Telecommunications firm Safaricom #ticker:SCOM has sought to entrench its Kenyan identity through special resolutions to be voted on by shareholders at a time when its ownership structure is changing and concerns are growing over its huge role in Kenya’s economy.
Independent non-executive directors in the company will have to be Kenyan while the seat of chairman will also be reserved for a citizen as per the proposed resolutions.
This means the total representation of Kenyans on the board will always be greater than three, given that the government has a right to the board due to its 35 per cent shareholding in the listed telco.
The government has said it has no plans to dilute its stake in the company, underlining how crucial the asset is to the country.
All critical decisions, such as approval of business plans and appointment of chief executive and chief financial officer, will need a 75 per cent vote — meaning that one of the Kenyan directors has to give consent for any such action.
Safaricom can appoint a maximum of 10 directors and a minimum of seven.
“The number of directors (excluding alternates) shall not be less than seven nor more than 10 in number and shall include independent non-executive directors who shall be of Kenyan citizenship,” reads part of the resolutions.
The resolution also implies a Kenyan will always chair the powerful audit committee of the board, which is reserved for independent directors.
An independent director is one who does not actively participate in the daily running of the organisation and is not tasked with representing the interest of any one shareholder on the board.
Bitange Ndemo, who has previously served as a permanent secretary for information and telecommunications technology is set to be confirmed as the second independent non-executive director, after Susan Mudhune.
The resolutions come after UK-based Vodafone restructured its ownership in Safaricom by selling a 35 per cent stake to its South African unit, Vodacom. Vodafone UK retained a five per cent stake.
Notably, South African firms have had a hard time penetrating the Kenyan market.
Besides the non-executive posts, Safaricom is also bound to have a Kenyan in its top management.
“The directors shall encourage the retention of a predominantly Kenyan character in the senior management and executive committee of the company,” read the resolutions.
Directors nominated by Vodafone will also not be allowed to vote on agreements directly related to M-Pesa in which Vodafone has interests.
Vodafone charges Safaricom an M-Pesa licence fee of five per cent — payable quarterly — which saw the multinational earn Ksh3.7 billion ($37 million) from these fees in the year ended March.
M-Pesa’s exponential growth has seen it generate Ksh55 billion ($550 million) in revenue in the year ended March.
A Treasury report released at the end of last year had warned that the collapse of Safaricom’s M-Pesa service would cause widespread disruption to the economy.