Equity Bank has concluded sale of its 24.7 percent stake in Housing finance at cut-off date to avoid paying capital gains tax in a transaction valued at Sh 2.2 billion.
The lender said in a public announcement to shareholders it had transferred its banking business, assets and liabilities to a non-holding company a minute before year ended to beat the deadline upon receiving regulatory approvals.
Consequently, the bank registered the special purpose vehicle with central Bank of Kenya (CBK) as Equity Group Holdings.
The holding company will only be able to lend financial support through cash reserves or stock sales, assist in restructuring the operational model but will not be engaged in daily activities of the operating entity.
“The transfer was affected at 23:59 hours on 31st December, 2014.” said its company secretary, Mary Wamae in a notice dated Jan 1.
Delays in securing regulatory approvals could have exposed the lender to huge tax burden, with capital gains tax law affected on Thursday.
The law charges five percent of all transactions including property prices, construction costs and those realized from sale of bonds and stocks.