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CMA wants listed firms to adhere to corporate governance

Failure by the listed companies at the Nairobi Securities Exchange (NSE) to adhere to the principles of the code of corporate governance contributed to the low annual weighted overall score, a report by Capital Market Authority (CMA) has disclosed.

According to the report, the annual weighted overall score for all issuers on leadership rating declined by 2.15 per cent from 75.71 per cent in the 2022/2023 to 73.56% in the 2023/2024.

Wyckliffe Shamiah, the CMA Chief Executive Officer, noted that the assessment is a critical roadmap for issuers, showcasing areas where they have done well while identifying opportunities for improvement.

‘Our ultimate goal is to strengthen corporate governance and sustainability practices, fostering long-term growth, transparency and enhanced stakeholder confidence in the capital markets sector,” Shamiah said.

Out of the 52 companies assessed, only 27 issuers secured leadership rating, 13 achieved good rating, 8 issuers demonstrated fair rating and four issuers were classified within the needs improvement category.

The assessment was in accordance with the corporate governance principles under the Capital Markets (Public Offers, Listings, and Disclosures) Regulations 2023 (POLD Regulations 2023) and the Code of Corporate Governance Practices for Issuers of Securities to the Public 2015 (the CG Code).

However, the listed companies were able to refine and implement their governance frameworks, elevating corporate transparency, accountability, investor confidence, and market integrity.

There is also a move from disclosure-based assessment by the Authority to implementation-based approach where issuers are expected to document specific initiatives on how they were implementing the provisions of the CG Code.

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Despite the decline in the annual weighted overall score by Issuers, they improved good corporate governance, ethics and social responsibility, accountability, risk management and internal control from what was posted in 2022/2023 compared to 2023/2024.

CMA was set up in 1989 as a statutory agency under the Capital Markets Act Cap 485A. It is charged with the prime responsibility of both regulating and developing an orderly, fair, and efficient capital markets in Kenya with the view to promoting market integrity and investor confidence. CMA also regulates the commodity markets and online forex trading.

The authority has the mandate to license and supervise all the capital market intermediaries, ensuring compliance with the legal and regulatory framework, and regulating public offers of securities.  It also promotes market development through research on new products and services, reviewing the legal framework to respond to market dynamics; promoting investor education and public awareness; and protecting investors’ interest.

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