Banks holding Sh47 billion dividend pay as regulators differ

Central Bank of Kenya Governor Patrick Njoroge and Capital Markets Authority acting CEO Wycliffe Shamiah (right). The two regulators have differed on how companies should pay dividends. FILE PHOTOS | NMG The Central Bank of Kenya (CBK) and Capital Markets Authority (CMA) have issued conflicting directives on how companies should pay dividends following the freeze on Annual General Meetings (AGMs), causing confusion over how bank shareholders will share profits in the wake of the coronavirus restrictions.

Both regulators agree that AGMs must be postponed in the wake of calls to shun large gatherings for fear of spreading infections which have claimed 14 lives and infected 270 people in Kenya.

However, the two regulators have differed on how firms should treat considerations like dividend payments, changes in directorship and external auditors as well as approval of accounts.

CMA has allowed firms listed at the Nairobi Securities Exchange #ticker:NSE to pay dividends without holding AGMs and directed boards to seek approval from investors when the shareholder meetings are held at a later date.

On the other hand, CBK has directed banks to adopt electronic voting on critical issues linked to AGMs like dividend payment in the quest to have majority of owners approve board decisions that affect shareholders.

This directive affects listed banks such as Equity Group #ticker:EQTY, KCB Group#ticker:KCB, I&M Bank #ticker:IMH, Absa Bank Kenya #ticker:ABSA, Standard Chartered Bank of Kenya #ticker:SCBK, NCBA #ticker:NCBA, Co-operative Bank #ticker:COOP, and Diamond Trust Bank #ticker:DTB.

All listed banks have large numbers of shareholders due to the high number of retail investors.

When Safaricom #ticker:SCOM is excluded, listed banks account for nearly 90 percent of dividends paid by the 62 firms listed at the NSE.

Kenya’s top nine banks are set to pay a combined dividend of Sh47.31 billion from last year’s performance, reflecting the impact a possible delayed payout will have on shareholders.

“Institutions are advised to either defer AGMs to a time when the pandemic is brought under control or where their Articles of Associations allow, consider holding virtual AGM meeting,” CBK said in a circular seen by the Business Daily .

“In addition, and where technology permits, institutions should make appropriate arrangements for their shareholders to conduct online voting for critical AGM resolutions including dividends payments, changes in external auditors and directorships, approval of audited accounts and bonus issues.”The conflicting messages from the two regulators have triggered confusion among bankers, especially from the 10 listed lenders and Kenya’s top banks who […]

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