Africa Business Communities
[Kenya] IFC and Capital Markets Authority train company directors on corporate governance

[Kenya] IFC and Capital Markets Authority train company directors on corporate governance

IFC, a member of the World Bank Group, and Kenya’s Capital Markets Authority have announced a training program to familiarize directors and issuers with the Code of Corporate Governance Practices for Issuers of Securities to the Public. The new Code will be applied starting March 2017.   

The corporate governance training will cover specific topics such as board effectiveness, rights of shareholders, ethics and social responsibility, risk management and internal control, and disclosure, to empower leaders to improve functioning of their boards and control environments.

IFC and CMA’s first training was held in November 2016 and attracted 80 Chief Executives Officers, Chief Finance Officers and Company Secretaries from listed companies. The second round will have 200 attendees.   

“Since we entered into partnership with IFC in 2016, we have seen overwhelming interest from issuers on the Corporate Governance Code,” said CMA Chief Executive Paul Muthaura. “Strengthening corporate governance practices is fundamental for issuers to succeed in mobilizing resources from the capital markets locally and globally, as well as to achieve Vision 2030 and Capital Market Master Plan.” 

IFC and CMA have developed a corporate governance reporting framework which will help companies, issuers and governance auditors to structure compliance statements and ensure that stakeholders understand an issuer’s degree of compliance.

The reporting framework will present data in a format that allows for cross-company comparison. The partnership has also developed an assessment framework for CMA to assess the quality of corporate governance among issuers of securities in Kenya. 

IFC Director for Eastern and Southern Africa Oumar Seydi, said, “Companies with good corporate governance practices tend to carry lower risk and generate higher returns for shareholders. Good practices boost performance and build investor confidence that can lead to reduced capital and regulatory costs.’’ 

The Corporate Governance Code functions on an “apply or explain” principle. An issuer may explain non-application of the Code in favor of an alternative measure, as long as the alternative delivers a better standard of corporate governance.

Where non-application delivers a lower standard of corporate governance, issuers will be expected to explain to the Authority, shareholders and stakeholders the reasons for non-application or partial application, the time frame required to meet each application requirement, and strategies to progress to full application.

Each issuer will be required to post the completed reporting template on their website and send the same to the Authority within four months of the close of each financial year. 

There are, however, mandatory corporate governance provisions that were extracted from the Corporate Governance Code. The mandatory provisions are prescribed in the Capital Markets (Securities) (Public Offers, Listing & Disclosure) Regulations, 2002. 

CMA began implementing corporate governance reforms in 2012, culminating in the enactment of the new Corporate Governance Code in March 2016. The Corporate Governance Code provided issuers with a transition period on one year, within which they should commence its application.

IFC and CMA have also developed a Stewardship Code for Institutional Investors, which will soon be enacted.  IFC has contributed to the adoption of 95 corporate governance codes, laws, and regulations in more than 30 countries worldwide. IFC’s Corporate Governance Program in East Africa is funded by the State Secretariat for Economic Affairs of Switzerland.


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