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Editorials

EDITORIAL: CMA failed Unga investors

Stockbrokers on the trading floor of the Nairobi Securities Exchange. FILE PHOTO | NMG
Stockbrokers on the trading floor of the Nairobi Securities Exchange. FILE PHOTO | NMG 

The Capital Markets Authority (CMA) is on the spot yet again for failure to protect the interests of shareholders in a company that is targeted for takeover.

The regulator is accused of failing to protect Unga Group’s #ticker:UNGA minority interests as America’s Seaboard Corporation bids to buy a large stake on the cheap.

The CMA has made the situation even worse by allowing suspension of the company’s shares from trading at the Nairobi bourse with hardly any notice.

Neither did the Nairobi Securities Exchange (NSE) find it necessary to inform the public of the shares return to the trading floor as is the norm, raising queries as to its legality.

Its description of the two-day suspension as a “trading halt” (which has rarely lasted past a few hours in previous instances) is unhelpful.

Besides, that the suspension of shares has been used in the past by major shareholders to take up companies at a price they prefer or have set -- does little to assuage concerns of minority shareholders.

For other investors or potential investor in other companies, or even the larger public, they are unlikely to believe that the CMA will be acting in the best interests of all.

There is after all, a likelihood that the CMA could do the same thing again in the future.  By their actions, CMA appears to favour the buyers at the expense of the minority shareholders, which it should not. CMA should always be seen to be even-handed in its actions.

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