CMA EXTRACT OF CODE OF CORPORATE GOVERNANCE REPORTING

CMA EXTRACT OF CODE OF CORPORATE GOVERNANCE REPORTING

No. Mandatory or ‘apply or explain’ Part No. Question Kenya Code Reference Application Application or Explanation Source of Information
A INTRODUCTION
1 M A.1 Has the company developed and published a Board Charter which is periodically reviewed and which sets out the Board responsibility for internal control? 1.1.2, 2.6.2, 6.3.2 Fully Applied Yes. The Board Charter is in place and the same is reviewed at least annually by the Board. It has also been published on the Company’s website. Board Charter
2 M A.2 Does the Board Charter or company documents distinguish the responsibilities of the board from management in line with Code requirements? 1.1.2, 2.3.1, 2.3.2, 2.6.2 Fully Applied Yes. The Board Charter and Corporate Governance Policy distinguish the responsibilities of the Board from those of management. Board Charter;
Corporate Governance Policy.
3 A or E A.3 Is there a statement indicating the responsibility of Board members for the application of corporate governance policies and procedures of the company? 1.1.6 Fully Applied Yes. The Corporate Governance Policy and Board Charter provide that the Board is responsible for the governance of the Company and that it is committed to ensuring that its business and operations are conducted with integrity and in compliance with the law, internationally accepted principles and best practices of corporate governance and business ethics. Board Charter;
Corporate Governance Policy.
4 M A.4 How has the Board ensured all directors, CEOs and management are fully aware of the requirements of this Code? 1.1.6 Fully Applied A check list on the Company’s status of compliance with the requirements of the Code was prepared by management for review and implementation by the Board. This was then tracked on a quarterly basis to review the status of compliance and ensure full implementation of the requirements of the Code. During implementation, the Internal Audit Department and Company Secretary ensured that the status of such implementation was reported to the Board Audit and Compliance Committee (“BACC”), the Board Nomination and Human Resource Committee (“BNHRC”) and the Board. Code Compliance Check List – Template;
BNHRC Minutes;
BACC Minutes;
Board Minutes.
5 M A.5 Do company documents indicate the role of the Board in developing and monitoring the company strategy? Part II – Overview, 2.3 Fully Applied Yes. Board Charter;
Corporate Governance Policy.
6 A or E A.6 Does the company strategy promote sustainability of the company? 2.3.6 Fully Applied Yes. The Company’s 2017-2021 Business Strategy and Operating Budget;
The Company’s Vision 2020.
7 M A.7 Are all board committees governed by a written charter/terms of reference, disclosing its mandate, authority, duties, composition, leadership and working processes? 2.2.2 Fully Applied Yes Terms of Reference of the BACC, Board Credit Committee (“BCC”), Board Executive Committee (“BEC”), Board Information Technology Committee (“BITC”), BNHRC and Board Risk Management Committee (“BRMC”).
B BOARD OPERATIONS and CONTROL
8 M B.1 Has the Board established a Nomination Committee comprised mainly of independent and non-executive Board members? 2.1.2, 2.2.2 Fully Applied BNHRC in place. Three of the current four members thereof are independent and non-executive. The fourth member is also a non- executive director. BNHRC Terms of Reference (“ToR”).
9 M B.2 Is the chairperson of the Nomination Committee an independent director? 2.2.3 Fully Applied Yes. BNHRC ToR;
This has been disclosed in the Governance Report within the Integrated Report.
10 M B.3 Has the board adopted and published procedures for nomination and appointment of new Board members? 2.1.1, 2.1.7 Fully Applied Yes. BNHRC ToR;
Board Appointment and Diversity Policy.
11 M B.4 Is the Board size adequate for the exercise of the company business? 2.1.4 Fully Applied Yes. There are currently eleven directors who are within the limits prescribed by the Company’s Articles of Association, Board Charter and the Appointment and Diversity Policy. Articles of Association;
Board Charter;
Board Appointment and Diversity Policy.
12 A or E B.5 Has the board adopted a policy to ensure the achievement of diversity     including age, race and gender) in its composition? 2.1.2, 2.1.3, 2.1.5, 2.5.1 Fully Applied Yes. Board Appointment and Diversity Policy.
13 M B.6 Do the Board members represent a mix of skills, experience, business knowledge and independence to enable the discharge of their duties? 2.2.1 Fully Applied Yes. This has been disclosed in the Director Profiles within the Integrated Report
14 M B.7 Has the board adopted and applied a policy limiting the number of board positions each Board member may hold at any one time? 2.1.6 Fully Applied Yes. Board Charter;
Corporate Governance Policy.
