The Nairobi Securities Exchange (NSE) is fine-tuning details on the transfer of nine companies listed on the Alternative Investment Market Segment to either the Main Investment Market Segment or the SME market.
The process expected to be completed in by December 31 will see companies that fail to meet the minimum criteria for the premier trading platform, such as solvency with sufficient working capital, total assets of at least Ksh1 billion ($7.75 million) and minimum issued and fully paid-up ordinary share capital of Ksh50 million ($387,596.89) downgraded to the Small and Medium-sized Enterprises market.
The target companies are Eaagands Ltd, Kapchorua Tea Kenya Plc, Limuru Tea Co Plc, Williamson Tea Kenya Plc, Deacons East Africa Plc, Express Kenya plc, Longhorn publishers Plc, Transcentury Plc and Kenya Rrchards Ltd.
The NSE also transferred all companies listed on the Growth Enterprise Market Segment (Gems) — Homeboyz Entertainment plc, Home Africa Ltd, Kurwitu Ventures Ltd, Flame Tree Group Holdings Ltd and Nairobi Business Ventures Ltd to the newly created SME market.
This follows the abolishment of the mid-cap AIMS and GEMS under the revised regulations, which came into effect on December 15, 2023.
“The Board of the Nairobi Securities Exchange (NSE) Plc approved the reclassification of companies from GEMS and Alternative Investment Market Segment (AIMS) into two market segments, namely the Main Investment Market Segment (MIMS) and the SME market segment for the equities market and the Main Fixed Income Securities Market and the SME fixed income securities market for fixed income securities, in line with the recommendations of the Public Offers, Listing and Disclosure Regulations, 2023. The NSE expects to finalise the transition by December 31, 2024,” said NSE chief officer for Regulatory Affairs Titus Kiilu.
“Reclassification involves transferring the issuers to the segment they qualify for and should maintain the continuing listing obligations requirements.”
The new regulations provide that the securities listed or approved for listing on the AIMS at the date the regulations come into effect (December 15, 2023) have to be transitioned to the MIMS if they qualify or at their discretion to be communicated within 90 days to the SME market.
On the other hand, if these companies do not qualify to be listed on the MIMS, they will be transitioned to the SME market.
A company applying for listing of its securities on the MIMS or SME market must be suitable for listing, and is not permitted to adopt a dual class share structure at an initial public offering.
A company whose securities are listed on a certain market segment (MIMS or SME) is not eligible to transfer the listed securities to another market segment before the expiry of one year from the date of the first listing, and the transfer should be subjected to the eligibility criteria of the new segment, disclosure requirements of the new segment and the approval of the securities exchange.
Bond issues valued at more than Ksh400 million ($3.1 million) will be listed on the fixed income securities market segment, while those valued at less than Ksh400 million will be listed on SME fixed income securities market.
Among the new listing requirements of the MIMs are that the issuer must have been in business for at least five years, a minimum issued and fully paid-up ordinary share capital of Ksh50 million ($387,596.88), a minimum of 250 shareholders, minimum total assets of Ksh1 billion ($7.75 million) and should have good growth potential and a revenue earning record with at least one of the past five years of business operations reflecting a profit.
The company must also have a dividend policy and be a going concern, with the external auditor confirming the appropriateness of the use by the issuer’s directors of the going concern basis of accounting as well as a confirmation that no material uncertainties exist.
A company listing on the new SME market is required to have been in business operations for at least two years, have a minimum issued and fully paid-up ordinary share capital of Ksh10 million ($77,519.37), have a minimum of seven shareholders and minimum total assets of Ksh100 million ($775,193.79).
It must have a dividend policy, be solvent, and have a credible and auditable business plan with verifiable growth potential, and at least a major asset or a contracted business opportunity consistent with its line of business.
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