MWONGOZO; THE CODE OF GOVERNANCE FOR STATE CORPORATIONS. CS Catherine Musakali

Transcription

1 MWONGOZO; THE CODE OF GOVERNANCE FOR STATE CORPORATIONS CS Catherine Musakali

2 Background v The Presiden2al Taskforce on Parastatal Reforms report recognized that the performance of state Corpora2ons depended to a large extent on the capabili2es and performance of their Boards. v The Taskforce therefore recommended a uniform Code of Governance to provide a firm founda2on for good Corporate Governance and be applicable across all State Corpora2ons as a means of strengthening the roles and responsibili2es of the Board v Based on these recommenda2ons, the Ins2tute of Cer2fied Public Secretaries jointly with SCAC developed Mwongozo v It is geared towards providing a harmonized approach on maiers of governance in State Corpora2ons with the aim of addressing challenges iden2fied in the Taskforce report but also to enhance the performance of GOEs towards achievement of the na2onal development goals.

3 Role of State Corpora2ons v With Kenya s Blue print development agenda reflected in Vision 2030, SCs will play a major role in enabling social and economic transforma2on of the economy in which they operate. v They have five major roles; ü Promo2ng economic growth and development. ü Building the capability and technical capacity of the state in facilita2ng and promo2ng na2onal development. ü Facilita2ng the delivery of public services, including mee2ng the basic needs of ci2zens. ü Crea2on of good and widespread employment opportuni2es. ü Building of interna2onal partnerships.

4 Key plavorms driving the transforma2on agenda in respect of SCs

5 Therefore Mwongozo is Ø A uniform Code of Governance to provide a firm foundation for good Corporate Governance. Ø Applicable across all State Corporations to strengthen governance. Ø Issued on 25th March, 2015 by His Excellency vide the Executive Order No. 7 instructing all Boards to implement its provisions Ø The Government plans to encourage County Governments to adopt the same best practices in the Code.

6 Basis of Mwongozo; Ø The Constitution of Kenya, 2010 ² Article 10 National values and principles of governance ² Article 73 - Public trust, honor and dignity of public offices. ² Article 232 Personal integrity, values and principles of public service, efficiency, effectiveness and economic use of resources. ² Chapter Six of the Constitution on Leadership and Integrity. Ø The Public Officers and Ethics Act, Ø OECD Guidelines on Corporate Governance of SCs, (2005) Ø King III Ø SCAC Guidelines (2004) Ø Global best practice 6

7 Reasons for Mwongozo Ø Absence of a clear framework for recruitment, selection, appointment and removal of boards; Ø Untimely appointment/replacement of Boards and CEOs Ø Inadequate induction processes for Board members; Ø Lack of proper skills mix; Ø Bloated Boards; Ø Lack of uniformity in management of Board Affairs; Ø Conflicting guidelines in appointment of CEOs; Ø Lack of understanding of role of Boards by board of directors; and Ø Fusing of the Chief Executive and Board Secretary roles 7

8 Comply or Explain model Ø Recognizes that at the implementation of Mwongozo, SCs will be at different levels of compliance with corporate governance norms. Ø This approach will allow organizations time to fully comply at a pace that is realistic in their circumstances and to learn from the experience of others, whilst at the same time taking responsibility and ownership for any noncompliance. Ø While full compliance is expected, the approach positively recognizes that a satisfactory explanation, coupled with a roadmap to full compliance will, in certain circumstances be acceptable. Ø This requires that the disclosures for non-compliance will need to be detailed and Boards will be held to account for any explanations given.

9 OUTLINE OF MWONGOZO Ø Chapter One - The Board of Directors Ø Chapter Two - Transparency and Disclosure Ø Chapter Three - Accountability, Risk Management and Internal Control Ø Chapter Four - Ethical Leadership and Corporate Ci2zenship Ø Chapter Five - Shareholder Rights and Obliga2ons Ø Chapter Six - Stakeholder Rela2onships Ø Chapter Seven - Sustainability and Performance Management Ø Chapter Eight - Compliance with Laws and Regula2ons 9

10 KEY THEMES IN MWONGOZO

11 Sustainability is a key concern

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14 GREAT EMPHASIS ON RISK MANAGEMENT & INTERNAL CONTROLS

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16 Governance Audit

17 Whistle Blowing Policy

18 The Role of the Corpora2on secretary The Board should be assisted by a suitably qualified and competent Company Secretary CS provides guidance to the Board on their du2es and responsibili2es and on maiers of governance. The Board should empower the Company Secretary to enable them effec2vely carry out their role.

19 Transparency and Disclosure

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21 Importance of Board Tools Board Charter Board EvaluaNon Tools Board work plan CommiLee Charters Code of Conduct and Ethics

22 SUCCESSION PLANNING

23 BOARD INDUCTION AND SKILLS DEVELOPMENT Early and effec2ve induc2on of Directors into the organiza2on is essen2al for early par2cipa2on and engagement. Professional development of governance and industry skills and quali2es also adds significantly to the value contributed by a Director.

24 TERM LIMITS Useful for infusing the board with innova2ve ideas and new skills. Can sever important 2es and damage ins2tu2onal memory.

