The Capital Markets Authority’s report that an equivalent of 44 percent of listed companies are in breach of corporate governance is alarming.
The report says of the 27 firms that have fallen short, 10 have failed to submit annual reports and an internal review of their corporate governance processes. That is inexcusable.
Corporate governance determines how a credible company ought to be run. The big number failing transparency test speaks volumes about problem of Kenya’s corporate scene. That they are listed makes it worse.
Corporate governance challenges lead to collapse, and this is the road these firms appear to have taken. Indeed, poor corporate governance has been at the centre of many corporate scandals in Kenya that have led to loss of billions of shillings and collapse of operations.
While a number of struggling State firms best exemplify this problem, the CMA indicates the rot is deeper.
It is an indictment on the regulator and its lax system that is meant to enforce compliance.
While identifying the problem is a key step in the quest to address the problem, more work remains to be done.