The changes in the law
making it easier for majority shareholders to forcibly take over
companies listed on the Nairobi Securities Exchange have left minority
investors exposed and do not bode well for robust governance.
Worse
still, the manner in which the Statute (Miscellaneous Amendments) Act
No. 12 of 2019, which now allows shareholders with a 50 percent stake to
make compulsory acquisitions of shares held by remaining investors, was
passed leaves a lot to be desired.
On the overall, the
opaqueness of the way this was done is likely to hurt growth at the
Nairobi bourse and make it unattractive for small scale investors to put
their money in companies with big shareholders. That the amendments
seem to have caught stakeholders unawares raises key questions over
whether there were adequate public consultations on the legislation as
required by the law.
In principle, the process does not
seem to have been transparent given that it was part of an omnibus Bill
that might have escaped scrutiny and debate that would have allowed the
investing public and other stakeholders to give their views on the
issue.
It is not too late to go back to the drawing board and amend the law to avoid investor flight from the NSE.
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