Vacancies at the Capital Markets Tribunal have made it unable to hear a case seeking to stop the proposed acquisition of BOC Kenya #ticker:BOC by Carbacid Investments, leaving the transaction in limbo.
The deal was announced in November 2020 and was challenged at the tribunal in March last year by BOC’s minority shareholder Ngugi Kiuna who argues that Carbacid undervalued the target company with its offer of Sh1.2 billion or Sh63.5 per share.
The tribunal has not acted on the application due to lack of quorum, the Capital Markets Authority (CMA) said.
“The tribunal has not been quorate and therefore it can't hear the matter. The tribunal secretary and another member must be appointed by the Judicial Service Commission (JSC) following the decision of the High Court in consideration of petition 197 of 2018,” the regulator said.
“The court held that the Capital Markets Tribunal (amongst others) is a subordinate court and therefore vacancies should be filled through JSC.”
CMA noted that previously, the Cabinet Secretary for National Treasury and Planning (a member of the executive arm of government) would appoint tribunal members. The court said members of the executive should not appoint tribunal members.
Besides the lack of proceedings at the tribunal, the proposed transaction faces another objection from a separate minority shareholder who filed an application at the High Court.
Carbacid and investment firm Aksaya –which both have billionaire investor Baloobhai Patel as their top shareholder— made a joint bid to acquire 100 percent of BOC.
Carbacid’s chairman Dennis Awori recently told shareholders that the company is still keen on pursuing its proposed buyout of BOC despite the legal hurdles that has delayed the transaction which was initially expected to close in July last year.
Amid the deadlock, BOC’s share price has risen to trade above Carbacid’s offer, closing at Sh72 yesterday.
BOC’s majority shareholder BOC Holdings had committed to sell its 65.38 percent stake to Carbacid and Aksaya and the other minority shareholders were to decide whether to take or reject the offer.