15 M B.8 Have any Alternate Board members been appointed? If so, have the Alternate Director/s been appointed according to regulation and Code requirements? 2.1.6, 2.1.7 Fully Applied There are no alternate Directors appointed. Annual Returns as filed at the Companies Registry
16 M B.9 Are independent directors at least one-third of the total number of Board members? 1.1.2, 2.1.3, 2.4.1 Fully Applied Yes. Seven of the eleven Directors are independent and non- executive directors. This has been disclosed in the Governance Report within the Integrated Report
17 A or E B.10 Does the Board have policies and procedures to annually assess the independence of independent Board members? 2.4.1 Fully Applied Yes. This is contained in the Board Appointment and Diversity Policy and is evaluated annually by the BNHRC and the findings then tabled to the Board. Board Appointment and Diversity Policy;
Board Charter.
18 M B.11 Do all independent Board members have a tenure of less than 9 years? 2.4.2 Fully Applied Yes. This is contained in the Board Appointment and Diversity Policy and is evaluated annually. Board Appointment and Diversity Policy;
Board Charter
19 M B.12 Is the Board comprised of a majority of non-executive board members? 2.1.3 Fully Applied Yes. Ten of the current eleven directors are Non-Executive Directors. This has been disclosed in the Governance Report within the Integrated Report
20 M B.13 How does the Board ensure a smooth transition of Board members? 2.1.8 Fully Applied By ensuring an adequate composition of the Board and that no more than one-third of the Board members shall retire at the same time at the Annual General Meeting. Articles of Association;
Board Appointment and Diversity Policy;
Board Charter;
Corporate Governance Policy.
21 M B.14 Has the Board established an effective Audit Committee according to Code requirements? 2.2.4, 6.5.1, 2.1.7 Fully Applied Yes. BACC ToR;
This has been disclosed in the Governance Report within the Integrated Report,
22 M B.15 Are the functions of the Chairperson and the Chief Executive Officer exercised by different individuals? 2.3.3 Fully Applied Yes. Corporate Governance Policy;
Board Charter;
This has been disclosed in the Governance Report within the Integrated Report
23 M B.16 Is the Chairman of the Board a non-executive board member? 2.3.4 Fully Applied Yes. This has been disclosed in the Governance Report within the Integrated Report
24 A or E B.17 Has the Board established procedures to allow its members access to relevant, accurate and complete information and professional advice? 2.3.5 Fully Applied Yes. Corporate Governance Policy;
Board Charter;
This has been disclosed in the Governance Report within the Integrated Report.
25 M B.18 Has the Board adopted a policy on managing conflict of interest? 2.3.8 Fully Applied Yes. Code of Ethics and Conduct;
Policy for dealing with Related Party Transactions;
Conflicts Register;
This has been disclosed in the Governance Report within the Integrated Report.
26 M B.19 Has the Board adopted a policy on related party transactions to protect the interests of the company and all its shareholders and which meets the requirements of the Code? 2.3.7 Fully Applied Yes. Policy for Dealing with Related Party Transactions.
27 M B.20 Has the company appointed a qualified and competent company secretary who is a member in good standing of ICPSK? 2.3.9 Fully Applied Yes. Corporate Governance Policy;
This has been disclosed in the Governance Report within the Integrated Report
28 A or E B.21 Has the Board adopted policies and processes to ensure oversight of sustainability, environmental and social risks and issues? 2.3.2, 2.3.6 Fully Applied Yes. Corporate Citizenship Policy;
Corporate Social Responsibility Policy;
Social and Environmental Management Policy;
This has been disclosed in the Sustainability Report within the Integrated Report.
29 A or E B.22 Has the Board developed an annual work-plan to guide its activities? 2.6.3 Fully Applied Yes. Board Work Plan and Board Calendar.
30 M B.23 Has the Board determined, agreed on its annual evaluation process and undertaken the evaluation or the performance of the Board, the Board Committees, the CEO and the company secretary? 2.6.4, 2.8 Fully Applied Yes. An evaluation of the Board, CEO and the Company Secretary was undertaken by an external consultant for year 2016. Annual Evaluation Policy;
Board Evaluation undertaken by Institute of Directors (Kenya).
31 A or E B.24 Has the Board established and applied a formal induction program for in-coming members? 2.7.1 Fully Applied Yes. Induction Policy.
