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Kenya Orchards faces CMA penalty over late CEO notice

Sudhir Damodar Vaidya. PHOTO | DIANA NGILA
Sudhir Damodar Vaidya. PHOTO | DIANA NGILA 

Food processor Kenya Orchards #ticker:ORCH is facing penalties for breaching regulatory guidelines when it failed to immediately notify the Capital Markets Authority after it hired a new chief executive in July.

Vipul Patel took over from Sudhir Damodar Vaidya as the boss of Kenya Orchards on July 31.

The appointment marked the beginning of Mr Patel’s second stint at the head of the company, which is listed on the Alternative Investment Segment of the Nairobi bourse.

Three weeks later, when Kenya Orchards revealed that it had appointed Mr Patel, the Capital Markets Authority (CMA) said that it would investigate the food processor for failing to disclose the change within the legally stipulated window.

The CMA last week told the Business Daily that its investigations “established a breach” of the continuous reporting regulations that require listed companies to make public the hiring of a new CEO or board member within 24 hours of the appointment. 

The law also requires companies to publish a notice in the newspapers.

The Authority said that the “breach is subject of an enforcement action”. 

The Capital Markets Act empowers the regulator to take action that ranges from public reprimand to financial penalties of up to Sh10 million for contravening its regulations.

Kenya Orchards has room to respond to the findings before the Authority decides on the nature of the action to be taken against the company.

“Yes, we breached the regulations by reporting late but we have requested leniency since it was not intentional,” Kenya Orchards said in a statement to the Business Daily.

Mr Patel has a 14.89 per cent stake in the company.

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