Press Release

CMA Issues Policy Guidance Note to facilitate the issuance of Global Depositary Receipts and Notes

Nairobi 13 July, 2017In order to deepen and develop the capital markets through innovative products, the Board of Capital Markets Authority (CMA) has approved a Policy Guidance Note (PGN) for the listing and trading of global depositary receipts and notes.

A global depositary receipt or note (GDR/N) is a negotiable certificate issued, listed and traded on a securities exchange. The GDR/N certificate represents securities issued in another country. Where the certificate represents ownership of bonds instead of shares, it is referred to as a global depositary note (GDN).

There are two types of GDRs and GDNs; sponsored GDRs/GDNs are depositary securities in which the issuer of the underlying security has direct involvement in the issuance of the depositary securities. An unsponsored depositary security is issued by a depositary bank without the involvement, participation or consent of the issuer of the underlying securities. Outbound depositary securities are GDRs/GDNs, whose underlying securities are primarily issued in Kenya and whose certificates are to be issued as depositary securities in another country. Inbound depositary receipts are GDR/GDN whose underlying securities are primarily issued in a foreign country and which are issued as depositary securities in Kenya. Where the objective of issuing a GDR/GDN is to raise capital domestically or internationally, then the issuer must be involved in structuring the depositary receipts/notes as it would effect the listing and prepare any potential prospectus.

The CMA Chief Executive, Mr. Paul Muthaura noted, ‘the approval of the PGN is instrumental in the implementation of the Authority’s Strategic Plan 2013-2017 which is now in its final year of implementation and the 10-year Capital Market Master Plan. The PGN underpins industry’s efforts to develop and deepen capital markets products and services and provide a facilitative environment for cross border investments”.

GDRs/GDNs are further expected to promote Kenya as an attractive investment destination by providing a means for international investors to familiarise themselves with local companies that may issue GDRs and GDNs in other markets and create opportunities for international entities to raise capital in Kenya. As a result of their inherent characteristic of representing securities issued in another country, GDRs/GDNs also eliminate the cost and complexity of establishing custody arrangements in multiple countries.

Mr. Muthaura added that in the case of GDNs, debt issued in foreign markets and depositary notes in Kenya would be denominated in the Kenya Shilling, thus eliminating currency risk for the investors. In the alternative, Kenyan companies could issue GDNs into foreign markets to tap liquidity and appetite in those markets while remaining denominated in Kenya Shillings, thereby providing an alternative to the currency risk of Eurobonds.

The depositary receipts listed and traded at the Nairobi Securities Exchange, will be admitted to the main investment market segment and the issuer or depositary bank where unsponsored, will be required to have proportionate securities held in trust in a custody account. Investors in sponsored depositary receipts have the right to vote in any shareholder meeting through the depositary bank.

PGNs are a key tool used by the Authority to facilitate a principle-based approval approach, which empowers the Authority to fast-track roll-out of new products and services in capital markets. This approach allows for the market to be more diverse in terms of the portfolio of investable products, by ensuring a more timely response to the changing capital market dynamics.

The principle-based approval approach is in line with the amendments to the Capital Markets Act, effected in December 2013 that enhanced CMA’s role in facilitating market development in relation to the introduction of new products.



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. For more information, please contact: Antony Mwangi, Head of Corporate Communications on This email address is being protected from spambots. You need JavaScript enabled to view it.

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