APPLICATIONS FOR THE ISSUE OF
SECURITIES – ADDITIONAL
REQUIREMENTS
Mary M. Njuguna
Manager, Corporate Approvals
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Statutory declarations on disclosures
Use of proceeds
Independence of Note Trustee
Management Commentary
Signed agreements between issuer and transaction
advisers/agents
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One of the key objectives of the Authority is investor
protection. (Sec. 11(1) (d) of the Capital Markets Act.
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Sec. 13(1)- Power of the Authority to request for any
additional information that it may deem necessary to
ensure that investors have access to information that
would enable them make an informed decision in
relation to a public offer of securities.
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A representation made that:
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when made, the representation was known to be false or made
recklessly without knowledge of its truth;
is made with the intention that investors rely on it;
investors rely on and suffer damages as a result
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Sec. 30D (1)- A person who makes a false, misleading or
deceptive statement in a prospectus; or omits information or a
statement from a prospectus which is required under this Act to
be included commits an offence and shall be liable on
conviction;
 Individual- a fine not exceeding 10 million shillings or to
imprisonment for a term not exceeding seven years or to
both; and
 Company -a fine not exceeding 30 million shillings.
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Sec. 30 E (2). – Where the Issuer is a corporate, the
directors of the Issuer at the time when the Prospectus is
published and each person who accepts and is stated in the
Prospectus or supplementary prospectus as accepting
responsibility for or for any part of the prospectus or
supplementary prospectus is jointly and severally
responsible to pay compensation to any person who suffers
a loss on relying on the false information including those
who buy the securities in the secondary market on reliance
on the false prospectus.
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Section 30D (1) of the Capital Markets Act requires directors of the
Issuer to bear the responsibility for the disclosures contained in
the disclosure documentation.
A statutory declaration by the directors and company secretary of
the issuer on the accuracy of the information availed in the
Information Memorandum relating to the:
◦ company’s financial position
◦ operations and future prospects
◦ a confirmation that in the event that the said information changes, based on
the prevailing circumstances of the company, a supplemental disclosure
document shall be submitted to the Authority for approval
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statutory declaration from the CFOs who prepare the
financial statements to confirm that the financial statements are
true and fair to the best of their knowledge.
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This is to ensure that the CFOs take responsibility for the
contents of the financial statements and eliminate the defense
that they may not have been aware of financial misstatements
therein.
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A statutory declaration from the external auditor of the issuer
confirming:
That they were the auditors of the firm for the period
That they were independent
That based on their review procedure conducted, nothing came to their
attention to indicate that the financial statements were not true and fair.
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This will ensure that other independent parties other than the
CFOs take responsibility for the contents of the financial
statements and eliminate the defense that they may not have
been aware of financial misstatements therein
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Clear disclosure on use of proceeds
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What if minimum subscription level is attained?
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Returns to be made to the Authority on application of
proceeds bi-annually
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The Public Offer Regulations do not stipulate specific requirements for
Note Trustees.
However, the Note Trustee’s responsibilities as
contained in the Trust Deed should be disclosed in the disclosure
document.
The Note Trustee should be independent of the Issuer and preferably a
licensee of the Authority wherever possible. This is for accountability
and oversight purposes by the Authority.
Note Trustee to provide a statutory declaration on its independence
from the issuer or any other party in the transaction.
The Note Trustee should also confirm that they understand their
responsibilities as contained in the Trust Deed appointing them.
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Key audit matters that are identified by the auditors in the
course of performing their audit for the latest accounting
period should be included in the disclosure document.
There should also be comment from management on how
they are addressing the issues identified
This is to enhance transparency by ensuring that all material issues identified by
auditors are made public
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Inclusion of a Management Commentary on the latest
financial statements of the potential issuer in the issue
documentation.
The management commentary will be expected to give additional information on the
operations and prospects of the company
Submission to the Authority signed copies of all
agreements between itself and transaction team
before the offer opening date as well as the signed
Information Memorandum and/or Prospectus.
THANK YOU!