Legislative Update: Amendment of Companies (General) Regulations

In September, we highlighted the amendments to the Companies Act effected vide the Companies Amendment Act of 2017. In a further raft of measures to improve corporate governance particularly for quoted companies in Kenya, the office of the Attorney General in Kenya has released The Companies (General) (Amendment) (No. 2) Regulations, 2017 vide Legal Notice Number 240 of 2017. The Regulations amend the Companies (General) Regulations of 2015.

Remuneration reports

The amendments introduce Regulation 50A which provides that directors of quoted companies must prepare a remuneration report for every financial year according to the guidelines in the Tenth Schedule. The remuneration report is to include the following:

  • An annual statement on the directors’ remuneration which includes the major decisions made on directors’ remuneration, any substantial changes made to directors’ remuneration within the year and the context within which such changes were made;
  • A policy statement on directors’ remuneration which details the directors’ performance conditions which make them eligible for share options or long term investment schemes, methods used to determine those performance conditions and explanations for any proposed changes to such performance conditions;
  • Details of the directors’ contracts, for example durations, unexpired terms, notice periods and termination payments and any other details in the contracts that would enable the members of the company to estimate liability in the event of early termination of the contract;
  • Report of the previous general meeting as to the number of votes cast for and against a resolution to approve a directors’ remuneration report or remuneration policy;
  • The total amount of salary/fees, bonuses, expense allowances and benefits paid to a director in the relevant financial year and the preceding year including any element of a director’s remuneration that is not in cash;
  • The total amount of compensation paid to a director for loss of office or any other payments made to a director in respect of termination of their contract;
  • The details of share options for each of the directors who served in that financial year for example the number of shares subject to the options, the share options awarded, exercised or unexercised in that year, the unexpired options, and any variations to the terms and conditions of the options;
  • The details of long term incentive schemes for directors who served in that financial year for example the scheme interests a director had at the beginning and end of the financial year, any interests allocated to directors within the year and any variations made to the terms and conditions of the scheme within the year;
  • The details of any pension arrangements that the directors have rights in, any changes made to those pension arrangements within the year and management of assets and financial affairs of the pension scheme.; and
  • The details of any sums paid to third parties in respect of a director’s services.

 

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Authors: Moreen Mwangi

                 Lorna Mbatia