The government’s attempt to sell a 15 per cent stake in Safaricom PLC has suffered a major setback after the High Court cancelled the transaction and directed that the shares be returned to State ownership.
A three-judge bench ruled that the divestiture did not meet constitutional and legal requirements, citing inadequate public participation as well as the concealment and misrepresentation of important information about the deal.
“Based on our analysis, findings and holdings in respect of the various issues identified for determination, we are satisfied that the petitioners have proved on a balance of probabilities that the divestiture in question was undertaken and procured in contravention of the Constitution and the law,” the court said.
“It was, therefore, invalid, null and void.”
The judges based their decision partly on Article 2 of the Constitution, which states that any act or failure to act that violates the Constitution is invalid.
The ruling led to the cancellation of several decisions and approvals that had been made as part of the process of disposing of the government’s stake.
The bench held that the decision to partially divest the 15 per cent holding was a public policy matter and was therefore required to comply with the Constitution, particularly Articles 10 and 201.
It found that the divestiture had been “formulated, undertaken and approved by Cabinet and the National Assembly without any reasonable meaningful qualitative and quantitative public participation” required by the Constitution.
The judges also questioned the manner in which details of the transaction were presented to key decision-making institutions.
They said the process was marked by “obscurities, misrepresentations and concealment of material information” relating to what the transaction involved and its possible effects.
According to the ruling, Cabinet and Parliament were presented with the transaction as a sale of shares. The court, however, found that the arrangement amounted to a merger, acquisition and takeover because it resulted in effective control passing to a majority foreign shareholder through a single entity holding 55 per cent.
The bench said this was contrary to requirements under the Capital Markets Act, the Capital Markets (Takeovers and Mergers) Regulations, 2002 and the Competition Act.
The judges further found that the transaction did not meet constitutional standards relating to integrity, openness, transparency and accountability in financial matters.
The court also ruled that the divestiture failed to comply with constitutional principles on intergenerational and intragenerational equity and sustainable development.
Another issue raised by the bench was the appointment of KCB Investment Bank Limited to provide transactional advisory services.
The judges found that the procurement of the advisory services was done contrary to Article 227 of the Constitution and provisions of the Public Procurement and Asset Disposal Act.
The court consequently quashed Session Paper Number Three of 2025, which had received National Assembly approval in relation to the divestiture.
It also nullified any merger, acquisition or takeover of Safaricom PLC arising from the transaction, as well as approvals, exemptions and no-objection decisions issued in connection with the deal.
The most direct consequence of the ruling was the order requiring the 15 per cent stake to be restored to the government.
“A declaration is hereby made that the 15 per cent shares subject of the partial divestiture having been transferred in contravention of the Constitution and the law are hereby restored to the ownership of the Government of Kenya on behalf of the people of Kenya,” the court ruled.
The judges rejected arguments that returning the shares would not be possible once the transaction had been completed.
In reaching its decision, the bench referred to a 2026 Court of Appeal ruling which held that Safaricom shares remained capable of being restored to the relevant party, with appropriate refunds made where such orders were issued.
Despite finding against the divestiture and ordering the government stake restored, the court did not award costs to either side.
Instead, each party was directed to meet its own costs because the case was considered public litigation.