KENYA Law and Practice Contributed by: Sammy Ndolo, Brian Muchiri, Damaris Muia and Nicole Gacheche, Kieti Law LLP
• has unlimited capacity and can do anything that a legal person can do; and • its members have limited liability; hence, they do not need to meet the LLP’s liabilities. 1.2 Sources of Corporate Governance Requirements Several key sources that establish corporate governance requirements for companies in Kenya have been outlined below. • The Companies Act sets out the primary legal framework governing the formation, opera - tion, and dissolution of companies, including aspects of corporate governance. • The Insolvency Act, Chapter 53 of the Laws of Kenya ( “Insolvency Act” ), provides regula - tions for dealing with financially distressed companies and influences how companies manage their finances. • The Partnership Act, Chapter 29 of the Laws of Kenya ( “Partnership Act” ), sets out the framework for the formation, management and operation of general partnerships and limited partnerships. • The Limited Liability Partnerships Act, Chap - ter 30 of the Laws of Kenya ( “LLP Act” ) specifically addresses the registration and management of LLPs. • Common law: Principles established through past court decisions (precedent) in England regarding companies can still be relevant even if not directly codified in Kenyan law. • Internal governance documents: A company’s articles of association or a partnership’s partnership deed and, in the case of compa - nies listed on the Nairobi Securities Exchange ( “NSE” ), its board charter, establish internal rules regarding its operations, including direc - tor powers and shareholder meetings. • The Code of Corporate Governance Prac - tices for Issuers of Securities to the Public,
2015 (the “CMA Governance Code” ) is a set of guidelines issued by the Capital Markets Authority ( “CMA” ) that apply to publicly trad - ed companies in Kenya and sets out various requirements aimed at ensuring fair treatment of shareholders, transparency, and responsi - ble management. • The Code of Governance for State Corpora - tions ( Mwongozo ) is a set of guidelines that lays a foundation for the management, gov - ernance and oversight of state corporations in Kenya. 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares Publicly traded companies in Kenya must com - ply with the CMA Governance Code. Some key requirements have been outlined below. Fair Treatment of Shareholders The CMA Corporate Governance mandates companies to treat all shareholders fairly, includ - ing minority and foreign shareholders. This includes ensuring equal voting rights and access to information. Disclosure The CMA Governance Code follows an “Apply or Explain” principle in which listed companies must fully disclose any instances where they are not complying with the CMA Governance Code. While the CMA may consider satisfactory expla - nations for non-compliance, adherence to the mandatory disclosure provisions outlined in the Capital Markets (Public Offers, Listing and Dis - closures) Regulations, 2023 ( “Disclosure Regula- tions” ) is essential.
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