Jubilee Holdings #ticker: JUB shareholders approved amendments to the company’s bylaws on Tuesday to allow it to buy back its own shares when they trade below fair value.
The insurer had asked shareholders to modify their bylaws to authorize one-time transactions in the future.
“When we want to use this option, we will go back to the shareholders to obtain approval before exercising this option,” said the president of Jubilee c.
Share buybacks generally involve the buyback of shares by the company that issued them. It occurs when the issuing company pays the shareholders the market value per share and reabsorbs that part of their property that was previously distributed between public and private investors.
Share buybacks are common in the Western world, where they are ideally implemented when companies believe that their shares are trading at a large discount to intrinsic value.
These transactions have the effect of driving up stock prices in addition to increasing the participation of continuing shareholders. Companies often buy back shares when they have more cash than they need to fund their day-to-day operations.
Tuesday’s nod from shareholders makes Jubilee the second company listed on the Nairobi Stock Exchange (NSE) to allow share buybacks.
Nation Media Group (NMG) #ticker: NMG is the first company in the NSE #ticker: NSE to launch a share buyback following changes to the Companies Act in 2015 that allowed companies to acquire their own shares.
On Monday, NMG began repurchasing up to 10 percent of its issued shares in Kenya’s first public share buyback program, offering investors the opportunity to collect. The offering will close on or before September 24 if the company acquires 20,739,652 shares before the deadline.
The media house began buying the shares through the NSE at Sh25, a piece after shareholders nodded at the annual general meeting on Friday.
Since then, Jubilee has been listed on the NSE in 1984 and relied on dividends to pump money into shareholders.
The insurer has paid dividends consistently for the last 36 years, either growing or maintaining the same level year after year.
Jubilee shareholders approved a dividend payment of 652.3 million shillings on Tuesday, paving the way for investors to receive final dividends of 579.78 million shillings by July 26.
Jubilee had already paid an interim dividend of 72.47 million shillings. The payment corresponds to the financial year that ended in December, when the insurer recorded a 1.74 percent growth in net income to Sh4.087 billion.
The insurer became the only publicly traded insurer to increase profits and pay a dividend in a tumultuous year that saw an increase in pension fund withdrawals and policy cancellations.
Sanlam Kenya #ticker: SLAM, CIC #ticker: CIC and Britam #ticker: BRIT all posted losses last year, while Liberty Kenya Holdings #ticker: LBTY posted a 1.9 percent decrease in net profit to Sh676 million.
Jubilee also saw the retirement of Lutaf Kassam as director after he decided not to offer himself for re-election.
“Mr. Kassam has been on our board for the past 17 years and has used his vast experience to be the driving force behind many of our important decisions. He has ably chaired our board’s finance committee for many years, ”said Mr. Juma.