CONVEYANCING

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

edwardsudi@salclaw.co.ke

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

edwardsudi@salclaw.co.ke

LEGAL ALERT: PAYMENT OF STAMP DUTY AND CAPITAL GAINS TAX

LEGAL ALERT: PAYMENT OF STAMP DUTY AND CAPITAL GAINS TAX 150 150 Admin_salclaw

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

 

SUDI & ASSOCIATES

www.salclaw.co.ke