Page 2 – Capital Markets Authority

7 January 2025

CMA Issues the Seventh Edition of the State of Corporate Governance Report

Nairobi, 06 January 2025…The Capital Markets Authority (CMA) has issued the Seventh Edition of the Report on the State of Corporate Governance for Issuers of Securities to the Public in Kenya. The report is for the financial year 1 July 2023 to 30 June 2024.

The annual publication outlines CMA’s independent assessment of companies listed on the Nairobi Securities Exchange (NSE) and the issuers of corporate bonds are applying the principles and recommendations contained in the Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 (CG Code).

The CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, observed; “This comprehensive assessment serves as a crucial roadmap for issuers, showcasing areas of excellence while identifying opportunities for improvement. Our ultimate goal is to strengthen corporate governance and sustainability practices, fostering long-term growth, transparency and enhanced stakeholder confidence in the capital markets sector.”

The Authority assessed fifty-two Issuers, and the performance was as follows: 27 assessed issuers securing a Leadership Rating, 13 issuers achieving a Good Rating, 8 Issuers demonstrating a Fair Rating and 4 Iissuers within the Needs Improvement category. The assessment was based on corporate governance principles under the Capital Markets (Public Offers, Listings and Disclosures) Regulations 2023 (POLD Regulations 2023) and the Code of Corporate Governance Practices for Issuers of Securities to the Public 2015 (the CG Code).

One of the outstanding achievements is the significant improvement in the annual weighted overall governance score of issuers (listed companies). From a Fair Rating of 55% in the financial year 2017/2018, issuers have advanced to an impressive Good Rating of 73.56% in 2023/2024. This remarkable improvement underscores the collective effort by issuers to refine & implement their governance frameworks, elevating corporate transparency, accountability, investor confidence and market integrity.

However, the annual weighted overall score for all issuers showed a decrease in performance, declining by 2.15% from 75.71% (Leadership rating) in the 2022/2023 financial year to 73.56% (Good rating) in the 2023/2024 financial year. The decline was attributed to failure by issuers to adhere to the principles of the CG Code following the enactment of POLD Regulations 2023 which has made the application of the CG Code mandatory.

There is also a move from disclosure-based assessment by the Authority to implementation-based approach where issuers are expected to document specific initiatives on how they were implementing the provisions of the CG Code.

Despite the decline in the annual weighted overall score by Issuers, the following three principles improved in comparison to the FY 2022/2023: Commitment to good corporate governance improved from 78.60% (Leadership Rating) to 81.31% (Leadership Rating), Ethics and Social Responsibility principle improved from 74.82% (Good Rating) to 74.94% (Good Rating) whereas Accountability, Risk Management and Internal Control improved from 80.7% (Leadership Rating) to 80.72% (Leadership Rating).

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BACKGROUND INFORMATION

The Capital Markets Authority (CMA) was set up in 1989 as a statutory agency under the Capital Markets Act Cap 485A. It is charged with the prime responsibility of both regulating and developing an orderly, fair, and efficient capital markets in Kenya with the view to promoting market integrity and investor confidence. CMA also regulates the commodity markets and online forex trading. The regulatory functions of the Authority as provided by the Act and the regulations include; Licensing and supervising all the capital market intermediaries; Ensuring compliance with the legal and regulatory framework by all market participants; Regulating public offers of securities, such as equities and bonds & the issuance of other capital market products such as collective investment schemes; Promoting market development through research on new products and services; Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest. For more information, please contact: Antony Mwangi, Manager Corporate Affairs & International Relations on amwangi@cma.or.ke

2 January 2025

CMA Licenses New Fund Manager and Admits One Firm to the Regulatory Sandbox

lydia Press Release

Nairobi, 02 January 2025 – The Capital Markets Authority (CMA) has unveiled two groundbreaking initiatives, reinforcing its commitment to advancing Kenya’s capital markets.

CMA has licensed Kenyan Alliance Asset Management Limited as a fund manager, increasing the total number of licensed fund managers in Kenya to forty two. With its entry into the market, Kenyan Alliance Asset Management will look to provide wealth and portfolio management services tailored to both individual and corporate clients, in full compliance with the Capital Markets Regulations.

Yeshara Tokens Limited has also been admitted to the regulatory sandbox for a one-year trial. Through its blockchain-powered Yeshara Platform, the company will test the trading of tokenized securities, focusing initially on real estate. This innovation is set to unlock liquidity and broaden access to financial markets.

