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Welcoming Remarks by Mr. Kung’u Gatabaki, Chairman, Capital Markets Authority, During the Fire Award 2011 Event, Tsavo Ballroom KICC, 18th October 2011

The Chief Guest, Ambassador Richard Sezibera, Secretary General, East

African Community;

The Chairman of ICPAK, Mr Patrick Mtange;

Council Members of ICPAK present;

NSE Board members present;

Board members of the Capital Markets Authority present;

The Chief Executive of the Capital Markets Authority, Mrs Stella Kilonzo;

The Chief Executive of ICPAK, Mrs Carol Kigen;

Invited Guests;

Ladies and Gentlemen;

Introduction

I am delighted at this opportunity to make remarks as Chairman of Capital Markets Authority during the Fire Award 2011 Event, where we are also celebrating 10 years of the existence of the award.

This is an important event where we are seeking to reward and encourage excellence in financial reporting.

Excellence in financial reporting is important as it will help us ensure that disclosure by companies, both listed and non-listed companies, are benchmarked to international standards.

Corporate Governance and Reforms in the Capital Markets

Improved financial reporting standards are key to ensuring that corporate governance standards are to the highest level. 

This is important for listed and non-listed companies, as corporate governance is now a key issue that companies are encouraged to report on in their annual financial reports and accounts. 

Proper disclosure of governance on issues such as related parties is important improving the way companies including listed entities are governed.

For listed companies, we have Corporate Governance Guidelines, which are expected to enhance the board and management structures, since corporate governance is key to how listed companies operate. 

Companies are expected to disclose the extent of compliance with the guidelines or explain in their annual reports and accounts the extent of noncompliance.Where the company is not fully compliant with the guidelines, it is expected to identify the reasons for non-compliance and indicate steps being taken to become compliant.

The Authority is currently reviewing this to see how higher levels of compliance with the corporate governance standards can be enhanced by listed companies as we seek to ensure that the highest standards are observed. 

I am glad to state that the Corporate Governance Regulations covering our market intermediaries are in the gazettement stage and this should be completed by November 2011.

This is part of the broader reform agenda in the capital markets and have been spearheading an overhaul of our legal and regulatory framework, in close consultation with all stakeholders, to make our market environment better and more facilitative. This is line with our Strategic Plan, 2009-2012.

An improved legal and regulatory framework is key to positioning the capital markets to play their role of mobilizing long term financial resources to support productive economic activities as envisaged in the Vision 2030 Economic Blueprint.

I am glad to say that this process has been going on well and we delivered a new Capital Markets Authority Bill and Securities and Investments Bill to the Deputy Prime Minister and Minister for Finance for onward tabling in Parliament.

This marks a major improvement of our regulatory framework, which we expect will be aligned to international best practice in effective securities regulations.

We have seen the expectation by citizens and shareholders alike of their government and companies – the need for social/ethical contract. In this regard, I laud the category of CSR disclosure in the Financial Statement.

Conclusion

As I conclude my remarks, I note that the Authority is exerting efforts to ensure that our market operates to the highest standards of governance and transparency as the constitution has raised the bar in terms of expectations from our stakeholders, especially investors and the public at large.

Thank you.

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