KENYA Law and Practice Contributed by: Sammy Ndolo, Brian Muchiri, Nicholas Owino and Valere Nyaboke, Cliffe Dekker Hofmeyr
3.2 Board Members The Companies Act provides for a single-tiered board of directors with no distinctions unless a company elects to differentiate certain managerial roles for cer - tain board members. In some cases, the chairperson may be given a casting vote in the event of a deadlock in a decision of the directors. The board of directors as a whole is responsible for managing the company’s business. 3.3 Board Composition The Companies Act does not prescribe the composi - tion of the board of directors for private or unlisted public companies. These entities are free to appoint directors as deemed necessary to fulfil their specific requirements. However, companies listed on the NSE must ensure their board composition complies with the recommen - dations set forth in the CMA Governance Code. These recommendations are as follows. • Balance of directors – The board should be com - prised of a balanced mix of executive directors responsible for the company’s day-to-day opera - tions and non-executive directors who provide independent oversight and guidance. A majority of the directors should be non-executive and one- third of the board should be independent non- executive directors. • Board size – The optimal board size should be determined by the company’s specific needs and operations. It should be large enough to accommo - date a diversity of expertise and perspectives yet remain conducive to productive discussions during board meetings. • Director limits – An individual director of a listed company (excluding corporate directors) cannot hold such a position in more than three publicly listed companies concurrently. In addition, certain industries, such as banking and insurance, may have additional board composition requirements based on “fit-and-proper” assessments of directors conducted by the relevant regulatory bod - ies.
3.4 Appointment and Removal of Directors/ Officers Appointment of Directors The Companies Act allows for appointing directors upon a company’s incorporation. This process is set out in the articles of association for future appoint - ments. As such, directors are typically appointed by a resolution of the shareholders, with a simple major - ity vote sufficing. However, the articles of association may prescribe specific instances where the directors may appoint a director (eg, filling a casual vacancy) Restrictions on the Appointment of Directors The Companies Act imposes certain restrictions on who can be appointed as a director. Firstly, any indi - vidual under the age of eighteen is automatically ineli - gible. Furthermore, the company’s articles of associa - tion will ordinarily preclude specific groups of people from acting as directors. Such groups may include undischarged bankrupts and individuals deemed to be of unsound mind. This aligns with the Insolvency Act, which further prohibits undischarged bankrupts from participating in the management or control of any business without the express consent of a bankruptcy Ordinary resolutions can remove a director. However, specific procedures must be followed. A special notice detailing the proposed removal must be served on the director in question. The director is then given the opportunity to submit written representations within twenty-one days of receiving the notice. Following the receipt of any representations, the board must convene a meeting to consider the matter. The director facing removal is entitled to be heard during this meeting when the motion for removal is being considered. If the motion for removal is passed, the director retains the right to challenge the removal in court. trustee or the court. Removal of Directors It is important to note that even after being removed from office, a director remains subject to certain con - tinuing duties. These duties include: • the obligation to avoid conflicts of interest regard - ing exploiting any property, information or oppor -
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