A Kenya Airways shareholder has challenged the extension of the suspension of the national carrier from trading at the Nairobi Securities Exchange (NSE) for another one year.
The Capital Markets Authority (CMA) announced the extension of the trading freeze on KQ for an additional year, the sixth time in a row.
Mihr Samir Thakar says in the appeal filed at the Capital Markets Tribunal that the additional one year is unreasonable and unjustified.
The suspension of KQ’s shares from trading has trapped more than 77,000 small investors, who are unable to liquidate all or part of their portfolio should they wish to.
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“That the Respondent (CMA) erred in law and in fact by abusing a discretionary power, which allows the Respondent to suspend trading of shares in listed companies to protect shareholders and the general public,” he said in the appeal.
The matter will be mentioned on January 25 for directions.
Mr Thakar said the industry regulator erred by extending the period without inviting the views of the general public and specifically shareholders.
The trader says CMA was being biased against minority investors holding shares at Kenya Airways.
“That the Respondent erred in law by making a decision which was taken with an ulterior motive and purpose calculated to prejudice the legal rights of the Appellant and other minority investors,” he said.
The national carrier’s shares were initially suspended from trading at the NSE in July 2020 after Members of Parliament (MPs) began to review a law that would allow the government to take over the loss-making airline.
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The second extension was made on September 4, 2020 as the NSE said the company was yet to finalise on its operational and corporate restructure for the eventual government buy-out, following the publication of the National Management Aviation Bill, 2020 on June 18, 2020.
“Notice is hereby given on the extension of suspension from trading of Kenya Airways Plc shares. The extension of suspension seeks to enable the company to complete its operational and corporate restructure process,” said NSE in a statement on January 4, the sixth announcement extending the suspension.
“The extension of suspension from trading the company’s shares will remain in force for an additional 12 months, with effect from January 5, 2023,” the statement added.
Mr Thakar, says he owns shares at KQ and is an active trader on other counters at the NSE.
He said he is aware that the government’s interest to take over the ownership of the airline did not exist, apart from a lacklustre Bill that was introduced in Parliament in June 2020, but it later stalled.
“It is clear that despite the Respondent having knowledge that the initial reason for suspension was now in doubt, they still proceeded to approve an extension of the suspension of trading of Kenya Airways Plc shares,” he said.
He added that the regulator only has power to suspend trading for three months, with an option that the Authority may extend the suspension for an additional three months.
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“The Appellant argues that the validity of suspension in trading of Kenya Airways shares lapsed on December 31, 2020. Despite knowledge of this Act of Parliament, the Respondent in conjunction with the 1st (KQ) and 2nd Interested Party (NSE) have abused the discretion conferred by an Act of Parliament and enabling laws,” said Mr Thakar.
He wants his appeal to be allowed.