Most people view a Prenup as a bet against the success of the marriage. But marriage is a contract and a Prenup is simply a way of putting guidelines on that contract.
c. Legal Backing
1. Article 40(1)(b) of the Constitution of Kenya, 2010 (the Constitution) provides for the right to own property in any part of Kenya either individually or in association with others.
2. Section 6 (3) of the Kenyan Matrimonial Property Act provides that parties to an intended marriage may enter into an agreement before their marriage to determine their property rights whereby a prenuptial agreement takes precedence over other principles of subdividing matrimonial property.

d. Validity of a Prenuptial Agreement
1. The agreement must be freely entered into.
2. The parties must have a full appreciation of the implications of the agreement.
3. It must not be unfair to hold the parties to their agreement in the circumstances prevailing.
4. Must be signed before the formalization of the marriage.
e. What should a Prenup Cover
A prenuptial agreement is most important when it comes to protecting pre-marital financial interests, such as retirement, investment funds, property and other finances and most importantly debts. It should also cover how sentimental items should be handled because these have strong emotional triggers that can often become the focal point of messy divorces.
f. Courts power to set aside a Prenup
Section 6 (4) of the Matrimonial Properties Act gives courts the power to set aside this agreements if it is proven that it was influenced by fraud, coercion or is manifestly unjust.
BY Eugene SUDI



Did you know that an order for extension of parental responsibility, in regards to payment of fees, can be issued to a person who has attained the age of 18 years where the training/school he has enrolled for has not ended, the High Court in Civil Appeal 34 of 2017 stated in summary that despite a person attaining the age of majority which is 18 years and at that time has neither completed his education nor gotten gainful employment then the parents having set high standards for their children, have a responsibility to promote their social progress and better standards of life for them especially children who are willing and who are self-driven .It is against the child’s right to education for a parent to discontinue their education prematurely on account of them being adults.

LEGAL ALERT:Employees wooed by Kshs. 9,000 monthly tax relief under the Affordable Housing Programme

LEGAL ALERT:Employees wooed by Kshs. 9,000 monthly tax relief under the Affordable Housing Programme 150 150 Admin_salclaw

The Affordable Housing Programme (AHP) has been in the list of president Uhuru’s Big 4 Agenda. The said programme seeks to provide affordable housing for Kenyans in the low and middle income segment.The programme launched in January, 2019 seeks to roll out 500,000 units by 2022 to try and plug the housing gap in the country.
To spur uptake and interest in the programme, the Government of Kenya through an amendment to Finance Act 2019 and the schedules therein has provided a tax relief to employees that will allow them a tax relief of 15% of gross contributions capped to KSh. 108,000 per year or KSh. 9,000 per month of their income. Employers will be allowed to reduce their employees’ Pay As You Earn (PAYE) payable by 15% of the gross contributions to the Affordable Housing Scheme and this relief will be termed as Affordable Housing Relief. For instance, a person earning Kshs. 90,000 a month is currently liable to pay KRA Kshs. 20,740 but under the housing incentive plan, their income tax would reduce to Ksh11, 740.

The Kenya Revenue Authority (KRA) will be required to issue details on tax relief to employers. Technically, saving into the housing fund has become voluntary as only workers who will have registered for the programme will enjoy the relief.

Initial plans to force employers to deduct the equivalent of 1.5 per cent of workers’ pay to the housing fund mandatorily were dashed by the courts which ruled that the proposal was illegal.

By Eugene Sudi

LEGAL ALERT: Turnover Tax

LEGAL ALERT: Turnover Tax 150 150 Admin_salclaw

Turnover Tax
In accordance with the Finance Act, 2019, the Turnover Tax (TOT) has been re-introduced and will be payable from 1st January 2020.

Who should pay TOT?
Turnover Tax (TOT) is payable by any resident person whose turnover from business does not exceed or is not expected to exceed Kshs 5,000,000 during any year of income.

TOT does not apply to:

Persons registered for VAT
Persons with business income of Kshs 5,000,000 and above,
Employment Income,
Rental Income,
Limited Liability Companies,
Management and Professional Services among others.

What is the rate for Turnover Tax (TOT)?
The tax rate for TOT is 3% on the gross sales/turnover and is a final tax.

Filing of TOT Returns
TOT will be filed and paid on a monthly basis. The due date is on or before 20th of the following month.

TOT payers are also liable to pay Presumptive Tax at a rate of 15% of the Single Business Permit fee payable or licence payable. However, Presumptive Tax paid will be offset against the TOT payable.