The Capital Markets Authority(CMA) has put Limuru Tea under intense scrutiny after its minority shareholders filed a court petition stopping the regulator from approving the transfer of a 52% equity owned by Unilever to UK’s Tea Co.
The grounds are that they were not allowed by to purchase these shares.
These investigations follow a petition from a minority shareholder in Limuru Tea accusing the firm of undervaluing Unilever’s land holding at KSh1 million against an estimated value of Sh23 million per acre or KSh16.2 billion.
CMA is also investigating allegations that Limuru Tea was understating its revenues and delaying the collection of tea sales from Unilever, which is accused of overcharging the Kenyan tea firms for services.
“The Capital Markets Authority(CMA) is conducting an investigation into the affairs of Limuru Tea as an issuer of securities to the public following allegations of misrepresentation of published financial statements regarding undervaluation of revenues, coordination of delays in the collection of trade receivables, high cost of sales and improper valuation of the company’s land and buildings,” reads a letter from the director of market operations Abubakar H. Abubakar.
Limuru Teas’ annual report shows that the company’s buildings and land it owns are held at a book value of KSh 1.4 million as of December 2021.
CMA to be stopped from approving the transfer
The CMA probe seeks to take a look at the secrets of Unilever’s boardroom and the financial operations of Limuru tea.
In October last year, Unilever Tea Kenya Limited’s Board of Directors gave the nod to plans to approve plans to separate its tea business following a decision by its parent firm Unilever Group.
Unilever Kenya owns a 52% stake in the Nairobi-listed Limuru Tea Plc.
The two minority shareholders at Limuru Tea have asked the court to stop CMA from approving the acquisition and have also asked the regulator to investigate impropriety in Limuru.