Ngenye Kariuki & Company offices in Nairobi. The firm has been under statutory management since February 5, 2010. File
Capital markets regulator has lifted nearly two years of statutory management of Ngenye Kariuki & Company Ltd after the firm sold 10 per cent of its shareholding to three individual investors.
This paves the way for the reopening of one of Kenya’s oldest brokers. Principal owner and chief executive Ngenye Kariuki and his family will hold 80 per cent of the shares with another 10 per cent held by non-family investors who held the shareholding even before the statutory management.
The new investors had to have their debt converted into shares as part of the deal to resume business.
But the company will have to wait for further restructuring before it can be allowed to trade in shares at the Nairobi Securities Exchange (NSE). If it returns to the market, it will be the first firm to do so after emerging from statutory management. The move also paves the way for the company to be allocated NSE shares under the demutualisation process.
Capital Markets Authority (CMA) chief executive Stella Kilonzo said the revocation of the statutory management was meant to facilitate completion of restructuring of the company.
The firm has been under statutory management from February 5, 2010. The statutory manager had in line with the provisions of the Capital Markets Act, assumed the management, control and conduct of the affairs of the company.
Among the requirements before lifting of the suspension to trade at the NSE, Ms Kilonzo said, are compliance with the authority’s corporate governance guidelines and all aspects of the capital markets law. It did not go into specifics of the requirements.
“Going forward, the Authority will be working with Ngenye Kariuki & Company to ensure full compliance with the requirements for licensing of stock brokers before consideration is given to lifting its suspension from trading at the Nairobi Securities Exchange,” she said.
The authority said the revocation of the statutory management was “in accordance with sound investment and financial principles and had taken due regard the interest of clients, other creditors and the shareholders of the company”.
In an interview, majority shareholder, Mr Ngenye Kariuki, a one-time Cabinet minister in the Moi administration, said he welcomed the move. adding that the shareholders had injected Sh50 million as part of recapitalisation.
He said he was not yet in a position to discuss the details of the new shareholding deal as he had not seen the CMA letter allowing his resumption of business.
For the payment of clients, he said the organisation had obtained cash from K-Rep Bank. “We got money from K-Rep and we paid out up to Sh12 million to investors. The investors are still keen to stay with the company,” said Mr Kariuki.
Ms Kilonzo said the statutory manager, Mr Ronald Ng’eno, an employee of CMA, had facilitated payment of a majority of investors who hitherto had not had access to such payment due to the previous financial status of the company.
She said the statutory manager had negotiated with major creditors leading to restructuring of the company’s debts.
This involved the statutory manager undertaking a financial audit into the company to independently ascertain the status of its assets and liabilities. Though CMA did not state the amounts involved in the latest statement, the regulator’s February 2010 assessment, indicated that the firm was “insolvent and illiquid” to the tune Sh227 million by November 2009, meaning it could not meet financial obligations to its customers and creditors.
“Through continuous engagement, the shareholders of the company had also injected additional capital into the company to improve its liquidity and to be able to meet financial requirements for operating as a stockbroker,” she said.