There is a formal induction for all New Directors. Induction for the directors appointed in 2017 was undertaken by the Institute of Directors (Kenya).
32 A or E B.25 Do Board members participate in on-going corporate governance training to the extent of 12 hours per year? 2.7.3 Fully Applied Yes. There are records confirming the same.
33 A or E B.26 Has the Board set up an independent Remuneration Committee or assigned to another Board committee the responsibility for determination of remuneration of directors? 2.9.2 Fully Applied Yes. Board Remuneration Policy.
BNHRC ToR as this function has been assigned to the BNHRC.
34 M B.27 Has the Board established and approved formal and transparent remuneration policies and procedures that attract and retain Board members? 2.9.1 Fully Applied Yes. Board Remuneration Policy.
35 M B.28 How does the Board ensure compliance with all applicable laws, regulations and standards, including the Constitution and internal policies? 2.10, 2.10.1, 2.10.2 Fully Applied Through the Internal Audit and Compliance Departments both of whom report to the BACC BACC ToR.
There are also records in place confirming the same e.g. BACC Minutes and Board Papers
36 M B.29 In the past year, has the Board organized a legal and compliance audit to be carried out on a periodic basis? 2.10.3 Fully Applied Yes. A legal and compliance audit was carried out in 2017 as recommended by the Code. External professionals have also been engaged to carry out the external bi- annual Legal and Compliance Audit for 2018.
37 A or E B.30 Has the Board subjected the company to an annual governance audit? 2.11.1 Fully Applied Yes. There are records confirming the Governance Audit has been undertaken and a formal report submitted to the Company by a duly accredited governance auditor.
C RIGHTS of SHAREHOLDERS
38 M C.1 Does the governance framework recognize the need to equitably treat all shareholders, including the minority and foreign shareholders? 3.0 Overview, 3.2.1 Fully Applied Yes. Articles of Association;
Code of Ethics and Conduct;
Corporate Governance Policy.
39 M C.2 Other than at the AGM, how does the Board facilitate the effective exercise of shareholders’ rights? 3.1.1 Fully Applied By ensuring that information is disseminated adequately, timely and equitably using a variety of channels and availing a whistle blowing platform where malfeasance can be reported. Communication via the media and the Company’s website.
40 M C.3 How does the Board facilitate shareholders participation at the AGM? 3.1.1 Fully Applied By communicating the Agenda for the AGM in advance as set out in the Articles of Association, ensuring the AGM is conducted at a convenient venue and allowing shareholders to raise questions and seek clarifications on issues in the Notice of the AGM. Articles of Association;
Corporate Governance Policy.
41 A or E C.4 Are minority and foreign shareholders holding the same class of shares treated equitably? 3.2.1 Fully Applied Yes. Articles of Association;
Corporate Governance Policy.
42 A or E C.5 Is there evidence that the Board proactively provides information to shareholders and the media, (and in a timely basis) on corporate affairs and corporate governance? 3.1.1, 3.4.1 Fully Applied Yes. Annual Reports, shareholder circulars, Media Publications, the Company’s website and social media platforms, and the Nairobi Securities Exchange website.
D STAKEHOLDER RELATIONS
43 A or E D.1 Does the Board have a stakeholder-inclusive approach in its practice of corporate governance and which identifies its various stakeholders? 4.1.1 Fully Applied Yes. Board Charter;
Corporate Citizenship Policy;
Corporate Governance Policy;
Corporate Social Responsibility Policy;
This is disclosed in the Integrated Report.
44 A or E D.2 Has the Board developed policies, procedures and strategies to manage relations with different/key stakeholder groups? 4.1.2, 4.1.3, 4.1.5, 4.2.1 Fully Applied Yes. Communication Policy;
Social Media Policy;
Stakeholder Management Policy.
45 A or E D.3 How does the Board take into account the interests of key stakeholder groups prior to making decisions? 4.1.4 Fully Applied By incorporating stakeholder feedback received by the Company following communication on major proposed decisions through public notices, shareholder circulars and, when required by law, in general meetings. There are records confirming the same.
46 M D.4 How does the Board ensure effective communications with stakeholders? 4.2, 4.2.1 Fully Applied By complying with requirements of legislation, regulation and Company’s Articles of Association on public notices to and communications with stakeholders. There are records confirming the same.
47 M D.5 Has the Board established a formal dispute resolution process to address internal and external disputes? 4.3.1 Fully Applied Yes. There are formal internal dispute resolution processes and complaints channels. This is also covered in the contracts with external professionals.
