GUIDE TO LISTING
A. APPROVAL FOR LISTING
The Capital Markets Authority grants approval for listing for all public offers and listing of
securities on any securities exchange in Kenya. (Reg 3 (2))
A Securities Exchange may approve the listing of a security on a Growth Enterprise Market
Segment if that security is not offered to the public and the listing is by way of Introduction
(Reg 3 (2A).
B. IMPORTANT CONSIDERATIONS PRIOR TO LISTING
Appointment of Transaction Advisor or a Nominated Advisor.
Any company proposing to offer its securities to the public or a section of the public is
required to appoint a transaction adviser who shall be responsible for ensuring that the offer
of securities is made in accordance with the Act and regulations issued thereunder
(Reg 5A. (1))
An issuer seeking to be listed on the Growth Enterprise Market Segment is required to
appoint a Nominated Adviser by a written contract and shall ensure that it has a Nominated
Advisor at all times. The Nominated Advisor is expected to advise and guide an issuer on the
application of listing requirements of Growth Enterprise Market Segment and manage the
submission of the listing statement and all other documentation to the Securities Exchange
and ensure its completeness and correctness before submission. (Reg 10A. (1))
Corporate Governance Considerations
1) The company must have at least a third of the Board as nonexecutive directors
2) The company should establish an audit committee in compliance with guidelines on corporate
governance issued by the Capital Markets Authority
3) The Chairman of the company shall not hold such position in more than two listed companies
at any one time, in order to ensure effective participation in the board.
4) The chief financial officer and the head of accounting department of shall be members of the
Institute of Certified Public Accountants established under the Accountants Act
1
5) The company secretary of every issuer shall be a member of the Institute of Certified Public
Secretaries of Kenya established under the Certified Public Secretaries of Kenya Act.
6) The auditor of the company should be a member of the Institute of Certified Public
Accountants and shall comply with the International Standards of Auditing
Other Pre-Listing Considerations
1.
The company should review the Memorandum and Articles of Association to align them
with the guidelines on corporate governance practices by Public Listed Companies in
Kenya as set out by the Capital Markets Act.
2.
The company should have a company register who will maintain the register of
shareholders of the company.
3.
The Articles of Association of the company must be amended in order to comply with the
Central Depository (Operation) Rules and the Central Depositories Act, 2000 in regards to
provisions relating to immobilized securities.
C. ELIGIBILITY REQUIREMENTS FOR PUBLIC OFFERING OF SHARES AND
LISTING
Requirement
Incorporation status
Share
capital
Net assets
Part A
Criteria For The
Main
Investment
Market Segment
Part B
Part C
Criteria For The Criteria For The
Alternative
Growth Enterprise
Investment Market Market Segment
Segment
A public company limited by shares and registered under the Companies
Act (Cap. 486 of the Laws of Kenya).
Minimum authorized Minimum authorized The issuer shall have
issued and fully paid issued and fully paid a
minimum
up ordinary share up ordinary share authorized and fully
capital of fifty million capital of twenty paid up ordinary share
capital of ten million
shillings.
million shillings.
shillings; and
Net
assets
immediately before
the public offering or
listing
of
shares
should not be less
Net
assets
immediately
before
the public offering or
listing
of
shares
should not be less
2
The issuer must have
not less than one
hundred
thousand
shares in issue
NA
than one hundred
million shillings.
Free transferability
of shares
than twenty million
shillings.
Shares to be listed shall be freely transferable and not subject to any
restrictions on marketability or any preemptive rights.
Availability
and The issuer shall have audited financial NA
reliability
of statements complying with International
Financial Reporting Standards (IFRS) for an
financial records
accounting period ending on a date not more
than four months prior to the proposed date of
the offer or listing for issuers whose securities
are not listed at the securities exchange, and six
months for issuers whose securities are listed at
the securities exchange.
Competence
suitability
directors
management
The Issuer must have prepared financial
statements for the latest accounting period on a
going concern basis and the audit report must
not contain any emphasis of matter or
qualification in this regard.
and At the date of the
of application, the issuer
and must not be in breach
of any of its loan
covenants
particularly in regard
to the maximum debt
capacity.
