This archive report was first published on 8 June 2020.
On June 8, 2020, the Capital Markets Authority (CMA) issued guidelines for issuers of securities to the public to host virtual general meetings, in line with the recent High Court ruling and the challenges posed by the Covid-19 pandemic.
The guidelines were issued in response to the Government Directive banning public gatherings, and are aimed at ensuring that companies can continue to operate and make informed decisions despite the pandemic.
According to Mr. Wyckliffe Shamiah, the CMA Acting Chief Executive, the guidelines apply to any issuers of securities to the public who find it impracticable to conduct a general meeting in the manner required by their articles of association due to the measures set out by the Government.
Companies listed on the Nairobi Securities Exchange can hold virtual general meetings subject to the following terms: obtaining a No Objection from CMA before issuing the notice to shareholders on the intended general meeting; sending to CMA details of how the meeting will be held; and demonstrating how requisite information will be provided to shareholders to enable them make informed decisions.
Mr. Shamiah explained that CMA will process all complete applications received from issuers within 14 days, and hence listed companies must factor in this time as they plan for their AGMs.
Upon receipt of a no objection, issuers are at liberty to issue a twenty-one day statutory notice of the intended general meeting to its shareholders.
Mr. Shamiah emphasized that all shareholders should be given ample time to raise their questions and receive explanations from the Directors and/or management, in order to protect their rights.
He also lauded the Judiciary for the landmark ruling which enables the capital markets industry to leverage technology to facilitate general meetings.
Mr. Shamiah explained that the capital markets industry players have been working closely through joint strategies to ensure business continuity and mitigate disruption in the capital market.
Key outcomes of the engagements include the waiver of the need for listed companies and market intermediaries to publish their financials in newspapers, and flexibility to use websites and social media channels instead.
Additionally, guidance has been provided to the Boards of listed companies to progress key issues such as approval and payment of dividends and appointment of auditors, which would be ratified once AGMs are convened.
As part of the commitment to support national efforts to address the adverse effects of the Coronavirus pandemic, the capital markets industry stakeholders led by CMA donated Ksh30 million to the Covid-19 Emergency Response Fund.