E ETHICS AND SOCIAL RESPONSIBILITY
48 A or E E.1 Does the Board ensure that all deliberations, decisions and actions are founded on the core values (responsibility, accountability, fairness and transparency) underpinning good governance and sustainability? 5.1.1 Fully Applied Yes. Anti- Bribery and Anti- Corruption Policy;
Corporate Governance Policy;
Code of Conduct and Ethics;
Policy on Related Party Transactions.
49 M E.2 Has the Board developed a Code of Ethics and Conduct (which includes sustainability) and has it worked to ensure its application by all directors, management and employees? 2.6.1, 5.2.2, 5.2.3, 5.2.4 Fully Applied Yes. Code of Ethics and Conduct applicable to all Directors, management and employees.
50 A or E E.3 How does the Board ensure that compliance with the Ethics Code and Conduct is integrated into company operations? 5.2.3 Fully Applied The Code of Ethics and Conduct is availed to all new Directors on induction and to all staff on the intranet. All new Directors and staff are required to undertake to comply with inter alia the Code of Ethics and Conduct as part of their on-boarding. Code of Ethics and Conduct;
Corporate Governance Policy
51 A or E E.4 Does the Board incorporate ethical and sustainability risks and opportunities in the risk management process? 5.2.1 Fully Applied Yes. Code of Ethics and Conduct;
Enterprise Risk Management Framework:
Social and Environmental Management Plan.
52 A or E E.5 How is the company performance on ethics assessed, monitored and disclosed to internal and external stakeholders? 5.2.4, 5.2.5 Fully Applied Through a Governance Audit. Governance Audit Report;
This is disclosed in the Integrated Report.
53 A or E E.6 Has the company established and implemented a whistle blowing policy? 5.2.5 Fully Applied Yes. Whistle Blowing Policy.
54 A or E E.7 Has the Board/or management developed policies on corporate citizenship and sustainability and strategies for company use? 5.3.1, 5.4 Fully Applied Yes. Corporate Citizenship Policy;
Corporate Social Responsibility Policy; and
Social and Environmental Management Policy.
55 M E.8 Does the Board consider not only the financial performance but also the impact of the company’s operations on society and the environment? 5.3.2, 5.3.3 Fully Applied Yes. Corporate Citizenship Policy;
Corporate Social Responsibility Policy; and
Social and Environmental Management Policy.
56 A or E E.9 Does the Board monitor and report activities leading to good corporate citizenship and sustainability to demonstrate they are well coordinated? 5.4.1 Fully Applied Yes. This is monitored by the Compliance Department which reports to the BACC. Corporate Citizenship Policy;
Social and Environmental Management Policy
This is disclosed in the Integrated Report
F ACCOUNTABILITY, RISK MANAGEMENT AND INTERNAL CONTROL
57 M F.1 Does the Audit Committee and the Board consider and review the financial statements for integrity of the process and for truthful and factual presentation? 6.1, 6.1.1a Fully Applied Yes. BACC ToR;
There are records confirming the same.
58 M F.2 Does the Annual Report contain a statement from the Board explaining its responsibility for preparing the accounts and is there a statement by the external auditor about his/her reporting responsibilities? 6.1.2 Fully Applied Yes. This is disclosed in the Integrated Report.
59 A or E F.3 Does the board or audit committee have a process in place to ensure the independence and competence of the Company’s external auditors? 6.1.1b Fully Applied Yes. The process is outlined in the BACC ToR and the Procurement Procedures. In addition, the external auditor’s independence is confirmed in the Post-audit report on an annual basis. The external auditors also have two meetings a year with the BACC to the exclusion of management.
60 M F.4 Do the shareholders formally appoint the external auditor at the AGM through a formal and transparent process? 6.1.3 Fully Applied Yes. Notification of the proposed appointment is contained in the AGM Notice circulated to shareholders at least 21 days prior to the AGM. The proposal is then deliberated upon at the general meeting and put to a vote in accordance with the Company’s Articles of Association.
61 A or E F.5 Is the Company working towards the introduction of integrated reporting (incorporating financial and non-financial information) or is the company’s Annual Report prepared on an integrated basis using a framework available from the Integrated Reporting Council, The Global Reporting Initiative, G4 Sustainability Guidelines and/or Sustainability Accounting Standards Board standards? 6.1.5 Fully Applied Yes. The Annual Report is prepared on an integrated basis.
