This archive report was first published on 11 September 2019.
On September 11, 2019, the Nairobi Securities Exchange (NSE) and the Capital Markets Authority (CMA) released proposed listing rules that could see insolvent or financially distressed companies delisted.
The proposed changes aim to protect investors by creating a recovery board for struggling firms, giving them three years to complete a turnaround or face expulsion from the NSE.
According to the proposed rules, firms placed on the recovery board will be required to submit a recovery plan within six months and provide progress reports on their restructuring plan.
Failure to comply with these requirements will result in the firm being delisted from the NSE.
The recovery board will also alert investors to trade with caution when buying shares in companies that have been moved to the board.
The proposal is aimed at helping retail investors make informed decisions before buying stocks.
Similar boards exist in Hong Kong and India, where listed firms that do not meet certain criteria are moved to a separate board to ensure key investor protection measures are maintained.
