Importance of corporate governance in Kenya

Corporate governance is a method of governing the company while stating its own customs, policies and laws to its employees from the highest to the lowest levels.

Corporate governance is very important because it increases the accountability of a company and also helps avoid massive disasters before they occur.

Corporate governance plays a major role in ensuring that an organization is able to sustain itself. This is done through the corporate governance research.

During the research, the heads or managers get to know what they exactly need to successfully run the company and also what they need to correct in order to move the company forward.

Corporate governance is also a very important tool in the success any organization since it will help a company understand the kind of competition they have and how to deal with it. This also helps the company to deal with external pressures effectively without seeking any assistance from somewhere else.

corporate governance in Kenya

Let’s look at the important principles of corporate governance as discussed below;

Principles of corporate governance in Kenya

 Shareholder recognition

Many companies tend to forget or give little attention and importance to the small shareholders to make way for the interests of the majority shareholders and the executive board. What they do not understand is that being able to recognize all your shareholders be it big or small is very important especially in maintaining a company’s stock price.

A good corporate governance will ensure that all shareholders get a voice at general meetings and are allowed to participate.

Stakeholders' interests

It’s also important that the interests of all the stakeholders are recognized by corporate governance. This way it will be easier for a company to establish a positive relationship with the community and the press.

Ethical behavior

It's always good for a good company to ensure that there are no violations of ethical behavior to favor higher profit, which could end up causing massive civil and legal problems down the road.

Companies should therefore ensure that they do not underpay their workers and should also follow environmental regulations because not doing could come back to haunt the company at the end. It’s therefore important that a code of conduct regarding ethical decisions should be established for all members of the board to follow.

Board responsibilities must be clearly outlined

Ensuring that board responsibilities are clearly outlined to majority shareholders will help grow a great deal. It’s therefore very important that all board members are on the same page and share a similar vision for the future of the company.

Business transparency

This is the key to promoting shareholder trust. All financial records and reports should be clearly stated without exaggeration or creative accounting.

As a company you need to understand its never good to give financial reports as these may lead to shareholders not trusting the company. This is also a crime punishable by law and for that reason company’s need to avoid this as much as possible.

well the above are just but a few important principles of corporate governance in Kenya.