The Senate Standing Committee on Trade, Industrialization and Tourism held a meeting today with a team from the Capital Markets Authority (CMA) led by the CEO, FCPA Wyckliff Shamiah to consider a Petition by Mr. Rono Nicholas on the alleged fraudulent acquisition of shareholding at the East African Breweries Limited. 

The Petitioner had prayed that the Committee investigates the matter with a view to recommending amendments to the Capital Markets Authority (CMA) Act to cushion the shareholders from such future manipulation.

In their response, the Capital Markets Authority CEO presented a detailed report of the recent transaction involving EABL and Diageo Kenya which was done through a tender offer and subsequent to the transaction, an increased percentage shareholding by Diageo Kenya in EABL. 

When asked whether the transaction was compliant with the Capital Markets Act and Public Offers Regulations, the CEO affirmed that the transaction was reviewed to ensure compliance with disclosures required by the Capital Markets Act and Capital Markets (Securities) (Public Offers, Listing and Disclosure) Regulations, 2002. He further informed the Committee that the relevant disclosures were made in a tender offer document which was circulated to all shareholders to ensure fairness, transparency and investor protection. 

The Petitioner had raised a concern that purchaser acquired the securities with an intention to transfer the shares onward to a new buyer and at a higher value. The CEO explained to the Committee that Diageo Kenya confirmed that there was no agreement or arrangement that had been made by which shares acquired by Diageo Kenya in pursuance of the Tender Offer would or may have been transferred to any other person.

Lastly on the query of acquisition of the securities with an intention by the purchaser to evade tax liability, Senators were informed that the advisers to the transaction correctly indicated that as the Ordinary Shares are listed on the Nairobi Securities Exchange, no capital gains tax would be payable in Kenya in connection with the gain accruing on the transfer of such Ordinary Shares in accordance with the relevant laws. Similarly, no stamp, 

registration or similar duties or taxes would be payable in Kenya in connection with the transfer of the Ordinary Shares in accordance with applicable laws. The CEO however made it clear that this opinion and conclusion by the advisers to the transaction does not preclude the Kenya Revenue Authority (KRA) from conducting an independent assessment to ensure compliance with the applicable tax laws in Kenya.

In his conclusion, the CEO appreciated the right of the petitioner to petition the Honourable Senate for appropriate remedy and for his vigilance with respect to rights of shareholders; and also highlighted that the petitioner did not approach the Authority on this matter by way of a complaint or in any other manner. He committed to assist the petitioner to resolve the concerns he has regarding his shares once he gets the shares details. 

The Committee Chaired by Lenku Ole Kanar Seki will meet with the other relevant stakeholders in this matter before making a final determination. 

The meeting was hybrid hence Sen. Esther Okenyuri, Sen. Karungo Thangwa and Sen. Andrew Omtatah were physically present while Sen. Crystal Asige and Sen. Betty Montet joined the meeting online.