Investors face losses as controversy dogs Carbacid share split

Carbacid factory in Nairobi’s industrial area. The company produces and supplies pressurised carbon dioxide and dry ice. Photo/FILE  NATION MEDIA GROUP

By John Gachiri

In Summary

• In a letter seen by the Business Daily, the AIB Capital chief executive Paul Mwai has demanded a written confirmation of the effective date for Carbacid’s share split
• Mr Mwai reckons that a notice sent out by Carbacid on October 22 did not explicitly indicate when the share split would be effected, yet the share price appears to have adjusted for the split after November 15 when the shareholders’ register closed for a bonus and dividend payout
• The company however said that the dates given for its corporate actions was clear, referring the Business Daily to the notice

A stockbroker has claimed that listed industrial gas producer Carbacid could have misled investors on the effective date of its planned share split, occasioning losses to shareholders who took position on the stock based on erroneous information.

In a letter seen by the Business Daily, the AIB Capital chief executive Paul Mwai has demanded a written confirmation of the effective date for Carbacid’s share split.

Mr Mwai reckons that a notice sent out by Carbacid on October 22 did not explicitly indicate when the share split would be effected, yet the share price appears to have adjusted for the split after November 15 when the shareholders’ register closed for a bonus and dividend payout.

“We note with concern that your notice appears to be ambiguous with regard to the closing of the register for purposes of the share split. This ambiguity was manifested in a trade undertaken for one of our clients, who stands to suffer irreparable financial damage,” states Mr Mwai in the letter also copied to the Capital Markets Authority, the Nairobi Securities Exchange and the Central Depository and Settlement Corporation.

A shareholder who sells a stock believing that it is trading “ex-split” could miss out on capital gains that in most cases come after the splitting of a stock, which makes it more liquid and nominally more affordable to investors.

Carbacid’s share touched a 52-week high of Sh73.50 in yesterday’s trading, an 84 per cent jump from the Sh40 November 18 price that it dropped to following closure of the register for bonus and dividend payment.

The company’s market capitalisation has surged to Sh12.40 billion from Sh7.85 over the same period.

“There are indications that this ambiguity in the referenced letter is the cause of this upward movement in price,” argues Mr Mwai.



Carbacid’s company secretary N P Kothari said the company had received and responded to AIB Capital’s letter.

The company however said that the dates given for its corporate actions was clear, referring the Business Daily to the notice.

“Notice is hereby given that the Register of Members will be closed from November 16, 2013 to November 26, 2013 both dates inclusive for the purpose of preparation of dividend and capitalisation lists. Documents for registration, which should be received by 4.30 p.m., on November 15, 2013,” said the notice by Carbacid after releasing its end of year results.

AIB Capital says that there is confusion on whether the share split happened on November 15, in spite of the NSE having reflected that the shares had been split.

“Our discussion on telephone with one of your employees namely Francis indicates that the share is still trading cum split. However the Nairobi Securities Exchange (NSE) price list as late as yesterday, November 28, 2013 indicates that the record date for the closure of register for the share split was on November 15, 2013,” says the letter to Mr Kothari.

The gas-maker’s net profit stood at to Sh475.5 million in the year to July compared to Sh389.2 million a year earlier, a 22 per cent increase.




Carbacid maintained dividend payout at three shillings per share.

The five-for-one share split increased the number of shares to 169.9 million from 33.9 million.

The increased liquidity has brought the stock under the investment radar of large buyers such as fund managers and analysts said that this has contributed to the share’s recent rally.