KENYA – The Capital Markets Authority (CMA) in Kenya has recommended a restructuring of the Limuru Tea company’s board to fairly reflect its shareholding structure in the spirit of the Corporate Governance Code.
CMA, in a Corporate Governance Assessment Report on the company for the year ended December 2021, questioned the structure of the company’s board, falling short of accusing it of being captured by its majority shareholder, Unilever Tea, and being unfair to minority shareholders.
The regulator noted that with a shareholding of 27.31 percent, Reit Capital, one of the minority shareholders, was entitled to a seat on the board of the company.
“We note that Unilever Tea Ltd is the majority shareholder with 52 percent stake whereas Africa Reit is a significant shareholder with a stake of 27.31 percent,” CMA wrote in its observations and recommendations.
The regulator added that the board composition should not be biased toward representation by a substantial shareholder, but should reflect the company’s broad shareholding structure.
Responding to the findings of the report which was sent to the chief executive officer of Limuru Tea Gerridina Johanna Maria Ten Den on December 3 last year, he said Unilever Tea is fully represented on the board whereas Africa Reit does not have a single representation at the board level.
“This statement that Africa Reit is a significant shareholder should be expunged from the CG Assessment Report as it is not factual,” said Limuru Tea, adding that there was no requirement in law to appoint directors to represent the interest of minority shareholders.
Maria Ten Den insisted that Africa Reit’s stake is only 4.6 percent, which does not entitle it to a board seat.
Also, in the findings, CMA noted the board did not represent a mix of skills, experience, and requirements of the Corporate Governance Code, which Limuru Tea agreed that 50 percent of the directors were executive, contrary to the requirement that a majority, (50+1 percent), be non-executive.
However, it responded by saying it had ensured a suitable mix of skills and experience from the various directors and was still scouting for an independent director.
“The process has stalled following a suit instituted by Africa Reit against the board,” said Limuru Tea. Africa Reit and billionaire businessman Joe Wanjui want the court to bar Unilever Tea from selling its 52 percent stake in the company as part of Sh596.7 billion ($5.1 billion) global deal.
KTDA disburses January payments to farmers late due to system hitches
As wrangles push the executive tea to the brink, Kenya Tea Development Agency (KTDA) has finally dispatched a Sh2.47 billion payment for 120 million kilograms of green leaf delivered to KTDA-managed factories in January 2023.
There has been a delay in the payment for January green leaf, blamed on a system hitch, which KTDA says has since been rectified.
The monthly green leaf payments are to be paid by the fifth day of the subsequent month under changes introduced last year, an improvement from the previous payment by the 20th of the following month.
The smallholder tea sub-sector accounts for about 60 percent of Kenya’s tea production, four percent of the GDP, and over 15 percent of the global tea exports, providing tea to many tea packers across the world.
For all the latest food industry news from Africa and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook and subscribe to our YouTube channel.
