NSE Gets New Board in Restructuring:A DEMUTUALIZATION STEP?

My Finance class has been rife with speculative stories on the prespect of the NSE being demutualized soon.One of the conclusions we reached was that we still,are quite far from that,since the right infrastructure has not been put in place.Well,seems we were wrong.

Barely a day later,this is in the news!

As part of its ongoing
demutualisation process, the Nairobi Securities
Exchange has elected a new board of directors that
will foresee the separation of private ownership from
the management of the exchange.
NSE Chairman Eddy Njoroge said the board
restructuring will allow for more autonomy in the
company that is now limited by shares and subject to
regulations under the Companies Act.
“There should be a little more independence in terms of
how the Exchange works. It will not be controlled by
the members. Before when it was a mutual club it was
the members who used to decide,” he said.
The new board will now comprise six independent and
non-executive directors, two trading participant
directors and one Executive Director who will serve as
the Chief Executive Officer (CEO).
NSE members would hold 80 percent in the
demutualised Exchange, while the government and the
Investor Compensation Fund would be allocated 10
percent each.
The 80 percent stake held by members, however,
would be further reduced to 40 percent, which Njoroge
said would be facilitated through a subsequent offer of
shares in the Exchange by private placement or initial
public offer.
“In total we will have 22 participating members. We
have given four percent to each of the participating
members. Once the regulations are done we could
allocate up to four million shares – about eight percent –
to government and to the investors protection fund,”
he noted.
Stockbrokers Shah Munge and Francis Thuo have also
been admitted as individual shareholders into the NSE,
on certain conditions, which Njoroge was not willing to
divulge just yet.
He added that as the demutualisation process
continues the company plans to be listed on the NSE by
2014 to unlock more value for shareholders.
Now that the NSE is pursuing status of a self-
regulatory organisation it will assume some
responsibility from the Capital Markets Authority
(CMA) in terms of compliance and regulations within
the market.
Njoroge, who is also the KenGen Managing Director,
will maintain his post as the NSE Chairman.
New board members will include Winnie Nyamute, an
ICPAK Audit Quality Assurance Committee member,
Farhana Hassanali, HassConsult Property Development
Manager and Samuel Njuguna Kimani, Jamii Bora Bank
Uchumi CEO Jonathan Ciano, Hosea Kimutai Kili (Chief
Executive and Managing Trustee of the Local
Authorities Pension Trust) Bob Karina (Executive
Director of Faida Investment Bank) and Geoffrey
Odundo, Managing Director and CEO of Kingdom
Securities Limited will make up the rest of the board.
The names of the elected board have been forwarded
to the CMA for consideration and approval.


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