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Dream Properties - Items filtered by date: July 2013
Tuesday, 23 July 2013 03:00

GEMS: Growth Enterprise Market Segment

We could soon own shares in some of our favorite SME’s. Yes, you read that right. This is as a result of the CMA together with the NSE and the CDSC launching the Growth Enterprise Market Segment (GEMS) in January this year. The Segment aims at providing a more facilitative framework for Small & Medium Enterprises (SME’s) to access listing of the approved securities exchanges.

A great example of a listed small comapany is Home Afrika, a property developer here in Kenya whose shareholders recently assented to the company’s bid to establish a Sh10 billion consolidated fund. This fund in addition to the use of REIT's will finance Home Afrika projects as well as its expansion into other countries in Africa.

One of the great results will be deepening of the market & increased investment opportunities in Kenya. So, before you head down to your next business meeting or go off for a round of golf with your associates, allow me to break it down for you, just so you can face the question, “Are you planning on listing your business yet?” well armed.

What exactly are GEMS?

GEMS market is a platform that can be used by growing companies to raise initial and on-going capital provided by the public, while also benefiting from increased profile and liquidity. It’s an alternative method of harnessing savings at a regulated environment to suit their needs. The main aim of the GEMS counter is to create an avenue for firms with high growth potential to access venture capital through public markets to expand their businesses and raise their profile. GEMS is the easiest counter to get listed on because the entry barriers are set much lower than those of the Main Investment Markets (MIMS) and Alternative Investment Markets.

What Types of Companies is Eligible?

The GEMS is open not only to the SME’s but also a broad spectrum of companies whether they are large capitalized entities or small companies.

Why Should I List My Company?

I. Access to capital to fund acquisitions as well as for growth (You can also use your listing to expand your market for example into the rest of Africa)

II. Boost your public profile with customers, suppliers, the media and investors.

III. Create value and liquidity for shareholders; because your company’s value is independently assessed, shareholders can realize their investment, liquidity is stimulated and your shareholder base may be broaden.

IV. You may offer share incentives (stock options) to employees to encourage commitment and improve productivity at work.

Costs & Benefits?

I. Stamp Duty: Exemption of stamp duty and VAT on the transfer of listed securities for the Investor and no stamp duty payable on share capital or increase in share capital of a company listed on the exchange for the Company.

II. Tax Incentives: Kenyan Investors and members of the EAC pay a withholding tax of 5% on dividends while foreigners pay 7.5%. For the Company: 40% issued share capital listed tax rate 20%(5yrs), 30% issued share capital listed tax rate 25%(5 years), 20% issued share capital listed tax rate 27%(3 years)

III. Legal Costs: Legal and other incidental costs relating to introduction is corporate tax deductible.

IV. IPO Costs: Tax deductible to both investor and company; therefore leaving more value to shareholder

V. ESOPS: CIS set up by employers on behalf of employees to invest in listed shares is exempts from income tax

VI. Capital Gains Tax: Suspended for investors for listed companies

What Do I Need to Qualify?

I. Incorporation status: Public company registered under the Companies Act.

II. Minimum Authorized Issued and Fully Paid up Share Capital KES 10 Million ($114,168.00)

III. Shares in Issue At least 100,000 in issue.

IV. Pre Listing Accounting Requirements Audited accounts for one year of operations (no profit requirement)

V. Post Listing Share ownership: Within 3 months of listing, at least 15% of the shares must be held by not less than 25 shareholders (excluding employees of the issuer or family members of the controlling shareholder)

VI. Track Record, profitability and future prospects prior to listing, audited accounts for one year of operations. There is no requirement to have made a profit, during this time.

VII. Working Capital and Solvency: Adequate amounts of WC for at least 24 months after Listing

VIII. Number of Directors: Five directors, one third non-executive. The directors must have completed the Directors. Induction Programme (DIP) or must complete the same within 6 months after listing. They also should have had no bankruptcy, fraud, criminal offence or financial misconduct proceedings for 2 years

IX. Board and Management Experience: At least one years’ experience running the business.

X. Lock-in Period: Controlling shareholders cannot sell for at least twenty four (24) months, their entire stake

Sounds Great So Far, So How Do I List?

