KenGen on Thursday controversially re-elected two non-executive directors whose terms had expired and who had not offered themselves for re-appointment, breaching corporate governance rules.
The power producer said ahead of the annual general meeting that Joseph Sitati and Maurice Nduranu will not offer themselves for re-election, having served for the maximum six years as provided for in the code of corporate governance for State-owned firms.
They were nonetheless re-elected with the help of the National Treasury which holds 4.61 billion shares equivalent to a 69.99 percent stake in KenGen.
The two got massive backing in one of the most controversial re-elections of board members among Nairobi Securities Exchange-listed companies.
“Mr Maurice Nduranu who retires in accordance with Article 104 of the Articles of Association of the company does not offer himself for re-election as a director of the company,” KenGen had said in its AGM notice.
“Mr Joseph Sitati who retires in accordance with Article 104 of the Articles of Association of the company does not offer himself for re-election as a director of the company.”
They both first joined KenGen’s board on December 16, 2015, as non-executive directors for initial three-year terms which were renewed on December 11, 2018, for another three years.
This means that they had exhausted their tenure of six years by the time of the latest AGM based on Mwongozo –the code of corporate governance for State corporations.
“Board members shall hold office for a period not exceeding three years and are eligible for reappointment for one more term not exceeding three years. A board member may be appointed for a cumulative term not exceeding six years,” Mwongozo says of the board members’ term limits.
Mr Sitati is the chair of KenGen’s audit, risk, and compliance committee. He is also a member of the company’s governance advisory committee.
Mr Nduranu chairs the company’s finance committee and is also a member of its human resource and nomination committee as well as the government advisory committee.
The re-election of the two board members is the latest controversy for KenGen which failed to issue a profit warning for the year ended June, drawing unspecified punishment from the Capital Markets Authority (CMA).
The company did not warn the investing public that its net income will drop by at least 25 percent as required by law.
The power producer’s net profit for the year ended June dropped 93.5 percent to Sh1.1 billion from Sh18.3 billion a year earlier.
KenGen blamed the reduced profitability on higher taxation. It incurred an income tax expense of Sh13.5 billion in the period, having booked an income tax credit of Sh4.5 billion the previous year.
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