CMA Chief Executive Officer Stella Kilonzo said the revocation of the statutory management was positive and that it was geared at facilitating completion of restructuring of the company that had now regained liquidity.
Ngenye Kariuki had been put under statutory management February 2010 over a Sh227 million debt, more than a quarter of which was owed to investors. This makes it the first broker to be pulled from bankruptcy after previous attempts to revive three other collapsed brokers; Francis Thuo, Nyaga and Discount Securities ended up in liquidation.
Kilonzo said in reaching the decision, the regulator had, in line with the provisions of the Capital Markets Act, assumed the management, control and conduct of the affairs of Ngenye Kariuki in accordance with sound investment and financial principles and had taken due regard to the interest of clients, other creditors and the shareholders of the company.
Under the CMA, the stock broker had facilitated payment of a majority of investors who hitherto had not had access to such payment due to the previous financial status of the company further negotiating with major creditors leading to restructuring of the company’s debts.
“Through continuous engagement, the shareholders of the company had also injected additional capital into the company to improve its liquidity and to be able to meet financial requirements for operating as a stockbroker,” Ms Kilonzo said.
The statutory manager had also undertaken a financial audit into the company to independently ascertain the status of its assets and liabilities.
The successful restructuring of the company is a key milestone in the country’s capital markets as it is a prime demonstration of a company undergoing restructuring with the objective of enabling it to operate thereafter successfully as a going concern.
The firm will however have a hard task of winning back the investor confidence it lost in the run up to the receivership through, according to the CMA, trading without authority on investor accounts.
The company’s shareholders had injected Sh30 million into the firm raising its capitalisation to Sh60 million making it more sound.
“Going forward, the Authority will be working with Ngenye Kariuki & Company Limited to ensure full compliance with the requirements for licensing of stock brokers before consideration is given to lifting its suspension from trading at the Nairobi Securities Exchange,” she said.