How to prepare your company for a listing in Kenya.

1. Easy steps to listing your company on the stock exchange
Running business is hard. Just when you thought you can now relax, a competitor comes up with a new
innovation that may make your business irrelevant. Sometimes, you just don’t have money for
advertisement, marketing, research and development, expansion or moving to new territories. Business
gurus advise that the only way your company can grow sometimes is through acquisitions. But, who has
the money for that? Where do you get money to do all that? The bank manager is no longer answering
your phone calls because the company’s debt to equity ratio is bad.
In this article I am going to show how by listing your company on the stock exchange can open up your
company to accessing new capital either during the Initial Public Offer (IPO) or subsequent issues such as
rights issue or a secondary IPO.
Listing a company on the stock exchange is a process. Many companies fear listing on the stock
exchange for loss of ownership and control. True, when you list you get a whole lot of new shareholders
and reporting obligations but, you also get access to a LOT of capital for expansion and growth. It’s the
case of being a part owner of a huge company as opposed to a big owner of a small company.
It means ceding control of the company but having access to capital when business may require it. It is
being able to attract high caliber of professionals because when you list you have no option but to have a
well-run company. When you list your company will be required to submit annual audited reports but
that is the job of the CFO anyway.
Listing opens up opportunities for companies. Most international news channels such as Bloomberg,
Reuters will only cover news from companies that are already listed at the stock exchange. Negotiating
across borders gets easy as you can always start with “My company is X and we are listed at the Nairobi
Securities Exchange.
Listing creates capital and liquidity at the Stock Exchange thereby bringing in much needed capital to the
economy. While other countries such as Egypt and South Africa have progressed in having many listed
companies, Kenyan companies are still lagging behind because of the fear of getting listed and the
obligations that come with it.
But what exactly are the benefits of being listed?
1. Free coverage/publicity- everyday if you have watched business news, you must have seen news
about gainers and losers at the stock exchange. What better way to remind your customers that
your company exists at no cost! Media is very interested in listed companies and offers a lot of
value in terms of free media coverage.
2. A company is a separate entity from a person. Studies have shown that family companies do not
survive the third generation and this stems from poor governance, family members may not be
interested in running the company, family disputes etc. Listing forces the company to separate
ownership and management. A company must appoint a board of directors separate from the
management running it.

2. 3. Listing is a long process but you get to learn about your company. Company valuations must be
done and so it means for the first time, you might have a clue as to the value of a share of your
company.
How do you go about being listed anyway?
1. Decide from the first day that your company will be listed at the exchange. This means keeping
proper accounts from the first year of operation. Financial records are central to listing and must
be kept religiously. The Growth Enterprise Market Segment at the Nairobi Securities Exchange
requires that a company been in operation for only one year and no proof of profitability is
rquired. Keep financial records and hire a good accountant from the first day.
2. If yours is a private company, you will need to convert it to a public limited company. A public
company allows easy transferability of shares. Before you list, you can do a private placement
where you invite specific investors to invest in your company. This is the route that was taken by
Deacons Kenya. This will ensure that your shares are already available and can be traded at the
Over the Counter Market (OTC) and that you meet the minimum float required to list your
company. Contact your stockbroker to find out if they offer OTC trading.
3. Listing can be a long and arduous process. The best thing is to get professionals who understand
the capital markets and who have the requisite knowledge to drive this process. This will be a
combination of lawyers, accountants, investment bankers, corporate governance professionals.
This people must also be in touch with the Securities Exchange and Capital Markets Authority.
At Capita, we can put together an enviable team that will assist with this process. Professionals
are not necessarily hired at the point of listing but engagement can start earlier on when the
decision to list has been taken.
4. If yours is a family company, the board structure will have to change. Ideally, a board should
have a right mix of persons that combine gender sensitivity with skills. In perfect world, 1/3 of
board members should ideally be female. But not just any woman, you must look for a woman
who has the right skills. Diversity both of gender and skills.
5. Contact the Capital Markets Authority with your intention to list. We can organize a first meeting
between your company and the CMA officials to begin the process of listing.
Do not shy away from listing because you do not understand the process, visit the NSE, CMA, investment
banks for initial discussions. This can be done even a few years before considering the listing.
If you any queries, please write to us at info@capitaregistrars.co.ke and we will be happy to assist with no
obligation.