Suspension of AGMs Over coronavirus Hinders Dividends Payouts

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It is no longer business as usual as regulators have moved in to freeze annual shareholders’ meetings due to the outbreak of coronavirus in the country. This means that investors will have to wait much longer to earn their dividends and change company directors.

Earlier today, health cabinet Secretary Mutahi Kagwe confirmed three more cases of coronavirus bringing the total of those already diagnosed to seven. With the country on high alert, the Sacco Societies Regulatory Authority (Sasra) has directed all deposit taking savings and credit cooperative societies (Saccos) to suspend AGMs for the next thirty days. The Commissioner for Co-operatives has also communicated the same to non-deposit taking Saccos.

The postponement of the AGMs means members will not vote on resolutions such as dividend payments, approval of accounts, changes to directorship, bonus issues and share splits.

Section 30 of the companies Act 2015 provides that a public company is statutorily compelled to hold an AGM within six months from the end of its financial year. Against this background, firms whose financial year ends in December, have until the end of June to hold the meetings failure to which they are fined up to Kshs 1 million.

The suspension of the shareholders meetings is in line with the state directive that prohibits mass gatherings such as meetings, weddings and funerals to contain the spread of the deadly coronavirus. Among the listed firms set to be affected are the ones that hold their AGMs between April and May.

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