The Treasury has capped approval fees payable by issuers of initial public offers (IPOs) and corporate bonds at Sh30 million, in a move aimed at encouraging more large companies to list securities on the stock exchange.
Companies pay a fee of 0.15 per cent to the Capital Markets Authority when listing.
A large issue in the size of the Safaricom IPO which raised Sh50 billion would attract a levy of Sh75 million under the previous rules that had no levy cap.
However, with the Sh30 million cap, any company issuing an IPO of more than Sh20 billion will stand to make a saving on the levies chargeable.
The Central Depository and Settlement Corporation (CDSC) has also emerged a winner in the revision of capital market levies with the transaction levy charged by the depository rising from the current 0.06 per cent to 0.08 per cent of the value of a given transaction.
“The review of the fees, levies and commissions was necessitated by the need to ensure financial sustainability of the capital markets sector, and raise levies collected by the CDSC given its national importance to market stability and to support continuous improvement of systems and strengthened operational oversight,” said CMA acting Chief executive officer Paul Muthaura.
“The transaction fees levied by brokers at the NSE have been reduced from 1.78 per cent to 1.76 per cent, by reflecting the percentage increase in the CDSC levy, implying that the cost to investors has not increased.”
Mr Muthaura added that approval fees for rights issues are also subject to the maximum cap Sh30 million per issue.
Government bonds, whose approval fees are payable at 0.075 per cent of the amount raised, have their levy capped at Sh50 million.
The amendments on the Capital Markets (Licensing Requirements)(General)(Amendment) Regulations were made through a legal notice issued by Treasury CS Henry Rotich, who has also gazetted the derivatives markets regulations that consolidate the framework of the derivatives exchange, clearing houses, derivatives contracts and derivatives brokers.
