+-

Listing on the Nairobi Securities Exchange

GEOFFREY O. ODUNDOCHIEF EXECUTIVE

14 JUNE 2017

Contents

o About NSE

o Our Heritage

o NSE Strategy

o Capital Market Trends

o Listing on the Exchange

• The Nairobi Securities Exchange (NSE) is a leading AfricanExchange, based in Kenya – one of the fastest growingeconomies in Sub-Saharan Africa.

• Founded in 1954, NSE has a six decades heritage in listingand capital raising of equity and debt securities.

• NSE Demutualized and self listed in 2014. Its Board andmanagement team are comprised of some of Africa’sleading capital markets professionals.

• NSE operates under the jurisdiction of the Capital MarketsAuthority of Kenya and is an affiliate of the WFE, (foundermember of ASEA), EASEA and the AFM.

• We are also a partner exchange in the United Nations –ledSustainable Stock Exchange (SSE) Initiative and member ofthe UN Global Compact.

ETHICS

INTEGRITY

CONFIDENTIALITY

INNOVATION

EXCELLENCE

WORLD CLASS

TRADING

FACILITY

EXCEPTIONAL

PEOPLE

ROBUST

REGULATION

A LEADING

SECURITIES

EXCHANGE IN

AFRICA WITH

A GLOBAL REACH

About the NSE

CAPITAL MARKETSTRENDS

Capital Markets Trends - Global

• All the 3 key indices MSCIWorld, MSCI EmergingMarkets and MSCI ACWIIMI (Investable MarketIndex) were positive in2016.

• This was a rebound fromthe negative returnsposted in 2015.

• The Egyptian market has been the bestperformer over the last year (+78%).

• The USE has posted the lowest return over thelast year at -20%.

• The NSE has posted a -13.5% return in thesame period

Global Capital Markets Trends –E.Africa

Rwanda Stock Exchange Started in 2010, presently hosts 8 listed companies with an average market

capitalization of USD. 2 Billion per year and a Bond market worthUSD. 17.7 Million

Uganda Stock Exchange Started in 1997, presently hosts 15 listed companies with an average market

capitalization of USD. 7 Billion annually

Dar-es-Salaam Stock Exchange Started in 1997, presently hosts 15 listed companies with an average market

capitalization of USD. 11 Billion annually

Capital Markets - Performance Indicators

Capital Markets - Performance Indicators

LISTING ON THE EXCHANGE

Asset Classes that can be listed on the Exchange

Ways of Listing on the Exchange

1. Initial Public Offers

2. Listing by Introduction

3. Additional Listing:

• Rights Issues

• Bonus Issues

• Scrip Dividend

Financial Benefits for Listing

Raising capital to finance growth.

Gaining acquisition

capital.

Optimization of the Balance Sheet

through Equity and

Debt financing

Access tax

breaks enjoyed by listed compani

es.

Unlocking value for

shareholders through enhanced liquidity

from secondary

trading.

Corporate Transactions such as mergers,

acquisitions, exits).

Efficient Price

discovery.

Non Financial Benefits for Listing

Promote Brand Profile

Improved Corporate

Governance and

operational efficiency

Entry Strategy in new

regions(Cross Listing, Dual

Listing)

Attracting and retaining top talent in a

Company (ESOPs)

Help Develop a Succession

Plan

Regulatory Framework for Listing

• The Capital Markets (Securities) (Public Offers, Listing and

Disclosures) Regulations, 2002- equities and fixed income

securities;

• The Capital Markets (Real Estate Investment Trusts) (CollectiveInvestment Scheme) Regulations, 2013- REITS;

• Exchange Traded Fund Guidance Note- ETFs; and

• NSE Listing Rules.

Requirement Part A Criteria for The Main Investment Market Segment

Part BCriteria for TheAlternative Investment Market Segment

Part CCriteria for The Growth EnterpriseMarket Segment

Incorporation Status A public company limited by shares and registered under the Companies Act (Cap. 486 of the Laws of Kenya).

Share Capital Minimum authorized, issued and fully paid up ordinary share capital of fifty million shillings.

Minimum authorized, issued and fully paid up ordinary share capital of twenty million shillings.

Minimum authorized and fully paid up ordinary share capital of ten million shillings; and

The issuer must have not less than one hundred thousand shares in issue

Net Assets Should not be less than one hundred million shillings.

Should not be less than twenty million shillings.

N/A

Requirement Part A Criteria for The Main Investment Market Segment

Part BCriteria for TheAlternative Investment Market Segment

Part CCriteria for The Growth EnterpriseMarket Segment

Free transferability of shares

Shares to be listed shall be freely transferable.

Availability and reliability of financial records

The issuer shall have audited financialstatements complying with IFRS for anaccounting period ending on a date not morethan four months prior to the proposed date ofthe offer or listing .

N/A

Requirement Part A Criteria for The Main Investment Market Segment

Part BCriteria for The Alternative Investment Market Segment

Competence and suitability of directors and management

At the date of the application:

The issuer must not be in breach of any of its loan covenantsparticularly in regard to the maximum debt capacity.

No director of the issuer shall have any petition underbankruptcy or insolvency laws proceedings.

No director should have been convicted of fraud or anycriminal offence, nor be named the subject of pendingcriminal proceeding related to capital market or financialservice institution.

