Should the NSE Suspend Companies Under Receivership?

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The Nairobi Securities Exchange (NSE) is facing renewed scrutiny following its decision to indefinitely suspend trading in TransCentury PLC and East African Cables PLC, two publicly listed firms placed under receivership by Equity Bank over a combined KSh 4.74 billion loan default.

The move, announced on June 20, 2025, has revived the long-running debate on whether suspension is the appropriate regulatory response when companies enter receivership.

Why TransCentury and East African Cables Were Suspended

The NSE acted under Regulation 73(2)(a) of the 2023 Capital Markets regulations, which permits it to halt trading to protect investors or maintain orderly markets, subject to Capital Markets Authority (CMA) approval.

The CMA, Kenya’s principal financial markets regulator, approved the suspensions. PwC Kenya has since been appointed as joint receiver and administrator of the two companies.

According to the NSE, the decision was intended to safeguard investors during a period of financial and managerial uncertainty. However, the lack of detailed justification, particularly the absence of market instability indicators, has raised legal and policy questions.

Lawyers, investor advocates, and insolvency experts argue that receivership, as defined under Kenya’s Insolvency Act, 2015, is a business recovery tool, not a trigger for de-listing or indefinite suspension.

They contend that removing such companies from public trading blocks shareholder exits, limits access to new capital, and reduces transparency at a time when stakeholders need it most.

Several stakeholders now suggest that the decision may be challenged at the Capital Markets Tribunal, as Kenya’s securities law does not explicitly classify receivership as sufficient grounds for suspension.

The Capital Markets Act requires that suspensions be based on actions that may harm investors or market operations, not corporate distress alone.

In the past, companies placed under financial distress or receivership in Kenya have experienced different regulatory outcomes. Athi River Mining (ARM) Cement was suspended in 2018 after entering administration and remained delisted throughout its insolvency proceedings.

Mumias Sugar was suspended in 2019 following receivership over loan defaults, and despite opposition from shareholders and other stakeholders, the suspension was upheld.

Kenya Airways, suspended from 2020 to 2024 during its restructuring process, was eventually relisted after returning to profitability, with limited legal resistance.

Notably, in 2023, when initial efforts were made to place TransCentury and East African Cables under receivership, the process was halted by court injunctions, and the CMA did not pursue a suspension at that time

Internationally, exchanges in jurisdictions like the United Kingdom and South Africa often allow companies in administration or business rescue to continue trading, provided they comply with disclosure and reporting rules.

In Kenya, experts have suggested several alternatives to indefinite suspension for listed companies under financial distress. One option is supervised trading, which would allow such firms to remain listed while adhering to stricter disclosure requirements.

Another is the use of time-bound suspensions, typically between 30 and 90 days, to allow for assessment and restructuring without cutting off market access. There is also the idea of a recovery board, approved in 2021 but not yet implemented, which would serve as a dedicated platform for companies undergoing turnaround efforts.

Additionally, some firms have pursued restructuring while remaining active, as seen in East African Cables’ move to sell its Tanzanian operations to reduce debt.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.