NAIROBI, Kenya Mar 5 – The Nairobi Stock Exchange (NSE) is set to be sold to the public as part of the demutualisation process of the bourse.
This comes in the wake of an Extraordinary General Meeting convened on Thursday by the NSE Demutualisation Steering Committee which gave the go ahead.
Briefing the media NSE Chairman Eddy Njoroge said following the approval, the management of the bourse had decided to raise the share capital to Sh1billion from the current Sh200million.
“We reckon that the market is on the rise and we would want to have value for the member in two years and the market place will have changed,” Mr Njoroge said adding that as part of demutualisation it was normal to give a transition period.
He said the committee had passed a number of recommendations key among them a proposed renaming of the bourse.
“The new company will go by the name of the Nairobi Securities Exchange Limited to reflect what goes on at the exchange,” Mr Njoroge said.
The process is however subject to the coming into force of the relevant provisions of law that provide the legal framework to achieve demutualisation. A Bill has already been drafted awaiting debate in Parliament.
Demutualisation of the NSE is aimed at improving business, discipline and governance, while making the bourse a commercially viable entity among other things.
Post demutualisation, the share holding will see current members get an 80 percent stake while the Investor Compensation Fund receives a 10 percent stake. The government, through the Treasury will receive a further 10 percent of the bourse.
The NSE has 20 members and the decision to allocate 80 percent is set to come under sharp focus, focus given the feeling demutualisation was aimed at curtailing stockbroker’s influence on the stock exchange when they flout regulations.
“It will not since two years down the line there will be a drop to 40 percent,” Mr Njoroge said.
The members have also approved the proposed post demutualisation Memorandum and Articles of Association of the NSE.
The bourse is ranked the fifth biggest market in Africa by market capitalisation, and it is believed the process will improve this ranking, wooing more investors into the country.