NAIROBI In an effort to improve the market environment for issuers of securities, Kenya’s Capital Markets Authority (CMA) has announced amendments to the Capital Markets to reduce the fees paid by listed companies and new companies applying to list equity securities, corporate bonds, capitalization or rights issue.
The Cabinet Secretary (Minister) of Finance has also gazetted the Capital Markets (Derivatives Markets) Regulations to set out the consolidated framework on the business of a derivatives exchange, clearing houses, derivatives contracts and derivatives brokers.
CMA Acting Chief Executive Paul Muthaura says the review of the fees, levies, and commissions was necessitated by the need to ensure financial sustainability of the capital markets sector and raise levies collected by the Central Depository and Settlement Corporation (CDSC), given its national importance to market stability and to support continuous improvement of systems and strengthened operational oversight.
The approval fees paid to the Authority by issuers of equity securities such as an initial public offer has been 0.15 per cent of the total value of the issue. However, the newly gazetted Regulations have introduced a maximum fee cap of 30 million shillings (about 295,000 US dollars) in order to encourage large capital markets issuances.
Muthaura also noted that for capitalization or rights issue, approval fees paid to the Authority by issuers is now subject to a maximum cap on amounts that an issuer will pay at any one time of 30 million shillings.
In the case of corporate bonds, approval fees have also been capped at 30 million shillings.
Government bonds approval fees payable at 0.075 per cent of the amount raised has been capped at a maximum limit of 50 million shillings.
The Regulations have also increased the transaction levy charged by CDSC from the current 0.06 per cent to 0.08 per cent of the value of a given transaction. The transaction fees levied by brokers at the Nairobi Securities Exchange have been reduced from 1.78 per cent to 1.76 per cent, by reflecting the percentage increase in the CDSC levy, implying that the cost to investors has not increased.
Muthaura observed that these developments will encourage more issuers to come to the market, while encouraging increased participation of investors in the capital market.