Regulatory Alerts2015-01-01
Code of Corporate Governance Practices for Issuers of Securities to the Public 2015
The 2015 Code of Corporate Governance establishes mandatory principles and guidelines for listed and unlisted public companies in Kenya, transitioning from a 'comply or explain' to an 'apply or explain' framework. It mandates boards to adopt rigorous standards for director appointments, composition, and independence, while enforcing comprehensive transparency, ethical leadership, risk management, and audit committee oversight. Issuers must implement these requirements within one year and provide detailed annual disclosures regarding their compliance status and governance practices.
Code of Corporate Governance Practices for Issuers of Securities to the Public 2015
1.1 INTRODUCTION
1.1.1 Citation
This Code may be cited as the Code of Corporate Governance Practices for Issuers of Securities to the Public 2015.
1.1.3 Implementation and oversight
Issuers are encouraged to implement this Code immediately but not later than one year after its publication in the Gazette. Where an issuer does not implement this Code one year after it has been published, the issuer shall disclose to the Capital Markets Authority the reasons for non-application, and clearly indicate the time frame required and the strategies to be put in place towards full application.
2.1 Appointment, composition, size and qualifications of Board members
2.1.3 Recommendation: Board composition
The Board shall comprise a balance of executive and non-executive directors, with a majority of non-executive directors. Independent non-executive directors shall be at least one third of the total number of Board members.
2.3.3 Recommendation: Roles of Chairperson and Chief Executive Officer (CEO)
The functions of the Chairperson and the Chief Executive Officer shall not be exercised by the same individual.
2.4.2 Recommendation: Tenure of independent Board members
The tenure of an independent Board member shall not exceed a cumulative term of nine years.
2.11 Governance audit
2.11.1 Recommendation
The Board shall subject the company to an annual governance audit by a competent and recognized professional accredited for that purpose by the Institute of Certified Public Secretaries of Kenya (ICPSK), in order to check on the level of compliance with sound governance practices.
6.1.4 Recommendation
The Board shall rotate independent auditors every six to nine years.
8.0 Revocation
The Guidelines on Corporate Governance Practices by Public Listed Companies in Kenya, 2002, are revoked.