THE REPORT ON THE STATE OF CORPORATE GOVERNANCE OF ISSUERS OF SECURITIES TO THE PUBLIC IN KENYA 2021

[Full report text follows the structure and content as provided in the PDF, covering the Foreword, Executive Summary, Background, Findings and Recommendations on specific principles, and Next Steps.]

EXECUTIVE SUMMARY

Good corporate governance practices by companies enhance efficiency leading to decreased operational risks. Additionally, it facilitates the achievement of strategies by corporates. This report has been prepared based on an assessment of corporate governance practices by 49 issuers. It is important to note that two issuers who have the same governance structure were assessed as one hence bringing down the number of assessed issuers to 48. However, a number of issuers were excluded from the assessment as they failed to submit either the reporting template or the full set of annual reports for assessment purposes. The Authority is considering taking appropriate enforcement action against issuers who have repeatedly violated the continuous reporting requirements. The weighted average score by the assessed companies remained at a “Good Rating” as the previous assessment but with a slight decrease in the percentage score from 72% to 70.15% as discussed in the subsequent sections of this report. The number of issuers in the leadership category remained 25, those in the good rating category decreased from 11 to 8, those in fair rating increased from 8 to 10 while those in needs improvement rating increased from 4 to 5. The reduction in the number of issuers in good rating was occasioned by penalty imposed on some issuers under the principle of commitment to good governance due to their failure to submit their comments on the assessment findings within the requisite time. The additional one issuer in ‘needs improvement’ rating had not been assessed and rated in the previous year. The table below represents the distribution of the issuers in the leadership category across different sectors. The sectors not mentioned did not have issuers in the leadership category.

Sectors	No. of Issuers
1 Banking	10
2 Commercial & services/telecommunications	3
3 Automobiles & accessories/manufacturing & allied	2
4 Energy & petroleum	2
5 Insurance	4
6 Investment & investment services	3
7 Construction & allied	1
TOTAL	25

A sectoral performance analysis revealed that the banking sector had the best weighted score with a leadership rating across all the principles of the code while the agricultural sector had the least weighted score with a fair rating. An analysis of performance per principle indicated that the best performing principle was rights of shareholders while the least performing was commitment to good corporate governance as detailed in the report.