Banks to list directors of defaulting companies in CRBs

The names of directors and key shareholders of companies taking out commercial loans will be submitted to credit reference bureaus (CRBs) under new rules intended to rate the firms’ ability to repay debts. FILE PHOTO | NMG 

By OTIATO GUGUYU
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Summary

• Names of individuals who hold at least 10 percent in a company seeking loans will also be listed with CRBs
• The new requirement comes on the back of multiple credit defaults by companies.
• Consolidated Bank, Athi River Mining and Nakumatt are some of the most recent defaulters of billions of shillings

The names of directors and key shareholders of companies taking out commercial loans will be submitted to credit reference bureaus (CRBs) under new rules intended to rate the firms’ ability to repay debts.

A new template to be filled by lenders wants to link top shareholders, directors, partners and trustees of corporate borrowers to establish the identity of owners and assist in conducting due diligence on companies.

Names of individuals who hold at least 10 percent in a company seeking loans will also be listed with CRBs in addition to directors, partners, trustees and officials of the firms.

Disclosure of the names will effectively lift the veil of incorporation, a key tenet that has been applied over time to separate ownership of limited companies from their liabilities and day-to-day management.

“In the case of non-natural persons like companies, the information of the directors is shared to the bureau so that the lenders can know the level of indirect exposure they have,” said Jared Getenga, chief executive of the industry lobby Credit Information Sharing Association of Kenya.