The Capital Markets Authority of Kenya (CMA) has proposed the establishment of a recovery board at the Nairobi Securities Exchange.
The proposal to have a recovery board at the NSE, if implemented will see investors getting a reprieve in the event a listed company collapses or ceases to trade at the NSE.
According to CMA, the recovery board will be mandated with protecting investors from losses in the event of firms they have invested in collapse.
Currently, investors have had to be left counting losses with a number of companies being placed under administration or receivership.
In a statement published in local dailies, CMA said: “in order to enhance investor protection, the NSE and CMA are jointly proposing the establishment of a recovery board at the Exchange.”
With the board in place, the securities of an issuer who is technically insolvent, non-compliant with any other listing obligation or whose operations are being conducted in a manner that is prejudicial to the interest of the investor or market integrity can be temporarily listed.
In simple terms, in a company ceases to operate or is barred from trading because of one legal reason or the other, investors will still be assured of getting their investment back through the recovery board.
The prevailing hard economic times in the country have been blamed for many countries issuing profit warnings in 2018. Some companies have also been placed under receivership.
Some of the companies that seem to be receiving the heat are those in the retail sector as well as those from the cement industry. Nakumatt, Uchumi, and Choppies are all going down the drain though Uchumi is the only listed retailer at the moment.
The NSE is currently struggling to debunk the notion that it is only meant for the elites as it seeks to bring the larger Kenyan youth on board.