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CMA allows boards to declare dividends without AGMs

By Moses Omusolo | April 4th 2020

The Capital Markets Authority (CMA) has allowed boards of listed companies to declare dividends without convening Annual General Meetings (AGMs).

This is after AGMs were postponed following the outbreak of Covid-19 that has seen Government discourage all kinds of social gatherings.

“Given the need to postpone AGMs, to help eligible shareholders access dividends during these difficult circumstances, the respective boards of issuers of securities have been allowed to proceed to declare and pay dividends to their shareholders,” said CMA acting Chief Executive Officer Wyckliffe Shamiah.

The exemption, however, would be subject to the companies’ dividend policies, compliance with all relevant internal approvals as well as availing the audited financial statements to CMA and Nairobi Securities Exchange (NSE).

Mr Shamiah noted that the regulator had also given boards of listed companies the green light to go ahead and appoint and pay auditors.

Both decisions are usually deliberated and voted upon at AGMs by shareholders.

However, both decisions will have to be tabled at the AGMs once convened for ratification. Besides CMA and NSE, the industry players that were also part of this resolution are Central Depository and Settlement Corporation, Kenya Association of Stockbrokers and Investment Banks and Fund Managers Association.

These are among the measures that were agreed upon by different industry players in a move to mitigate disruption of the capital markets activities by Covid-19.

The changes are meant to ensure trading and settlement systems continue functioning to support transactions.

This regulatory flexibility follows an earlier decision by the Authority to relax disclosure obligations in relation to the publication of financial statements in two newspapers of national circulation until 30 June 2020.

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