Stockbrokers have unveiled a plan for a special shareholder meeting to oust the CEO of the Nairobi Securities Exchange (NSE), escalating the boardroom battle at the bourse.
The brokers, who own 20 percent of the exchange, have taken issue with the NSE chief executive Frank Mwiti's leadership style and accuse him of withholding information from stakeholders and making material decisions without the board’s knowledge.
They also accuse Mr Mwiti of pushing for the direct share sales that bypass stockbrokers and allow the exchange to earn transaction charges and not brokerage commissions, which ran up to Sh1.9 billion in the year to December.
This marks the first public spat between the NSE leadership and traders since 2014 when the exchange sold a 38 percent stake in an initial public offering, which saw the stockbrokers cede their full ownership to the State, foreigners and local investors.
Besides the ouster of the CEO, the brokers, through their lobby Kenya Association of Stockbrokers and Investment Banks (Kasib), are seeking for their right to hold at least two board seats as part of the extraordinary general meeting (EGM) agenda.
They want Nancy Noreh, a manager at Sterling Capital, to occupy the vacant seat left by the resignation of Paul Mwai — a representative of the brokers.
Kasib is also pushing for Tom Mulwa, the managing director of Liaison Group, to occupy the seat of independent director left vacant by the exit of private equity (PE) guru, Michael Turner.
To oust Mr Mwiti, Kasib must get the backing of the eight NSE directors and in writing.
“We hereby express a vote of no confidence in the chief executive officer of the NSE. The decisions and actions highlighted above indicate a disconnect from market realities and stakeholder relations,” said Kasib in a letter sent to NSE chairman Kiprono Kittony and signed by the lobby’s chairperson, Donald Wangunyu.
“The concerns call into question the quality of management at the exchange. A case in point is the procedural irregularities of 71st AGM of which we are certain that the NSE board was unaware of and would not have condoned. On behalf of the undersigned members who collectively hold approximately 20 percent of the issued share capital of the NSE, we formally request the board of directors to convene an extraordinary general meeting of shareholders.”
The lobby said the AGM held on May 21 was flawed as the notice for the meeting failed to comply with the 21-day notice requirement.
“We request the board to address this violation and its implications,” said Kasib.
They also accused the CEO of blocking the stockbrokers from accessing the bourse’s strategic plan, arguing that it has been kept secret to prevent interrogation.
“As Kasib members, we have been prevented from interrogating the strategy, we respect the NSE’s management decision to go at it alone and our members have little choice but to disassociate themselves from a strategic plan that they are not privy to,” Kasib added.
The brokers reckon that recent public messaging from the bourse suggests that investors may buy and sell shares directly at the exchange without going through licensed brokers, arguing that move is in breach of the Capital Markets Act, 2023 and the NSE direct market access guidelines.
Mr Mwiti declined a request to comment on Kasib’s ouster bid, saying the sack notice was sent to Mr Kittony and not him.
Mr Kittony acknowledged receiving the Kasib letter, adding that he had opened talks with the lobby.
“I have received the letter from Kasib. As you know they are our key stakeholders. We will consult and get back to you,” he said in a phone interview.
Kasib has given the NSE board chairperson up to June 19, 2025 for a response.
Mr Mwiti was appointed NSE chief executive officer in May last year from Ernst & Young where he served as a Partner and as the Eastern Africa Markets Leader.
The articles of association of the NSE provides for the procedure of ousting directors who sit on the board, including executives like the CEO.
The CEO will be fired if all the directors call for his resignation.
The NSE currently has eight directors, including six who are non-executive; Donald Wagunyu who is also the Chairman of Kasib, Risper Alaro, Stephen Chege, Caroline Kariuki, John Niepold and Isis Nyong’o.
NSE vice-chairman Mwai was a non-executive director representing trading participants and retired from the board at the AGM and did not offer himself for re-election.
His exit and that of Mr Turner prompted vacancies that are also a subject of the fights at the NSE.
Kasib wants Ms Noreh to replace Mr Mwai and Mr Mulwa for Mr Turner.
“Trading participants insist on their right to maintain at least two representatives in the board,” said Kasib.
“Ms Noreh nomination supports continuity and ensures that trading participants’ views and expertise remains well represented in the board.”
Before the 2014 IPO, the bourse was a mutual company held by brokers.
Presently, a foreign fund for a family and an overseas pension scheme are the top owners with a combined 23.82 percent stake.
The Treasury has a 3.35 percent stake with eight stockbrokers directly owning between 1.34 percent and 2.69 percent.
