Treasury’s proposal to have companies listed on the Growth Enterprises Market Segment (Gems) of the Nairobi Securities Exchange lose tax amnesty if they delist before five years should actually have come before the commencement of the segment in 2013.
It should have been a provision in the regulations on Gems listing from the word go because some companies have taken advantage of tax incentives associated with listing to raise money for growth or for some owners to realise value from their shares only for them to delist some years later.
These firms may not necessarily have delisted after five years or even on the Gems segment; it is only that the advantages advanced to companies on the Gems are even more extensive than those for companies listing on other segments of the bourse, hence the need to keep a keen eye on them in the protection of public interest.
The essence of the tax exemption for the Gems segment is to encourage small firms to get listed and stay so. If the firms instead opt to exploit the incentive and then get out of the NSE some years afterwards, then the policy aim is not realised.