ARM Cement Plc #ticker:ARM now becomes the second-high profile administration case under the current Insolvency Act, 2015, which came into force on January 18, 2016. ARM Cement was placed under the administration of PricewaterhouseCoopers (PwC) on August 17, 2018 by its lenders.
It now joins Nakumatt Supermarkets, the first high profile company to have fallen into the Act’s jurisdiction.
However, ARM’s case is unique given that it is a public company. Indeed, trading on the company’s stock has since been suspended. Obviously. However, for investors, who have probably been spooked by the suspension, there are certain interesting facets of the relatively new Act worth taking into consideration.
First, unlike its predecessor, the Companies Act, it is quite progressive and its pronouncement on a company doesn’t automatically imply a call for hammer on the company’s assets. Instead, the main objective of the Act is to maintain a company as a going concern. Consequently, at the core of it, resuscitating a business is main deliverable of the administrator.
To support this objective, the Act has done away with the office of the receiver and replaced it with the office of the administrator. As set out in Section 522(1) of the Act, the administrator has three objectives: (i) maintain the company as a going concern; (ii) achieve a better outcome for the company’s creditors as a whole, than would likely to be the case if the company were liquidated (without first being under administration); and (iii) to realise the property of the company in order to make a distribution to one or more secured or preferential creditors (and this is only applicable in the event that the business resuscitation is unsuccessful.
Secondly, the Act offers some form of protection to a company. Section 560(1) (a) provides that in the administration period, a security over the company’s properties is only enforceable with the consent of the Administrator or approval of the Court.
Essentially, if a creditor had registered a charge on a company’s properties — both moveable and immovable, realising such a charge requires some pre-approval.
Additionally, during the business resuscitation period, which is initialed at 12 months, with the option of extending for a further six months (at the Court’s behest), the debtor is handed a reprieve from having to immediately honour creditors’ demand notices. For ARM Cement especially, this means that the company’s core business of producing and selling cement remains unencumbered.
Thirdly, the Act envisions that the Administrator(s), while primarily representing the interest of the creditor(s), will act in good faith to the company. Speculatively, the Act immerses the administrative receiver’s skin into the game—akin to having an equitable share. Consequently, the administrator, in the course of retooling a company’s operations, is largely expected to exercise due care.
For investors, this is probably the most progressive insolvency regime as it offers protection to a company by not automatically calling the bell on its assets. Further, a company’s going concern is preserved. However, this calls for grit, focus, good faith and reasonable care on the part of the administrator.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.