New proposals to attract listing at the NSE
The Capital markets authority wants new policies to stimulate listing at the NSE that has declined over the last couple of years.
In the main segment the last firm to list was Deacons which is already facing challenges due to a tough economic environment and had to sell of it franchise, Mr Price.
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CMA now wants Treasury to offer companies that float 40 percent of their shareholding to the general public to only pay 18 percent for five years.
Those who free float a 30 percent of their shareholding will pay 22.5 percent while those who offer 20 percent stake to the public will pay 25 percent corporate tax for five years.
Those who will list 15 percent by introduction will pay 27 percent in corporate tax for five years also.
In the Growth and Enterprise Market Segment (GEMS) the last to be listed was Nairobi Business Ventures or K-Shoe was the last to list but it has also been struggling just like its peers in the small business segment.
CMA is also proposing a tax amnesty on SME’s past incomes when they list in the Bourse’s GEMS.
Apparently many small businesses are afraid that if they listed, and opened up their books to the public, the Kenya Revenue Authority will hunt them for previous disclosures and slap them with hefty bills.
In the Bonds segment CMA wants companies to be allowed to issue multi-currency bonds locally, this will attract foreign funds and help firms hedge against currency volatility.
The Capital markets authority is also asking the National Treasury to grant tax exemption to Green Bonds to encourage eco-friendly investing. Currently, only Infrastructure bonds are tax exempt.
Under new products that have emerged in the capital markets, the players want online forex trading and futures trading under the derivatives market to be exempt from Value Added Taxes.
Kenya has only one licensed online currency trader, EGMS securities after CMA moved in to regulate this new market segment.
To tackle double taxation on new asset classes that own underlying companies, CMA wants Real Estate Investment Trusts and Asset Backed Securities to be recognized as one and the same with the special purpose vehicles (SPVs) they use to make investments.
Reits usually buy assets or build them and list in the NSE as an SPV and ABS create instruments from a pool of liquid underlying assets and then list them.
