NAIROBI, Kenya, Jul 31 – The Kenya Attorney-General, Githu Muigai has published a new set of rules, the ‘Companies (General) (Amendment) Regulations, 2017, that requires companies listed on the Nairobi Securities Exchange (NSE) to publish in their annual reports a breakdown of directors’ pay, in a bid to increase transparency and strengthen corporate governance.
The guidelines also provide that shareholders must approve directors’ pay by way of vote, ushering in a pay-for-performance regime that may see directors of loss-making companies take a pay cut to match the profitability of the firms they lead.
Publicly traded firms will also have to disclose details of payments to executive and non-executive directors for the past 5-years.
Cytonn Investment Analysts see the move as beneficial to investors since it will ensure information symmetry amongst shareholders, unlike in the previous regime where only the major shareholders would be privy to such information as they are in charge of hiring and replacing the directors, including the top management.
“This regulation is expected to result in greater disclosure, which is key to investors for decision-making thus boosting investor sentiment,” Cytonn Investments say.