The Capital Markets Authority (CMA) will take action against firms yet to make disclosures on corporate governance practices.
The regulator in its fifth report on the State of Corporate Governance for Issuers of Securities to the Public in Kenya cited some players for non-disclosures.
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Without giving names, CMA said some issuers were excluded from the assessment as they failed to submit either the reporting template or the full set of annual reports for assessment purposes.
“The Authority is considering taking appropriate enforcement action against issuers who have repeatedly violated the continuous reporting governance requirements,” CMA said in the report.
The report for the period July 1 2021 to June 30 2022 measures the extent to which issuers have adopted governance principles, particularly commitment to good governance, board operations and control.
It also sheds light on the rights of shareholders, stakeholder relations, ethics and social responsibility, accountability, risk management and internal control as well as transparency and disclosure.
This year's assessment shows that there has been a general improvement in reporting by companies in the country.
The banking sector had the best-weighted score with a leadership rating across all the principles of the code while the agricultural sector had the least weighted score with a fair rating.
“The report exemplifies the progress made and the direction the capital market is taking especially noting that the weighted average score improved from the previous 70 percent to 72 percent,” said CMA Chief Executive Officer, Wyckliffe Shamiah.
Three sectors had a leadership rating with the Banking sector recording the highest at 83.12 percent.
The report further shows that the banking sector has had the best score across all the assessment cycles.
“All the other sectors had a good rating save for the Agricultural sector which had a fair rating of 59.75 percent,” the report reads in part.
Although the sector remained to be the least performed, a slight improvement was noted from the previous rating of 55.04 percent.
The most improved sector was manufacturing & allied/automobiles & accessories, which improved by ten percent to 78.68percent (Leadership Rating) from the previous 67.99 percent (Good Rating) in the FY 2020/2021.
On the other hand, the most dropped sector was the Construction and Allied sector which dropped by five percent from 66.34 percent in the FY 2020/2021 to 61.09 percent in the current assessment.
The number of issuers in the leadership category scoring 75 percent and above increased from 25 to 30, those in the good rating category (between 65 percent & 74percent) increased from 8 to 12.
Those classified under the fair rating (between 50percent and 64 percent) decreased from 10 to 6 while those in the need’s improvement rating (below 50 percent) increased from 5 to 6.
The improved performance is attributable to the partnership and collaboration between the Authority and capital markets stakeholders.
