Companies listed at the Nairobi bourse have up to end of next April to comply with the new corporate governance rules that demand disclosure of directors pay, their term limits, adoption of a code of ethics and review of board composition.
Capital Markets Authority (CMA) says the firms will need to make the disclosures to the regulator and shareholders four months after the end of the financial year or end of April for companies whose accounts period closes in December.
The stringent codes became operational last year in the middle of listed firms’ financial year, pushing the compliance deadline to April.
The firms must cap independent directors terms to nine years, ensure diversity in the board with at least a third being independent and a code of ethics established to guard against corrupt directors.
The firms are also expected to disclose executive and directors pay and the basis of such payments in annual financial reports.
The executive pay must be within the industry average and must contain an element linked to company performance to avoid higher salaries in underperforming companies.
Experts reckon that some firms are struggling to meet the requirements, prompting International Finance Corporation (IFC) and a Scribes Services, a corporate governance consultancy firm, to host a two-day refresher training staring March 15.
“Scribe Services and IFC have jointly organised sensitisation sessions for boards and management of issuers in Kenya to increase the awareness of their responsibilities as provided in the new code,” said Bernard Kiragu, managing partner at Scribes Services.
The training is anchored on stringent Code of Corporate Governance Practices for Issuers of Securities to the Public 2015, which requires companies to make good corporate governance an integral part of business dealings and culture.
The training will touch on the composition, independence of directors and their responsibilities, especially keeping management in check and protecting investors’ interests.
Companies will be taught the importance of setting ethical standards with boards expected to ensure their structures to verify and safeguard the integrity of financial reports and directors.
The importance of timely and balanced disclosure of material information will also be the focus of the training, a critical plank in avoiding regulatory penalties.
Kenya Airways #ticker:KQ and Uchumi Supermarkets #ticker:UCHM are some of listed companies which have been plunged into massive loss positions because of governance malpractices.