Capital Markets

CMA tribunal to resolve disputes within 90 days

shamia1

CMA chief executive Wycliffe Shamiah. FILE PHOTO | NMG

victorjuma_img

Summary

  • The Treasury has proposed legal amendments that will see the Capital Markets Tribunal resolve disputes, such as fallouts arising from mergers and acquisitions, within 90 days.
  • The Finance Bill 2021 seeks to delete subsection 17 of Section 35A of the Capital Markets Act.
  • This part of the law says that any proposed transaction shall be suspended upon an appeal at the tribunal but does not give a specific period within which the dispute will be resolved.

The Treasury has proposed legal amendments that will see the Capital Markets Tribunal resolve disputes, such as fallouts arising from mergers and acquisitions, within 90 days.

The Finance Bill 2021 seeks to delete subsection 17 of Section 35A of the Capital Markets Act.

This part of the law says that any proposed transaction shall be suspended upon an appeal at the tribunal but does not give a specific period within which the dispute will be resolved.

The Bill proposes to amend the section to read: “The Tribunal shall hear and determine an appeal within ninety days from the date of filing of the appeal.”

The National Assembly’s Departmental Committee on Finance and National Planning said the change is “intended to improve efficiency in the capital markets and ensure fair administrative action by the Authority.”

Lack of fixed period for determining disputes in the capital markets has caused uncertainty for investors and delayed transactions.

The proposed buyout of BOC Kenya by Carbacid Investments, for instance, is currently held up at the tribunal which is yet to start hearings since an appeal was filed on March 2.

Former BOC chairman Ngugi Kiuna filed the appeal, objecting to the deal which he says undervalues the company in which he holds a 7.6 per cent stake.

Carbacid has offered to acquire BOC for Sh63.5 per share or a total of Sh1.2 billion.

The delay at the tribunal has seen BOC progress with its corporate activities including proposing a final dividend of Sh4.15 per share which is to be paid on July 19 to shareholders who will be on record as of May 25.

BOC’s majority shareholder, BOC Holdings, has signed a deal to sell its 65.38 per cent stake in the company to Carbacid by July 31 as part of the proposed buyout.

The parties could be forced to extend the acquisition timeline to accommodate delays at the tribunal.

BOC told its shareholders to stop sending in their acceptance forms until the tribunal makes its decision.

Mr Kiuna says CMA erred in approving the takeover by ignoring the undervaluation of BOC besides disregarding the protection of interests of minority shareholders.