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Muramati Sacco Society offices. CMA has ordered the co-operative society to stop its share sale for flouting market rules. Photo/FILE 

The capital markets regulator has ordered Muramati Sacco Society to stop its share sale, throwing into confusion the thousands of investors who had committed their funds to the firm’s capital raising offer.

About 4,000 investors had taken part in the share sale which started on October 1 and was due to close on Friday, according to the Sacco chairman Samuel Muturu.

He said the Sacco had contacted the Capital Markets Authority (CMA) on the issue but declined to say how much money investors had committed in the offer. Information on the Sacco’s website showed the company had targeted to raise Sh200 million.

The Sacco has been offering shares to existing and new members at a rate of Sh10 per share, with participants required to buy a minimum of 100 units for Sh1,000 and a maximum of 100,000 shares for Sh1 million.

“We have contacted the CMA on this issue and expect to have a meeting early next week,” said Mr Muturu, adding that the share sale was approved by the Sacco Societies Regulatory Authority (SASRA). “What we are doing is open and we are not hiding anything” he said.

SASRA officials were not available for comment.

The CMA in a statement on Tuesday ordered Muramati to stop advertising the share sale “until it fulfills requirements of the law on offers of securities to the public or a section of the public.”

“The public is hereby notified that the sale of the shares has not been approved by the authority to be made to the general public and is therefore being made contrary to the provisions of section 30A of the capital markets act, chapter 485A laws of Kenya,” said CMA.

The offer which was being advertised on TV, newspapers and Muramati Sacco’s website promised buyers an opportunity to enter a raffle where they would win three Toyota vehicles, motor cycles, gas cookers and investment shares worth Sh50,000.

Investors would also be eligible to become “full members” of the Sacco upon purchase of a minimum of 10 shares.

Share sales and other capital raising offers in Kenya are regulated by the CMA.

A company selling shares or bonds to the public is required to publish an information memorandum that discloses assets and financial performance history of the firm.

Clothing and lifestyle goods retailer Deacons Kenya, a non-listed firm, raised Sh700 million from the public early this month after getting CMA’s approval.

“Section 30A provides that no person shall in Kenya, offer its securities for subscription or sale to the public or a section of the public unless prior to such offer, it publishes an information memorandum signed by or on behalf of its officers and files a copy thereof with the Authority” said CMA.

“Every information memorandum must comply with such requirements as may be prescribed by the Authority and the offer should be made in accordance with the requirements set out in the Capital Markets (Securities) (Public Offers, Listing and Disclosure) Regulations” the statement added.

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