jurisdiction

1. Are members of the armed forces permitted to hold shareholdings in private companies, including startups, provided that they do not participate in management?

In Kenya, members of the Kenya Defence Forces (KDF) may hold shares in private companies, including startups. There is no general prohibition on military personnel owning shares in private businesses.

KDF personnel may also participate in the management of a company. However, both share ownership and any management role are subject to the Defence Forces Code of Conduct.

The Code of Conduct recognises that members of the armed forces should not be isolated from the society of which they are part. At the same time, it requires them to ensure that their non-official activities do not interfere with the performance of their official duties, affect the dignity of their office or give rise to a conflict of interest.

Accordingly, where a member of the armed forces participates in the management of a company, such participation must not interfere with military service and must not be undertaken while on duty. Where the individual is merely a shareholder and does not participate in management, the shareholding must not create a conflict of interest or adversely affect the dignity of the office held.

2. Is notification or approval required before acquiring a shareholding or establishing a company?

We are not aware of any general requirement for members of the Kenya Defence Forces to notify their employer or obtain prior approval before acquiring a shareholding or establishing a company.

However, where a conflict of interest arises, the individual is required to disclose the relevant interest to their superior officers.

Accordingly, the applicable framework is based primarily on conflict-of-interest disclosure obligations rather than prior approval requirements.

3. Are there any notable limitations, thresholds or conflict-of-interest rules?

Members of the Kenya Defence Forces are required to ensure that the risk of conflict between their private interests and official duties is minimised. Where an actual or potential conflict arises, the individual must disclose the interest to the appropriate superior and refrain from participating in any matter that gives rise to the conflict.

In addition, the Kenya Defence Forces Act prohibits members of the Defence Council from conducting business or trade with the Kenya Defence Forces. As a result, Defence Council members may not hold interests in companies that transact business with the KDF.

For completeness, the Defence Council consists of the Cabinet Secretary (as chairperson), the Chief of the Defence Forces, the three Service Commanders and the Principal Secretary. The Defence Council is responsible for the overall policy, control and supervision of the Kenya Defence Forces.

Conclusion

Kenyan law does not generally prohibit members of the Kenya Defence Forces from holding shares in private companies, including startups. Such shareholdings may even be accompanied by management roles, provided that those activities do not interfere with military duties, compromise the dignity of the office or create a conflict of interest.

The principal restrictions relate to compliance with the Defence Forces Code of Conduct and the obligation to disclose and appropriately manage any actual or potential conflicts of interest.