Treasury to fast-track 100pc foreign stake in NSE firms

What you need to know:

Capital Markets Authority has been pushing for the removal of the current cap of 75 per cent and included the proposal in its 10-year master plan launched in November.
Removal of the ownership cap would help the markets move towards achieving the status of emerging market by 2020 as rated by the Morgan Stanley Capital International index.
If passed, the legal provision could be effective from as early as January, 2016.

The Treasury will fasttrack regulatory changes, opening up listed companies to full foreign ownership this year, Cabinet secretary Henry Rotich has said.

The Capital Markets Authority (CMA) has been pushing for the removal of the current cap of 75 per cent and included the proposal in its 10-year master plan launched in November.

Mr Rotich said such reforms will help accelerate the establishment of the Nairobi International Financial Centre (NIFC) as well as improve access, stability and efficiency of the capital markets as per the master plan.

The NIFC Authority was gazetted by President Uhuru Kenyatta in May last year.

“The National Treasury will fasttrack these flagship projects this year by facilitating the openness to foreign ownership, ease of capital inflows and outflows, efficiency and stability of the operational and institutional framework of the capital markets,” Mr Rotich said on Wednesday.

Removal of the ownership cap would help the markets move towards achieving the status of emerging market by 2020 as rated by the Morgan Stanley Capital International (MSCI) Index.

READ: CMA wants foreigners allowed to fully own listed firms

It should also enable Nairobi to enter the Global Financial Centre Index ranking of financial centres published by the Z/Yen Group.

It would also see the NSE included in the widely followed MSCI indices.

Market accessibility is one of the key criteria for reclassification of a market by the MCSI, which only covers bourses, allowing foreigners to hold up to 100 per cent of listed companies.

Speaking in November at a stakeholders’ discussion on reforms to be put before the Treasury for adoption in the next Budget, acting CMA director for regulatory, policy and strategy Luke Ombara had said the amendments will be made in the Budget proposals for 2015/16 fiscal year.

If passed, the legal provision could be effective from as early as January, 2016.

Mr Ombara said the proposal may be modified to prescribe the portion foreigners can own in strategically important companies, which would not otherwise be left fully in foreign hands.

The 75 per cent cap was put to reserve ownership of listed firms for local investors as a way of encouraging Kenyans to buy shares at the stock market.

According to the latest CMA filings of up to September 2014, foreign investors held 22.4 per cent of the shares at the NSE.