Control and enforcement of corporate governance by the capital markets authority (CMA)

Abstract

Corporate governance has been a term not quite understood. Many people appreciate its importance having experienced the effect of the lack of it as opposed to the presence of it. This research tries to understand the meaning of corporate governance and why it is important for control and enforcement in corporations by the Capital Markets Authority, the body mandated to regulate public listed companies. The context of the study is the companies listed at the Nairobi Stock Exchange, very important because of the role they play in attracting public funds (aswell as foreign) capital for longer investment purposes. The research looks at the functions of CMA and its role in controlling and enforcement of corporate governance throug,h powers bestowed through legislation. The study looks at scholarly views on the concept and how it is practiced in the major economies including the Unites States and Great Britain. It then borrows a leaf from the King's report on corporate governance and suggests how the seven characteristics can be applied in the Kenyan context. A survey on the significance of practicing corporate governance in corporations is also captured with emphasis on aspects of corporate governance they consider important. The case study is then undertaken to determine whether CMA actually undertakes control and enforcement of the corporate governance on the companies listed at the NSE. The data collected and analyzed suggested that the Authority has put in place various measures . a~ and reporting requirements for listed companies which essentially as a guideline. Control and . A enforcement of the guidelines is effected through various means including use of fines and penalties. There is, however, varying levels of control and enforcement of the guidelines against the prescribed measures. The research, however, found that the Authority is undergoing a lot of reforms which are geared to see a more firm control and enforcement framework backed by legislation.