East Africa’s stockmarket listing rules under review

Monday January 7 2019

A trader monitors stocks at the Nairobi

A trader monitors stocks at the Nairobi Securities Exchange. The regional stock exchanges are going through an initial public offering drought partly due to the reluctance of family-owned businesses to open up their books for public inspection and for fear of stringent regulation. FILE PHOTO | NATION 

By JAMES ANYANZWA
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East Africa’s stockmarket regulators are reviewing listing requirements that will make it possible for new companies to sell shares to the public.

The regional stock exchanges are going through an initial public offering drought partly due to the reluctance of family-owned businesses to open up their books for public inspection and for fear of stringent regulation.

Last year, Kenya proposed to waive capital raising and listing fees for small and medium-sized firms on the stagnating Nairobi Securities Exchange.

Currently firms seeking to list on the Growth Enterprise Market Segment (GEMS) — the trading platform for SMEs — pay a listing fee of 0.015 per cent of the issued amount with the minimum amount set at Ksh50,000 ($500) while the maximum stands as Ksh250,000 ($2,500).

Tax amnesty

The Capital Markets Authority also proposed to provide tax amnesty for firms that list on the GEMS provided that they make full disclosure of their assets and liabilities and commit to pay all their future due taxes and remain listed for a period of five years.

The Kenyan bourse has not attracted an IPO from a corporate entity in the past 10 years, except the self-listing of the NSE in 2014, while the GEMS market has only attracted five companies since it was launched in January 2013.

The Uganda stockmarket had an IPO drought for six years until August 2018 when Indian drug maker Cipla Quality Chemical Industries came to the market to sell 657 million shares (18 per cent stake) to the public.

Tanzania, on the other hand, has removed a ban on foreign investments allowing foreigners to buy shares in telecommunication firms listing on the Dar es Salaam Stock Exchange.

A law that requires telecom operators to float at least 25 per cent of the shares to the public has been enforced.

Kigali also launched the SME market segment last year to encourage small businesses and corporates to list on the Rwanda Stock Exchange.

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