Kenyan companies rank highly on corporate governance matters relating to disclosures, shareholder rights and the roles of board of governors, an Africa report shows.
The study of corporate governance requirements done by consultancy KPMG and the Association of Chartered Certified Accountants (ACCA) ranks Kenya second to South Africa in development and application of corporate governance standards in listed and unlisted companies.
The study concentrated on 15 African economies selected on the basis of their GDP and availability of corporate governance instruments in their laws.
The Capital markets Authority (CMA) revised the country’s corporate governance code last year capping the number of listed company boards on which an individual can serve, among other things.
“South Africa and Kenya stand out, with their requirements to set out clearly the fiduciary duties of the board, to require the board to document and disclose its role formally in a board charter, and to establish a code of conduct,” reads the report in part.
The move to strengthen Kenya’s corporate governance laws came in the wake of a series of high profile scandals in listed and unlisted firms, which could be traced to poor oversight and management, leading to losses for shareholders.
Kenya’s corporate governance framework is guided by various laws, which include the Companies Act, the CMA Act, the #ticker:NSE Listing Rules, the Capital Markets (Securities) (Public Offers, Listing and Disclosure) Regulations and the Code of Corporate Governance Practices for Issuers of Securities to the Public.
Companies are now required to apply the rules, or failure to that explain steps they are taking to make sure they are moving towards application of recommended corporate governance practices.
New laws have also been proposed that will further increase transparency in corporate governance, especially targeting directors who seek to do business with family members.
The amendments to the Companies Act have proposed to compel directors to widen disclosure of their relations to include kin such as in-laws, grandchildren and their spouses, and siblings.
Currently, the law only calls for disclosure of spouses, parents, children and step-children in the definition of family.