EQUITY Group chairman Peter Munga,72, may have to resign as director of the giant banking group unless shareholders vote to retain him, with a compelling explanation to the Capital Markets Authority.
This follows Friday's publication of the code of corporate governance practices for listed companies in the Kenya Gazette which comes into effect immediately.
However, the notice signed by CMA chairman James Ndegwa states, companies have one year to comply.
"It is desirable for Board members to retire at the age of 70. However, members, at an Annual General Meeting, may vote to retain a Board member who is over 70 years," CMA says in the guidelines.
This means that serial director Jimnah Mbaru may also be on his way out of boards of listed firms such as the Nairobi Securities Exchange and Equity Group, as he turns 70 next year.
CMA said the new guidelines are a shift from the previous one which has been in place since 2002 and which takes the "comply or explain" approach rather than the
"apply or explain".
Therefore under the new rules, boards are required to fully disclose any non-compliance to relevant stakeholders including the CMA, and issue a firm commitment to move towards full compliance.
The new rules also prohibit directors from holding the chairman post in more than two listed firms.
Company boards will also be required to have at least a third non-executive directors while chairmen will be delinked completely from day-to-day running of the companies they oversee.
Listed firms have also been directed to record and maintain a register of all conflict of interest declarations by the directors.
Publication of the guidelines which were formulated in 2014 comes after rising cases of mismanagement and abuse of power by several company directors.
In January, a KPMG preliminary audit on Uchumi Supermarkets indicated that several managers and directors, including ex-CEO Jonathan Ciano were major suppliers of the firm which is currently facing financial problems.
Previously listed CMC Motors also suffered financial problems when it emerged in 2011 that the company could have lost nearly Sh2 billion between 2007 and 2011 to a company associated with Andy Muthoka, a director of the board who was once chairman at the firm. Muthoka's logistics company Andy Forwarders, was the single largest provider of services to CMC Motors Group.
The new CMA rules also limit the term limit of independent directors to nine years.