The Capital Markets Authority (CMA) has placed a 28-day freeze on the withdrawal of funds from Amana Capital to cushion it amid reports that it lost Sh275 million in a commercial paper of the failed Nakumatt Holdings.
Amana clients will not be allowed to redeem their money to give the investment firm time to find solutions in the wake of its liquidity challenges, CMA said.
“The Capital Markets Authority (CMA) has given a no-objection to a 28-day moratorium to enable the fund manager, Amana Capital Limited (ACL), work with its Trustee, NatBank Trustee & Investment Services Limited, to improve its liquidity position to meet redemption obligations to unit holders with investments in the Amana Shilling Fund,” CMA said in a statement.
Amana’s shilling fund has remained frozen for the last two years. This has frustrated clients who had been accustomed to recalling their capital in a matter of days when entering similar investment vehicles.
Nakumatt defaulted on the commercial paper holders among other classes of creditors, sparking major write-offs among banks, suppliers, insurance firms and high-net-worth individuals.
The authority’s move comes days after it ordered money market funds to disclose in detail where they have invested clients’ cash as well as the terms of those deals following revelations of investment gambles that have lost investors billions of shillings.
CMA acting chief executive Wycliffe Shamiah said the regulator plans to audit the committees that make investment decisions after they realised some of the funds were being controlled by lone rangers.
“We have issued circulars clarifying when they do their quarterly fillings to disclose which investments in classes, for example you do not just make a return saying; Cash, Sh1 billion, we want you to be very specific, what is in deposits, what is in cash. As we review we also ask you to explain more on the terms of those assets as you disclose them,” he said.
“We will go into the investment committees sitting in the fund managers that make those decisions because we can see there are specific decisions left to one individual as opposed to a committee which can have better ideas,” Mr Shamiah said.