DOCUMENT NO: KK-RA-4.20,24,46,47
1. General Purpose
Kakuzi PLC (the “Company”) is subject to various laws and regulations in Kenya relating to transacting in its securities as well as in the securities of other companies where it is an insider. The purpose of this Insider Trading Policy (the “Policy”) is to promote compliance with applicable securities laws by the Company and all directors, officers and employees thereof, in order to preserve the reputation and integrity of the Company as well as that of all persons affiliated with it. The Policy is intended to also implement procedures and guidelines designed to prevent trading based on non-public information regarding the Company, including any of its subsidiaries, which is likely to have a material effect on the market price of the Company’s shares.
The Policy is guided by Section 32A – 32L of Part VI of the Capital Markets Act (Cap 485A) which prohibits Insider Trading (as defined below) and it applies to all listed securities, their derivatives and derivatives traded on any market regulated by the Capital Markets Authority, and may also be imposed by securities laws wherever the Company does business.
2. Scope of the Policy
2.1. Covered Transactions and Securities
The policies and guidelines contained herein cover securities of all classes (and the derivatives thereof) authorized and issued by:
a) The Company itself;
b) Any corporate in which the Company is a corporate director or Insider (as defined below).
Trading refers to buying or selling of these securities.
2.2. Covered Person
The policies and guidelines contained herein cover the following persons (‘A Covered Person’), who may be deemed to be Insiders:
a) All directors of the Company and their alternates (if any);
b) All staff of the Company;
c) All legal, audit and other contractual advisors and consultants to the Company;
d) The immediate family of, or associates deemed to have significant personal or commercial relationships with, the persons listed above; and
e) Government officials who in execution of their duties may come across confidential information which they may elect to utilize to conduct Insider Trading.
2.3. Companies Covered
The prohibition on Insider Trading in this Policy is not limited to trading in Securities (as defined below). It also includes trading in the securities of other firms, such as those with which the Company:
a) May be negotiating a major transaction, such as an acquisition, investment or sale; or
b) May have a proposed, present or past business relationship. Information that is not material to the Company may nevertheless be material to one of those other firms.
3. Definitions
3.1 Securities
These are “price-affected securities” in relation to Insider Information if the information is likely to, if made public, materially affect the price of the securities (including common shares, options for common shares and any other securities the Company may issue from time to time, such as preferred shares, warrants and convertible debentures, as well as to derivative securities relating to the Company’s shares, whether or not issued by the Company, such as publicly-traded options.);
3.2 An Insider
Any person in possession of Insider Information is considered an insider as to that information. Insiders include the Company directors, officers, employees, independent contractors and those persons in a special relationship with the Company, e.g. large shareholders, auditors, accountants, consultants or attorneys. The definition of Insider is transaction specific; that is, an individual is an insider with respect to each non-public item of which he is aware.
3.3 Insider Information
Insider Information means information relating to particular securities or to a particular issuer of securities that has not been made public and if it were made public is likely to have a material effect on the price of the securities. Information shall be treated as relating to an issuer of securities where it may affect the business prospects of the company.
The policies and guidelines contained herein cover any information that may be deemed to be of a non-public nature (that is, available only to Insiders), and which is material enough to affect the price of the securities, or the price of the securities of any body-corporate where the Company is an Insider. Insider Information may include, but is not limited to:
- Earnings or losses that are significantly higher or lower than generally expected by the capital markets;
- A proposed or imminent merger, acquisition or divestiture of the Company’s business or its investment.
- A proposed or imminent public issue of the securities;
- A proposed share split or share dividend;
- Significant board and management changes;
- Significant new innovations, technologies, intellectual properties, new product, process, or service;
- Significant new regulatory approvals, agreements or business partnerships;
- Imminent financial distress or bankruptcy of the company or its investments;
- Large contracts in a pending status or in discussion;
- Significant cybersecurity incidents;
- The imposition of a ban on trading in the Securities or delisting from a stock exchange;
- Pending or threatened significant litigation, or the resolution of such litigation;
- Pending or threatened regulatory enforcement action or proceedings against the Company; and A change in auditors or notification that the auditor’s reports may no longer be relied upon.
The above list is only illustrative; many other types of information may be considered “material” depending on the circumstances. The materiality of particular information is subject to reassessment on a regular basis.
3.4 Insider Trading
This refers to transactions in the Company’s listed Securities, and or their derivatives by the Insiders or their associates based on information originating within the Company that would, once publicly disclosed, materially affect the prices of such Securities.
3.5 Public Information
Information is made public if:-
i) It is published in accordance with the rules of a securities exchange for the purpose of informing investors and their professional advisers;
ii) It is contained in records which by virtue of any law are open to inspection by the public;
iii) It can readily be acquired by those likely to deal in any securities:-
· to which the information relates; or
· of an issuer to which the information relates; or
iv) It is derived from information which has been made public.
Information may be treated as having been made public even though the information:-
i) Can be acquired by persons exercising diligence or expertise;
ii) Is communicated to a section of the public;
iii) Can be acquired by observation;
iv) Is communicated on the payment of a fee; or
v) Is published outside Kenya.
