CMA CEO Wyckliffe Shamiah
The Capital Markets Authority (CMA) has approved new Corporate Governance Regulations for market intermediaries, replacing rules that have been in force since 2011.
At the same time, it has cleared a draft Environmental, Social and Governance (ESG) Code for public consultation, marking a major shift towards sustainable business practices.
The two initiatives are expected to improve oversight of capital market players, enhance investor confidence and align Kenya's regulatory framework with evolving global standards.
The new corporate governance regulations target licensed market intermediaries such as stockbrokers, investment banks, fund managers, investment advisers, custodians and other firms regulated by the CMA.
They replace the Capital Markets (Corporate Governance) (Market Intermediaries) Regulations, 2011, which the regulator says no longer adequately address the changing governance landscape.
A key feature of the new rules is the introduction of measures to ensure board continuity and preserve institutional memory.
The regulations seek to prevent situations where several directors leave office at the same time, a practice that can disrupt leadership and weaken oversight.
The reforms require staggered board transitions, allowing experienced directors to remain in office while new members join.
According to the CMA, this approach will strengthen governance, improve decision-making and support long-term organisational stability.
The regulations also reinforce accountability and board effectiveness, ensuring market intermediaries maintain governance structures that match the growing complexity of Kenya's capital markets.
Alongside the governance reforms, the CMA has approved a draft ESG Code that will guide listed companies on integrating environmental, social and governance issues into their operations.
The proposed code builds on the existing code of corporate governance practices for issuers of securities to the public, which was introduced in 2015.
While the earlier framework focused largely on corporate governance, the new code expands its scope to incorporate sustainability as a core business responsibility.
Under the draft code, company boards will be required to take direct responsibility for ESG oversight.
They will be expected to integrate sustainability into corporate strategy, risk management, remuneration policies, stakeholder engagement and public disclosures.
The framework also encourages companies to identify and manage ESG-related risks and opportunities while improving transparency for investors and other stakeholders increasingly seeking information on sustainability performance.
The CMA says the code reflects growing global expectations that businesses should create long-term value while managing their environmental and social impact alongside financial performance.
It will undergo public participation, allowing investors, listed companies, industry players and other stakeholders to submit their views.
The regulator will review the feedback before finalising and gazetting the framework.
The latest reforms come as Kenya seeks to deepen its capital markets and attract more domestic and international investment.
