Question 1

Introduction
On the on set it is supercritical to conceptualize the scope of corporate governance to
the board members. Corporate governance refers to the tools, systems, rules policies
and culture among others that the leadership of organizations employ to govern and
control the organization so as to meet its objective and at the same time monitor
performance. Additionally, corporate governance provides transparency, accountability
and efficiency in the organizations processes.
The board have raised pertinent issues in regard to the current corporate environment
in Kenya which will set the tone and basis of the advice.
The Chair and Director Wachira take the position that corporate governance only exists
for the purpose of promoting and serving the shareholder’s interest. The chair and
Director’s reasoning are not wrong or misplaced, but they are just the original or
traditional view of corporate governance. The Chair and Director appear to be rigid to
the evolving nature of corporate governance where the scope has been broadened to so
as to incorporate social factors in governance. This social factors for example are the
Environmental Sustainable Governance (ESG), and community welfare and help
(organization assist the local communities set up social amenities such class,
recreational areas, provide hospital equipment, solar and water solutions). The
governance of these social factors ultimately boost the shareholders benefits in the long
run through tax grands and government incentives.
Director Juma’s sentiments are giving the true picture of the gap faced in the corporate
governance space. In every industry the organizations a diverse, for example in the
Kenya Savings and Credit Cooperative Societies (SACCO) industry. Which are diverse in
nature which causes difficulty in compliance for specialized SACCO or tire one SACCOs.
CEO Anna’s view is that it is the regulated of industries that are failing the corporate
governance environment.
Critique
1. Use of generic best practices
In most industries the composition of the board is usually required to have a member
who is independent. This position is normally filled with person who are not experts in
the nature of business the organization is involved in. Organization generically fill this
position rather than go for expert members so as to check the compliance box with
individual who will joy ride rather than make the board accountable.
2. Regulatory Environment
In regard to Corporate Governance Regulations, the issue of concern of most board is
meeting the compliance requirement set by their respective regulators. The regulator in
pubic interest and for ease of regulation they set a general standard for corporate
governance for its regulated organizations. Which poses a change for some of the
organizations. For example the Regulator, the SACCO Societies Regulatory Authority
(SASRA) as provided for guidelines for Corporate Governance for Regulated SACCOs
2023. To aid board of directors in running the SACCO. Small SACCOs in asset base and
those that have limited expertise are usually non compliant to the guidelines as they are
not really tailor made to accommodate the diverse nature of SACCOs.
3. Limited Stakeholders engagement
As seen from the Chair and Director Wachira they take the position that directors only
exist to serve the interest of the shareholders. This culture affects the organizations
accountability and transparency elements. Most organization are like this and have little
regard for stakeholders. Stakeholders engagement who include the staff, community,
and customers is very important to an organization as it build trust, loyalty and long
lasting relationships with the organization which in the long run benefit the
shareholders.
Recommendations and Conclusion
1. The board should benchmark with other similar organizations in Kenya and
other jurisdictions and compare notes. This will aid them tailor make their board
policy and framework to accommodate their unique business operations without
breach the law or being non compliant with their regulator. This can also be done
through engaging corporate governance firms for restructuring and also
engaging with the regulator for guidance and amendment of regulations and
policies.

2. Stake holder engagement with its staff, employees and customers which are
regulator so as to be in touch with the market and the day to day running of the
organization. This will create a good reputation in the market which will attract
more customers or engagement with the organization. The work culture and
moral of the staff will improve which will increase productivity. All these would
benefit the organization financially and reputation wise which will directly
improve shareholders’ benefit.

3. To evolve from the traditional idea of corporate governance observed with the
Chair and Director Wachira. It would be prudent for the board to undergo
regulator training in the evolving, new practices, emerging issues and developing
legal framework of corporate governance. This will equip the board with the
capacity to govern efficiently and be more accountable and transparent which
would lead the organization in meeting its goals and objectives.

4. The regulators greatly relay on the market and its stakeholders to shape
regulatory laws and policies. Therefore the board should maintain engagement
with their regulator to point out to the them the challenges they are facing in the
market and suggest ways in which the regulator could assist them. This would
foster a good collaborative environment for organization rather than the normal
hostile relationship and lead to amendment and expansion of the scope of the
regulatory laws.