Capital Markets Authority set to cut lengthy delisting time

The Capital Markets Authority (CMA) on Wednesday said it is developing ways of orderly delisting and suspension of companies at the securities 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.

Acting director for regulatory policy and strategy Luke Ombara said the legislation is expected to be rolled out 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,” said Mr Ombara.

Uchumi Supermarkets was held in suspension for five years. The suspension was not lifted even after it began making a profit.

After suspension in 2006, the supermarket chain showed it had emerged from loss-making when it made a profit of Sh95 million in 2008, but it was not immediately re-admitted to the stock market.

In 2009, it again made a profit of Sh420 million, but there was no mention of lifting of the suspension from trading at the NSE.

By mid-2010, the company had not only made a profit for three consecutive years, but was in a positive balance sheet position yet it did not qualify for the lifting of the suspension. This raised queries on what criteria is used to determine the lifting of such suspensions.

Currently, agricultural firm Rea Vipingo is awaiting conclusion of court cases before a takeover decision can be made. The takeover offer was first made late last year.

Although CMC Holdings was sold to Al-Futtaim Group of the United Arab Emirates by mid this year, it is yet to be officially removed from the NSE.

In response to a market player who singled out the delay in delisting of CMC and Rea Vipingo, CMA acting chief executive Paul Muthaura said it was not purely the authority’s fault, as legal issues had contributed to the delays.

Mr Muthaura said that in any upcoming regulations, the CMA was out to protect investors.

“The Authority, in its endeavour to balance its regulatory and developmental mandate supports a regulatory framework based on the core objectives of protecting investors, maintaining orderly markets and supporting financial stability,” said Mr Muthaura.

Mr Muthaura said to foster innovation, there was need to relook at some existing primary legislations that may hinder introduction of a responsive regulatory environment.