African Investor Relations

Kenyan legislators, in their bold quest to demand accountability from listed company directors, wish to punish directors with a jail term of up to 6 months and or a fine should the annual report not be published online in accordance with the requirements of section 387 of the new Companies Bill. One legislator though, nervous at this particularly draconian move, quickly slipped in section 389 below.

A failure to make information available on a website throughout the period referred to in subsection (4)(b) is disregarded if—
(a) the information is made available on the website for part of that period, and
(b) the failure is wholly attributable to circumstances that it would not be reasonable to have expected the company to prevent or avoid.

So that makes sense: if a listed company is unable to post the annual report online because of circumstances beyond its control then the directors have a “get out of jail free card”. The following general implications arise from Kenya’s news legislation:-

- all listed companies in Kenya should have a website (Kenya has the highest incidence of listed company corporate websites) up and running all the time
- the publication of information on their website requires discipline in the financial reporting process – the obligation to post information online as soon as it is practically available creates an obligation on someone to think about what they are doing
- control over the availability of information online will have to be increased to ensure that reporting requirements are not inadvertently contradicted

I have spoken to numerous listed company executives in Kenya and the level of awareness of the issues contained in the new Companies Bill is very low, if not non-existent.

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