Stockbrokers resolve to stop trading at NSE for a month
What you need to know:
A statement from the KASIB chief executive says the suspension will run from February 20 to March 18 this year.
Kenyan stockbrokers have resolved to suspend trading at the Nairobi Securities Exchange (NSE) for a month to await a court ruling on a capital gains tax row.
The “unanimous” decision was reached at a meeting of the Kenya Association of Stockbrokers and Investment Banks (KASIB) council Thursday.
In response, Capital Markets Authority officials called an emergency meeting with the brokers even as they declared KASIB had no authority to suspend trading.
A statement from KASIB chief executive Willie Njoroge says the suspension will run from February 20 to March 18 this year, covering 19 trading days.
“KASIB Council members have resolved to suspend trading at the NSE… pending the ruling of the high court matter, Petition 22 of 2015 Kenya Association of Stockbrokers and Investment Banks v The Attorney General and The Kenya Revenue Authority,” the statement reads.
“This shall ensure that members uphold the rule of law and do not disobey the law. It also allows for the creation of an avenue for consultations with the relevant authorities to find a way of complying with the law in its entirety.”
CMA responded by insisting the market would be open and saying KASIB had no legal authority to suspend trade.
“Under the law the only entities with the power or authority to halt or suspend trading at a securities exchange are the CMA or the NSE in consultation with the CMA,” the regulator said in a statement. “At this time neither we nor the NSE have issued any directions relating to the suspension of trading at the exchange.”
KASIB recently filed a petition against the Attorney General and The Kenya Revenue Authority challenging KRA’s implementation of the capital gains tax after a 30-year hiatus.
Stockbrokers say there is ambiguity in the provisions of the Finance Act regulating the implementation of the tax. While sections provide for a five per cent deduction, they say, others put the rate at seven per cent.
KRA commissioner-general John Njiraini recently suggested said the tax could be deferred to allow for time to agree on implementation with stockbrokers. Three weeks of dispute resolution talks have, however, yielded no solution.
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