A shareholder of Mumias Sugar, Taiti Hanningtone, has taken the Capital Markets Authority (CMA) to the office of the Ombudsman, accusing the regulator of failing to provide reasons for the continued suspension of the miller's stock. Hanningtone, through city law firm I.C. Law LLP, wrote to CMA on August 27, seeking answers on the suspension and whether the company has been complying with regulations requiring it to furnish shareholders with material information, including financial results.
The prolonged suspension has left shareholders without sufficient information concerning the regulatory status and future of their investment. In its reply, the CMA declined to offer specific responses to the 33 queries filed by Hanningtone, citing Section 13 (2) of the Capital Markets Act that restricts disclosure of information it gathers in the course of exercising its functions. The CMA also directed some of the queries to Mumias and its receiver manager, noting that disclosures on prospective or ongoing regulatory and receivership processes would be speculative.
Hanningtone has taken issue with the CMA's response, arguing that the CMA Act contemplates disclosure in edited or redacted form where only part of a record is exempt, rather than a blanket refusal on information. He faulted the decision to direct him to the company for answers without confirmation whether the CMA already holds the information that he sought in his letter. Hanningtone has requested that the Commission find that the CMA's reliance on section 13(2) of the Act does not constitute a lawful basis for refusal under the Act.
Mumias was suspended from trading in September 2019 after it was put into receivership by KCB Bank over debt default. At the time of suspension, Mumias owed banks Sh12.5 billion. The miller was initially suspended for a period of three months, which was extended by a further three months at the expiry of the initial freeze. In April 2020, CMA announced that the suspension had been extended indefinitely.
Mumias is among six companies that are currently frozen from trading at the Nairobi Securities Exchange, locking in Sh27 billion in paper wealth for the affected investors. The others are ARM Cement, Bamburi Cement, East African Cables, TransCentury and Deacons East Africa. Even as the sugar miller remains suspended from trading, its assets in Western Kenya were leased to Ugandan businessman Sarbjit Singh Rai through his firm Sarrai Group in 2021, for a period of 20 years.
In its letter to Hanningtone, the CMA said that it continues to exercise its statutory oversight over the company as a listed issuer, while also respecting the primacy of the process under the Insolvency Act 2015 and directions of the courts handling the receivership related proceedings. The CMA added that it carried out an onsite governance inspection of Mumias in May 2025, assessing the corporate governance structures of the company and arrangements to safeguard the interests of stakeholders, secured and unsecured creditors and shareholders.
The CMA's response to Hanningtone's queries highlights the delicate balance between regulatory oversight and the need to protect sensitive information. The outcome of Hanningtone's application to the Ombudsman will likely have implications for the regulation of listed companies in Kenya. The case has also raised questions about the transparency and accountability of the CMA in its dealings with listed companies and their shareholders.
Key points
- A shareholder of Mumias Sugar has reported the Capital Markets Authority to the Ombudsman, citing failure to address concerns over the suspension of the miller's stock.
- The prolonged suspension of Mumias Sugar has left shareholders without sufficient information concerning the regulatory status and future of their investment.
- The Capital Markets Authority has declined to offer specific responses to the shareholder's queries, citing Section 13 (2) of the Capital Markets Act.