3.6 Black-Out Period
A “Black-Out Period” is a time before and after a significant event, and as specified by the Company from time to time, wherein an Insider may not buy or sell Securities without violating this Policy.
Covered persons are advised to restrict their trading in the Securities to 60 days only following the public announcement of any Insider Information (such as the dissemination of annual or half-year operating results in the media, or a major investment announcement by the Company).
3.7 Tipping
Tipping is the act of providing material non-public information about a publicly traded company or a security to a person who is not authorized to have the information. As long as the information is accurate, tipping can produce huge profits for an investor who acts on it when performing a securities transaction. In most cases, it also leads to unfair gains for the tipper because of pre-arranged agreements to share the trading profits. Tipping is closely related to Insider Trading.
3.8 The Trading Window
The period of time within which, if opened, directors, officers and certain employees of the Company and its subsidiaries are permitted to trade in the Securities, as specified by the Company from time to time.
3.9 Related Person
For the purposes of this Policy, a Related Person includes your spouse, children and anyone else living in your household; partnerships in which you are a general partner; trusts of which you are a trustee; estates of which you are an executor; and other equivalent legal entities that you control. Although a person’s parent or sibling may not be considered a Related Person (unless living in the same household).
4. Statements of the Policy
a) General Policy
It is the policy of the Company to prohibit the unauthorized disclosure of any non-public information acquired in the workplace, the use of non-public Information which is likely to have a material effect on the market price of the Company’s shares in securities trading and any other violation of applicable securities laws.
b) Specific Policies
4.1 Policies Regarding Transactions in the Securities
1. A person who deals in listed securities or their derivatives that are price-affected in relation to the information in his possession commits an offence of insider trading under provisions of section 32B of the Capital Markets Act, Laws of Kenya, if that person:-
a) Encourages another person, whether or not that other person knows it, to deal in securities or their derivatives which are price-affected securities in relation to the Insider Information in the possession of the Insider, knowing or having reasonable cause to believe that the trading would take place; or
b) Discloses the Insider Information, otherwise than in the proper performance of the functions of his employment, office or profession, to another person.
2. For the purposes of subsections (1) (a) and (b), a person deals in securities or their derivatives if, whether as principal or agent, sells, purchases, exchanges or subscribes for any listed securities or their derivatives.
3. No officer or employee of the Company shall purchase or sell Securities from the last date of the closure of the half year, end of the financial year or within a period of one month of any material event that may affect the price of the Securities of the Company until after official communication is made to the public.
4.2 Policies Regarding the Use, Disclosure and Protection of non-public Information which is likely to have a material effect on the market price of the Company’s shares
4.2.1. Trading in Securities
a) A Covered person may not buy or sell securities of another company at any time when they have material non-public information about that company, including, without limitation, any company that the Company conducts ordinary business with, such as customers, vendors or suppliers, when that information is obtained during the course of his/her employment with the Company. If they are not certain whether it is permissible to trade in the securities of such company; they should contact the Company Secretary before making any trades.
b) A Covered person may not disclose material non-public information to third parties, to any other person, including family members, or make recommendations or express opinions on the basis of material non-public information with regard to trading securities.
c) A Covered person who receives or has access to the Company’s material non-public information may not comment on the share price movement or rumors of other corporate developments that are of possible significance to the investing public, unless it is part of his/her job description (e.g. Investor Relations) or you have been specifically pre-authorized by the Company MD or FD in each instance.
d) A Covered person is advised to seek clarification from the Company Secretary, if unsure of whether or not to trade during the open period. Even after obtaining consent from the Company Secretary, A Covered person is advised to trade with caution, since they will be directly liable of any Insider Trading Accusation from the Capital Markets Authority.
4.2.2. Tipping
a) A Covered person may not disclose or pass on (“tip”) non-public Information which is likely to have a material effect on the market price of the Company’s shares to any other person, including a Related person or friend, nor shall such person make recommendations or express opinions on the basis of non-public Information which is likely to have a material effect on the market price of the Company’s shares as to trading in the Securities.
b) A Covered person with Insider Information must not trade, or cause other persons to trade (“hot tip”), on the basis of such information until the information has been widely disseminated to the capital markets and the public.
4.2.3. Restricted securities
A restricted security is any security that is currently being considered or evaluated as a potential investment by the Company. Covered persons are advised not to trade in any restricted security.
In addition, no director, officer or employee of the Company shall effect any transaction in the securities of another entity, the value of which is likely to be affected by actions of the Company that have not yet been publicly disclosed. Please note that this provision is in addition to the restrictions on trading in securities of other entities set forth in the Code of Ethics of the Company.
4.2.4. Black Out Period
Covered persons are advised to restrict their trading in covered securities to the trading window only following the public announcement of any Insider Information (such as the dissemination of annual or half-year operating results in the media, or a major investment announcement by the Company).
4.2.5. Post-termination transactions
This Policy continues to apply to a Covered person’s transactions in the Securities even after they have terminated employment or other services to the Company or a subsidiary as follows: if they are aware of non-public Information which is likely to have a material effect on the market price of the Company’s shares when the employment or service relationship terminates, they may not trade in the Securities until that information has become public or is no longer material.
