NOMINATED ADVISORS

(NOMADS)

What You Need To Know

Prepared by Kariuki Johnson, LLB

RESPONSIBILITY

A NOMAD assesses the appropriateness of a company intending to

list under the Growth Enterprise Market Segment (GEMS),

specifically-

1. its eligibility to list under GEMS; and

2. compliance with the Capital Markets (Securities) (Public Offers,

Listing and Disclosure) Regulations, 2002.

OUTSOURCING SKILLS

A special feature of a NOMAD is that it can seek advice and

assistance from professional advisors in performing its responsibilities,

provided it retains overall management and responsibility for the

process.

ELIGIBILITY

1. It must be a limited liability company.

2. It (or its Authorized Representatives) has acted in at least 3 relevant corporate finance transactions during the 3-year period preceding the application.

A relevant transaction includes offering advisory services on the public offering of securities, corporate financial restructuring, takeover, mergers, acquisitions and privatizations, corporate financing options including issuance of equity or debt securities or loan syndication or investment.

3. It has a professional indemnity insurance cover.

4. It has suitable facilities for carrying on business (such as office space, operational systems, appropriate, equipment and personnel).

ELIGIBILITY Contd…

5. Has employed at least 2 persons registered as Authorized

Representatives.

Authorized representatives must be registered. The eligibility criteria is

that they must –

a) hold a first degree in either Accounting, Finance, Economics, Law or any

other relevant degree;

b) be a member, in good standing, of a relevant professional body;

c) have at least 3 years experience in significant corporate finance advisory

roles, which may include regulating issues relating to corporate finance;

d) be in full time employment of a Nominated Advisor;

ELIGIBILITY Contd…

e) demonstrate a sound understanding of the capital markets operations in

general and SMEs in particular;

f) meet the Authority’s prescribed fit and proper requirements; and

g) have at least 3 years practical experience in relevant transactions

(explained in 2 above).

6. Has a Compliance Officer.

A Compliance Officer coordinates all compliance matters with the NSE, inter

alia, submission of reports within the prescribed period.

REPORTING OBLIGATIONSNOMADS have a number of reporting requirements, that is -

1. QUARTERLY MANAGEMENT ACCOUNTS within thirty (30) days of the

end of each calendar quarter;

2. HALF YEARLY MANAGEMENT ACCOUNTS within thirty (30) days of

the end of the half year.

3. AUDITED ANNUAL ACCOUNTS within three (3) months after the end

of its financial year;

4. an ANNUAL REPORT of the GEMS Companies under its

management; and

5. a REPORT ON THE PERFORMANCE OF LISTING OF SECURITIES for

which the Nominated Advisor has acted within one (1) month after the listing date including details of challenges faced and measures taken

to mitigate.

COSTLicense Fees

Application fee (non-refundable) KES 2,500

Initial Registration fee (license fee) KES 25,000

Annual Renewal Fees

For 0-5 clients, KES 25,000

For 6-15 clients KES 50,000

For 16-30 clients, KES 75,000

For 31 clients and above, KES100,000

COMMENTARY

The GEMS market segment allows small and medium sized start-up

companies that do not meet the listing requirements under other

market segments to access capital by listing.

As at March 2, 2015, only four companies; Home Afrika Ltd, Flame Tree Group Holdings Ltd, Kurwitu Ventures Limited and Atlas Development

and Support Services; were listed under GEMS. NIC Capital was the NOMAD for Home Africa, Standard and Mutual Limited advised Kurwitu

Ventures while Burbidge Capital Limited advised Flame Tree Group

Holdings Ltd and Atlas Development and Support Services.

Being a NOMAD, a company involved in capital raising advisory may

act as a transaction adviser to small and medium size companies

whose shareholders are seeking to exit by listing under GEMS.