KENYA – Kenya’s Capital Markets Authority (CMA) has suspended Minnesota Coffee Markets Ltd from participating in the weekly Nairobi Coffee Exchange (NCE), effective April 25, 2024.
The suspension comes after allegations of trading practices that include the diversion of funds from the coffee auction and non-compliance with regulations restricting the trade to growers only.
The brokerage company, licensed to sell coffee on behalf of Coffee Management Services Ltd (CMS), was found to be in violation of the CMA and Capital Markets (Coffee Exchange) Regulations 2020.
These regulations mandate that entities trading in coffee at the NCE must be growers of the cash crop.
Additionally, the proceeds from coffee sales must be remitted by buyers or roasters through a direct settlement system to ensure payment to service providers and growers.
According to CMA, the settlement and distribution proposal for sale 27, including the sale catalogue submitted by Minnesota Coffee Markets Ltd for the auction on April 30, 2024, did not comply with the Capital Markets Regulations 2020.
CMA’s sanctions against Minnesota were delivered on April 25.
CMS opted to challenge the regulator’s decision through the Capital Markets Tribunal. It sought orders to file an appeal against CMA’s decision out of time, as well as an injunction to stay the implementation of the regulator’s decision pending the hearing and determination of the application and the appeal.
However, on July 23, the Tribunal dismissed the appeal, stating that CMS violated trading regulations and failed to adhere to internal review mechanisms for resolving disputes with the regulator.
The Tribunal ruled: “In the upshot, the Tribunal finds no merit in the application, and we proceed to make the following orders: (a) The applicant’s (CMS) Notice of Motion dated June 5, 2024, is hereby dismissed with costs to the respondent (CMA).
(b) Consequent to the above order, the applicant’s appeal lodged without the leave of the Tribunal by way of a Memorandum of Appeal dated June 5, 2024, is also struck out.”
The Tribunal further contended that CMS is not a coffee grower under the Capital Markets (Coffee Exchange) Regulations, 2020, and that the company is neither a cooperative society, union, association, nor estate as stipulated by the regulations.
Moreover, the Tribunal highlighted that there exists a three-tier appellate process for those aggrieved by CMA’s decisions, with the High Court being the final resort.
CMS, however, sought judicial review in the High Court before exhausting other options, which included first appealing to the authority and then to the Capital Markets Tribunal.
“We have considered the applicant’s explanation for the delay, but we are not persuaded that the same is justified. The applicant elected to challenge the decision of the respondent (CMA) through a Judicial Review process in court and ought to live with the consequences of the outcome,” the Tribunal stated.
Liked this article? Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World. HERE
