What Is GEMS
Growth Enterprise Market Segment (GEMS). GEMS enables small and medium sized firms to raise substantial initial and ongoing capital, while benefiting from increased profile and liquidity within a regulatory environment designed specifically to meet their needs.
GEMS sets the entry barriers much lower. Aspiring small and mid-size companies keen to raise their profile and capital need to show accounts for a single year, for which they need not be profitable, need only enough working capital for a year, can list as little as 15 per cent of their company, and have as few as 25 shareholders, even three months after listing.
This will enable small companies to list on the country’s NSE, home to 61 companies (51 in the main investment market segment and 10 in an alternative investment market segment) and 70 bond issues (61 government and 9 corporate).
The importance of GEMS To the Listing Company and The Economy in General.
The main segment of the market requires a company to have net assets of at least 100m shillings, minimum share capital of 50m shillings held by at least 1,000 shareholders and a track record of three years of profit in the past five years. This punitive requirements have always locked Small and Medium Enterprises from raising the much needed Capital through the NSE, with the introduction of the GEM segment, Savvy investors will be picking on prospective companies at a bargain.
“[GEMS] helps even somebody starting up at a micro level end up a major corporate down the road,” said Mugo Kibati, C.E.O vision 2030. “This is the bastion, the guardian, of universal suffrage in the economy.”
The so called Small and Medium Enterprises of today given ample Funding and the required Publicity will be the Blue chips of tomorrow, 15 years ago Equity Building Society was considered a small struggling Building society but with Good management and availability of Cheap Funds, Equity bank has grown into one of Kenya’s financial success story with subsidiaries all over East Africa.
The Net impact of This Segment on the Trading Volumes at NSE Will definitely be a positive one.
Eligibility criteria for listing on GEMS
1. Public company registered under the Companies Act;
2. Minimum fully paid up capital of 10 million;
3. At least 100,000 shares in issue;
4. Free transferability of shares;
5. Adequate working capital and solvency;
6. Operation for at least one year;
7. No profitability record required;
8. 5 directors, 1/3 non-executive;
9. Directors with no bankruptcy, fraud, criminal offence or financial misconduct proceedings for 2 years;
10. Competent board and senior management – at least 1 year experience in the business;
11. 1/3 board must have completed Directors Induction Program and the rest within 6 months of listing;
12. All issued shares to be immobilized;
13. 15% of the shares must be available for trading & held by at least 25 independent shareholders within 3 months of listing; 14. Controlling shareholders lock in for 24 months; 15. NOMAD appointed by written contract.
The Nairobi Securities Exchange (NSE) is the principal securities exchange of Kenya. Besides equity securities, the NSE offers a platform for the issuance and trading of debt securities. The NSE is a member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA). It is an affiliate member of the World Federation of Exchanges (WFE).