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CMA approves Diamond Trust Bank rights issue

We would like to clarify that the Board of the Capital Markets Authority has adequate quorum as prescribed under the Capital Markets Act Chapter 485A of the Laws of Kenya to conduct business and make decisions notwithstanding the lapse of term for some of its members.

The Board currently has seven members and this number surpasses the quorum requirement of six members in accordance with the provisions of the Act. The Board of the Authority has therefore since the end of May 2014 continued to hold meetings and made decisions in compliance with the provisions of the Act always being quorate.

Further Section 6 subsection 3 of the Act which states that in the absence of the Chairman “the members present shall elect one of their number who shall, with respect to that meeting and the business transacted thereat, have all the powers of the chairman provides for the seamless holding of the meetings of the Authority even in the event of a vacancy in the office of chairman and this has been the case since the departure of the previous office holder. “

We would like to confirm that the Board of the Authority has the quorum to make all decisions according to the power vested upon it to ensure the smooth running of the organization and the capital markets industry.

Nairobi cityscape - capital city of Kenya

CMA approves issuance by Britam of a Ksh5 billion corporate bond with a green shoe option of Ksh1 billion

Nairobi, June 6, 2014…In an effort to deepen the corporate bond market, the Capital Markets Authority (CMA) has approved the issue of a Ksh5 billion Medium Term Note Programme by British American Investment Company (Britam) to be used to fund strategic business initiatives.

Prior to giving the approval, the Authority reviewed information provided and is satisfied that it meets the eligibility requirements for Public Offering of Fixed Income Securities and Listing on the Fixed Income Securities Market Segment and is satisfied that contained in the second schedule of the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002.

The bond will be issued in two tranches as follows; the first tranche will amount to Ksh3 billion and with the option to take up to an additional amount of up to Ksh1 billion in a green shoe option, while the second tranche will amount to Ksh2 billion.

Britam expects to use the funds to support several strategic initiatives including; real estate opportunities; private equity opportunities; local and regional business growth; and ICT investments.

ENDS 

BACKROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

The Capital Markets Authority (CMA) was set up in 1989 as a statutory agency under the Capital Markets Act Cap 485A. It is charged with the prime responsibility of both regulating and developing an orderly, fair and efficient capital markets in Kenya with the view to promoting market integrity and investor confidence.

The regulatory functions of the Authority as provided by the Act and the regulations include; Licensing and supervising all the capital market intermediaries; Ensuring compliance with the legal and regulatory framework by all market participants; Regulating public offers of securities, such as equities and bonds & the issuance of other capital market products such as collective investment schemes; Promoting market development through research on new products and services; Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest.

Nairobi cityscape - capital city of Kenya

CMA releases Corporate Governance Code for Listed Companies

Nairobi, May 19, 2014…The Capital Markets Authority (CMA) has today released a draft Code of Corporate Governance Practices for public listed companies in Kenya, in exercise of the powers conferred by sections 11(3) (v) and 12 of the Capital Markets Act. The draft Code will be placed on exposure to the public for a period of 30 days commencing 20 May, 2014.

The Code of Corporate Governance Practices has been drafted after extensive engagement and rigorous input from listed companies, licensed intermediaries, government officials, academia, multinational and foreign investors and global corporate governance experts. Its drafting was necessitated by the need to address developments at national, regional and international levels so as to strengthen the market against risks that would threaten the financial system and stifle private sector dynamism, entrepreneurship and ultimately, economic growth. The Code is also intended to move away from simple compliance and ‘box-ticking’ towards fundamental change.

Mr. Paul Muthaura, the acting Chief Executive of CMA noted, ‘The exposure period provides a chance to all stakeholders to review the Code and give their input. Once stakeholders comments have been taken into consideration the Authority will channel the draft Code to the Cabinet Secretary, The National Treasury for enactment.’ Once enacted, the Code of Corporate Governance will supersede the Corporate Governance Guidelines issued in 2002.

