Impact Investment

Kenya’s financial market regulator on Tuesday announced the gazettement of “stewardship code” meant to guide the conduct of institutional investors in the East African nation.

The Capital Markets Authority (CMA) said the code is intended to encourage responsible management and oversight of assets by institutional investors through engagement with listed companies.

“The enactment of the Stewardship Code is a strong statement of the government’s support for ongoing corporate governance reforms in the capital markets. Its design, development and drafting were spearheaded by the Authority through a special industry committee appointed by the CMA board,” said CMA chief executive, Paul Muthaura.

Muthaura said in a statement issued in Nairobi the stewardship code’s primary intent is to empower institutional investors to take up the role of stewardship as the representatives of their clients or investors to encourage continuous improvement in corporate governance practices in listed companies and other approved products.

The Code is applicable to institutional investors – asset owners and asset managers – investing in securities listed at the Nairobi Securities Exchange.

There are two categories of institutional investors, firstly asset owners who collect and manage funds by way of investing in equities and other capital markets products on behalf of their beneficiaries or clients.

Institutional investors are also asset managers who provide fund management and other investment services on behalf of their clients.

Muthaura said the development of the Stewardship Code is the final component of the corporate governance reforms instituted by the CMA in 2012 that have included the enactment of a new Code of Corporate Governance Practices for Public Issuers of Securities and the development of a standardized Reporting Template for Issuers to publicly report on their application of the Code.

He added that The World Bank Group and International Finance Corporation were key partners, having provided technical and financial assistance for all components of the governance reform agenda.

The code will complement the existing reporting and assessment templates for enforcement and oversight of sound governance practices under the Corporate Governance Code through using the information reported to inform their investment and voting decisions as well as to proactively engage management and the boards of investee entities. Enditem

Source: Xinhua/