PROPOSALS ON THE GOVERNANCE STRUCTURE FOR STATE CORPORATIONS - Submitted to the the Chairman pf The Presidential Taskforce on Parastatals Sector Reforms by The Institute of Certified Public Secretaries of Kenya (ICPSK) through APSEA
Chief Executive Officer
As per ICPSK’s proposals, this role should be separated from the role of Secretary to the board. Furthermore we strongly recommend that the CEO must have at the minimum a university degree from a recognized university or a professional qualification.
The CEO should also undertake annual continuous professional development related to his/her profession and the nature of the state corporation.
The corporation secretary should be a qualified Certified Public Secretary in terms of Section 20 of the Certified Public Secretaries of Kenya Act, Cap 534 in order to ensure that the Directors and Board members have access to professional advice on governance issues from a certified secretary and governance professional. In addition, the company secretary must be a member in good standing of their Professional Organization. This way the individual can be held accountable by his/her peers and be disciplined if necessary.
Code of Ethics
That State Corporations be required to submit to a uniform code of corporate Governance based on international best practice and the values enshrined in the Constitution of Kenya, 2010. APSEA would be happy to work on this code should this recommendation be accepted.
Annual Governance Audit
That State Corporations be required to undergo an annual Governance Audit as a health check on adherence to governance parameters (listed below). A Certified Public Secretary, who is a governance specialist, and who shall file an annual return of the same, should conduct the audit. The governance parameters should include;
a) Transparency and Disclosure
b) Adherence to Laws and Regulations
c) Communication and Public Education
d) Board Independence and Governance
e) Board Systems and Procedures
f) Consistent Shareholder, Stakeholders’ Value Enhancement
g) Corporate Social Responsibility
h) Leadership and Strategic Management
Awards in recognition of Good Corporate Governance
All parastatals should subscribe to good corporate governance, management and administration practices. To that end the parastatals should also subscribe to a mandatory assessment and recognition exercise of their performance in order to enhance governance and compliance. Some of the assessment and recognition mechanisms/ platforms include the Champion of Governance (COG) Awards initiated by ICPSK.
Recruitment& Qualifications of Directors and Chairman
Where there is no legislation the recruitment of directors to State Corporations should be done competitively through set criteria and by advertising the positions in the media. The position of Chairman should be elected by the board and not appointed by government as is currently the practice.
We further propose that without exception, all Board members, including Chairmen, either be holders of a university degree from a recognized university or a recognized professional qualification.
Term Limits for Board Members
We propose that Board members be subject to term limits. In this regard, we would suggest a three-year term renewable only once on basis of performance as determined through independent evaluation. Any Board Member that does not meet minimum performance requirements should not be re-elected nor should they be allowed to serve in another board. Board membership should not be revoked mid-term due to a change of Cabinet Secretary.
Multiple Board Appointments
There be a limit on the number of State Corporations that a Director can serve on, and in this regard, we propose that a board member should not be appointed to more than two state corporations at any one time.
Director’s Age Limit
Age limit be 70 years for chairmen, directors and board members similar to the provisions of Section 186 (1) and (2) of the Companies Act. This natural attrition will give opportunities to the younger generation of our society to serve in state corporations.
Diversity and Inclusiveness Policy
Each Board be required to have in place and implement a Diversity and Inclusiveness Policy that will among other things require that each Board have a mix of skills relevant for the Board in question, a minimum gender balance as set out in the Constitution of Kenya, 2010 as well as a regional balance reflecting as much as possible the face of Kenya.
Continuous training requirements for Directors
We recommend that in addition to induction, Directors be required to undergo at least one training programme in governance for purposes of up skilling them, taking in to consideration the changing environment.