Kenya's capital markets authority has unveiled plans to revise share lock-in rules, aiming to enhance liquidity and trading activity on the Nairobi Securities Exchange.
The proposed reforms would reduce the mandatory holding period for shares owned by company directors and major shareholders from the current duration to six months. This change would allow these restricted shares to enter the public trading pool, increasing market participation.
The regulator highlighted that prolonged lock-in periods have limited investor access to tradable shares. Luke Ombara, CMA director for regulatory policy, noted that only a small fraction of available shares currently circulate in the market, creating opportunity costs for investors.
The reforms specifically target firms with large shareholdings, such as Co-operative Bank, where a 65% stake held by Co-opholdings Co-operative Society has remained locked since 2008. This group has maintained its position beyond the five-year lock-in period that expired in 2013.
Additional measures include lowering the minimum free float requirement for large companies from 25% to 5% of issued shares, while maintaining 15% for smaller firms. This adjustment seeks to attract major enterprises like Bharti Airtel and state-owned entities to the stock market.
The proposals will be submitted to the National Treasury as part of the 2019/2020 budget process. CMA officials stated that public consultation is required before finalizing the reforms.