The new Code is organized into seven pillars namely, board operations and control; rights of shareholders; stakeholder relations; ethics and social responsibility; accountability, risk management and internal control; transparency and disclosure and supervision and enforcement. Under each pillar, principles and recommendations are proposed and this is reinforced by a rationale which is termed as ‘guidelines’. The rational seeks to present the Authority’s perspective having extensively reviewed domestic and international corporate governance standards and practices.

“The Capital Markets Corporate Governance Steering Committee that has been responsible for the development of this Code has broadly reviewed corporate governance standards from all over the world all the while taking into account the special circumstances in Kenya to ensure this Code is highly localized and contextualized’, Mr. Muthaura added.

He also noted that a fundamental difference in the draft Code is that it is predicated on an ‘apply or explain’ principle, whereas the current guidelines are on a ‘comply or explain principle.

‘The ‘apply or explain’ model recognizes that no set of regulations can be applicable to all types of listed companies and therefore those areas that each and every listed company must comply with, at a bare minimum, have been extracted from the Code as an annex and the same are also exposed for comment. These provisions will be enforceable by the Authority once they are captured in the CMA legislation’, Mr. Muthaura stated.

The members of the Capital Markets Corporate Governance Steering Committee are Catherine Musakali (Chair) representing Institute of Certified Public Secretaries of Kenya (ICPSK), Jackline Nyandeje representing State Corporations Advisory Committee, Maryanne Macheru and Jennifer Ng’ang’a both representing Registrar of Companies, Mahmood Manji representing the Authority’s Board, Prof. Gituro Wainaina, the acting Director General of Vision 2030, James Mworia representing listed companies, Job Kihumba representing the Nairobi Securities Exchange, Mirie Mwangi, representing the academia and Rev. Geoffrey Njenga representing the insurance industry.

Nairobi cityscape - capital city of Kenya

CMA grants Investment Advisor license to MTC Capital Limited

Nairobi, April 10, 2014…The Capital Markets Authority (CMA) has granted a license to MTC Capital Limited to operate in Kenya’s capital market as an Investment Advisor under the Capital Markets Act and Regulations. The license is effective from March 27, 2014.

The license approval will enable the company to offer advisory services for debt issues, commercial paper and corporate bond transactions; corporate advisory (for capital markets and private companies); equity raising (private placements and public listings); strategic advisory services and real estate and property advisory services. The licensee will also undertake due diligence and business valuations as well as preparing feasibility studies.

An investment advisor is a person or group licensed under the Capital Markets Act to make investment recommendations or conduct securities analysis in return for a fee whether through direct management of a client’s assets or through written publications.

The approval brings the number of investment advisors authorized by the Capital Markets Authority to 18.

Nairobi cityscape - capital city of Kenya

CMA approves registration of Centum Unit Trust Fund

Nairobi, April 9, 2014… The Capital Markets Authority (CMA) has granted consent for registration of Centum Unit Trust Fund as a Collective Investment Scheme in accordance with section 30 of the Capital Markets Act and Part II of the Capital Markets (Collective Investment Schemes) Regulations, 2001.

Centum Asset Managers Limited, the fund manager responsible for the collective investment scheme noted that the fund would venture into other African markets so as to offer superior returns to investors as African economies were on a faster growth path at between five and seven percent compared to other continents in the world. Four sub-funds are covered under the approval namely: Africa Equity Fund, Africa Balanced Fund, Africa Fixed Income Fund and Africa Money Market Fund.

In the period between 2009 and 2014, the company invested more than 50 percent of its portfolio outside Kenya.

According to the Capital Markets Act, a collective investment scheme includes an investment company, a unit trust, a mutual fund or other scheme which is incorporated or organized under the laws of Kenya which collects and pools funds from the public or a section of the public for the purpose of investment; or is managed by or on behalf of the scheme by the promoter of the scheme. It also includes an umbrella scheme whose shares are split into a number of different class schemes or sub-schemes, each of which is managed by or on behalf of a common promoter.

