Doing Business in Kenya - RSM International

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8.0 Listing Rules8.1 The Capital Markets AuthorityThe Capital Markets Authority, established by the Capital Markets Act (Chapter485A), is the Government regulator charged with licensing and regulating the capitalmarkets in Kenya. It also approves public offers and listings of securities traded atthe Nairobi Stock Exchange (NSE).8.2 Types of Listing MarketsThe following are NSE market segments.• Market for issuing shares• Main Investments Market Segment (MIMS)• Alternative Investments Market Segment (AIMS)• Market for issuing bonds• Fixed Income Securities Market Segment (FISMS)8.2.1 Main Investments Market SegmentThe minimum eligibility conditions and listing requirements for the MIMS are:• Company to be listed must be a company limited by shares and registered underthe Companies Act (Cap 486) as a public company.• Company must have a minimum authorised, issued and fully paid up sharecapital of Shs 50,000,000 and net assets of not less than Shs 100,000,000before the public offering of shares.• Shares to be listed must be freely transferable and not subject to any restrictionson marketability or pre-emptive rights.• Company must have published audited financial statements (prepared underthe IFRS framework) for an accounting period ending on a date not more than4 months prior to the proposed date of the offer.• If more than 4 months will have elapsed since the end of the company’s lastaccounting period for which audited financial statements have been preparedand the proposed offer date, the company must prepare a set of un-auditedinterim financial statements for the period following the end of the financialperiod.• The un-audited interim financial statements should not however exceed 6months, unless the issuer is already listed in any market segment. In this regard,unlisted issuers who have published accounts exceeding a period of 6 monthswill have to carry out an interim audit for the period, or plan the date of offer toimmediately follow the completion of the next annual audit.76DOING BUSINESS IN KENYA
• Company must have prepared financial statements for the latest accountingperiod on a going concern basis and the audited report must not contain anyemphasis of matter or qualification/modification in this regard.• At the date of application, the company must not be in breach of any of its loancovenants particularly in regard to the maximum debt capacity.• For a period of at least 2 years prior to the date of the application, no directorof the company shall have any petition under bankruptcy or insolvency laws inany jurisdiction pending or threatened against the director (for individuals), orany winding-up petition pending or threatened against it (for corporate bodies);any criminal proceedings in which the director was convicted of fraud or anycriminal offence, nor be named the subject of pending criminal proceedings, orany other offence or action either within or outside Kenya; or been the subjectof any ruling of a court of competent jurisdiction or any governmental body inany jurisdiction, that permanently or temporarily prohibits such a director fromacting as an investment adviser or as a director or employee of a stockbroker,dealer, or any financial service institution or engaging in any type of businesspractice or activity in that jurisdiction.• Company must have suitable senior management with relevant experiencefor at least 1 year prior to the listing, none of whom shall have committed anyserious offence in any jurisdiction that may be considered inappropriate for themanagement of a listed company.• At least a third of the Board should be non-executive directors, and the companymust have a clear future dividend policy.• At least 25% of the shares must be held by not less than 1,000 shareholdersexcluding employees of the issuer.• In the case of a listing by introduction, the company shall ensure that theexisting shareholders, associated persons or such other group of controllingshareholders who have influence over management shall give an undertakingnot to sell their shareholding before the expiry of a period of 24 months followinglisting and such undertaking shall be disclosed in the Information Memorandum.• Company to be listed must have declared positive profits after tax attributableto shareholders in at least 3 of the last 5 completed accounting periods to thedate of the offer.• Company shall be solvent and have adequate working capital.8.2.2 Alternative Investments Market SegmentThe minimum eligibility conditions and listing requirements for the AIMS are:• Company seeking listing must be incorporated or registered as a public limitedliability company under the Companies Act (Cap 486).• Company must have a minimum authorised, issued and fully paid up shares ofShs 20,000,000 and net assets of Shs 20,000,000 before seeking listing.• The shares to be listed must be freely transferable and not subject to anyrestriction on their marketability or pre-emptive rights.DOING BUSINESS IN KENYA77
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2.0 General2.1 IntroductionKenya li
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Kenya Tanzania Uganda Rwanda Burund
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A huge chunk of the Act regulates m
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• Stamping of the Memorandum of A
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the Registrar within a statutory pe
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3.2.3 Thin CapitalisationThin capit
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Where a business is carried on or e
Page 26 and 27: territory or domestic market. Motor
Page 28 and 29: • Unrealised foreign exchange los
Page 30 and 31: 4.2.6 Business with Non-Resident Pe
Page 32 and 33: Installments Due Date RateNon-Agric
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Page 36 and 37: c) Housing• The higher of market
Page 38 and 39: partnership in which the husband or
Page 40 and 41: (1) East African Community partner
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Page 44 and 45: The VAT rates applicable in Kenya a
Page 46 and 47: 4.8.4 De-registration and Disposal
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Page 50 and 51: 4.8.7 Records, Invoices, Credit and
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Page 54 and 55: However, where a motor vehicle or o
Page 56 and 57: Where there is no tax payable a ‘
Page 58 and 59: granted or is partly granted, the b
Page 60 and 61: • Airtime on cellular mobile phon
Page 62 and 63: Transit VisasThese are visas requir
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Page 66 and 67: 5.3.2 WagesAlthough the Employment
Page 68 and 69: NSSF provides the employee with a l
Page 70 and 71: 6.0 ACCOUNTING6.1 Statutory Framewo
Page 72 and 73: 7.0 INTELLECTUAL PROPERTYRIGHTSKeny
Page 74 and 75: Years 1 Shs 1,000Year 2 Shs 1,500Ye
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Page 80 and 81: 8.3 Payable FeesCompanies pay an in
Page 82 and 83: 9.0 Investing in Kenya9.1 General I
Page 84 and 85: 9.3 Foreign Ownership of Shares and
Page 86 and 87: Contact Details - RSM AshvirRSM Ash
Page 88 and 89: Appendix of Acronyms used in the Bo
Page 90: Notes90DOING BUSINESS IN KENYA
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Doing Business in Kenya - RSM International

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