CMA Chief Executive Officer Wyckliffe Shamiah highlighted the significance of these developments said; “The tokenization of real estate holds significant potential to expand access to international financial markets for both local and global investors.”

The regulatory sandbox provides a secure and controlled environment for testing innovative financial solutions, aligning with CMA’s mission to foster market integrity, investor confidence, and market development.

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BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

Regulating public offers of securities, such as equities and bonds & the issuance of other capital market products such as collective investment schemes; Promoting market development through research on new products and services; Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest. For more information, please contact: Antony Mwangi, Manager Corporate Affairs and International Relations on amwangi@cma.or.ke

5 December 2024

Update on the acquisition of Bamburi Cement PLC shares

lydia Press Release

Nairobi, 04 December 2024 – The Capital Markets Authority (CMA) would like to notify the shareholders of Bamburi Cement Plc and the investing public that Savannah Clinker Limited has withdrawn its competing offer for acquisition of the Bamburi Cement Plc shares today (04 December 2024). CMA has also approved the withdrawal of the offer in line with the Capital Markets (Takeover and Mergers) Regulations, 2002.

Following this development, shareholders of Bamburi Cement Plc who had accepted the offer by Savannah Clinker Limited have until 5.00pm on Thursday, 5 December 2024 to reconsider their decision. Shareholders who do not change their decision will be deemed to have declined the offer by Amsons Industries (K) Limited and remain shareholders of Bamburi Cement Plc.

Consequently, the only valid offer is the one from Amsons Industries (K) Limited as already approved by the Authority without any changes.

Shareholders who had accepted either of the offers are free to withdraw their acceptance before closure of the offer period at 5.00 pm on Thursday, 5 December 2024. Trading of Bamburi Cement Plc shares will be suspended from 9.00 am on 06 December 2024 to facilitate reconciliation.

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BACKGROUND INFORMATION

Promoting market development through research on new products and services; Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest. For more information, please contact: Antony Mwangi, Manager Corporate Affairs & International Relations on amwangi@cma.or.ke

27 November 2024

CMA Approves Ziidi Money Market Fund From Safaricom PLC

lydia Press Release

Nairobi, 27 November 2024 – The Capital Markets Authority (CMA) has granted approval to Safaricom PLC to establish the Ziidi Money Market Fund, as a Collective Investment Scheme (CIS), marking another innovative step. The fund will be accessible through the M-PESA platform, making it convenient for subscribers to grow wealth through the capital markets.

Safaricom has partnered with three fund managers; Standard Investment Bank, ALA Capital Limited, and Sanlam Investments East Africa Limited to offer the Ziidi Money Market Fund.

The CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, said the milestone underscores the commitment to foster innovation which also enables Safaricom enhance its footprint in the finance services sector.

Ziidi Money Market Fund is expected to empower unit holders by offering accessible and diversified investment options as part of the broader National Government’s financial inclusion strategy.

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BACKGROUND INFORMATION

26 November 2024

CMA Grants Approval of Firms in Various License Categories

lydia Press Release

Nairobi, 26 November 2024 – In an effort to deepen and promote development of the capital markets, the Capital Markets Authority (CMA) has granted approval to several firms across various license categories.

AKN Investments Limited has been granted approval as an Authorized Securities Dealer license from its prior Investment Advisor license, enabling it to expand its services to institutional investors.

Moran Capital Management Limited has been licensed as an Investment Adviser to focus on private equity, stock trading, and unit trusts, among other areas.

Entrust Advisory Limited was granted an Investment Adviser License, specializing in equities trading, fixed income, and business expansion advisory.

Future Construkt Investment Managers Limited has been approved as a REIT Manager to leverage its expertise in real estate advisory and development.

Givva Wealthtech Limited was licensed as an Intermediary Service Platform Provider, with a mission to foster financial inclusion through secure technological platforms offering licensed investment products.

CPF Financial Services, through its subsidiary CPF Capital and Advisory Limited has been licensed both as a REIT Manager and Investment Adviser. The REIT Manager license will enhance CPF’s presence in the real estate sector, building on its portfolio restructuring and feasibility services. As an Investment Adviser, CPF will guide clients in managing risks and achieving growth through innovative financial solutions.

