1. INSTITUTE OF CERTIFIED PUBLIC SECRETARIES OF KENYA Corporate Secretarial Seminar Venue: Sarova Panafric Hotel, Nairobi Session: Role of the CS in promoting good governance under: (a)Code of governance for state corporations (b)Code of governance for private organizations Raphael G. Mwai, MBS, FCPS (K) PPD Consultants Ltd 3 rd floor, Bishops Garden Towers, P.O. Box 47972-00100, Nairobi, Kenya Tel: 2733441, 2733438 Fax: 2733448 Email info@ppdconsult.cominfo@ppdconsult.com Website: www.ppdconsult.com Date: November 19, 2 015www.ppdconsult.com Presented by:

2. Outline of presentation Corporate governance defined; Principles of corporate governance; The Code of Governance for state corporations - Mwongozo; The Code of Governance for private organizations; Key features of the two codes of governance; The role of the Certified Secretary in promoting good governance under the Codes; Conclusion. 2

3. 1. Corporate Governance Defined The system through which organizations are directed and controlled (Cadbury Report, 1992); Transparency, accountability and power relationship within organizations; The system that ensures that the organization is managed in the long term interest of shareholders and key stakeholders (sustainability); Structures and system of rules, practices and processes by which the organization is directed, controlled and held accountable (MWONGOZO) ; A framework for achieving the objectives of the organization and creates benchmarks for the measurement of corporate performance and disclosure 3

4. 2. Principles of Corporate Governance Effective leadership at board level; Transparency and accountability; Effective structures, systems and processes of management; Effective communication with shareholders and stakeholders; 4

5. 3. Code of Governance for State corporations – MWONGOZO Context of Mwongozo:  weak governance and performance of state corporations;  complex governance framework (institutional arrangements and reporting relationship);  unclear framework for appointment of directors;  inadequate skills mix and bloated boards. Rationale for Mwongozo:  a unified Code for the governance of state corporations;  foundation for enhanced reform of state corporations sector;  Institutionalization of national values, public and trust and leadership and integrity in public service (Constitution of Kenya, 2010);  Make state corporations operate with similar efficiency, transparency and accountability as is the good practice in the private sector. 5

6. Con’t Outline of Mwongozo  The Board of Directors  Transparency and Disclosure  Accountability, Risk Management and Internal Control  Ethical Leadership and Corporate Citizenship  Shareholder Rights and Obligations  Stakeholder Relationships  Sustainability and Performance Management  Compliance with Laws and Regulations Operationalization of Mwongozo:  Executive order No.7 of 2015 (under State Corporations Act, Cap. 446). 6

7. 4. Code of Governance for private organizations Good governance practices;  Enhance corporate performance, attract investment capital and promote sustainability;  Creates a fair, transparent and accountable business environment ;  Ensure sustainable value creation to the shareholders in the long term;  Enhance the confidence of stakeholders in the governance of the organization. Developed by the Institute of Certified Secretaries of Kenya, the Code is structured as follows:  The Board of Directors;  Transparency and Disclosure  Accountability, Risk management and Internal Control ;  Ethical Leadership and Corporate Citizenship.;  Shareholder Rights and obligations;  Stakeholder Relations;  Sustainability and Performance management;  Compliance with Laws and Regulations 7

8. 5. Key features of the two Codes of Governance Board appointments;  State corporations – Transparent and formal process;  Private organization – Nominations Committee appoints; shareholders approve; Board size;  State corporations – between 7-9;  Private organizations – not less than 5 Board composition:  a mix of skills, competencies and diversity Chairperson  appointed by the President – State corporations  appointed by directors from among their number – private organizations Term limit  Two term of 3 years; not more than 6 culminative years. 8

9. Con’t Committees of the Board  State corporations – maximum 4; of which 1 is the Audit Committee  Private organization – necessary Committees, but these should include: Audit, risk, remuneration, nomination and governance compliance Performance management:  ensure a performance management system is in place and linked to organizational strategy. Board Evaluation  Annual Board Evaluation by an accredited Governance professional (ICPSK) Separation in roles:  Chairperson and CEO  CEO and Corporation Secretary Conflict of interest  Conflict of interest avoidance system in place Succession planning  The Chairperson to ensure succession planning at Board level. 9

10. 6. The Role of CS in promoting Good Governance The role of the CS as the “conscience” of the Board is detailed in the two Codes; Among these are:  providing guidance to the Board on their duties and responsibilities; and on matters of governance;  assisting the Board in Board induction, Board Evaluation and Governance Audit;  maintaining and updating the Register of Conflict of interest;  facilitating effective communication between the organization and shareholders/stakeholders;  ensuring Board members are aware of the Laws affecting the organization; and ensure that these are complied with. 10

11. 7. Conclusion Corporate governance is an evolving discipline in the management of organizations; The CS profession is uniquely placed to engage in the evolving paradigm; Indeed the CS should be at the forefront of governance; The CS should therefore be well versed in the principles and practice of governance; The Institute of CPS (K) has the responsibility of supporting members in promoting good governance.

12. THANK YOU!