Nairobi, Kenya, February 7, 2017 — IFC,
a member of the World Bank Group, and Kenya’s Capital Markets Authority
today 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.
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets. Working
with 2,000 businesses worldwide, we use our six decades of experience to
create opportunity where it’s needed most. In FY16, our long-term investments
in developing countries rose to nearly $19 billion, leveraging our capital,
expertise and influence to help the private sector end extreme poverty
and boost shared prosperity. For more information, visit www.ifc.org
About Capital Markets Authority
The CMA was set up in 1989 as a statutory agency under the Capital Markets
Act Cap 485A. It is charged with the prime responsibility of both regulating
and developing an orderly, fair and efficient capital markets in Kenya
with the view to promoting market integrity and investor confidence. The
regulatory functions of the Authority as provided by the Act and the regulations
include; Licensing and supervising all the capital market intermediaries;
Ensuring compliance with the legal and regulatory framework by all market
participants; Regulating public offers of securities, such as equities
and bonds and the issuance of other capital market products such as collective
investment schemes; Promoting market development through research on new
products and services; Reviewing the legal framework to respond to market
dynamics; Promoting investor education and public awareness; and Protecting
SECO is Switzerland’s competence center for all core issues relating to
economic policy. SECO’s economic development cooperation strives to achieve
sustainable growth. Such growth is sustainable if it creates jobs, helps
to increase productivity, to reduce poverty, inequalities and global risks.
For more information, visit www.seco-cooperation.ch.