The Capital Markets Authority (CMA) plans to introduce continuous monitoring of corporate governance in listed companies, signalling a shift to real-time oversight aimed at restoring investor confidence in a market long plagued by compliance breaches.
The regulator said the move will enable early detection of governance failures before they escalate into market disruptions. Currently, compliance with corporate governance principles is assessed annually.
In its 2025 State of Corporate Governance Report, CMA said it is transitioning from a focus on awareness to demonstrable implementation and consistency of governance practices, supported by artificial intelligence and machine learning tools.
“We are advancing a data-driven supervision model that will transform how governance is monitored in real time,” CMA said, adding that early-warning systems will help detect governance deterioration before it disrupts markets.
The shift comes amid persistent concerns from minority investors over weak enforcement of governance standards. Over the past year, at least seven companies have breached regulatory requirements, including remaining listed while insolvent, failing to disclose material information in mergers and acquisitions, and not issuing public notices on major asset sales.
Other governance lapses cited include insider trading, fraud and failure to issue profit warnings.
The Capital Markets (Public Offers, Listings and Disclosures) Regulations, 2023, make it mandatory for listed companies to comply with the Corporate Governance Code. Firms that fall short must disclose reasons for non-compliance and outline corrective measures.
The Nairobi Securities Exchange.
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CMA assesses adherence using a Corporate Governance Scorecard, which assigns zero points for non-compliance, one point for partial compliance, two points for full compliance and three points for practices that exceed requirements.
Based on overall scores, issuers are classified into four categories: Leadership Rating (75 per cent and above), Good Rating (65–74 per cent), Fair Rating (50–64 per cent) and Needs Improvement (below 50 per cent).
The scorecard evaluates performance across key principles, including board effectiveness, shareholder rights, risk management, accountability, transparency and stakeholder relations.
Despite ongoing compliance challenges, the report shows improvement in governance standards. The weighted overall score rose to 78.88 per cent (Leadership Rating) in the 2024/2025 financial year, up from 73.56 per cent (Good Rating) the previous year.
CMA attributed the gains to stronger commitment by boards and management to align governance frameworks with regulatory expectations and best practices. “Overall, the assessment highlights meaningful progress in the governance landscape among issuers,” the authority said.
It added that the findings also point to areas requiring further improvement to enhance transparency, accountability and market integrity.