In a statement released to newsrooms, the Authority noted that the approval to register Centum Unit Trust Fund was issued following the Fund’s compliance with the provisions of the relevant capital markets regulations. Once registered, this will bring the number of approved collective investment schemes to 18.

Nairobi cityscape - capital city of Kenya

CMA grants licenses for three new REIT Managers

Nairobi, April 8, 2014…The Capital Markets Authority (CMA) has approved the grant of three new licenses for Real Estate Investment Trusts (REITs) Manager to Stanlib Kenya Limited, Fusion Investment Management Limited and CIC Asset Management Limited respectively, bringing the total number of approved and licensed REIT Managers in Kenya to five. The Authority granted the first two licenses for operation of REIT Managers to Centum Asset Managers Limited and UAP Investments Limited in December 2013. A REIT manager, according to the (Real Estate Investment Trusts) (Collective Investment Schemes) Regulations 2013, is a company incorporated in Kenya and licensed by the Capital Markets Authority to provide real estate management services in respect of a Real Estate Investment Trust.

Stanlib Kenya Limited is currently licensed to operate as a fund manager in the Kenyan capital markets, managing collective investments schemes for more than six years and has also been involved in property development and investments for over 15 years. Fusion Investment Management Limited is also licensed to operate as a fund manager and with the addition of a new REIT Manager license, will develop investment vehicles that provide a viable home for collective investment funds. CIC Asset Management Limited is a subsidiary of Nairobi Securities Exchange-listed CIC Insurance Group. The licensees seeks to capture investors seeking income, capital gains possibilities and diversification benefits of the real estate class through REITS in property investments.

In a press statement sent to newsrooms, Capital Markets Authority noted that it had reviewed the applications by the three licensees and was satisfied that each institution had complied fully with the requirements of Regulation 125 of Capital Markets (Real Estate Investment Trusts) (Collective Investment Schemes) Regulations, 2013.

Nairobi cityscape - capital city of Kenya

CMA Signs MOU to Introduce Certification Standards for Capital Markets

Nairobi September 17, 2014… As part of its drive to enhance  the positioning of Kenya as a premier investment destination, the Capital Markets Authority (CMA) has signed a Memorandum of Understanding (MOU) with the Chartered Institute for Securities & Investment (CISI) for the introduction of international certification standards in the capital markets industry.

The CMA Acting Chief Executive, Mr Paul Muthaura, said the MOU will pave the way for the introduction of a certification programme that will ensure that practitioners in the capital markets industry have the requisite skills, operate with high standards and apply best practice as Kenya takes its position as the hub for the African capital markets.

Mr Muthaura observed; ‘’For Kenya to be competitive and attract international funds flows, key staff in capital market intermediaries need to adopt international certification standards to support the introduction of more diversified products in the market as well as to ensure that engagement with investors is consistent and to the highest possible standards’’. He disclosed that the introduction of certification standards, aimed at creating a highly skilled talent pool, is aligned to the Capital Market Master Plan, the ten-year blue print for the Kenyan capital markets industry, and the ambition of the country to become a regional and International Financial Centre.

The implementation of the MOU will lead to the adoption of CISI’s International Introduction to Securities and Investment (IISI) program, as an industry recognised certificate for Kenya with intention to support its adoption within the wider East African Community (EAC) region, as capital market players increasingly operate across different markets. In this regard, the learning manual will be expanded to include concepts and issues related to the EAC region.

Simon Culhane, Chartered FCSI, CEO of CISI said: “We are very pleased to work with CMA to enhance and promote professionalism and professional standards in the capital markets industry in Kenya which will extend to the EAC region.”

Funding for the proposed initiative will be provided by FSD Africa which is already collaborating with CMA on a wide-ranging programme of technical support. Skills development across financial markets in sub-Saharan Africa is a core priority for FSD Africa.

Mark Napier, Director of FSD Africa, said: “We are delighted to be able to assist with the introduction of this certification programme which is an important step forward for Kenya and the wider EAC region in boosting the professionalism of its capital markets and enhancing their attractiveness as a place for investors to do business.’’