Octagon Pension Services Limited has been granted approval to operate as Octagon Unit Trust Scheme, which comprises five sub-funds; Octagon Money Market Fund; Octagon Balanced Fund; Octagon Fixed Income Fund; Octagon Equity Fund; and Octagon USD Dollar Money Market Fund.

Trademax Global Markets (KE) Pty Ltd has been granted a non-dealing online foreign exchange broker license. The firm is part of the TMGM Group, which also has operations through regulated businesses in Australia, New Zealand, and Mauritius.

The Authority granted a Money Manager License to Store Poa Enterprise Limited, who are seeking to leverage their expertise in technology to provide comprehensive online trading solutions for individuals and businesses.

The CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, observed, “These licenses are key to aligning the capital markets with the national Government agenda of enhancing the savings to GDP ratio by offering Kenyans a broader range of investment opportunities in the capital markets.”

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BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

14 November 2024

CMA Approves Two New Funds to Expand Investment Opportunities for Sophisticated Investors

lydia Press Release

Nairobi, 14 November 2024 – The Capital Markets Authority (CMA) is pleased to announce the approval of two significant funds, enhancing investment opportunities for sophisticated investors.

Faida Investment Bank Limited has received approval to establish the Oak Multi-Asset Special USD Fund under the Faida Umbrella Fund. This USD-denominated fund targets high-yield assets such as global sovereign bonds, corporate bonds, and derivatives, offering medium to high-risk investment options and a T+2 settlement period after a six-month lock-in.

Additionally, Dry Associates Limited (DAL) has converted its Balanced Fund into the DAL High Yield Special Fund, now focused on high-yield returns through Kenyan and East African government securities and corporate fixed-income investments. Targeting moderate to aggressive investors, the fund provides structured asset allocation across short- and long-term fixed-income securities.

These approvals reflect CMA’s commitment to fostering innovative products that meet evolving investor needs while ensuring compliance and transparency in the capital markets.

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BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest. For more information, please contact: Antony Mwangi, Manager Corporate Affairs & International Relations on amwangi@cma.or.ke

14 November 2024

CMA Approves New Collective Investment Schemes from various Asset Management Firms

lydia Press Release

Nairobi, 14 November 2024 – The Capital Markets Authority has approved four new funds by licensed asset management firms. These funds will be offered to investors with diversified investments across different asset classes and geographical regions.

Britam Asset Managers Limited has been authorized to introduce the Britam USD Money Market Fund, under the Britam Unit Trust Scheme. The Fund is targeted at the investor seeking stable, low-risk returns denominated in USD. It will invest its assets primarily in short-term money market instruments, including Government securities and highly rated commercial papers, with the objective of preserving capital and realizing consistent income.

Also, Orient Asset Managers Limited has been approved to offer the Orient Dollar Money Market Fund under the Orient Umbrella Fund. It is designed to accommodate low entry levels and semi-annual income distribution for investors who seek reasonable stability in capital together with reasonable income.

The Authority has also approved the new CIC Global Special Fund offered by CIC Asset Management Limited, which forms part of the CIC Unit Trust Scheme. The Fund shall target investors falling within the medium- to high-risk category who seek a balanced approach as far as capital growth is concerned, with regular income actively managed through interest rate and credit risk.

Finally, permission was granted to VCG Asset Management Limited to introduce the VCG Offshore Opportunities Special Fund with eight specialized sub-funds that aim at offshore equities, commodities, technology, and multi-asset investments. These sub-funds are aimed at high net worth and institutional investors who are keen to diversify their investments across global markets with key sectoral themes.

These approvals highlight the commitment of CMA to the continued development and stability of the Kenyan financial market through assurance of access to a variety of investment products. The new funds among others would afford a wider exposure for investors to the global and regional markets towards the undertaking of the capital market in Kenya.

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BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

Nairobi cityscape - capital city of Kenya

27 August 2024

FiRe Awards Promoters Push for Enhanced Accountability, Transparency in Resource Use

lydia Press Release

Nairobi, 27 August 2024… The promoters of the Financial Reporting (FiRe) Award have today launched the FiRe Award 2024 edition in a move aimed at pushing for integrated financial reporting across the private and public sectors in the country, thus enhancing accountability and transparency in resource management.

This year’s Award’s theme is “championing for effective sustainability reporting through technology and innovation to enhance transparency,” which underscores the growing importance of business sustainability disclosures as a reporting mandate for private companies and public sector entities.

