This archive report was first published on 11 September 2019.
On September 11, 2019, the Nairobi Securities Exchange (NSE) took a commendable step by proposing the establishment of a board for distressed companies.
The proposed board aims to provide a platform for firms with serious governance challenges to restructure and improve their operations.
By listing distressed companies on a separate platform, the NSE can signal to investors that such firms are a risky investment, even if their shares are priced low.
This move will also challenge the directors and managers of these companies to raise their game and improve their governance practices.
Furthermore, the listing of distressed companies will serve as a cautionary tale to other listed firms, reminding them of the importance of maintaining good governance practices.
However, to ensure the success of this initiative, the NSE must consult widely and ensure that the rules are water-tight, upholding predictability of sanctions and preventing arbitrary punishment of well-managed companies.