Nairobi cityscape - capital city of Kenya

IFC and Capital Markets Authority Kenya Build Capacity for 200 Directors of Listed Companies and Issuers

In Nairobi In Nairobi
Neha Sud Antony Mwangi
Phone: +254-20-293-7403 Phone: :+254-20-226-4204
E-mail: NSud@ifc.org E-mail: Amwangi@cma.or.ke

In Washington, D.C.
Loty Salazar
Phone:1-202-458-2559
E-mail: lsalazar@worldbank.org

Nairobi, Kenya, February 2, 2017 — International Finance Corporation (IFC), a member of the World Bank Group, and Capital Markets Authority (CMA) have kicked off the second phase of the capacity building program for directors of listed companies and issuers focusing on the Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 (Corporate Governance Code). The capacity building program seeks to raise awareness on the requirements of the Corporate Governance Code among listed companies and issuers in order to enhance its application beginning March 2017. The program will see 200 directors sensitized over a four-day period from 2 – 7 February 2017.

“Since we entered into the agreement with IFC in November 2016, we have observed overwhelming interest from issuers on the Corporate Governance Code. The first Corporate Governance Code Master class held in November 2016 attracted 80 CEOs, CFOs and CSs from listed companies and we are glad to see strong levels of interest from board members for the current round,” CMA Chief Executive, Paul Muthaura noted.

The Authority noted that each of the two sessions of the Corporate Governance Master Class will take place over two days. The Corporate Governance Master Class is structured to cover specific Corporate Governance Code related topics such as board effectiveness, rights of shareholders, ethics and social responsibility, risk management and internal control, and disclosure, in order to empower board members to improve their company’s Corporate Governance practices and strengthen the functioning of their boards and control environments.

“These capacity building programs are expected to strengthen corporate governance among issuers in the capital markets and as a result enhance investor confidence. This strengthening of governance practices is fundamental for issuers to succeed in mobilizing resources from the capital markets locally and globally, as well as to facilitate development and the achievement of ambitious plans outlined in the Vision 2030 and Capital Market Master Plan”, said Mr. Muthaura.

‘’Companies that practice good corporate governance tend to carry lower risk and generate higher returns for shareholders. They also have demonstrated better performance, and can secure cheaper capital and lower regulatory costs”, said Oumar Seydi, IFC Director for East and South Africa.

The IFC in conjunction with the CMA has subsequently developed a corporate governance reporting framework which includes guidelines for reporting and a reporting template. The reporting framework will aid listed companies, issuers and governance auditors to structure compliance statements to reduce regulatory burden and ensure that shareholders and stakeholders are able to rapidly understand an issuer’s degree of compliance. The reporting framework will also present data in a structured format that allows for cross-company comparison.

The partnership has also developed an assessment framework for use by CMA to assess the quality of corporate governance among issuers of securities in Kenya.

The Corporate Governance Code is on an “apply or explain” principle. This means that an issuer may in some circumstances explain non-application of the Corporate Governance Code principles, guidelines and recommendations in favor of an alternative measure, as long as the alternative delivers a better standard of corporate governance. Where non-application delivers a lower standard of corporate governance, issuers will be expected to explain to the Authority, shareholders and stakeholders the reasons for non-application or partial application, the time frame required to meet each application requirement, and the strategies the issuer will put in place to progress to full application. Each issuer will be required to post on its website, the completed reporting template and send the same to the Authority within four months of the close of each financial year.

The Authority noted that there are mandatory corporate governance provisions which were extracted from the Corporate Governance Code which an issuer must comply with. The mandatory provisions are prescribed in the Capital Markets (Securities) (Public Offers, Listing &Disclosure) Regulations, 2002.

The IFC and Authority further observed that a pool of 21 executives have been through a rigorous Training of Trainers program on the Corporate Governance Code carried out in November 2016. The trainers will be able to support issuers through further in-depth and customized capacity building as issuers may require.

CMA began implementing corporate governance reforms in 2012, which culminated in the enactment of the new Corporate Governance Code in March 2016. The Corporate Governance Code provided issuers with a transition period on one year, within which they should commence its application. IFC and CMA have also developed a Stewardship Code for Institutional Investors, which will soon be enacted.