62 A or E F.6 Has the Board established an effective risk management framework which is inclusive of key risks as well as foreseeable risks, environmental and social risks and issues ? 6.2.1 Fully Applied Yes. This is comprised within the Enterprise Risk Management Framework.
63 M F.7 Has the Board established and reviewed on a regular basis the adequacy, integrity and management of internal control systems and information systems (including for compliance with all applicable laws, regulations, rules and guidelines)? 6.3.1, 6.3.2, 6.3.3 Fully Applied Yes. This is contained in the Board and Board Committee mandates and management further reports thereon on a quarterly basis. This is also reviewed by BACC as per the BACC ToR and Internal Audit Department as per its Charter.
64 M F.8 Does the Board annually conduct a review on the effectiveness of the company’s risk management practices and internal control systems and report this to shareholders? 6.4.1 Fully Applied Yes. Enterprise Risk Management Framework and internal control is reviewed annually by the Internal Audit Department which then reports to the BACC. This is as per the Internal Audit Department’s Charter. The external auditor also reviews the internal control environment and reports thereon to the BACC. Disclosure is also made to shareholders through the Integrated Report.
65 M F.9 Has the Board established an effective internal audit function according to Code requirements and which reports directly to the Audit Committee? 6.5.2 Fully Applied Yes This is provided for in the BACC ToR, Corporate Governance Policy and Internal Audit Department’s Charter.
66 A or E F.10 Does the Board disclose details of Audit Committee activities ? 6.5.2 Fully Applied Yes. This is disclosed in the Integrated Report
G TRANSPARENCY and DISCLOSURE
67 M G.1 Does the company have policies and processes to ensure timely and balanced disclosure of all material information as required by all laws, regulations and standards and this Code. 7.0 Overview, 7.1.1 Fully Applied Yes. This is covered by inter alia the Legal and Company Secretarial Manual and Shares Procedure that mandates the Company Secretary to make the necessary disclosures in line with legislation and regulations governing the affairs of the Company.
68 A or E G.2 Does the Annual Report cover, as a minimum, disclosures as prescribed in 7.1.1 relating to the company’s governance, the Board and the Audit Committee? 7.1.1 Fully Applied Yes. This is disclosed in the Integrated Report
69 A or E G.3 Does the Annual Report cover, as a minimum, disclosures as prescribed in 7.1.1 relating to the company’s mission, vision and strategic objectives? 7.1.1 Fully Applied Yes. This is disclosed in the Integrated Report
70 A or E G.4 Does the Annual Report cover, as a minimum, disclosures as prescribed in 7.1.1 relating to remuneration and whistleblowing? 7.1.1 Fully Applied Yes. This is disclosed in the Integrated Report
71 A or E G.5 As a minimum, does the company website disclose current information on all areas prescribed in 7.1.1 (Board Charter, Whistleblowing Policy, Code of Ethics and information on resignation of directors)? 7.1.1 Fully Applied Yes. The necessary disclosures are made on the Website
72 A or E G.6 Does the Board disclose the management discussion and analysis as required in 7.1.1? 7.1.1 Fully Applied Yes. This is disclosed in the Integrated Report
73 A or E G.7 Has the Board provided disclosures as required in 7.1.1 on compliance with laws, regulations and standards; ethical leadership, conflict of interest, corporate social responsibility and citizenship? 7.1.1 Fully Applied Yes. This is disclosed in the Integrated Report
74 A or E G.8 Has the Board made all required disclosures, including confirming requirements of 7.1.1 which include that a governance audit was carried out and that there are no known insider dealings? 7.1.1 Fully Applied Yes. This is disclosed in the Integrated Report
75 A or E G.9 Has the Board disclosed the company’s risk management policy, company procurement policy, policy on information technology as per 7.1.1? 7.1.1 Fully Applied Yes. This is disclosed in the Integrated Report
76 M G.10 Has the Board disclosed information on shareholders, including the key shareholders, including shareholding by directors and senior management and the extent of their shareholdings as required in 7.1.1 and on stakeholder who influence company performance and sustainability? 7.1.1 Fully Applied Yes. Disclosed in the Integrated Report, Annual Returns, monthly reporting to CMA and NSE as well as on the Company’s website.
77 M G.11 Has the Board disclosed all related-party transactions? 7.1.1 Fully Applied Yes. This is disclosed in the Integrated Report
78 M G.12 Does the Board include in its Annual Report a statement of policy on good governance and the status of the application of this Code? 1.1.3, 7.1.1r Fully Applied Yes. This is disclosed in the Integrated Report