Kenya: CMA under scrutiny as investors are kept in the dark for four years
Investors on Nairobi Securities Exchange (NSE)-listed Uchumi Supermarkets remain in the dark as the troubled retailer is yet to publish its financials for four years in an alarming regulatory breach.
The retailer has not released its financials for the year ending June 2018 despite several extensions from the regulator and subsequent financial calendar results for 2019, 2020 and 2021.
Uchumi had not responded to the Business Daily’s queries on the matter by the time of going of press Thursday.
Uchumi acting chief executive Mohamed Mohamed had in April 2019 referred the Business Daily to the retailer’s statement linking the extended delay to its ongoing “turnaround” activities.
“In light of the various initiatives that we are undertaking to revive the chain, including preparation of the company voluntary arrangement, it was not possible to finalise the audit,” Mr Mohamed had said then in a statement. He did not respond to Business Daily queries this week.
The Capital Markets Authority (CMA) chief executive Wycliffe Shamiah also did not respond to this writer’s queries on any actions the regulator plans to take.
Experts had cautioned earlier that Uchumi’s delay in opening its books to public scrutiny coupled with the regulator remaining mum on the matter is hurting investor confidence.
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Analysts said earlier that the CMA must arrest the breaches by enforcing the law to protect investors as it was crucial in ensuring an orderly market.
“The listed companies are required to publish their accounts before a certain deadline so that the investors wanting to invest in these companies might be able to make an informed decision before buying their shares,” said Kunal Ajmera, chief operating officer at Grant Thornton said earlier.
“A delay in publishing these accounts signifies some challenges with the audit and may reflect negatively on the management of the company.”
Actions the CMA could take include suspending the retailer from trading on the NSE or penalising it.
“In other markets like the UK, the regulator has suspended trading in securities pending clarification of a company’s financial position,” Shitul Shah, a partner at Nairobi-based law firm Daly & Inamdar Advocates, had earlier told the Business Daily.
Uchumi is fighting to stay afloat amid Sh900 million winding-up suits currently in court.
The retailer has struggled to raise new capital to fund its operations, even as it suffers closure of branches and frequent stock-outs.
Uchumi Supermarket’s uncertainty has shrunk its prices down to a record low of 23 cents and is facing several attempts to be wound up over insolvency.
