CMA Sets Tough Rules For Small Firms Issuing Bonds – Kenya

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The small businesses will have to be in operation for two years, have a minimum issued share capital of Sh10 million, and can only borrow four times the level of its shareholders’ funds.

The Capital Markets Authority (CMA) has set tough conditions for small businesses seeking to raise below a quarter a billion shillings in Kenya’s capital market. The regulator draft regulations will allow small companies that cannot satisfy these conditions to issue capital market debt if they can provide guarantees from a bank or insurance firm.

The SMEs seeking to list debt securities must also provide approvals from the regulator in their sector, audited financial reports, and must have both executive directors, non-executive and independent directors with untainted histories.

“Where the issuer does not satisfy any of the requirements under this Schedule, it may obtain a credit enhancement to have the securities it seeks to issue guaranteed,” the draft Public Offers Listing and Disclosures Regulations reads.

The regulator is trying to build an alternative for small businesses to access cash away from banks whose costs are higher than raising funds through the public.


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