CMC board should be dissolve and a caretaker board appointed, says Capital Markets Authority
By Ben Kinyanjui
The Capital Markets Authority (CMA) has recommended the appointment a caretaker board to run the affairs of the troubled CMC motors in order to protect investors’ interests.
CMC Chief Bill Lay has waged war against former chairman
CMA board chairman Mr Kungu Gatabaki said a forensic audit by Messrs Webber Wentzel had raised serious concern over the way the motor vehicle selling company was being run.
“The preliminary forensic investigation report and the boardroom disputes that triggered the CMA’s investigation raised serious questions about the running of the affairs of the company,” said a brief statement released by CMA Monday after meeting CMA board where the report was presented.
“The Board of the Authority informed that it would be engaging further with key shareholders of CMC Holdings Limited to implement the appointment of an interim caretaker board for a period to be determined.”
The company has been embroiled in a leadership wrangle pitting a section of the board led by former board chairman Mr Peter Muthoka Muthoka on one side and the managing director Mr Bill Lay who has insisted that the former used his position to fleece the company.
While Mr Muthoka has unsuccessfully tried to hold a special annual general meeting to discuss the company affairs, Mr Lay was on two occasions striped off his work permit though he was never deported from Kenya.
During the meeting, CMA that on Friday extended the suspension of CMC share trading at the Nairobi Securities Exchange for another 21 days handed over the executive summary of the report to the board.
The report touches on the breaches of capital markets laws, conduct contrary to good corporate governance, weaknesses in internal controls; questionable procurement procedures and controls, irregular establishment and operation of offshore accounts and poor oversight by the board.
However, the authority declined to divulge more details that are likely to bring to rest the thorny issue that has threatened to bring down one of the oldest companies in the country.
“The Board of the Authority advised that the interim board will be constituted of 2/3rd representation from the current shareholders with 1/3rd including the Chairman being independent persons nominated by the Capital Markets Authority in order to ensure effective public interest oversight in the interim period,” said Mr Gatabaki.
“In order to ensure continuity in the operations of the company, the current executive directors, namely the Group Managing Director and Group Finance Director will be retained as part of the interim board.”
He said clear directions on the regulatory and enforcement actions to be taken in light of the findings of the forensic investigations report would be communicated in due course taking into account the importance of due process and natural justice.
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