Nairobi, 18 March, 2016…In effort to improve the market environment for issuers of securities, the Capital Markets Authority (CMA) has announced the gazettement of amendments to the Capital Markets (Licensing Requirements)(General)(Amendment) Regulations by the Cabinet Secretary National Treasury. The amendments adopt CMA’s recommendations to reduce the fees paid by listed companies and new companies applying to list at the point of approval for issue of equity securities, corporate bond issues, capitalization or rights issue. The amendments have been effected through Legal Notice number 35 of 2016.
The Cabinet Secretary has also gazetted the Capital Markets (Derivatives Markets) Regulations through Legal Notice number 37 of 2016, which sets out the consolidated framework on the business of a derivatives exchange, clearing houses, derivatives contracts and derivatives brokers.
Speaking on the reduction of fees, CMA Acting Chief Executive Mr. Paul Muthaura explained, ‘the review of the fees, levies, and commissions was necessitated by the need to ensure financial sustainability of the capital markets sector; and raise levies collected by the Central Depository and Settlement Corporation (CDSC), given its national importance to market stability and to support continuous improvement of systems and strengthened operational oversight’.
The approval fees paid to the Authority by issuers of equity securities such as an initial public offer has been 0.15 percent of the total value of the issue. However, the newly gazetted Regulations have introduced a maximum fee cap of Kshs30 million in order to encourage large capital markets issuances. Mr. Muthaura also noted that for capitalization or rights issue, approval fees paid to the Authority by issuers is now subject to a maximum cap on amounts that an issuer will pay at any one time of Kshs30 million.
In the case of corporate bonds, approval fees have been capped at Kshs30 million. Government bonds approval fees payable at 0.075 percent of the amount raised has been capped at a maximum limit of Kshs50 million. The Regulations have also increased the transaction levy charged by CDSC from the current 0.06 percent to 0.08 percent of the value of a given transaction. The transaction fees levied by brokers at the Nairobi Securities Exchange have been reduced from 1.78 percent to 1.76 percent, by reflecting the percentage increase in the CDSC levy, implying that the cost to investors has not increased.
Mr. Muthaura observed that these developments will encourage more issuers to come to the market, while encouraging increased participation of investors in the capital market.