PROSPECTIVE

KTDA hints on listing at Nairobi Securities Exchange

This comes with farmers owning direct shares.

In Summary

•The direct shareholding allows farmers to have a seat at the KTDA Holdings Board.

•It gives them more control over their assets, currently worth more than Sh36 billion.

NSE chief executive Geoffrey Odundo monitors daily trading at the Bourse/
NSE: NSE chief executive Geoffrey Odundo monitors daily trading at the Bourse/
Image: FILE

Kenya Tea Development Agency Holdings has received a green light for future listing at the Nairobi Securities Exchange, as the new shareholding structure takes shape.

This follows  the allotment of  shares to individual farmers in one of the latest changes at the agency, granting farmers more control.

At a Special General Meeting in April  year, shareholders resolved to amend the company's Articles of Association granting farmers  direct shareholding.

This has seen five million bonus shares by the 54 tea factory companies extended to farmers – which before the resolution were KTDA's sole corporate shareholders.

The restructuring has made KTDA one of Kenya's largest companies by shareholding with  over 620,000 individual and institutional shareholders.

This will see it join the likes of Sasini Tea Company, Kapchorua Tea, Limuru Tea Company, and Williamson Tea Kenya which are listed at the bourse, trading under the agricultural segment.

Previously, farmers owned the organisation 100 per cent through their 54 tea factory factories whose zonal representatives formed the KTDA Holdings Board at the national level.

Under the new structure, the tea factory companies will remain corporate shareholders owning 23 million shares and will now jointly and directly own the company with the farmers who now own the five million shares.

The direct shareholding allows farmers to have a seat at the KTDA Holdings Board, with their representative from each of the 12 zones holding the position for a three-year nonrenewable term.

It gives the farmers more control over their assets, currently worth more than Sh36 billion.

Recently, there has been talks of KTDA Holdings assets being sold or possessed by persons outside KTDA, which is not now possible without the direct approval of the over 620,000 shareholders of the company.

“These new changes mean that KTDA shareholders can, in the future if they so wish, approve listing shares on the NSE allowing the company to raise additional funds for development expenditure, as opposed to its current framework where funds are raised through internal mechanisms,” the company said in a statement yesterday.

It will be regulated by the Capital Markets Authority. 

In the new setup, the sale of any assets whose value exceeds one percent of the total value of KTDA Holdings PLC net value will have to be approved by the shareholders including farmers.

Trading or sale of the shares will be locked for the next ten years to protect the farmers from short term speculators.

Farmers will now derive dividends directly, being earnings from KTDA Holdings and its subsidiaries, in addition to earning dividends through their factories.

In the last five years, farmers have earned more than Sh2.7 billion in dividends through their factories.