8.1: Strengthen and enforce corporate governance standards

Measurement

Publication of corporate governance code. Creation of education programme for issuers and potential issuers on good corporate governance.

Working Group
WG3
Implementation Progress

The Code of Corporate Governance for Issuers of Securities to the Public 2015 was gazetted on 4 March 2016 and became fully effective on 4 March 2017.

Below are some of the programs and mechanisms put in place to ensure that  issuers adhere to the code;

  1. Partnership Agreement between CMA and IFC signed on 13 October 2016. The parties agreed to corporate in improving the regulatory framework on corporate governance and promoting good corporate governance practices in Kenya through the implementation of the Corporate Governance Code for Issuers of Securities.
  2. Training for board and management of issuers in November 2016.
  3. Task force between CMA and ICPSK set up in October 2016. Taskforce made recommendations on areas of improvement for the ICPSK training programme and guidelines for governance auditors.
  4. ICPSK governance auditors trained by CMA and IFC on the framework for governance audits for issuers in August 2017.
  5. In collaboration with the IFC and in consultation with issuers, CMA developed the Corporate Governance Reporting Template and the Corporate Governance Scorecard in June 2017. The reporting template filled and submitted by issuers, serves to enhance adherence to governance requirements as well as disclosing the status of application of each requirement. The Corporate Governance Scorecard is assessed internally by CMA to assess the level of implementation of the Code.
  6. The first Report on the State of Corporate Governance for Issuers of Securities to the Public in Kenya 2018 was launched to listed companies on 30 October 2019 and was further cascaded to issuers on 31 October and 1 November 2018.
  7. Following stakeholder deliberations on the Report on the State of Corporate Governance for Issuers, CMA distributed a feedback statement to issuers on 29 January 2019. The feedback statement highlighted key matters raised by the participants and CMA’s corresponding considerations.
  8. Both the feedback statement and the first Report on the State of Corporate Governance for Issuers of Securities to the Public in Kenya 2018 were published on CMA's website on 6 February 2019.

Timelines
2014-2016
 
Status
Continuous
Measurement

Introduction of range of measures to achieve better corporate governance. Improved  results as measured by ICPSK’s Governance Index.

Working Group
WG3
Implementation Progress

Below are a range of measures introduced to achieve better corporate governance:

  1. The Stewardship Code for Institutional Investors was gazetted in June 2017. The Code applies to asset owners and asset managers investing in the debt and equity of companies listed on a licensed securities exchange. The Code seeks to reinforce the implementation of the Corporate Governance Code to ensure that listed companies adhere to corporate governance requirements. It ensures that institutional investors exercise their ownership rights actively and responsibly as part of their fiduciary responsibility to their clients. The role of the Code is to codify the key institutional investor responsibilities that come with ownership rights and provides guidance on how institutional investors act as responsible stewards in the oversight of issuers.
  2. 3 May 2018, CMA organized a Stewardship Code Workshop for Institutional Investors with the key objective of setting the framework for implementation of the Code.  Institutional Investors committed to actively sensitize their stakeholders on the Stewardship Code and their responsibilities.
  3. In conjunction with the LSK, CMA formed a Legal and Compliance Audit Taskforce that is to aid in empowering advocates to build capacity for legal audits training. Two meetings have been held so far i.e. on 25 June 2018 and 23 August 2018.
  4. 24 July 2018 CMA organized a teleconference with Integrated Reporting Committee of South Africa- in regard to the Integrated Reporting Committee Annual Conference 2018. The webcast followed the progress on Integrated Reporting initiatives and a discussion on implementation of the King IV Report on Corporate Governance.
  5. 4 March 2019, a Disclosure and Transparency Roundtable meeting was held with IFC, NSE, Sustainable Stock Exchanges, CMA and all listed companies as key stakeholders. The main objective of the meeting was to raise issuer awareness on disclosure and transparency, provide practical resources, tools and guidance for improving integrated reporting and build capacity on the integration of environmental and social aspects of corporate governance in the Kenyan context.

Timelines
2014-2016
 
Status
Continuous
Measurement
Corporate governance social responsibility and sustainability index in place
Working Group
WG2
Implementation Progress

CMA has negotiated support program from IFC to facilitate NSE to develop governance and sustainability indices. 
The NSE has already developed the Green Bond guidelines - an initiative that has enhanced the exchange's contribution to the development of the Corporate Governance and sustainability index. There now is a Green Bonds Policy Guidance Note, 2019 and the amendments to the NSE Listing Rules that incorporated Listing of Green Bonds in January 2019 thus introducing a framework for socially responsible and sustainable investment for issuers and investors.

Timelines
2014-2016
 
Status
In Progress (Behind Schedule)