The Capital Markets Authority will soon institute guidelines aimed at protecting interests of minority shareholders in listed firms.
The rules will apply in the event of delisting or suspension from trading at the bourse.
The regulator said a proposal is currently at board level seeking to limit the powers of majority owners in the event of a buyout of a publicly listed company and its subsequent removal from the securities exchange.
“The proposal will also address time frames on suspension and delisting of a stock from the NSE,” CMA acting director of strategy Luke Ombora said yesterday. There are no stipulated time lines under the current requirements.
Mr Ombora spoke on the sidelines of the regulator’s presentation of findings on impact assessment on market development in which a third of listed companies said current regulations are too cumbersome to comply with.
It was established that most small firms find CMA regulations too many to deal with, raising concerns over licensing requirements and the minimum share capital for listed companies.
The small firms found the regulations to prohibitive. Mr Ombora said the proposed regulations seek to have an independent valuer setting a fair price before a firm is delisted.
Currently for a firm to exit the NSE, its buyer needs a 90 per cent acceptance of its offer price from existing shareholders upon which the rest of the owners are compulsorily bought out.
In January, South Africa’s Dimension Data, for instance, made a compulsory acquisition of Access Kenya’s minority owners’s stake who did not participate in its Sh3 billion offer after attaining the 90 per cent acceptance target. Dubai-based Al-Futtaim Group also exercised a similar move to 7,000 minority shareholders of vehicle dealer CMC in its Sh7.5 billion buyout deal in April.
