CMA to step up market supervision with regular reviews

The Capital Markets Authority (CMA) has announced it is reviewing operations of a number of listed companies as it moves to strengthen regulatory oversight.

This comes in the wake of the CMA slapping fines and penalties on former Uchumi Supermarkets directors for engineering the retailer’s financial mess.

Speaking to Citizen Digital, Capital Markets Authority Chief Executive Officer Paul Muthaura said the review of industry operations will hold management and boards of listed firms accountable.

“The authority is already undertaking investigation into a number of companies and it is only once that is concluded and we are able to conclude appropriate due process hearing that we will be able to take the necessary action,” Mr Muthaura said.

In an opinion piece early in March, Mr Muthaura said it the CMA had taken an interest in Mumias, Kenya Airways and Home Afrika for wide ranging issues.

The regulator has been on the spot in recent months given the number of listed firms that continue to post mounting losses and erode shareholder value.

Recently East African Portland Cement announced it was technically insolvent with the CMA yet to take any action.

Mr Muthaura said the CMA will become more proactive to ensure the stability of the capital markets.

“We will be taking action to make sure that we can we can genuinely improve the environment for governance and therefore make Kenya that much more attractive,” he said without revealing the names of companies under review.

Analysts reckon the CMA needs to be more hands on to send the right signal to the market.

“That has to go all the way to the management.  All the problems are never about the client  but everything to do with the management and I think that is where we need to point so that the companies start making sense to their owners,” Investax Capital Executive Director Ndindi Nyoro said.

The CMA has been tightening its oversight role on the market introducing new rules for listed firms.

Apart from placing greater burden on directors and senior managers, CMA is also mulling introducing stiff penalties for companies found to be manipulating their financial performance.