No director should been the subject of any ruling of a courtof competent jurisdiction that permanently or temporarilyprohibits such director from acting as an investment advisoror as a director or employee of a stockbroker, dealer, or anyfinancial service institution.

Requirement Part ACriteria for The MainInvestment MarketSegment

Part BCriteria for TheAlternativeInvestment MarketSegment

Part CCriteria for TheGrowth EnterpriseMarket Segment

Dividend policy The issuer must have a clear future dividendpolicy.

N/A

Track record,profitability andfuture prospects

The issuer must havedeclared profits aftertax attributable toshareholders in atleast three of the lastfive completedaccounting periods tothe date of the offer

The issuer must havebeen in existence inthe same line ofbusiness for aminimum of two yearsone of which shouldreflect a profit withgood growthpotential.

N/A

Requirement Part A Criteria for The Main Investment Market Segment

Part BCriteria for TheAlternative Investment Market Segment

Part CCriteria for The Growth EnterpriseMarket Segment

Solvency and adequacy of working capital

The issuer should not be insolvent

The issuer should have adequate working capital.

The issuer should not be insolvent. The issuer should have adequate working capital.

Requirement Part A Criteria for The Main Investment Market Segment

Part BCriteria for The Alternative Investment Market Segment

Share ownership structure Following the public shareoffering or immediately priorto listing in the case of anintroduction, at least twentyfive per centum of the sharesmust be held by not less thanone thousand shareholdersexcluding employees of theissuer.

Following the public shareoffering or immediately priorto listing in the case of anintroduction, at least twentyper centum of the sharesmust be held by not less thanone hundred shareholdersexcluding employees of theissuer or family members ofthe controlling shareholders.

Requirement Part ACriteria for The MainInvestment Market Segment

Part BCriteria for The AlternativeInvestment Market Segment

Share ownership structure In the case of a listing byintroduction, the issuer shallensure that the existingshareholders, associatedpersons or such other groupof controlling shareholderswho have influence overmanagement shall give anundertaking not to sell theirshareholding before the expiryof a period of twenty fourmonths following listing andsuch undertaking shall bedisclosed in the InformationMemorandum

No investor shall hold morethan three per centum of thetwenty per centumshareholding.a

The issuer must ensure thatthe existing shareholders,associated persons or suchother group of controllingshareholders who haveinfluence over managementshall give an undertaking tothe Authority not to sell theirshareholding before the expiryof a period of twenty fourmonths following listing andsuch undertaking shall bedisclosed in the InformationMemorandum.

Requirement Part ACriteria for The MainInvestment MarketSegment

Part BCriteria for TheAlternativeInvestment MarketSegment

Part CCriteria for TheGrowth EnterpriseMarket Segment

Listed shares to beimmobilized.

N/A N/A All issued shares mustbe deposited at acentral depositoryestablished under theCentral DepositoriesAct, 2000 (No. 4 of2000).

Nominated Advisor N/A N/A The issuer mustappoint a NominatedAdviser in terms of awritten contract andmust ensure that ithas a NominatedAdviser at all times.

Tax Incentives for Listed Companies

• Where a company has 20% of its issued shares listed corporation tax is leviedat 27% for the first 3 years commencing immediately after the year ofincome following the date of such listing.

• Where a company has 30% of its issued shares listed corporation tax is leviedat 25% for the first 5 years commencing immediately after the year ofincome following the date of such listing.

• Where a company has 40% of its issued shares listed corporation tax is leviedat 20% for the first 5 years commencing immediately after the year ofincome following the date of such listing. (Source Third Schedule, Head BIncome Tax Act)

Other tax incentives include: No stamp duty on additional share capital No Capital Gains Tax on sale of shares

Green Bond

• Asset Backed Securities;• Global Depository Receipts; and• Carbon Credits

Future Products to be Listed on the NSE

Capital Markets - Key Reforms

In its journey to establish Nairobi as an International Financial Centre the Government in liaison with Capital Markets industry has introduced the following key reforms:

• Removal of ownership caps for foreign investors in listed companies (subject to approval by the National Treasury);

• Repeal of the Capital Gains Tax for marketable securities that had been introduced in the year 2015;

• Introduction of a new Corporate Governance Code (CGC);

• Introduction of Market Making (MM) Regulations;

• Introduction of Securities Lending and Borrowing Regulations ( soon to be enacted); and

• Recognition of the NSE as a Self Regulatory Organization

NSE has done the following to attract more listings;

• NSE has embarked on a programme of events in cities and major townsin Kenya in order to engage with potential issuers across the country,specifically focussed on equity listings (GEMS &MIMS) and REITS.

• The NSE has also held GEMS Forums with Nominated Advisors(NOMADS) to brainstorm on the regulatory issues affecting the GEMSmarket. This has formed the basis of our lobbying efforts.

• The NSE has also held a series of ETF Forums and trainings withdifferent stakeholders in the market. This has elicited a lot of interest inour ETF market.

• The NSE is currently in discussions with the LSE and other exchanges topromote dual listings. This is expected to bolster NSE’s position as aregional powerhouse and appeal to issuers keen on attractinginternational investors.

Initiatives to attract more listings

Thank You