The FiRe Award is organised by the Institute of Certified Public Accountants of Kenya (ICPAK), the Public Sector Accounting Standards Board (PSASB), the Nairobi Securities Exchange (NSE), Capital Markets Authority (CMA), and the Retirement Benefits Authority (RBA).

During the Award ceremony that takes place usually in December, private and public sector entities are expected to provide comprehensive information on their environmental, social, and governance (ESG) practices, reflecting their commitment to sustainable development, as part of their disclosure of non-financial information.

Speaking during the launch of the 23rd edition of the FiRe Award, the Chairperson of the Award Executive Committee, who is also the ICPAK CEO, CPA Dr. Grace Kamau, pointed out the critical role that sustainability reporting plays in advancing sustainable development goals and promoting corporate responsibility.

She said that by adopting International Financial Reporting Standards (IFRS), especially IFRS S1 and S2, ICPAK aims to provide guidance and frameworks that allow enterprises to effectively monitor, manage, and disclose their sustainability impacts and climate risks and opportunities.

“Soon, we will release a communique to guide the market on the envisioned phases of adoption, assurance of sustainability reports, and disclosure of sustainability information while continuing to create awareness through curated workshops and roundtable events to ensure a just transition.”, said Dr. Kamau.

The NSE Chief Executive, Mr. Frank Mwiti, noted that NSE has placed special focus in supporting and enabling companies in Kenya to report on sustainability to better manage risks and attract more investments in particular companies.

“We strongly believe that private companies will be better placed to address growing stakeholder demands for transparency on how businesses manage their impacts to the environment, economy and people.”

The PSASB Acting CEO, Ms. Georgina Muchai, encouraged the public sector entities to increase the uptake of ESG reporting noting that “ESG is a growing concern for government regulators, investors, and standards bodies. With ESG, public sector entities now have a great opportunity to prepare for new regulations around sustainability reporting and commit to transparency and accountability. This means setting out to gather information to inform entities’ strategies, manage risks and achieve a stronger, more sustainable performance over the long term.”

Present during the event was the RBA CEO, Mr. Charles Machira, who underscored the importance of adopting ESG principles in financial reporting by Retirement Benefits Schemes.

“In the pension industry, stakeholders are demanding for disclosures on sustainability strategies. As a way of promoting governance and enhancing confidence in the pension sector, I look forward to enhanced disclosures on the impact, opportunities and risks that have arisen with adoption of ESG Principles,” said Mr. Machira.

Equally, the CMA CEO, Mr. Wyckliffe Shamiah, said that business sustainability and climate-related disclosures are becoming a key consideration for publicly listed companies. This comes on the back of the publication of standards for Sustainability-related Financial Information (IFRS S1) and Climate-related Disclosures (IFRS S2) by the International Sustainability Standards Board (ISSB) 12 months ago.

“The finalization of the standards by ISSB marks an important step in the development of a global baseline for sustainability disclosures to support transparency and comparability in the capital markets. The Standards are expected to enhance trust and confidence in company disclosures about sustainability’’.

ABOUT THE FIRE AWARD

The Financial Reporting (FiRe) Award is the most prestigious and coveted Award in East Africa for financial reporting. The Award is carried out annually, in a colourful, gala evening hosted by the joint promoters. The FiRe Award has been recognized and awarded the best reporting entities in East Africa. The Award aims to promote integrated reporting by enhancing accountability, transparency, and integrity in compliance with appropriate financial reporting framework and other disclosures on governance, social and environmental reporting by private, public and other entities domiciled in East Africa. Visit the website: http://www.fireaward.org for more information.

ABOUT THE PROMOTERS

INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF KENYA:

The Institute of Certified Public Accountants of Kenya (ICPAK) is a statutory body that regulates the profession of accountancy in Kenya. The Institute of Certified Public Accountants of Kenya (ICPAK) is a statutory body of accountants established under by the Accountants Act of 1978, and as repealed under the Accountants Act Number 15 of 2008, mandated to develop and regulate the Accountancy Profession in Kenya. It is also a member of the International Federation of Accountants (IFAC), the global umbrella body for the accountancy profession. For more information, please contact: Mercelline Maroma, Head of PR and Corporate Communications on Email: mercelline.maroma@icpak.com

PUBLIC SECTOR ACCOUNTING STANDARDS BOARD:

The Public Sector Accounting Standards Board (PSASB) was established under sections 192 to 195 of the Public Finance Management (PFM) Act 2012. The Board is mandated to provide frameworks and set generally accepted accounting standards for the development and management of accounting and financial systems and internal audit procedures by state organs and public entities as spelt out under Section 194 of the PFM Act.