25 SUBJECT 1. Board appointments KEY HIGHLIGHTS ON MWONGOZO NEW POLICY DIRECTION - Shall be guided by Ar2cle 27 of the Cons2tu2on - Transparent and formal process involving the oversight body - GazeIement of all Board members including Ministry/ Ins2tu2onal reps. - Principle of merit to override other considera2ons - Must be staggered to ensure con2nuity / smooth succession 2. Board Size - Between 7 and 9 members including the CEO - The CEO shall be a member without vo2ng rights 3. Board Composi2on - Must have mix of skills and competencies required - At least one member to be a financial expert 4. Chairpersons - All Chairpersons shall be appointed by the President but must have set minimum qualifica2ons - Board members appointed by CSs but must posses set minimum qualifica2ons. - Appointment means formal gazeiement followed by an appointment leier from appoin2ng authority. 25

26 SUBJECT KEY HIGHLIGHTS ON MWONGOZO cont d NEW POLICY DIRECTION 5. Recruitment of the CEO - Exclusively by the Board - The CEOs shall be accountable to the Boards 6. Term limits - Tenure should not exceed a cumula2ve term of six years or two terms of three years each - Renewal of a Board member s term should be subject to a favourable evalua2on 7. Mul2ple Directorships - A Board member shall not hold such posi2on in more than 2 Corpora2ons at any one 2me. - A Chairperson shall not hold such posi2on I any other Corpora2on concurrently. 8. CommiIees of the Board - Not more than four CommiIees of the Board (including the Audit CommiIee)shall be established - Chairperson shall not be a member of any CommiIee save for ad hoc CommiIee - All recommenda2ons of the CommiIee must be ra2fied by the Board for them to become applicable. 9 The Corpora2on Secretary - All Boards shall acquire the services of a Corpora2on Secretary. - The Corpora2on Secretary shall be the Secretary to the Board 26

27 SUBJECT 10. Board Induc2on 11. Board Training and Educa2on 12. Succession Planning KEY HIGHLIGHTS ON MWONGOZO cont d NEW POLICY DIRECTION - All Boards to have Induc2on programme - All new Board members to undergo induc2on as per the programme - Competence Needs Assessment for the Board done - Annual development programme for a minimum of two days per Board member - con2nuous professional development by respec2ve bodies - Tenure of members to be staggered for con2nuity purposes - Succession planning strategy 13. Board Evalua2on - Mandatory for all Board members - Covers The Board as a whole, CommiIees, 27

28 SUBJECT 14 Board/ Governanc e principles NEW POLICY DIRECTION KEY HIGHLIGHTS ON MWONGOZO cont d 1. Strategy and Mission 2. Accountability EXPECTATIONS - Boards should be involved in the process of sehng strategies Directors are responsible for represen2ng the interest of shareholders Directors should be selected in a transparent fashion and based on objec2ve criteria The Board should engage in CEO succession planning 3. Oversight - Board should have adequate mix of independent and execu2ve Directors - The Board should exert sufficient control over management 4. Stakeholder Interests 5. Separa2on of powers 6. Conflict of Interest - - Corpora2ons should adhere to disclosure and transparency requirements Minority shareholders and stakeholder interests should be protected. - Board structure to ensure separa2on of policy, oversight, management and opera2onal levels - There should be a clear process for managing conflict of interest 28

29 Mwongozo ins2tu2onal framework Oversight/SCAC: Issue guidelines and Monitor implementa2on of: Governance Audit Board induc2on Board Evalua2on Review of Mwongozo Coordinate implementa2on of Mwongozo Chairpersons Capture and report gaps in Boards Ensure appointment of CEO, Board CommiIees, Corpora2on Secretaries and Internal Auditors Report on gazeiement of members Ensure induc2on, training and evalua2on Ensure func2onal Board tools are in place Manage Board dynamics Timely report on issues Quarterly communica2on to SCAC and appoin2ng authori2es InsNtuNons/ responsibilines Cabinet Secretaries Ensure gazeiement of Board members Timely appointments Sector policy formula2on Ensure adequate Board mix Principal Secretaries Appoint PS representa2ves in wri2ng Ensure 2mely reports / consulta2ons Timely communica2on of Ministry policies

30 In your language?

31 BACK UP SLIDES

32 Appointment, Composi2on and Size Role and Func2ons of the Board Du2es of Individual Board members Role of the Chairperson Term Limits for Board members CommiIees of the Board Board mee2ngs Board work plan Board Induc2on and Con2nuous Skills Development Board Charter Board Evalua2on Governance Audit Succession Planning Board Remunera2on Board Independence Liability Appointment of the CEO Role of the CEO Appointment of Corporate Secretary Role of the Corpora2on Secretary Separa2on of Roles CHAPTER 1

33 CHAPTER 2 TRANSPARENCY AND DISCLOSURE Organiza2onal vision and values Policy on Corporate governance Key stakeholder groups Governance structures Board performance and Remunera2on structure. Code of conduct and whistle blowing policy Key organiza2onal risks Financial Repor2ng Corporate ci2zenship Procurement Compliance with Laws Sustainability repor2ng

34 CHAPTER 3 ACCOUNTABILITY, RISK MANAGEMENT AND INTERNAL CONTROL - - Financial repor2ng - Risk Management Auditor Internal Controls Audit CommiIee & External Procurement process ICT

35 CHAPTER 4 ETHICAL LEADERSHIP & CORPORATE CITIZENSHIP Ethics and integrity Code of conduct and ethics Conflict of interest Corporate reputa2on and image Corporate social responsibility and investment whistleblowing

36 CHAPTER 5 Shareholder obliga2ons Ownership rights and interests Minority shareholders Shareholder rights and Obliga2ons

37 CHAPTER 6- STAKEHOLDER RELATIONSHIPS

38 CHAPTER 7 SUSTAINABILITY AND PERFORMANCE MANAGEMENT

39 CHAPTER 8 COMPLIANCE WITH LAWS AND REGULATIONS Applicable laws, Regula2ons and Standards The Cons2tu2on of Kenya Compliance Strategy Legal compliance Audit