The changes in the law making it easier for majority shareholders to forcibly take over companies listed on the Nairobi Securities Exchange have left minority investors exposed and do not bode well for robust governance.
Worse still, the manner in which the Statute (Miscellaneous Amendments) Act No. 12 of 2019, which now allows shareholders with a 50 percent stake to make compulsory acquisitions of shares held by remaining investors, was passed leaves a lot to be desired.
On the overall, the opaqueness of the way this was done is likely to hurt growth at the Nairobi bourse and make it unattractive for small scale investors to put their money in companies with big shareholders. That the amendments seem to have caught stakeholders unawares raises key questions over whether there were adequate public consultations on the legislation as required by the law.
In principle, the process does not seem to have been transparent given that it was part of an omnibus Bill that might have escaped scrutiny and debate that would have allowed the investing public and other stakeholders to give their views on the issue.
It is not too late to go back to the drawing board and amend the law to avoid investor flight from the NSE.