Share records to go fully electronic at Nairobi bourse

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The Nairobi Securities Exchange (NSE) and the Central Depository and Settlement Corporation (CDSC) have proposed to start using electronic records at the central depository as the official proof of shares replacing physical certificates from November 30, this year.

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This means that all investors at the NSE will be required to convert all shares held in paper form to electronic accounts which will also be used for corporate actions such as the distribution of bonus shares and share splits.

The move to a fully electronic process - also known as dematerialization - started in 2004 after the CDSC was formed allowing for the surrender of physical certificates with an electronic record of holdings through a process known as demobilization.

“The impact of dematerialization will be that with effect from the dematerialization date, share certificates shall no longer be recognized as the prima facie evidence of ownership of shares and this will be replaced with the electronic record at the depository,” said a statement from the CDSC and NSE.

According to the CDSC, 80.95 per cent of the shares available for trading at the NSE are already in electronic form.