The Capital Markets Authority has gazetted the Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 (the Corporate Governance Code). The Corporate Governance Code succeeds the Guidelines on Corporate Governance Practices by Public Listed Companies in Kenya, 2002.
The purpose of the Corporate Governance Code is to provide the minimum standards required from shareholders, directors, chief executive officers and management of a listed company or an unlisted company that issues securities to the public so as to promote high standards of conduct as well as ensure that they exercise their duties and responsibilities with clarity, assurance and effectiveness.
Of note, is the provision that Board members owe their duty to the company and not the nominating authority. In addition, the Corporate Governance Code now requires that the remuneration of executive directors be not only structured in line with the remuneration for other directors in the same industry but also be tied to corporate performance. CEO’s will now be on the spot as they will have a personal interest in ensuring that they improve the performance of the companies they head in a bid to justify and/or maintain their salaries.