Research indicates that good governance leads to better risk management, enhanced performance and sustainability. Good governance also results in increased attractiveness to investors, increase in profitability and effective management of reputational risk.
The best practice requirements have the flexibility of allowing issuers to explain any instances of non-application and the steps being taken and commitments being made towards full application of the best practice requirements.
Unsatisfactory explanations or failure to implement measures explained will result in enforcement proceedings in accordance with the Capital Markets Act.
The list of accredited governance auditors is available upon inquiry to the Institute of Certified Public Secretaries of Kenya (ICPSK). It is important for the issuer to ensure that the lawyers they select to do their legal and compliance audits have the necessary competence and experience for the audits.
The Code requires the Board to carry out independent legal and compliance audit at least once every two years. The audit seeks to establish the level of adherence to applicable laws, regulations and standards. The independent legal and compliance audit must be carried out by a legal professional in good standing with the Law Society of Kenya (LSK). The Board is required to ensure that any non-compliance findings are acted upon expediently.