As at the date of
application and for a
period of at least two
years prior to the date
of the application, no
director of the issuer
shall have
The issuer must have
a minimum of five
directors, with a least
a third of the Board
as non- executive
directors
As at the date of the
application and for a
period of at least two
years prior to the date
of the application(i)
Any petition under
bankruptcy or
insolvency laws in
any
jurisdiction
pending or threatened
against any director
(for individuals), or
3
any petition
under
bankruptcy or
insolvency
laws in any
jurisdiction
pending
or
threatened
against any
director (for
individuals),
any
windingup
petition pending or
threatened against it
(for corporate bodies
or
any
winding- up
petition
pending
or
threatened
against it (for
corporate
bodies)
-any
criminal
proceedings in which
the
director
was
convicted of fraud or
any criminal offence,
nor be named the
subject of pending
criminal proceeding,
or any other offence
or action within or
outside Kenya; or
(ii) any criminal
proceedings in which
the
director
was
convicted of fraud or
any criminal offence,
nor be named the
subject of pending
criminal proceeding,
or any other offence
or action within or
outside Kenya; or
been the subject of
any ruling of a court
of
competent
jurisdiction or any
government body in
any jurisdiction, that
permanently
or
temporarily prohibits
such director from
acting
as
an
investment advisor or
as a director or
employee
of
a
stockbroker, dealer,
or
any
financial
service institution or
engaging in any type
of business practice
or activity in that
jurisdiction.
(iii)been the subject
of any ruling of a
court of competent
jurisdiction or any
government body in
any jurisdiction, that
permanently
or
temporarily prohibits
such director from
acting
as
an
investment advisor or
as a director or
employee
of
a
stockbroker, dealer,
or
any
financial
service institution or
engaging in any type
of business practice or
activity
in
that
jurisdiction.
The issuer must have
suitable
senior
management with
relevant experience
for at least one year
The directors and
senior management of
an applicant must
collectively
have
appropriate expertise
4
prior to the listing,
none of whom shall
have committed any
serious offence in any
jurisdiction that may
be
considered
inappropriate for the
management of a
listed company
and experience for the
governance
and
management of the
applicant and its
business
Details
of
such
expertise
and
experience must be
disclosed
in any
listing
particulars
prepared
by
the
applicant.
appropriate expertise
and experience shall
mean at least one
year experience in
the
applicants
business, or where
the applicant has no
previous
record,
experience in similar
line of business.
The
issuer
shall
ensure
continued
retention of suitably
qualified management
during listing and no
change
of
management for a
period
of
twelve
months following the
listing other than for
reason of a serious
offence that may be
considered to affect
the integrity or be
inappropriate
for
management of a
listed company
One third of the
directors must have
completed
the
Directors Induction
Programme
(DIP)
prior to listing and
the remainder must
complete the same
within six months
after listing.
The issuer must have
at least a third of the
Board
as
nonexecutive directors.
The
issuer
shall
ensure
continued
retention of qualified
management during
listing and no change
of management for a
period
of twelve
months following the
listing other than for
reason of a serious
offence that may be
considered to affect
5
Dividend policy
Track record,
profitability and
future prospects
the integrity or be
inappropriate
for
management of a
listed company.
The issuer must have a clear future dividend NA
policy.
The issuer must have
declared profits after
tax attributable to
shareholders in at
least three of the last
five
completed
accounting periods to
the date of the offer
The issuer must have NA
been in existence in
the same line of
business
for
a
minimum of two
years one of which
should reflect a profit
with good growth
potential.
The issuer should not
be insolvent.
Solvency
and The issuer should not
adequacy of working be insolvent
capital
The issuer should
have
adequate
working capital.
The issuer should
have
adequate
working capital.
Share
ownership Following the public
share offering or
structure
immediately prior to
listing in the case of
an introduction, at
Following the public
share offering or
immediately prior to
listing in the case of
an introduction, at
6
The Directors of the
Issuer shall give an
opinion
on
the
adequacy of working
capital for at least
twelve
months
immediately
following the share
offering, and the
auditors of the issuer
shall
confirm
in
writing the adequacy
of that capital.
The
Issuer
must
ensure at least fifteen
per cent of the issued
shares
(excluding
those held by a
least twenty five per
centum of the shares
must be held by not
less
than
one
thousand
shareholders
excluding employees
of the issuer.
least
twenty
per
centum of the shares
must be held by not
less
than
one
hundred shareholders
excluding employees
of the issuer or family
members
of
the
controlling
In the case of a listing shareholders.
by introduction, the
issuer shall ensure No investor shall hold
that
the
existing more than three per
shareholders,
centum of the twenty
associated persons or per
centum
such other group of shareholding
The
issuer
must
controlling
that
the
shareholders
who ensure
have influence over existing shareholders,
management
shall associated persons or
give an undertaking such other group of
not to sell their controlling
shareholding before shareholders
who
the expiry of a period have influence over
shall
of
twenty
four management
months
following give an undertaking to
listing
and
such the Authority not to
undertaking shall be sell their shareholding
disclosed
in
the before the expiry of a
Information
period of twenty four
Memorandum
months
following
listing
and
such
undertaking shall be
disclosed
in
the
Information
Memorandum.
controlling
shareholder or people
associated or acting in
concert with him; or
the Company's Senior
Managers)
are
available for trade by
the public
An issuer shall cease
to be eligible for
listing
upon
the
expiry
of
three
months of the listing
date, if the securities
available for trade by
the public are held by
less than twenty-five
shareholders
(excluding those held
by
a
controlling
shareholder or people
associated or
acting in concert with
him,
or
the
Company's
Senior
Managers.)
