The Capital Markets Authority (CMA) announced that it will be developing an orderly way of delisting and suspending companies a the Nairobi security exchange.
The regulator says proposed rules aim to avoid long and uncertain process involved when a company wants to delist or is suspended from the Nairobi Securities Exchange (NSE).
Lifting of a suspension is burdensome, taking a few weeks to several years. The law will cover various types of delistings or suspensions including the mandatory and voluntary ones. Mr Luke Ombara CMA acting director for the regulatory policy said that the legislation would be rolled in early 2015.
“We are developing the policies and regulations so that a company does not have to wait for inordinate amount of time while in suspension or for the purpose of delisting,” addressed Mr. Ombara.
An example that was affected by the current CMA policy is Uchumi supermarket which was suspended for five years, even having made profit still its suspension was not lifted. Years later it made a profit of 420 million,after that not only was it making profits but had a very good balance sheet but still the CMA did not uplift the suspension from trading at the NSE. This made queries be raised on what specifically criteria was used in determination of such suspensions.
Rea Vipingo which is an agricultural firm is also awaiting delisting upon conclusion of its court case by the CMA.
CMC holdings is still waiting for delisting by the CMA from the securities exchange after its acquisition by the Al-futtaim Group of the united arab emirates which was completed around mid this year.
Upon this delays the CMA acting chief executive Paul Muthaura said the fault should not be put on NSE watchdog but legal issues were the contribution. Mr. Muthaura said to foster innovation, there was need to re-look at some existing primary legislation that may hinder introduction of a responsive regulatory environment.