NIC Bank has released a notice of the Annual General Meeting (AGM) in the local dailies. This will be the 52nd AGM of the shareholders of NIC Bank and will be held at the Kenyatta International Conference Centre in Nairobi on Wednesday 2nd May 2012. The bank’s profit after tax for the period ended 31st December 2011 increased by 46.385% from Ksh 1,730,397,000 for a similar period in the year 2010 to Ksh 2,533,048,000.

The main issues on which the shareholders are to decide are the following:

1. Confirmation of the interim dividend of Ksh 0.25 per share to be paid on 5th October 2012 and to approve the payment of a final dividend of a final dividend of Ksh 0.25 per share on the paid up capital of Ksh 1,974,487,810.
2. Election of Directors.
3. Increase of authorised share capital from Ksh 2 billion (400 million ordinary shares of Ksh 5 each) to Ksh 4 billion by the creation of 400 million new ordinary shares of Ksh 5 each.
4. A rights issue.
5. A bonus issue.
6. Regional expansion.
7. Amendment of Articles of Association.

It is worth noting that a rights issue and bonus issue are both ways of increasing the authorized share capital of a company. The bank may therefore either use a rights issue or a bonus issue to increase its authorised share capital upon shareholder approval of this increase.

There is a high probability that the bank will opt for a rights issue. Earlier, in February, Mr James Macharia, NIC Bank’s chief executive officer, announced that plans were underway to complete a Ksh 2 billion rights issue by end of July. This would increase the authorised share capital by Ksh 2 billion to Ksh 4 billion (the amount the board seeks approval from the shareholders).

The rights issue is to raise capital for expansion as the bank hopes to set up a Ugandan subsidiary this year on which the bank will spend Ksh 961 million. Read more here.