4.2.6. Confidentiality
A Covered person should exercise care that Insider Information is not discussed in any public vicinity or transmitted by any public means until it has been disseminated by a company announcement, regulatory filing or press release.
A Covered person should not disclose Insider Information to any person except as governed by the Company’s policies and procedures, business arrangements or as required by a competent court of law.
4.2.7. Individual Responsibility
a) A Covered person needs to be fully conversant and compliant with securities laws and regulations in Kenya and in all countries where the company does business.
b) Every employee, officer and director has the individual responsibility to comply with this Policy against insider trading, regardless of whether a transaction is executed outside a Blackout Period or is pre-cleared by the Company. The restrictions and procedures are intended to help avoid inadvertent instances of improper Insider Trading, but appropriate judgment should always be exercised by each employee, officer and director in connection with any trade in the Company’s Securities. If Insider Information regarding the Company is inadvertently disclosed, no matter what the circumstances, by any covered person, the person making or discovering that disclosure should immediately report the facts to the Company Secretary.
c) A Covered person may, from time to time, have to forego a proposed transaction in the Company’s Securities even if he or she planned to make the transaction before learning of the Material Nonpublic Information and even though the Insider believes he or she may suffer an economic loss or forego anticipated profit by waiting.
4.2.8. Precautions to Prevent Misuse or Unauthorized Disclosure of Sensitive Information
When a Covered person is involved in a matter or transaction which is sensitive and, if disclosed, could reasonably be expected to have an effect on the market price of the Securities of the Company or any other company involved in the transaction, that individual should consider taking extraordinary precautions to prevent misuse or unauthorized disclosure of such Insider Information. Such measures should include the following:-
Maintaining files securely and avoid storing information on computer systems that can be accessed by other individuals;
Avoiding the discussion of confidential matters in areas where the conversation could possibly be overheard;
Not gossiping about Company affairs; and
Restricting the copying and distribution of sensitive documents within the Company.
4.2.9. Internet
Any written or verbal statement that would be prohibited under the law or under this Policy is equally prohibited if made on the Internet or by social media.
5. Potential Criminal and/or Civil Liability and/or Disciplinary Action
5.1. Civil and Criminal Penalties
The items set forth in this Policy are simply to be viewed as guidelines, not as comprehensive coverage of all potential instances. Appropriate judgment should be exercised by each individual in connection with the purchase or sale of securities.
Pursuant to the provisions of Section 32E of the Capital Markets Act (Cap 485A), Laws of Kenya, a person who commits an offence indicated under section 32B of the Capital Markets Act (section (d) 2 (a) (1) in this policy) is liable on conviction:-
a) on a first offence, in the case of-
an individual, to a fine not exceeding Kshs 2.5 Million or to imprisonment for a term of two years and payment of the amount of the gain made or loss avoided; and
a company, to a fine of up to Kshs 5 Million and payment of the amount of the gain made or loss avoided.
b) on any subsequent offence, in the case of-
an individual, to a fine not exceeding Kshs 5 Million or to an imprisonment for seven (7) years and payment of twice the amount of the gain made or loss avoided; and
a company, to a fine not exceeding Kshs 10 Million and payment of twice the amount of the gain made or loss avoided.
Pursuant to the provisions of Section 32K of the Capital Markets Act (Cap 485A), a person who is convicted of an offence under Insider Trading, Part V1 of the Act shall, in addition to the penalty imposed for committing the offence, be liable to an action by a person who has sustained pecuniary loss as a result of having purchased or sold securities at a price affected by the act or transaction which comprises or is the subject of the offence, to an action for damages in respect of the loss concerned. However, the aforesaid shall not be construed to limit or diminish any civil liability which any person may incur under any other Act or Law.
5.2. Disciplinary Action
With a reasonable basis to conclude that an individual has failed to comply with this Policy, the Company shall impose disciplinary actions as outlined in the Employee Handbook, including ineligibility of future participation in equity incentive plans or termination of employment whether or not failure to comply with this Policy results in violation of law. It shall not be necessary for the Company to wait for the filing or conclusion of any civil or criminal action against the alleged violator before taking disciplinary action.
5.3. Violations and Reports of Unauthorized Trading or Disclosure
A Covered person should report any suspected violation of Insider Trading law to the Company Secretary. In order to avoid penalties against the Company, its directors and management for failure to take appropriate steps in the event of any Insider Trading. Supervisory authority over any of the Company staff must immediately report to the Company Secretary either any trading in the Company’s securities by staff or any disclosure of non-public Information which is likely to have a material effect on the market price of the Company’s shares by staff, in either case which they have reason to believe may violate this Policy or applicable securities laws.
6. Amendments to the Policy
The Company is committed to a continuous review and update of the Policy. The Company therefore, reserves the right to amend, alter or terminate this Policy at any time and for any reason, subject to applicable laws.
7. Acknowledgment concerning insider trading policy
All Directors and Staff will be given a copy of this Policy and they will acknowledge the same.
Revision Date: 21st March 2023 || Approved by Kakuzi Board || Revision No. 01/2023
