Regulators raise the bar for listing on stock exchange
Kenyan companies will be required to raise more capital to list shares on the stock market if proposals to harmonise regulations for East African Community member countries are adopted.
The EAC proposals on regional listings in the respective securities market indicate that firms planning an initial listing will be required to have a minimum paid up ordinary share capital of Sh73 million ($850,000), with net assets of at least Sh103 million ($1.2 million).
“The issuer shall have a minimum authorised issued and fully paid up ordinary share capital of $850,000. Net assets immediately before the public offering or listing of shares should not be less than $1,200,000,” reads the EAC directive in part.
The proposed capital and asset requirements are higher than those of the Main Investment Market Segment (MIMS), Alternative Investment Market Segment (AIMS) and Growth and Enterprise Market Segment (GEMS) of the Nairobi Securities Exchange.
These thresholds, if ratified, could lock out companies that had plans to list on the Nairobi bourse.
For MIMS listing on the NSE, companies require to have ordinary paid up share capital of Sh50 million, with minimum net assets of Sh100 million.
On the AIMS segment, the minimum capital requirement is Sh25 million with net assets of at least Sh25 million.
A GEMS listing requires a minimum share capital of Sh10 million, with at least 100,000 shares in issue and 15 per cent of shareholding, other than that of the majority shareholder, available for trade by the public.
However, the requirements for shareholding structure mirror those of the NSE’s main market segment where at least 25 per cent of the shares are required to be held by not less than 1,000 shareholders excluding employees of the issuer.
The harmonised regulations also set listing and annual fees that are higher than those of the NSE.
Firms will be required to pay up 0.1 per cent of the value of securities to be listed, subject to minimum of Sh1.7 million ($20,000) and a maximum of Sh17.2 million ($200,000).
Listing fees for the NSE main market segment are set at 0.06 per cent of value of the securities, to a minimum of Sh200,000 and maximum of Sh1.5 million.
