The Capital Markets Authority (CMA) wants to drop the regulation requiring firms listing on the Nairobi bourse through the Growth Enterprise Market Segment (GEMS) to have nominated advisors throughout their listing period.
The CMA says that it is revising the current Capital Markets Securities Public Offers Listing and Disclosures Regulations to among other things remove “obsolescence and ambiguity”.
CMA director of policy and regulation Luke Ombara said the regulator wants to limit the role of nominated advisors, popularly known as Nomads, to only guiding firms when listing on Gems.
This will be a departure from the current situation where firms listing on Gems market are required to maintain Nomads throughout the period they remain listed on Nairobi Securities Exchange (NSE).
“One thing we are considering is to have Nomads for purposes of listing only. Firms can then hire compliance officers as opposed to keeping Nomads throughout,” said Mr Ombara.
This looks set to cut the revenues of Nomads but help Gems firms lower their compliance costs.
Nomads role include assessing appropriateness of an applicant for Gems and advising and guiding a company to ensure it remains compliant with listing requirements.
NSE currently has 18 approved Nomads against the four firms listed under Gems- Home Afrika, Flame Tree, Kurwitu Ventures, Nairobi Business Ventures.
Atlas African Industries was delisted after its Nomad, Burbidge Capital quit the role. The firm had gone for more than three years without publishing its financials and ultimately went under due to insolvency, leaving shareholders staring at losses.
The CMA has hired a consortium of local and international advisors to lead the review of listing and disclosure rules, with the final document expected to be ready by June next year.
Mr Ombara says the review wants to look at ways of supporting listed firms to lower compliance costs.