Home ECONOMY CS Adan Mohamed Proposes Law to Protect Minority Shareholders

CS Adan Mohamed Proposes Law to Protect Minority Shareholders

by biasharadigest

The Ministry of EAC and Regional Development proposes that minority shareholders should have a greater say in takeovers. The ministry, through CS Adan Mohamed, suggests reverting to previous laws that required shareholders to own at least 90% shares before they could proceed with a buyout. The proposal seeks to protect minority shareholders from unfair business practices in The Statute Law (Miscellaneous Amendments Bill of 2019.

The law gazetted in October last year sought to amend the minimum threshold from 90% to 50%. This, according to the Kenya Association of Stockbrokers and Investment Banks (KASIB), would make it easy for majority shareholders to acquire minority shares for delisting. As a result, the repercussions will undermine investor comfidence in the capital markets.

NSE shares the same sentiments, highlighting that the law would work against enhancing sound corporate management.

“Most jurisdictions globally have set the threshold at 90 percent – and with good reason. Reduction of this threshold erodes investor confidence in the capital markets,” KASIB told The Star.

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