Businessperson and Kenya Airways share holder Mihr Samir Thakar, has initiated legal action against the Capital Market Authority (CMA) challenging its decision to extend the suspension of trading in Kenya Airways (KQ) shares on the Nairobi Securities Exchange (NSE) for an additional 12 months.
“I seek this appeal be allowed and the decision of the Capital Markets Authority be set aside with costs,” the plaintiff urged the court to overturn the CMA’s decision, stating,
The prolonged trading halt has affected over 77,000 small investors, preventing them from liquidating their portfolios.
Effective January 5, 2024, the trading suspension for KQ shares was extended for another year. Thakar, a filed a petition with the Capital Market Authority Tribunal, arguing that the one-year extension is both unreasonable and unjustified.
Thakar contends in the legal documents that the CMA made a legal error by not seeking input from the general public and specifically shareholders when making such a consequential decision. He also asserts that the recent extension of the trading suspension lacked proper explanation.
According to Thakar, the CMA’s decision was legally flawed, driven by an ulterior motive aimed at prejudicing the legal rights of the appellant and other minority investors.
In response to these legal challenges, the CMA had previously announced that the extension of the trading suspension was intended to allow Kenya Airways to complete its operational and corporate restructuring process.
In its statement, the CMA declared, “Notice is hereby given on the extension of suspension from trading of Kenya Airways Plc shares. The extension of suspension seeks to enable the company to complete its operational and corporate restructuring process.” The initial suspension occurred in July 2020 when the government proposed privatizing the struggling carrier.
Despite a noteworthy 120% improvement in operating profit, transitioning from a KES 5 billion loss in 2022 to a KES 998 million operating profit in 2023, Kenya Airways faced a net loss expansion to KES 21.7 billion. This setback was attributed to a KES 17 billion impact from foreign exchange losses on monetary items and loans. The government of Kenya owns 48.9% of Kenya Airways, while Air France-KLM holds 7.8%, with the remainder in private hands and banks.
