NAIROBI, Kenya, Feb 20 – Kenyan stockbrokers have now reversed their decision to suspend trading at the Nairobi Securities Exchange (NSE) after holding a meeting with the Capital Market Authority (CMA) on Thursday evening.
The brokers had vowed to halt trading for one month starting February 20 to March 18 until the court rules on the issue of Capital Gains Tax implementation.
“Following consultations, and in the interest of maintaining the sanctity and stability of the capital markets in Kenya, the Council of KASIB has further resolved that they shall not suspend trading services and that the Exchange shall operate as normal on February 20, 2015,” Kenya Association of Stock Brokers and Investment Banks (KASIB) CEO Willie Njoroge said in a statement.
The council had last month gone court to challenge the implementation of Capital Gains Tax by the Kenya Revenue Authority (KRA) claiming that it would lead to double taxation.
They had also expressed fears that they could be faced with huge debts due to confusion on how they were supposed to remit the taxes.
But the after the closed-door meeting with CMA, the stockbrokers now say the are ready for further consultations and that trading will continue as usual.
“The Council of KASIB continues to monitor developments,” Njoroge added.
Others in the meeting included officials from NSE and Central Depository and Settlement Corporation (CDSC).
Meanwhile on its part, the Capital Markets Authority has maintained that even if KASIB had not lifted their suspension, trading would still have continued normally as the stockbrokers have no powers to do so.
The authority says the only entities with the powers to halt or suspend trading at a securities exchange are the CMA or the NSE in consultation with the CMA.
“At this time neither the authority nor the NSE have issued any directions relating to the suspension of trading at the NSE,” the authority said.
CMA says stockbrokers and investment banks are only licensees and their legal responsibility is to render services in accordance with the statutory and regulatory responsibilities attaching to their licenses.
In the event they do not intend to render services they should notify the CMA and each of their clients of their intention.
They are further required to satisfy the authority as to the measures they have put in place for purposes of protecting the interests of their clients and investors generally.
“Clarification of who can suspend trading is important for the market to ensure there is order and predictability,” CMA maintained.
The Capital Gains Tax has been reintroduced by the government after its suspension in 1985 and is supposed to be charged at five percent of the difference between the selling price and the acquisition price, less any transactional costs incurred.
The deadline for submitting the tax is the 20th of every month.