Regulator approves special board for troubled firms on Kenyan exchange
TLDR
- CMA approves setup of recovery board for troubled companies on Nairobi Securities Exchange (NSE) to safeguard investor interests
- Troubled firms like TransCentury, Kenya Airways, Mumias Sugar Company, and Uchumi Supermarkets relocated to special board for 2 years for recovery and financial strengthening
- Failure to recover within 2 years may lead to delisting from the exchange; caution advised for investors trading with troubled entities.
The Capital Markets Authority (CMA) has approved the setup of a contentious recovery board for troubled companies listed on the Nairobi Securities Exchange (NSE). This decision aims to safeguard investor interests and restore confidence in the stock market.
Under this initiative, troubled firms like TransCentury, Kenya Airways, Mumias Sugar Company, and Uchumi Supermarkets will be relocated to the special board for a period of two years to facilitate their recovery and strengthen their financial position.
Failure to achieve recovery within this timeframe will result in the eventual delisting of these companies from the exchange. Investors engaged in trading firms on the recovery board are advised to exercise caution when dealing with troubled entities.
Key Takeaways
The policy shift, initiated in 2018, aims to safeguard investors by preventing them from purchasing shares in troubled firms. Its goal is to prevent unexpected company failures and to restore investor confidence in the volatile equity trading business. TransCentury, Kenya Airways, Mumias Sugar Company, and Uchumi Supermarkets are currently facing challenges such as depleted shareholder funds, losses, lack of sales, and financial reporting gaps. These issues pose a significant risk for uninformed investors.
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