Nairobi Securities Exchange. The NSE chairman, Eddy Njoroge, said that the defunct brokerage firm, Francis Thuo and Partners, will get an allocation of the exchange shares equal to the other 21 members.
Collapsed stockbroker Francis Thuo and Partners will get a stake in the restructured Nairobi Securities Exchange (NSE), which is set to list at the stock market by introduction in the next two years.
The NSE chairman, Eddy Njoroge, said on Tuesday that the defunct brokerage firm will get an allocation of the exchange shares equal to the other 21 members.
Francis Thuo had sued the NSE demanding recognition of its status as a shareholder of the bourse, stalling an ownership restructuring process that will see the exchange convert into a public limited company from a mutually owned firm.
“They still have a trading seat even though they are no longer trading,” said Mr Njoroge.
Other collapsed stockbrokers Shah Munge and Partners, Discount Securities and Nyaga & Company will also get shares in the demutualised bourse.
The decision to allocate shares to collapsed members was made to pave the way for a restructuring of the exchange, but it is expected that stockbrokers that went under with investors’ funds will cede their allocation to the capital markets regulators’ investors’ compensation fund.
Mr Njoroge said although the members were inactive, they still held trading seats at the bourse.
The 22 members of the NSE will get 80 per cent shares of the restructured bourse, which is to be shared equally.
The government and the Investor Compensation Fund will each get a 10 per cent stake.
The 10 per cent allocation to the Investor Compensation Fund is meant to boost funds for paying off investors in case of future failures by market intermediaries.
Owners of the collapsed brokerage firms nearly paralysed the demutualisation plan last year after they went to court seeking to have their ownership status affirmed.
The NSE had, however, allocated stakes to other stockbrokers that were then under statutory management —Nyaga and Discount.
The High Court directed that Francis Thuo’s application did not qualify as a matter that was subject to a judicial review, since the NSE is a corporate entity.
The NSE chief executive, Mr Peter Mwangi, said at the time that the bourse was willing to resolve the impasse between the two parties which had blocked demutualisation for five months.
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