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Kenya

Statement on Ngenye stockbrokers

NAIROBI, Kenya, Feb 12 – The Capital Markets Authority has placed Kenya’s stockbroker Ngenye Kariuki and Company under Statutory Management.

This statement was issued by Wycliffe Shamiah on Friday.

In exercise of its mandate and to protect the interests of the customers of Ngenye Kariuki Stockbrokers and those of the wider investing public, pursuant to Section 33A (1) (c) and Section 33A (2) (a) of the Capital Markets Act, the Authority placed Ngenye Kariuki & Co. Limited under statutory management with effect from February 5, 2010, for a period of six (6) months. This was done to ensure an orderly approach to addressing the challenges facing the company and to give the company a chance to revive its business

The statutory manger is required by law to undertake the following:

(i)    Trace and preserveall the property and assets of the licensed person or of its customers;
(ii)    Recover all debts and other sums of money due to and owing to the licensed person;
(iii)    evaluate the capital structure and management of the licensed person and recommend  to the Authority any restructuring or re-organization which he considers necessary and which, subject to the provisions of any other written law, may be implemented by him on behalf of the licensed person;
(iv)    Enter into contracts in the ordinary course of the business of the licensed person; and obtain from any officers or employees of the licensed person, any documents, records, accounts, statements or information relating to its business.

In doing the above the statutory manager is required to discharge his duties with diligence and in accordance with sound investment and financial principles and in particular, with due regard to the interests of the licensed persons\’ customers or investors.

Prior  to the appointment of the statutory manager the Authority had been in extended discussions with the firm in respect to regulatory non-compliance in the following; operating with a negative working capital,  weak financial base, overdrawing clients’ bank accounts, maintaining a bank overdraft facility above stipulated regulatory requirements, weak corporate governance  and  internal control.

As a consequence, in the course of 2009, the Authority extended the company’s license to give it an opportunity to the company to address these issues. Subsequently a conditional license was granted in reliance on the indications that the firm was in discussions with strategic partners in order to strengthen its financial position.  As at the end of 2009 the firm was unable to confirm that any of these negotiations had been successful. In light of this and the fact that the company had at that point not been able to address the outstanding issues the Authority, after having issued a notice,  suspended the company from trading at the Nairobi Stock Exchange, a position that was maintained until the appointment of a statutory manager.  Throughout this period the Authority has continued to receive complaints from Ngenye Kariuki & Co. Limited clients of the inability of the company to pay them as and when payment fell due.

Since moving in, the statutory manager is taking measure to address the above concerns with a view to having the company resume operations. After fully assessing the financial and operationally condition at Ngenye Kariuki Stockbrokers Limited (under statutory management), the statutory manager will be communicating to the investors, customers and creditors of Ngenye Kariuki and Company limited on the way forward.

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I take this opportunity to thank all stakeholders for their support.

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