BUSINESS SCHOOL

CORPORATE GOVERNANCE
TAKE HOME ASSIGNMENT 1
(SEMESTER 3)

QUESTION: Discuss to what extend corporate governance has succeeded

National bank of Kenya, National oil corporation and K.P.L.C

INSTRUCTOR: Mr Alfred

STUDENT: Derosen Mark Busuru

ADM: AD 100742

DATE: Monday – 2/4/2016

Corporate governance principles for National bank of Kenya
In simple terms, corporate governance determines how a company is directed,
administered and controlled.  Effective corporate governance is often viewed as
an essential part of sustained performance.

National Bank was incorporated on 19th June 1968 and officially opened on
Thursday November 14th 1968. At the time it was fully owned by the
Government. The objective for which it was formed was to help Kenyans get
access to credit and control their economy after independence.

Effective corporate governance is critical to the proper functioning of the banking

sector and the economy as a whole. While there is no single approach to good
corporate governance, it provide a framework within which banks and supervisors
should operate to achieve robust and transparent risk management and decision-
making and, in doing so, promote public confidence and uphold the safety and
soundness of the banking system.

The revised guidance emphasizes the critical importance of effective corporate

governance for the safe and sound functioning of National bank of Kenya. It
stresses the importance of risk governance as part of a bank's overall corporate
governance framework and promotes the value of strong boards and board
committees together with effective control functions. More specifically, the
revised principles:

 expand the guidance on the role of the board of directors in overseeing the
implementation of effective risk management systems;

 emphasize the importance of the board's collective competence as well as

the obligation of individual board members to dedicate sufficient time to
their mandates and to keep abreast of developments in National bank;

 strengthen the guidance on risk governance, including the risk

management roles played by business units, risk management teams, and
internal audit and control functions (the three lines of defence), as well as
 underline the importance of a sound risk culture to drive risk management
within National bank;

 provide guidance for National bank supervisors in evaluating the processes

used by banks to select board members and senior management; and

 Recognize that compensation systems form a key component of the

governance and incentive structure through which the board and senior
management of National bank convey acceptable risk-taking behaviour and
reinforce the bank's operating and risk culture.

Corporate governance for national oil corporation

The National Oil Corporation of Kenya is a fully integrated State Corporation
involved in all aspects of the petroleum supply chain covering the upstream oil
and gas exploration, midstream petroleum infrastructure development and
downstream marketing of petroleum products.

National oil Corporation maintains an exploration focus seeking to generate long-

term value for all shareholders, as well as other stakeholders, and has, since its
creation in 1988, been guided by general principles of corporate governance to:

 Protect shareholder rights

 Provide a safe and rewarding working environment to all employees

 Abide by applicable laws and best industry practice

 Carry out its activities competently and sustainably

 Sustain the well-being of local communities in its areas of operations

Role of the Board

The Board sets the Group’s strategy, ensuring that the necessary resources are in
place to achieve the agreed strategic priorities, and reviews management and
financial performance. It is accountable to shareholders for the creation and
delivery of strong, sustainable financial performance and long-term shareholder
value. To achieve this, the Board directs and monitors the Company’s affairs
within a framework of controls which enable risk to be assessed and managed
effectively. The Board also has responsibility for setting National oil’s core values
and standards of business conduct and for ensuring that these, together with the
Group’s obligations to its stakeholders, are widely understood throughout the
Company.

Composition

The National oil’s Board comprises of one Executive Director, a Non-Executive

Chairman and three Non-Executive Directors. The Non-Executive Directors have
either held senior appointments in oil and gas companies, companies with
interests in the energy sector or have significant corporate and financial
experience and bring a broad range of business, technical and commercial
experience to the Board. The Board believes that its composition is suitable for
operating an effective publicly traded Kenya’s junior oil and gas company.

Chairman and Chief Executive

There is a defined separation of the responsibilities between Non-Executive

Chairman and the Chief Executive Officer of the Company. The Chairman is
primarily responsible for the effective working of the Board while the Chief
Executive Officer is responsible for the operational management of the business,
for developing strategy in consultation with the Board and for the
implementation of the strategy. The roles of Chairman and Chief Executive Officer
are exercised by different individuals.

Board Committees
The Board has established Audit, Remuneration and Nomination Committees,
each of which has terms of reference (approved by the Board) setting out its
authority and duties.

CORPORATE GOVERNANCE FOR KENYA POWER AND LIGTHING

Kenya Power owns and operates most of the electricity transmission and
distribution system in the country and sells electricity to over 2.6 million
customers (as at April 2014).  The Company’s key mandate is to plan for sufficient
electricity generation and transmission capacity to meet demand; building and
maintaining the power distribution and transmission network and retailing of
electricity to its customers.

 Kenya power and lighting’s commitment to effective corporate governance is

reflected largely in our Principles of Corporate Governance, Principles of Business
Conduct, Code of Business Conduct and Ethics for members of the Board, and our
charters for the Audit, Directors and Corporate Governance and Human
Resources Committees of the Board.

 The Board of Directors has adopted corporate governance policies;

 A majority of the Board members are independent.

 All members of the Audit Committee, Human Resources Committee and the
Committee on Directors and Corporate Governance are independent;

 The non-management members of the Board meet regularly without the

presence of management, and the independent members of the Board
meet at least once a year;

 K.P.L.C have a code of business conduct that also applies to our principal
executive officer, principal financial officer and principal accounting officer
and will promptly disclose waivers of the code for these officers;
 The charters of the Board committees clearly establish their respective
roles and responsibilities;

 K.P.L.C have an ethics office with a hotline available to all employees, and
our Audit Committee has procedures in place for the anonymous
submission of employee complaints on accounting, internal controls or
auditing matters; and

 The Board, the Committee on Directions and Corporate Governance, the

Audit Committee and the Human Resource Committee conduct annual self-
assessments, and the Committee on Directions and Corporate Governance
evaluates annually the performance of individual directors.

REFERENCES

http://www.nationaloil.co.ke/site/

http://www.kplc.co.ke/content/item/14/about-kenya-power

http://nationalbank.co.ke/