Board Charter
The Board Charter is a policy document that guides members of the Board in discharge of their mandates. It clearly outlines the rules that guide the Board and does not in any way purport to replace or supersede any laws and regulations that govern the Company. This ensures the effectiveness of each Director’s contribution in the governance of the Company by facilitating full and free exercise of independent judgement and professional competencies.
Board Composition
In accordance with the Articles of Association of the Company, the Board consists of eleven (11) members made up of a non-executive and independent Chairman, one executive Managing Director & CEO, the Cabinet Secretary National Treasury, Principal Secretary Ministry of Energy & Petroleum, plus seven independent and nonexecutive directors.
At the last Annual General Meeting and in accordance with the Articles of Association of the Company on Rotation of Directors; three Board members retired and did not offer themselves for re-election. As a result, three independent and non-executive members were elected by the shareholders to join the KenGen Board of Directors. Further, a new Managing Director & CEO was appointed by the Board during the year.
Board Skills Set
The Board has the following skills set therefore offering a depth and breadth of insight perspective and experience.
The Board has achieved the 1/3 gender balance on its Board as shown below:
Board Operations
Separation of Powers & Duties of the Chairman and Managing Director & CEO
The Board’s oversight role is secured through separation of the functions of the Chairman and the Managing Director & CEO. This independence of the Board from the Company’s corporate management provides a distinction between the non-executive and executive roles. A clear definition of their responsibilities enables the Company achieve requisite balance of power, increased accountability and improved decision making.
Role of the Board
The Board:
- Provides leadership in the company by putting in place the strategic intent of the Company, its objectives and values; reviews this strategic direction and adopts business plans proposed by Management.
- Retains full and effective control over the Company, monitors Management’s implementation of the plans and strategies, ensures ethical behaviour and compliance with relevant laws ®ulations, audit and accounting principles, corporate policies & procedures and the Code of Ethics.
- Evaluates performance of Management against targets and objectives and benchmarks performance of the Company against best international practices.
- Reviews succession planning for the management team and approves senior executive appointments, organizational changes and remuneration.
- Constitutes and reviews composition of Board Committees and approves reports and performance of each Board Committee.
- Considers and approves the Company’s overall budget and specific proposals for capital expenditure & acquisitions plus strategic opportunities for the Company.
- Approves the quarterly, interim and preliminary financial statements, Annual Report & Accounts, quarterly Management Accounts and Operational Report from the Managing Director & CEO and public announcements of a material nature.
Responsibilities of Directors
The responsibilities of members of the Board are spelt out in both the Articles of Association of the Company, the Board Charter and in accordance with principles of good corporate governance. Execution of the mandate of the Board requires each Director to observe a code of conduct aligned to their duties and responsibilities to the Company and shareholders, and act within limitations as defined in the Charter.
Each Director therefore:
- Undertakes to act in good faith, with care and prudence in the best interest of the Company while exercising their power and executing their duties.
- Subscribes to uphold and promote effective and responsible use of Company resources.
- Commits that, while taking into account the financial impact of their decisions, they shall consider the consequences for sustainable development, effect on relations with stakeholders and interest of the society in general.
- Fully aware that they are individually and collectively responsible for deciding the Company’s vision, mission and values, its strategic objectives, ensuring establishment of the organisational structure, putting in place policies to achieve the objectives as well as ensuring effective control over the Company and accounting to shareholders.
- Shall familiarise themselves with the relevant regulations and statutes, the Memorandum and Articles of Association of the Company, the Board’s operating norms and procedures, and any other issues necessary for the discharge of their duties.
Board Effectiveness
- Induction: Upon appointment to the Board, new Directors embark on detailed program to familiarize themselves with the Company’s business and operating environment. Various corporate literature is provided and meetings arranged with senior management team. Visits to power stations are also organized. During the year, the new Directors undertook this program.
- Continuous Professional Development: During the year, the directors undertook various training and development programs in risk management, participated in relevant energy conferences, fora to ensure they update their skills and knowledge, as well as keep abreast with the developments in corporate governance. Bi-annually, the members of the Board attend specialized five-day corporate governance training for directors offered by the centre for corporate governance Kenya.
- Board Evaluation: The Board conducts an annual evaluation process on the Board as an entity, its committees, and each individual director to gauge the board’s performance. This is done by an independent consultant.
The board has an elaborate program based on good governance practice to ensure development of the board members in various facets in order to strengthen the board’s oversight role and promote board effectiveness.
Board Remuneration
As stipulated in the guidelines provided in the State Corporations Act and the shareholder approval granted at the Annual General Meeting, the Directors are paid taxable sitting allowance for every meeting attended, as well as travel and accommodation allowance while on Company duty. The Chairman is paid a monthly honorarium. KenGen does not grant personal loans or guarantees to its Directors. It is proposed that each Director receives fees of KShs.600,000 per annum for the financial year ended 30th June 2014.
No loans were granted to any non-executive and executive director.
Conflict of Interest and Declaration of Interest
The Board members have a statutory duty to avoid situations in which they have or may have interests that conflict with those of the Company. All business transactions with all parties, directors or their related parties are carried out at arms’ length.
Board members are obligated to fully disclose to the Board any real or potential conflict of interest, which comes to his/her attention, whether direct or indirect.
An acknowledgement that should it come to the attention of a director that a matter concerning the Company may result in a conflict of interest, obligates the Director to declare the same and exclude himself/herself from any discussion or decision over the matter in question.
During every Board meeting, an agenda item exists which requires members to make a declaration of any interest they may have in the business to be discussed.
Code of Conduct
At KenGen, good corporate governance is engrained as a valuable contributor to the long-term success of the Company through creation of the right culture throughout the organisation. The core values of integrity, professionalism, team spirit and emphasis on safety culture steer our Company’s organizational health and decision-making processes. Owing to the dynamic business environment. The Company periodically conducts reviews such as the culture baseline survey in view of the dynamic business environment so as to review and further improve the existing culture in the organisation.
The Company conducts its business in compliance with relevant legal principles and high ethical standards of business practice. The Board, Management and employees are required to observe the code and high standards of integrity. Further, these standards are applied in all dealings with customers, suppliers and other stakeholders.
Going Concern
The Board confirms that the Company has adequate resources to continue in business for the foreseeable future. For this reason, it continues to adopt the going concern basis when preparing the financial statements.
Communication with Shareholders
The Board is committed to provision of regular and timely information to the shareholders. The Company publishes its half-year and annual results in the local daily newspapers. In accordance with Article 137 of the Articles of Association of the Company, the Annual Report & Accounts is posted in the Company’s website at www.kengen.co.ke at least 21 days before the Annual General Meeting (AGM) to ensure that all the shareholders are well informed at the AGM. The Company’s website provides to shareholders quick access to the corporate information.
