Listed firms recovery board faces headwinds

Nairobi Securities Exchange (NSE). FILE PHOTO | NMG 

By BRIAN NGUGI
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Summary

• The proposed trading board for listed companies that fall into financial or management trouble that was to go live yesterday has stalled following a tussle with the Nairobi Securities Exchange (NSE).
• The Capital Markets Authority (CMA) had championed the new “recovery” board as a necessary buffer to protect investors seeking to buy shares of the ailing companies.
• Uchumi Supermarkets, Mumias Sugar and East African Portland Cement are among the firms facing a combination of corporate governance and financial challenges.

The proposed trading board for listed companies that fall into financial or management trouble that was to go live Wednesday has stalled following a tussle with the Nairobi Securities Exchange (NSE).

The Capital Markets Authority (CMA) had championed the new “recovery” board as a necessary buffer to protect investors seeking to buy shares of the ailing companies.

Uchumi Supermarkets, Mumias Sugar and East African Portland Cement are among the firms facing a combination of corporate governance and financial challenges.

The NSE, however, appeared to view the proposed board as condemning and shaming its members.

The NSE, which has 65 listed firms, argued that singling out its troubled members would add more pain on the beleaguered bourse that is suffering from a prolonged lack of new listings and capital raising.

The board was set to be launched on April 1.

A new tentative date has been set for June this year, but even that is not certain.

"We had to postpone. We conducted a joint CMA/NSE stakeholder workshop to sensitise the CEOs, boards and CFOs of listed companies and licensed intermediaries and to get their buy in last month (March) as a prerequisite for launch," the CMA director for Regulatory, Policy and Strategy Luke Ombara said in an interview.

"It was very well received and supported as we explained its benefits. We also agreed to change the name as 'Recovery' didn't seem popular. We planned to have a media briefing immediately after the workshop but this was indefinitely rescheduled because of the presidential directive on meetings."

Mr Ombara said plans were afoot to roll out a structured joint CMA/NSE public sensitisation and communication campaign before a roll out in June.

"With the current Covid-19 situation this may take longer as timing may not be right. We planned a roll out in June and it is still a possibility but remote."