Food processor Kenya Orchards #ticker:ORCH is facing a penalty from the capital markets regulator over failure to immediately disclose the exit of chief executive Sudhir Damodar Vaidya and the hiring of a new boss as required by law.
The Capital Markets Authority says it is investigating Kenya Orchards’ compliance with listing requirements after the food processer revealed on Wednesday that Mr Vaidya had left office on July 31, 2017 and former CEO Vipul Patel taken over.
CMA rules demand that all announcements such as changes in key management – chief executive, chief finance officer and any board member - be made public within 24 hours of the happening of the event.
“The authority is keenly following the events and will take the necessary action in accordance with the Capital Markets Act and Regulations,” CMA said in response to the Business Daily queries.
The maker of jams, sauces, canned products and spices faces a financial penalty and public rebuke for the corporate governance compliance breach.
The regulator also requires companies to publicly issue a profit alert if they project earnings will fall by more than 25 per cent, to warn investors of the risks of capital losses and reduced dividend as a result of the profit fall.
The Nakuru-based firm should have on July 31, 2017 immediately notified CMA and the Nairobi bourse of the exit of Mr Vaidya and the appointment of Mr Patel. The leadership changes should also have been put in at least two dailies of national circulation.
The firm joins a list of other firms penalised by CMA for flouting market regulations. CMA in June 2012 hit Centum #ticker:ICDC with a Sh50,000 fine for failing to issue a profit warning when it announced net earnings had dropped 48.4 per cent.