Andrew Franklin during a past interview. CMA accuses his firm of not complying with licensing requirements. FILE
The capital markets regulator has given investment advisory firm Franklin Management Consultants a week to show cause why its licence should not be cancelled.
The Capital Markets Authority (CMA) accuses the firm of not complying with licensing requirements, including the minimum capital requirement of Sh2.5 million, appointment of independent non-executive directors and appointment of a non-executive chairman.
The firm’s managing director Andrew Franklin, who is also the company’s chairman, had asked for exemption from the rules, but CMA has declined his request.
Mr Franklin, a US citizen, had argued that the small size of his company did not warrant having a bureaucracy or even meeting the stated capital requirements.
He has accused the US government of “not protecting his rights as a citizen and leaving him at the mercy of the Kenyan capital markets regulator.”
“The authority hereby invites the directors of Franklin Management Consultants (FMC) to a meeting at the authority’s premises on September 10 at 2.30pm to show cause why the investment adviser licence of Franklin Management Consultants Limited should not be revoked,” stated a CMA letter seen by the Business Daily.
The letter, signed by acting CMA chief executive Paul Muthaura said that Franklin Management Consultants had already been granted some exemptions from corporate governance regulations, including those on having a code of conduct for directors and management, preparing annual schedule of meetings and establishing an audit committee.
“FMC was granted a number of exemptions from the Corporate Governance Regulations 8, 9, 11, 13 and 14 as earlier requested.
“However, the company was advised of the issues that needed mandatory compliance and upon which no exemption would be granted,” said the CMA letter.
In early April, CMA gave the firm an extended licence for a period of three months ending July 4 this year for the firm to meet the requirement for a full-year licence.
The company was also required to have less than one third of its directors being close relations. Mr Franklin and his wife are directors in FMC Ltd.
“FMC wrote to the authority on July 4, the same date that the licence extension lapsed, but it did not address the pertinent issues that had been raised in the previous correspondence. These issues remain unresolved to date,” said Mr Muthaura in the letter to Mr Franklin.
In an earlier interview, Mr Franklin said he had hoped for another extension of his licence after the July 4 deadline pending possible fulfilment of the conditions.
The FMC chief executive has written several letters to the American embassy in Nairobi asking for its intervention.
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