IFC has contributed to the adoption of 95 corporate governance codes, laws, and regulations in more than 30 countries worldwide. IFC’s Corporate Governance Program in East Africa is funded by the State Secretariat for Economic Affairs of Switzerland.

About Capital Markets Authority
The CMA was set up in 1989 as a statutory agency under the Capital Markets Act Cap 485A. It is charged with the prime responsibility of both regulating and developing an orderly, fair and efficient capital markets in Kenya with the view to promoting market integrity and investor confidence. The regulatory functions of the Authority as provided by the Act and the regulations include; Licensing and supervising all the capital market intermediaries; Ensuring compliance with the legal and regulatory framework by all market participants; Regulating public offers of securities, such as equities and bonds & the issuance of other capital market products such as collective investment schemes; Promoting market development through research on new products and services; Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest. For more information, visit www.cma.or.ke. For more information contact: Antony Mwangi, Phone: +254-20-226-4204, Email: amwangi@cma.or.ke.

Stay Connected
https://twitter.com/CMAKenya
https://www.facebook.com/cmakenya
https://www.youtube.com/user/kenyacma

About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with 2,000 businesses worldwide, we use our six decades of experience to create opportunity where it’s needed most. In FY16, our long-term investments in developing countries rose to nearly $19 billion, leveraging our capital, expertise and influence to help the private sector end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org

Stay Connected
www.facebook.com/IFCwbg; www.facebook.com/IFCAfrica
www.twitter.com/IFC_org, www.twitter.com/IFCAfrica
www.youtube.com/IFCvideocasts
www.ifc.org/SocialMediaIndex
www.instagram.com\ifc_org

About SECO
SECO is Switzerland’s competence center for all core issues relating to economic policy. SECO’s economic development cooperation strives to achieve sustainable growth. Such growth is sustainable if it creates jobs, helps to increase productivity, to reduce poverty, inequalities and global risks. For more information, visit www.seco-cooperation.ch.

Nairobi cityscape - capital city of Kenya

Kenyan and Australian regulators sign agreement to support fintech innovation

October 21, 2016. The Capital Markets Authority of Kenya (CMA) and the Australian Securities and Investments Commission (ASIC) today signed a Co-operation Agreement which aims to promote innovation in financial services in their respective markets.

The agreement was signed in the margins of the Board meeting of the International Organization of Securities Commissions (IOSCO) held in Hong Kong this week.

The agreement sets up a framework for co-operation between the CMA and ASIC in the expanding space of innovation in financial services. The parties have agreed to share information in their respective markets including on emerging market trends and regulatory issues arising from the growth in innovation.

Paul Muthaura, Chief Executive, CMA, said: ‘We are committed to facilitating innovation in financial services, leveraging Kenya’s positioning in the region as an innovation centre. This however calls for us to assess lessons learned and to compare strategies to balance innovation and regulation with our peer regulators.’

‘The CMA has recently commenced efforts towards the establishment of a Regulatory Sandbox structure that is designed to encourage innovation in the capital markets. This strategy reflects the CMA’s role in facilitating the introduction of new fintech products in the capital markets area.’

‘ASIC has developed an Innovation Hub and we are keen to share best practices in terms of how to address regulatory issues pertaining to innovation in financial services.’

Greg Medcraft, Chairman, ASIC, said: ‘We are excited to be working more closely with CMA. It operates in a jurisdiction that has seen significant fintech innovation growth. Innovation in financial services isn’t confined by national borders. We hope this agreement will help to break down barriers to entry both here and in Kenya.

‘Since ASIC launched its Innovation Hub in 2015, we have seen a surge in requests by fintech start-ups seeking assistance about how to navigate the regulatory requirements.

‘Most recently we have consulted on the establishment of a Regulatory Sandbox that proposes an environment to allow start-ups to test concepts without a licence – we are currently considering the results of that consultation.’

ENDS

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