M-Oriental Bank is seeking to strip current shareholders of their pre-emptive rights in a bid to raise additional capital from new investors as it races to comply with new statutory requirements that take effect at the end of the year.
The small lender has called an extraordinary general meeting of its shareholders, at which it will be ask them to forgo their pre-emptive rights to buy new shares being created, opening the door for deep-pocketed investors to join its ownership register.
The bank is creating an additional 50 million authorised shares with a par value of Sh1 billion as it races to push its core capital beyond Sh3 billion, which will be the statutory minimum at the end of the year.
M-Oriental had a core capital of Sh2.5 billion as at end of June 2025, placing it below the Sh3 billion required by the end of December this year.
With a three-month window to comply with the new capital requirement the bank is inviting new shareholders to come on board and ensure its compliance.
“Pursuant to Section 348 of the Companies Act, 2015 and the Company’s Articles of Association, the shareholders hereby waive their pre-emption rights under Section 338 of the Companies Act, 2015 and the Company’s Articles of Association, in respect of the new ordinary shares to be issued under resolution 2.2, and authorise the directors to allot and issue such ordinary shares, subject always to compliance with all applicable laws and regulatory requirements,” said M-Oriental Bank in a notice.
The bank's largest shareholder is Tanzanian based M-Holdings Limited, with a 33.8 percent stake, followed by Pasha Investments (7.7 percent) and Nalinkumar Shah (6.5 percent).
The other 52 percent stake is held by 1,083 other investors, indicating its fragmented ownership with many holding small interests. Given the short timeline, it is difficult to raise cash from so many shareholders.
The bank intends to sell new shares over a five-year period, which coincides with the timeframe in which commercial banks have been given to raise their core capital further to Sh10 billion.
The Central Bank of Kenya has asked the lenders to increase their core capital from Sh1 billion to Sh3 billion by the end of 2025, Sh5 billion by end of 2026, Sh6 billion by end of 2027, Sh8 billion by end of 2028 and Sh10 billion by the end of 2029.
“The directors be and are hereby authorised to allot and issue, within a maximum period of five years from the date of this resolution 99,999,980 ordinary shares at such price (including any premium) as the directors may determine, subject to compliance with all applicable laws and regulatory requirements,” said M-Oriental.
M-Oriental is among 11 commercial banks that were short of the Sh3 billion requirement, as at the end of June. The 11 banks need to raise at least Sh14.7 billion to comply with the statutory requirement.
