Shareholders follow proceedings during Marshalls East Africa Annual General Meeting held at Kampala Road Branch in Nairobi’s Industrial Area. PHOTO | FILE In 2018, CMA proposed the creation of a recovery board where financially distressed firms on the NSE would be rehabilitated for two to three years to help them get back to financial stability.
Failure by the rehabilitated firms to recover within this period would eventually lead to delisting from the exchange as the last resort.
CMA acknowledged that listed companies have raised concerns about the proposed recovery board while insisting that each company that is put on this board will be given an opportunity to be heard.
Kenya’s Capital Markets Authority move to provide a lifeline to distressed companies listed on the Nairobi Securities Exchange (NSE) through a recovery board has faced opposition from quoted firms. The EastAfrican has learnt that listed firms are uncomfortable with the proposed trading platform for ailing firms, saying it has serious repercussions on the perception of investors about firms pushed onto this board.
In 2018, CMA proposed the creation of a recovery board where financially distressed firms on the NSE would be rehabilitated for two to three years to help them get back to financial stability.
Failure by the rehabilitated firms to recover within this period would eventually lead to delisting from the exchange as the last resort.
But a market insider told The EastAfrican that the proposed recovery board is not being seen as priority for now since investors are increasingly becoming aware of companies that are facing financial and governance challenges on the exchange.
“This board is not necessarily a priority for now because right now people are starting to know which companies have problems in the stockmarket. I don’t think there is any investor who is coming blindly to the stockmarket. They have stockbrokers who are carrying our intensive researches on these listed companies to know which one to invest in,” said source.
“Actually the main issue was delisting because ideally if you are not compliant you are supposed to be delisted. But because they were finding it difficult to delist, the recovery board was a way of giving these companies a chance to come back.”
CMA acknowledged that listed companies have raised concerns about the proposed recovery board while insisting that each company that is put on this board will be given an opportunity to be heard.
“NSE was trying to harmonise communication strategy […]