CMA new boss talks tough against issuing profit warnings lateJanuary 31, 2020
NAIROBI, Kenya, Jan 31 – The Acting Chief Executive of Capital Markets Authority Wycliffe Shamiah has warned companies listed on the Nairobi Securities Exchange against issuing profit warnings late.
Shamiah has urged the firms to comply with listing rules which require companies to issue a profit warning within 24 hours of the board becoming aware that returns will fall by more than 25 percent compared to the previous financial year.
“Good corporate governance practices dictate that companies prepare prudent periodic management accounts and projections. The company’s management and board also ought to be aware of the declining levels of profits well before commencement of external audit,” he said.
Shamiah said the Authority will continue to implement the penalties for late filing, which are capped at a maximum of Sh50,000.
“Where we feel there was an oversight the law is very clear that there are penalties that will be levied depending on the weight and frequency where other actions can be taken,” said the CMA boss during his first media briefing.
Last year, 17 listed companies issued profits warnings to investors with a majority blaming a tough economic environment to their woes.
In 2016, National Bank of Kenya was fined an undisclosed amount of money for failing to publicly issue a profit warning ahead of announcing a surprise loss.
Shamiah was speaking during the launch of Capital Market soundness report Q4 2019.
He took over from Paul Muthaura, who had been at the helm of the company for seven and a half years, at an interim capacity.
Shamiah said his top priorities include addressing issues affecting SMEs and ensuring they can raise capital within the capital markets.
the incoming CEO said he is also focused on changing the current legal framework that has been in practice.
“We need to look at our legal framework because companies have expressed concern over restrictive regulations that make the cost of compliance high,” Shamiah added.