News type: News

The Capital Markets Authority (CMA) has published draft guidelines that will enable listed firms to buy back their shares from next year. The CMA is now inviting stakeholders and the general public to submit comments on the draft guidelines by July 31, 2020.

The Companies Act, 2015 (the Companies Act) brought in a substantive change to company law in Kenya by providing for share buybacks by companies in Kenya. The Companies Act initially permitted such repurchase of shares by both private and public companies. However, concerns were raised by the Nairobi Securities Exchange (NSE) and the Capital Markets Authority (CMA) and share buybacks for listed companies were put on hold.

Share buybacks are a useful mechanism to return surplus cash to shareholders and listed globally companies often use this mechanism where they believe that their shares are undervalued. By reducing the number of shares in the market, and hence the supply of traded shares, listed companies are able to boost their share price and therefore provide long term shareholder value. Shareholders who retain their shares in a buyback effectively take a long term view in the hope of benefitting from a higher share price in the future. The repurchase of shares in listed companies is common in the UK and the USA; however, they have also been mired in controversy with buyback being claimed to artificially lift the value of the shares without any underlying value creation and hence no increase in actual value and potentially masking underlying financial problems of the company. In addition, the buyback route means that less capital is retained in the company for the development and expansion of the business. Share buybacks by listed companies can, therefore, open the door to potential abuse and caution should be exercised before this route is explored.

The share buyback draft guidelines are available here. Comments should be addressed to the Chief Executive Officer of the CMA.

To find out more or should you have any queries on share buybacks, please do not hesitate to contact Rosa Nduati-Mutero, Dominic Rebelo or Charlotte Patrick-Patel.

Leading international directory Chambers and Partners’ 2020 Global rankings have once again reaffirmed A&K’s  commitment to offering market-leading, integrated legal services to clients doing business in Africa. The firm has been top ranked across eight practice areas with the leading practice areas retaining Band 1 rankings:  Corporate M&A, Banking & Finance, Projects and Infrastructure, Real Estate, Fintech and Employment.

In its recognition of our practice areas, our growing Dispute Resolution team has been described as possessing “notable experience in class action defence and judicial review, as well as acting on insolvency proceedings and international arbitrations.” In the FinTech category, the firm has been described as “highly respected for its capabilities within the finance and technology sectors and is seen as a one-stop shop for many FinTech clients, at both the startup and institutional level.” In addition, the firm has been described as having “a broad pool of supporting expertise to draw upon as part of  ALN.”

A&K Ranked lawyers

Name	Category/Practice Area
Aisha Abdallah	Dispute Resolution
Amyn Mussa	Projects & Energy, Real Estate
Anne Kiunuhe	Corporate/M&A
Daniel Ngumy	Corporate/M&A-Tax
Dominic Rebelo	Corporate/M&A, FinTech
Karim Anjarwalla	Corporate/M&A
Mona Doshi	Real Estate
Roddy McKean	Corporate/M&A – Africa-wide
Rosa Nduati-Mutero	Employment, Corporate/M&A, expertise based abroad
Sonal Sejpal	Banking & Finance, Corporate/M&A, FinTech

Shem Otanga, who is a Senior Associate in the corporate department, has once again being recognised as an associate to watch. As quoted in the rankings, one source describes him as “a rising star in the Kenyan IP market.” Sonal Sejpal is recognised as a foreign expert in Banking & Finance in Tanzania and frequently leads cross-border deals. In addition, A&K Senior Partner Atiq Anjarwalla continues to be recognised as a leading lawyer in the UAE rankings for his Kenya expertise.

These annual rankings are based on extensive research by Chambers using in-depth interviews from clients, sector experts as well as competitors. As such, the rankings are a reaffirmation of A&K’s commitment to continue offering clients excellent legal services and effective solutions to their business challenges.