The Capital Markets Authority (CMA) has announced plans to relax rules for firms intending to list at the Nairobi Securities Exchange (NSE).
This follows a tendency by firms to avoid the bourse in the last few years, with the latest listing being in December 2020 when HomeBoyz Entertainment went public by introduction (without selling shares). Also, the last initial public offering (IPO) was in 2015 when property investment fund ILAM Fahari I-Reit raised Ksh3.6 billion.
“As a result, the authority has embarked on a complete overhaul of the existing regulations in a bid to address some of the key challenges and gaps identified by stakeholders,” said the CMA.
Read: Investors in CHYS/CPN Want Administrator Removed
“The new regulations seek to ensure that there is regulatory clarity for issuers, questions relating to high costs of public offering are addressed, provision of a flexible regulatory environment that is pro-innovation.”
With the current rules, for a firm to go public, it must have recorded profits in the three years and should cede at least a quarter of its shares to at least 1,000 shareholders who are not its employees.
Read: TechnoServe Strengthening African Processors Of Fortified Foods
In the new rules proposed by CMA, IPOs will be allowed to include special purpose acquisition companies (SPACs), which are relatively cheaper as compared to normal IPO listing. SPACs have lower charges, two percent as underwriter fees and 3.5 percent completion fees, as compared to at least five percent to seven percent additional costs including legal, audit, registration and administrative expenses charged for normal IPO listing.
“Additionally, we are expanding provision for initial public offerings to include SPAC IPOs as we seek to limit the time it takes to come to market for companies that opt to use this capital raising option,” said the CMA.
Read: Unit Trust Schemes Assets Under Management Hit A Record High Of Ksh134 Billion