The
issuer
must
ensure
that
the
existing shareholders,
associated persons or
such other group of
controlling
shareholders
who
have influence over
management
shall
give an undertaking in
terms agreeable to the
Authority and the
Securities Exchange
restricting the sale of
part or the whole of
their
shareholding
before the expiry of a
period of twenty four
months
following
Listed shares to be NA
immobilized.
NA
Nominated Advisor
NA
NA
listing
and
such
undertaking shall be
disclosed in the listing
statement.
All issued shares must
be deposited at a
central
depository
established under the
Central Depositories
Act, 2000 (No. 4 of
2000).
The
issuer
must
appoint a Nominated
Adviser in terms of a
written contract and
must ensure that it has
a Nominated Adviser
at all times.
D. OTHER LISTING INFORMATON (APPLICABLE TO ALL MARKET SEGMENTS)
1) Identity of directors, senior management and advisers (i.e. persons responsible for the
information disclosed)
2) Offer statistics and expected timetable
3) Information on the issuer
4) Operating and financial review and prospectus (the recent development and prospects of
the group)
5) Directors and employees
6) Major shareholders and related party transactions
7) Financial information
8) The offer and listing
9) Vendors
Exceptions
These Regulations shall not apply to
(a) securities issued by or on behalf of the Government of Kenya or a body corporate established
under any written law in Kenya other than the Companies Act; and
(b) private offers.
Meaning of private offers
For purposes of these Regulations, an offer of securities shall be regarded as private offer
and accordingly shall be deemed not to be an offer to the public in Kenya if, to the extent
that the offer is made to persons in Kenya under the following conditions ( Reg 21.(1))
the securities are offered to not more than one hundred persons;
the securities are offered to the members of a club or association (whether or not
incorporated) and the members can reasonably be regarded as having a common
interest with each other and with the club or association in the affairs of the club
or association and in what is to be done with the proceeds of the offer;
the securities are offered to a restricted circle of persons whom the offeror
reasonably believes to be sufficiently knowledgeable to understand the risks
involved in accepting the offer;
the securities are of a private company and are offered by that company to(i) members or employees of the company;
(ii) members of the families of any such members or employees; or
(iii) the securities are offered to a restricted circle of persons whom the offeror
reasonably believes to be sufficiently knowledgeable to understand the
risks involved in accepting the offer; and
(iv) the minimum subscription for securities per applicant is not less than
Kenya Shillings one hundred thousand (Kshs. 100,000);.
the members of a person's family are the person's husband or wife, widow or
widower and children (including stepchildren) and their descendants, and any
trustee (acting in his capacity as such) of a trust the principal beneficiary of
which is the person himself or herself, or any of those relatives
E. CONTINUING OBLIGATIONS.
Every issuer whose securities have been offered to the public shall comply with the continuing
obligations specified in the Fifth Schedule with respect to the relevant market segment (Reg 19.
(1)
In relation to the continuing obligation to disclose information, an issuer shall make immediate
public disclosure of information which might reasonably be expected to have a material effect on
market activity in the prices of, its securities (Reg 19 (2))
The information required to be disclosed under these Regulations shall be disclosed within
twenty-four hours of the event, simultaneously to the Authority, the securities exchange at which
the issuers securities are listed, if applicable, and to the public during non-trading hours of the
relevant market segment (Reg 19 (3))
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F. POLICY AND TAX INCENTIVES FOR THE CAPITAL MARKETS
1) Abolition of Stamp Duty payable on the share capital or increase in share capital of a
company listed on the Nairobi Stock Exchange (2007).
2) The legal costs and other incidental costs relating to the introduction of shares (when a
company lists its share without raising capital) is corporate tax deductible. (2006)
3) Effective 1 January 2003, newly listed companies pay a lower corporation tax of 25%
(i.e. 5 percentage points lower than the standard corporation tax of 30%) for a period of 5
years following their listing. The new legislation applies to companies with who float at
least 30% of their issued share capital to the public. (2002)
4) New and expanded share capital by listed companies or those seeking listing exempt
from stamp duty (2000/2001)
5) Reduction of withholding tax applicable to dividend income arising from investment on
listed securities for both local and foreign investors. Foreign 10%; Local 10% to7.5% to
5%. (1995/96/97)
6) Exemption of stamp duty and value added tax on the transfer of listed securities (1995)
7) Costs of IPOs were made tax deductible (1995)
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