Chad Larson, M-KOPA co-founder and shareholder, has filed a formal complaint with the Capital Markets Authority (CMA). He alleges a deeply concerning and unfair share buyback process initiated by the M-KOPA Board of Directors.
The complaint targets the conduct of the Board, major shareholder Sumitomo Corporation, and advisor Eden Global Partners, claiming the buyback is designed to exploit Kenyan employees and minority shareholders.
The core of Mr. Larson’s complaint centers on the valuation used to determine the buyback price. He asserts that the valuation is “biased, manipulated, and grossly inconsistent with the company’s actual market position and recent financial performance.”
- 95% Discount: Larson states the low valuation amounts to approximately a 95% discount to M-KOPA’s true share price.
- Exploitation: The low-priced offer is primarily targeting Kenyan employees who acquired their shares through the Employee Stock Option Plan (ESOP) after years of service. Larson argues this constitutes “Exploitation of Local Shareholders,” taking advantage of information asymmetry.
- Beneficiaries: The manipulated price and a large fee earned by advisor Eden Global Partners allegedly benefit Sumitomo Corporation the most, allowing a valuable claim on the company to shift from Kenyan employees to the large institutional shareholder.
The complaint details several serious governance and ethical issues:
- Conflict of Interest: Sumitomo Corporation is accused of a Conflict of Interest because its representative, Mr. Etsuke Takenaka, sits on the Board and is involved in approving or influencing the very buyback from which Sumitomo directly benefits as the buyer of the heavily discounted shares. This is alleged to contravene the Code of Corporate Governance for Issuers of Securities to the Public, 2015.
- Corporate Governance Breach: Larson argues the Board’s actions contradict the principles of transparency, fairness, and fiduciary duty, violating Section 143 of the Companies Act, 2015, which requires directors to act in the best interests of all shareholders.
Larson highlights a systemic issue regarding shareholder rights, specifically citing a clause in the sale agreement’s Frequently Asked Questions (FAQ): “All parties must keep the terms of the SPA confidential, except where disclosure is required by law or regulation.”
Larson argues this clause is unreasonable and designed to “isolate shareholders, preventing them from sharing information, seeking legal advice, or collectively questioning the fairness of the transaction,” violating the principle of shareholder democracy and informed participation.
Furthermore, he alleges Unfair Treatment of Minor Shareholders, stating that shareholders holding fewer than 500 shares are being denied fundamental rights, including the right to participate in meetings, receive notices, and access minutes—rights fully enjoyed by larger shareholders like Sumitomo Corporation.
Mr. Larson has requested the Capital Markets Authority to take immediate action:
- Halt the buyback process.
- Revalue the shares independently.
- Investigate the conduct of the M-KOPA Board, including the role of the Sumitomo representative, and advisor Eden Global Partners.
