CMC Holdings shares will not resume trading at the NSE for another 60 days, signalling that the troubled motor-dealer is not out of the woods yet.
The Capital Markets Authority has extended the suspension for the fifth consecutive period, after the initial seven trading days suspension on September 16, 2011.
The suspension was intended to protect shareholders and give its directors time a chance to resolve their issues. The regulator was at the time investigating how the company had been conducting its affairs in the past, while it also sought to safeguard investor confidence in the capital markets.
The suspension was first extended by 90 trading days on September 27, 2011, and another 21 days on January 25. It was further extended on March 5 to May 31, then followed by another 85 days “to facilitate resolution of outstanding matters.”
This time, the CMA said: “the extension of suspension has been effected to ensure that all necessary information for investors to make informed decisions is made available prior to the commencement of trading.”
The regulator yesterday said it also took into consideration a request by the firm’s management “for more time in order to fully stabilise the operations” and comply with internal control and disclosure requirements.
The tussles within the motor-dealer surfaced when CMC notified the CMA on September 8, 2011 of Joel Kibe’s appointment as board chair to replace Peter Muthoka.
“Thereafter allegations of non-compliance with corporate governance, conflict of interest and fraud were levelled against certain directors of CMCH causing panic in the capital markets,” said the regulator. The CMA summoned the firm’s directors to a round-table meeting on September 29, 2011 to try resolve the issues.
The company subsequently issued a profit warning six days later, projecting a dip in profitability by 25 per cent for the year ended September 30, 2011 over a similar period a year before.
On March 30, CMA released the final report on a forensic investigation prepared by South African firm Webber Wentzel which it had commissioned earlier.
Persons adversely mentioned in the report were summoned to appear before an ad hoc committee set up by the regulator between April 2 and May 4.
A court ruling on May 24 ruled that CMA was within its mandate to appoint an interim board for investors protection, alluding that the regulator would have failed in its mandate if it hadn’t.
The CMA blacklisted eight directors from CMC’s board and of any other listed firm on August 3, after a contempt case against it and select directors of the firm was dismissed by the High Court.
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