Shylocks must be licensed by CBK to operate, court says

A court in Nairobi ruled that entities or shylocks not licensed by the Central Bank of Kenya (CBK) cannot participate in court proceedings until they obtain the necessary approvals.

The Milimani Small Claims Court ruled that unlicensed financial entities cannot enforce claims until they secured proper regulatory certification.

Magistrate Kiongo Kagenyo in his ruling, found that M-Collect Limited, along with five other companies Kalita System Debt Holding Kenya Limited, Garnet Portfolio Management Limited, Aventus Technology Limited, Sirius Collect Limited, and Maxlex-Finance Limited had been filing multiple claims but failing to pursue them to conclusion.

Kiongo subsequently dismissed 139 related cases filed by these companies, ruling that the entities were abusing the court process.

In its ruling, the court held that these entities had not complied with Section 33S of the Central Bank of Kenya Act, which requires financial service providers, including debt collection agencies, to be licensed before conducting business.

Kiongo further established that Aventus Technology Limited, one of the claimants, was operating without the required CBK approval.

“As it stands therefore,Aventus Technology Limited is operating in non-conformity with the dictates of the regulating Authority and the court cannot dignify an illegality by presiding over such matters,” ruled the court.

“For the foregoing, all the matters filed by Aventus Technology Limited as appearing in today’s cause list are hereby dismissed for the Claimant is operating contrary to the law.”

During proceedings on January 6, 2025, Donald Nyaga, an employee of Aventus Technology Limited, told the court that the company is in the pipeline of compliance.

This is after Magistrate Kiongo inquired from Nyaga on whether Aventus Technology Limited had complied with the provisions of Section 33S of the Central Bank of Kenya Act.

“The totality of the foregoing is that the Court is compelled to make a finding that the Claimant is abusing the court process making it a candidate of being declared a vexatious litigant pursuant to section 2 (1) of the Vexatious Proceedings Act, and consequently dismiss the suit in limine, at this stage, which it hereby does,” ruled the court.