KENYA: Dematerialization of Securities Listed at the Nairobi Securities Exchange

Monday July 22 2013

The capital markets in Kenya has had a long history of paper based transactions and physical certificates until the Central Depository and Settlement Corporation (CDSC) commenced operations in 2004.

All quoted companies at the NSE have been grouped into three tranches to facilitate dematerialization in a phased approach. The process of dematerialization commenced in 2012 with stakeholder consultations, workshops and trainings and will close in November 2013. The impact of dematerialization will be that with effect from the dematerialization date, share certificates shall no longer be recognized as prima facie evidence of ownership of shares, and this will be replaced with the electronic record at the central depository. With the implementation of Dematerialization, risks involved with physical certificates for listed securities will be eliminated and the full register of members in a listed company will be available and maintained at CDSC.

The decision to dematerialize all Securities quoted at the securities exchange is a major step in the capital market and will significantly raise the profile of Kenya’s capital market in adherence to international best practice. This will also go a long way in achieving greater efficiency within the capital market.

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