Listed firms face tough gov­er­nance guide­lines

The new CMA rules, for­mu­lated in 2014, came af­ter ris­ing cases of mis­man­age­ment and abuse of power by com­pany direc­tors

The Star (Kenya) - - News Business - WEITERE MWITA @MwitaMartin

Listed com­pa­nies are star­ing at tighter reg­u­la­tions af­ter the Cap­i­tal Mar­kets Au­thor­ity signed a year-long deal with the In­ter­na­tional Fi­nance Cor­po­ra­tion to track im­ple­men­ta­tion of rules.

The CMA and the IFC yes­ter­day said they will de­velop a re­port­ing frame­work for is­suers of shares, bonds and other se­cu­ri­ties on the Nairobi Se­cu­ri­ties Ex­change.

This will help to mon­i­tor how well the guide­lines are ap­plied, and en­able in­de­pen­dent gov­er­nance au­di­tors to pro­vide as­sur­ance.

“We want to have a sus­tain­able, com­pet­i­tive and sta­ble cap­i­tal mar­ket,” CMA chair­man James Ndegwa said. “The agree­ment will po­si­tion Kenyan firms to be more com­pet­i­tive.”

Un­der the pro­gramme, the two will also de­velop a toolkit which will en­able cap­i­tal mar­kets ac­tors to ap­ply and mon­i­tor the new cor­po­rate gov­er­nance stan­dards when they is­sue se­cu­ri­ties in Kenya.

The au­thor­ity has put in place mea­sures to help ad­dress money laun­der­ing, con­flict of in­ter­est and fraud at listed com­pa­nies, as well as in­crease trans­parency.

Among them is the re­quire­ment that boards fully dis­close any non-com­pli­ance to rel­e­vant stake­hold­ers in­clud­ing the CMA.

The new rules pro­hibit direc­tors from hold­ing the chair­man post in more than two listed firms, and limit the term of in­de­pen­dent direc­tors to nine years.

Com­pany boards are re­quired to have at least a third non-ex­ec­u­tive direc­tors, while chair­per­sons will be delinked from the day-to-day run­ning of the firms they over­see.

“Good cor­po­rate gov­er­nance prac­tices make lo­cal busi­nesses more com­pet­i­tive and re­silient, and so sup­port eco­nomic growth and sta­bil­ity,” IFC di­rec­tor for East and South Africa Ou­mar Seydi said.

Code of cor­po­rate gov­er­nance prac­tices for is­suers of se­cu­ri­ties to the pub­lic was en­acted on March 4, 2016.

Listed firms are re­quired to record and main­tain a reg­is­ter of all con­flict of in­ter­est dec­la­ra­tions by the direc­tors.

The new CMA rules Pub­li­ca­tion of the guide­lines, which were for­mu­lated in 2014, came af­ter ris­ing cases of mis­man­age­ment and abuse of power by sev­eral com­pany direc­tors.


IFC Africa cor­po­rate gov­er­nance of­fi­cer Ste­fanus Han­doyo with Cap­i­tal Mar­kets Au­thor­ity chair­man James Ndegwa af­ter sign­ing com­pa­nies’ code of ethics part­ner­ship in Nairobi yes­ter­day

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