For more information, please contact: Benuel Bosire, Head of Public Relations and Communications on Email: benuel.bosire@psasb.go.ke

NAIROBI SECURITIES EXCHANGE:

The Nairobi Securities Exchange (NSE) is the principal securities exchange of Kenya. Besides equity securities, the NSE offers a platform for the issuance and trading of debt securities. The NSE is a member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA). It is an affiliate member of the World Federation of Exchanges (WFE), an associate member of the Association of Futures Markets (AFM) and a partner Exchange in the United Nations Sustainable Stock Exchanges Initiative (SSE).

For more information, please contact: Boniface Mbogo, Senior Officer, Communications on Email: bmbogo@nse.co.ke

CAPITAL MARKETS AUTHORITY:

CMA also regulates the commodity markets and online forex trading. The regulatory functions of the Authority as provided by the Act and the regulations include licensing and supervising all the capital market intermediaries; ensuring compliance with the legal and regulatory framework by all market participants; regulating public offers of securities such as equities and bonds and the issuance of other capital market products such as collective investment schemes; promoting market development through research on new products and services; reviewing the legal framework to respond to market dynamics; promoting investor education and public awareness; and protecting investors’ interest.

For more information, please contact: Antony Mwangi, Manager Corporate Affairs & International Relations on amwangi@cma.or.ke

RETIREMENT BENEFITS AUTHORITY:

The Retirement Benefits Authority (RBA) was established under the Retirement Benefits Act and is mandated to regulate and supervise the establishment and management of retirement benefits schemes; protect the interests of members and sponsors of retirement benefits sector; promote the development of the retirement benefits sector; advise the Cabinet Secretary, National Treasury and Economic Planning on the national policy to be followed with regard to retirement benefits industry and implement all government policies relating to the retirement benefits industry.

For more information, please contact: James Ratemo, Head of Corporate Communications on Email: jratemo@rba.go.ke

1 August 2024

CMA Licenses Three Coffee Brokers

lydia Press Release

Nairobi, 01 August 2024…The Capital Markets Authority (CMA) has announced the issuance of full coffee brokerage license to three companies allowing them to trade at the Nairobi Coffee Exchange. The expansion of the pool of licensed coffee brokers is anticipated to spur the uptake of new commodities products and services and grow market turnover.

Nandi Coffee Co-operative Union Coffee Brokers Limited, Meru South Coffee Marketing Company Ltd and Minnesota Coffee Importers Limited have satisfied all requirements of the Capital Markets Act and Capital Markets (Coffee Exchange) Regulations, 2020. This brings the number of fully licensed coffee brokers to 16.

“The Authority continues to implement coffee reforms at its level and as a member of the National Task Force on Coffee Sub-Sector Reforms. We see these reforms contributing to the uptake of commodity markets products and services while enhancing the experience of our customers in the coffee value chain” said CMA CEO Wyckliffe Shamiah.

CMA added that it has granted a six-month extension to New Kenya Planters Co-operative Union PLC (NKPCU) to continue operating as a conditionally licensed coffee broker. The extension will lapse in February 2025.

The licenses will remain in force unless otherwise suspended or revoked following the necessary due process.

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BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

1 August 2024

CMA Approves Three New Firms as License Holders

lydia Press Release

Nairobi, 01 August, 2024…The Capital Markets Authority (CMA) has granted a license to Mi Vida Homes Limited to operate as a REIT Manager in a bid to deepen and develop the capital markets.

‘The newly licensed REIT Manager joins other licensees to facilitate the development of real

estate infrastructure and thus support the national government agenda for affordable housing’, CMA CEO Wyckliffe Shamiah noted. As a REIT Manager, the company will provide real estate management services in respect of a real estate investment trusts (REITs).

The Authority has also licensed Kingsland Court Trustee Services Limited as a corporate trustee and Mirova Sunfunder East Africa Limited as an investment adviser.

Simultaneously, Securities Africa Kenya Limited has been upgraded from a licensed stockbroker to investment bank.

The licenses will remain in force unless otherwise suspended or revoked following the necessary due process.

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BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY