CMA says it is still executing mandate despite board gaps

The Capital Markets Authority is operating without a chief executive with Paul Muthaura (right) as acting CEO. Four independent directors — including chairman Kung’u Gatabaki (right) — have also exited leaving the board with gaps. PHOTO | DIANA NGILA 

By CHARLES MWANIKI

In Summary

• According to CMA, the law provides for operations in the absence of a substantive chairman, allowing the remaining board members to select from among themselves a temporary chair on a meeting by meeting basis.
• The Treasury has delayed making appointments as the government moves to consolidate financial sector regulators under one umbrella body.
• Some market players had previously raised doubt on the ability of CMA to operate at full capacity in the absence of a chairman and with only an acting CEO.

The Capital Markets Authority (CMA) Wednesday said its board of seven members is conducting regulatory business even as it awaits full constitution by the Treasury.

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The recent exit of four independent directors — including chairman Kung’u Gatabaki — has left the board with gaps. It also operates without a substantive CEO.

“The board of CMA has adequate quorum to conduct business and make decisions notwithstanding the lapse of term for some of its members,” said a CMA statement.

READ: CMA directors exit casts shadow on grain auction plan

The board has seven members, allowing it to meet the quorum requirement of six as stipulated under the CMA Act. The regulator said regular board meetings have been held since the lapse of the terms of the former directors at the end of May.

Among the key decisions passed by the regulator since end of May is the final approval of the demutualisation of the Nairobi Securities Exchange, which has allowed the bourse to open its initial share sale to the public.

READ: NSE valued at Sh2bn as bourse opens share sale

In June, CMA also approved the Diamond Trust Bank (DTB) rights issue and the Britamcorporate bond.

According to CMA, the law provides for operations in the absence of a substantive chairman, allowing the remaining board members to select from among themselves a temporary chair on a meeting by meeting basis.

“The Act provides for the seamless holding of meetings of the Authority even in the event of a vacancy in the office of chairman and this has been the case since the departure of the previous office holder,” said CMA.

CMA is also operating without a chief executive with Paul Muthaura as acting CEO, Mr Gatabaki left the chairmanship at the end of May.

The Treasury has delayed making appointments as the government moves to consolidate financial sector regulators under one umbrella body.

The Report of the Presidential Task Force on Parastatal Reforms recommended consolidation of CMA, the Insurance Regulatory Authority (IRA), Retirement Benefits Authority (RBA) and Sacco Societies Regulatory Authority (Sasra) to form the Financial Services Authority (FSA) in a step aimed at increasing efficiency.

READ: 42 parastatals to be dissolved under new reforms plan

Treasury secretary Henry Rotich said in this year’s Budget speech that he would table new bills before Parliament on the regulatory and supervisory aspects of the financial services sub-sector as well as the establishment of FSA.