SME’s to list at NSE by June 2012-CMA

Posted on December 16, 2011

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Press Release
The Board of Capital Markets Authority (CMA) has approved the Regulatory Framework that will establish a listing segment for small and medium enterprises (SME).

The Authority developed the policy and regulatory framework in conjunction with the Nairobi Securities Exchange (NSE) and the Central Depository and Settlement Corporation (CDSC).

The introduction of the Growth and Enterprise Market Segment (GEMS) at the NSE is largely informed by the Government of Kenya’s identification of micro, small and medium enterprise sector as one of the key drivers of Vision 2030.

Speaking from her office, Mrs. Stella Kilonzo, Chief Executive of the Authority said, ‘The SME market is intended to offer issuers benefits by permitting for listing by introduction, without a public capital raising component, and is aimed at seeing enterprises broaden their shareholder base, gain access to open market valuation through market price discovery

Mrs. Kilonzo observed that the policy is also in line with the sessional paper No. 2 of 2005 on development of micro and small enterprises for wealth and employment creation for poverty reduction, which identifies limited access to financial services as one of the major constraints inhibiting the growth of the MSME sector. A report titled Impact Investing- Challenges and Opportunities in the East Africa ICT Sector produced by the Authority in conjunction with the Rockefeller Foundation identified viable SMEs with Investment opportunities.

In the long term, the SME market will gain from access to long term capital by introducing modalities for the public offer of securities by SMEs thus enabling SMEs to raise capital through share offers.

Mrs. Kilonzo expounded that the approved policy and regulatory framework necessitates companies aspiring to list in the GEMS at the NSE to have minimum capitalization of Sh10 million, with no trading record or profit history required. The SMEs will also be required to appoint a duly vetted and approved nominated advisor who will be responsible for overseeing compliance of the company with all their listing and continuing obligations and is expected to ensure that at least one third of the company’s directors undergo a corporate governance director’s induction program.

Mrs. Kilonzo said that the creation of nominated advisors is aimed at reducing the costs associated with building up internal capacity for listing prior to a company coming into the market, thereby reducing the operation costs and encouraging wider participation by SMEs.

The Growth and Enterprise Market Segment is expected to be operational by June 2012

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