Kenya Tea Development Agency (KTDA) Holdings PLC shareholders have approved the shakeup of its shareholding structure to have farmers own shares directly in the company.
The changes were made by allotting 5 million bonus shares by the 54 tea factory companies, which before the resolution were KTDA's sole corporate shareholders.
The restructuring has effectively made KTDA Holdings PLC one of Kenya's largest firms by shareholding as it will have more than 620,000 individual and institutional shareholders.
Before the move, farmers owned the organisation 100 per cent through their 54 tea factory companies whose zonal representatives formed KTDA Holdings Board at the national level.
The tea factory companies will remain corporate shareholders owning 23 million shares
and will jointly and directly own the firm with farmers who will now own 5 million shares.
Farmers will now have a representative at the KTDA Holdings Board and each representative from the 12 Zones and will hold the position for a three-year non-renewable term.
The tea farmers will have the final say on the affairs of their investment through the majority shareholding by the 54 corporate shareholders and the tea factory companies.
Tea leaves. PHOTO/KTDA
In the resolutions, the sale of any assets whose value exceeds one per cent of the total value of KTDA Holdings PLC net value will have to be approved by the shareholders (farmers).
The resolutions also stipulated that trading or sale of the company’s shares will be locked for the next 10 years to protect the farmers from short-term speculators.
The changes come when the smallholder tea sub-sector is undergoing major reforms to
Improve corporate governance and significantly improve farmers' earnings.
The move also comes when the global tea market is experiencing low prices due to
oversupply of the popular product from the East Africa region and across the globe.
Farmers will now derive dividends directly through earnings from KTDA Holdings and its
subsidiaries as well as earning dividend through their tea factories.
In the past 5 years, farmers have earned more than Sh2.7 billion through their factories and will now have greater say over their assets, whose current value is more than Sh36 billion.