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Treasury moves to cap shareholding at Nairobi Securities Exchange

By Patrick Alushula | May 19th 2016

Stockbrokers at the Nairobi Securities Exchange (NSE) have up to six months to cede part of their equity in order to comply with new regulations from Treasury.

According to the new NSE Limited Shareholding Regulations that took effect last Friday, trading participants or simply stockbrokers will no longer be allowed to cumulatively hold more than 40 per cent of the bourse’s equity.

Already, NSE Chief Executive Officer Geoffrey Odundo has written to the current shareholders informing them of the changes. In the same regulations, a public company will not hold more than 10 per cent of the total equity. The shareholding of individual or private companies has also been capped at 5 per cent.

“Any person holding equity shares in the exchange in excess of the limits specified at the commencement of these regulations shall reduce his shareholding within six months to ensure compliance or apply for exemption,” directed CS Henry Rotich in a Gazette notice dated May 13.

According to the NSE top 20 investors list as at the end of December 2014, CfC Stanbic Nominees Kenya Ltd was the highest shareholder with 14.199 million shares, being 7.3 per cent of the total shares. This was followed by the Government with 6.74 per cent (13.125 million shares), with each half being held by The Investor Compensation Fund and National Treasury Cabinet Secretary.

But cumulatively, 17 of the 23 trading participants who form part of the top 20 investors own 88.84 million shares translating to 45.69 per cent of the total shares. This may therefore see them forced to dilute part of the ownership. However, the Gazette notice has also given them a chance to apply to CMA to be excluded from these requirements.

But even before the deadline, NSE is planning to introduce 162.5 million additional shares at the securities market in a move that could dilute the stakes of shareholders. Through a notice, NSE has announced that it will be seeking approval for the move by shareholders at the next Annual General Meeting (AGM) slated for June 2, 2017.

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