Companies

Agro firms trail banks in good governance ratings

CMA

Capital Markets Authority (CMA) CEO Wyckliffe Shamiah. FILE PHOTO | NMG

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Summary

  • Agricultural companies have the worst corporate governance record among listed companies, a new report by the Capital Markets Authority (CMA) has said.
  • Firms under this sector include Eaagads, Kakuzi, Kapchorua Tea, Limuru Tea, Sasini and Williamson Tea Kenya.
  • In 2016, the CMA published a code for corporate governance practices for publicly listed companies to adopt, or disclose and explain any non-compliance.

Agricultural companies have the worst corporate governance record among listed companies, a new report by the Capital Markets Authority (CMA) has said.

The sector with six firms had the least weighted score with a rating of 55.04 percen, shining a spotlight on their compliance with the code of governance principles that sets principles such as directors’ pay, their term limits, adoption of a code of ethics, review of board composition and stakeholder relations.

Firms under this sector include Eaagads, Kakuzi, Kapchorua Tea, Limuru Tea, Sasini and Williamson Tea Kenya.

In 2016, the CMA published a code for corporate governance practices for publicly listed companies to adopt, or disclose and explain any non-compliance.

The rules are meant to reduce risks to shareholders and community, increase investment for both local and foreign investors and manage conflict of interest.

In its fourth edition of the Report on the State of Corporate Governance for Issuers of Securities to the Public in Kenya, CMA said commercial banks were the most compliant. The report is for the financial year 1 July 2020 to 30 June 2021.

The CMA has revealed that the 11 banks with shares trading at the Nairobi Securities Exchange (NSE) performed best with a leadership rating and a weighted overall score of 81.74 percent across all principles in the financial year 2020/2021.

“A sectoral analysis of performance revealed that the banking sector had the best weighted score with a leadership rating across all the principles of the Code while the agricultural sector had the least weighted score with a fair rating,” CMA said.

The annual publication outlines CMA’s independent assessment of companies listed on the NSE and the issuers of corporate bonds are applying the principles and recommendations contained in the Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 (CG Code).

“Out of the seven governance principles assessed, there was improved performance on rights of shareholders, stakeholder relations and ethics and social responsibility,” CMA chief executive Wyckliffe Shamiah noted. He said the overall weighted average score for 2020/2021 assessment was 70.2 percent (good rating) compared to 72 percent (good rating) for the previous assessment’’.