To list on the GEMS counter, a company is required to retain a nominated advisor (NOMAD) by appointment through a written contract. A NOMAD is basically a firm or company which has been approved by the Nairobi Stock Exchange as a nominated adviser for the Growth Enterprise Market Segment (GEMS) and whose name has been placed on the register of nominated advisers published by the NSE. Only one NOMAD should be contracted and retained prior to listing and through the entire period of listing onwards. This is also a requirement as good corporate governance practice.

Where Can I Find a NOMAD?

NSE registered nominated advisors are listed below:

 African Alliance Investment Bank

 Burbidge Capital

 CBA Capital

 Emerging Africa Capital

 Faida Investment Bank

 Kingdom Securities

 NIC Capital

 Standard and Mutual

 Dyer and Blair

 Standard Investment Bank

 Horizon Africa Capital Ltd.

 AIB Capital Ltd.

 CFC Stanbic Financial Services.

 Dry Associates

Hopefully these points will help you make a bit of a well-informed choice when it comes to this venture.


Published in Real Estate
Thursday, 11 July 2013 23:16

Kenyan Home Security Industry

We’re a few days into the month and if you’re lucky money has come in. Unfortunately money has probably also gone out. One of the people who might have gotten a chunk of it is your Home Security Provider, or as we might know them, “That watchman at the gate.”

With the level of insecurity in the world today, an investment you need to make is with protecting your physical assets from theft and damage. Most gated communities have a guard to open and close the gate for you but have you checked out their credentials? Do you know their names and ID numbers? How ready are they to combat a gang of criminals should they come chasing after you? Will they protect you and your family or be the first ones out of the gate running away?

Most of us would agree that we would do everything within our power to protect those we love. Sadly though, often times, we get what we pay for and for most of us that’s a professional gate opener and closer. It only takes 1 minute or lapse and the worst consequence may be released.

It’s time we, in our different communities need to resolve not to take a chance with home security services. The Kenyan Security Industry is well established and most Kenyans can name several reputable security companies in the market.

Many neighborhoods now are banding together to resource for a professional security company (a quick Google search can set you on the path to a good one) to ensure the safety of their property and families – and maybe also to ward off any threat of crime or violence.

Be sure to check that your chosen company has all the relevant insurances including the efficacy (failure to perform) insurance, and make sure they offer 24/7 response, on every day of the year. Make sure to regularly audit their services and ensure efficiency. Another good tip is to request the company to circulate the guards after a period of time. In the end, these are still strangers and as much as it’s great to build a rapport with a good guard, it’s equally important not to have a bad guard be too familiar with your schedule.

Be sure to check out some of our furnished properties which do come with security support.

Published in Real Estate

A major downside to the highly anticipated budget unveiled last month is the new taxation mode that might put off any new real estate investors. Property developers have been raising concern over this issue since the unveiling of this year’s budget when National Treasury cabinet secretary Henry Rotich said the government will re-introduce the capital gains tax.

The resounding fear is that it will take a lot of time and resources to make a single transaction because of the new KRA procedures and legal fees which will come up with the new taxation mode. This will have a negative impact on the cost of housing and the consumers will have to bear the burden.

Most developers agree that real estate is still a growing industry and should be given support. Developers need to be encouraged and the taxation mode should not be seen as a move to oppress them.

Capital gains tax was abolished in 1985 to encourage investments in properties and securities. But these sectors have grown significantly compared to 30 years ago. Kenya is ranked the 10th economy in Africa and first economy in east Africa and possesses a unique location and resources like the port of Mombasa that attract investors who are able to reach other countries easily. The reintroduction of this tax means that the taxman will take his share whenever land, houses, stocks, bonds and other marketable assets change hands.

Henry Rotich explained, “This will allow wealthier members of our society to also make a token contribution toward our national development agenda.”

In Other News:

Serviced Apartments in Nairobi

Real Estate Investment Trusts: An Introduction

The demand for short-let houses is on the increase

Self-build homes scheme is launched in Kisumu

Published in Real Estate

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