In today’s dynamic corporate environment, corporate governance is no longer optional — it’s a strategic imperative. In Kenya, governance audits have become an essential tool in ensuring organizations adhere to best practices in leadership, ethics, compliance, and accountability. This article explores the significance of governance audits in Kenya, the regulatory framework provided by the Capital Markets Authority (CMA), and how organizations can benefit from this process forpublic listed companies other codes are available for other entities including the Mwongozo Code for state corporations.

What is a Governance Audit?

A governance audit is a systematic and independent assessment of an organization’s governance practices to determine how well it complies with established standards, principles, and codes. It evaluates key governance pillars, including:

• Board effectiveness
• Transparency and disclosure
• Compliance with laws
• Communication with stakeholders
• Risk management and internal controls
• Ethical leadership and integrity
• Stakeholder engagement

In Kenya, governance audits are not only a best practice but a regulatory requirement for certain institutions, especially those in the capital markets.

Example of  Regulatory Framework: CMA Code of Corporate Governance

The Capital Markets Authority (CMA), through the Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015, requires all listed companies and licensed intermediaries to undergo annual governance audits.

Key Provisions:

• Mandatory Governance Audit (Clause 2.7.3): Issuers must undertake a governance audit by a qualified and accredited governance auditor and submit the report to the CMA.
• Disclosure Obligation: Companies are required to disclose the outcomes of the audit in their annual reports.
• Continuous Improvement: The audit should inform continuous improvement in governance practices and policies.

The CMA Code aligns with international standards, including the OECD Principles of Corporate Governance, to promote transparency, investor confidence, and sustainable value creation.

Why Governance Audits Matter

1. Regulatory Compliance
   Compliance with the CMA Code and other industry-specific governance requirements avoids penalties and builds trust with regulators.
2. Enhanced Board Performance
   Governance audits highlight gaps in board composition, roles, and decision-making, enabling targeted reforms and training.
3. Reputational Strength
   Strong governance is a signal of credibility, transparency, and long-term resilience — essential for attracting investors and strategic partners.
4. Risk Mitigation
   Identifying governance weaknesses early reduces exposure to risks such as fraud, litigation, and regulatory sanctions.
5. Strategic Alignment
   A well-structured governance framework aligns the organization’s strategy, culture, and performance monitoring.

Who Needs a Governance Audit?

While the CMA mandates governance audits for listed companies and capital market intermediaries, other organizations — including state corporations, pension schemes, cooperatives, NGOs, and private companies — are increasingly adopting governance audits as part of their internal controls and sustainability efforts.

Choosing the Right Governance Auditor

To comply with regulatory requirements, governance audits must be conducted by a certified governance auditor accredited by a professional body ie Institute of Certified Secretaries (ICS)

At Scribe Services Registrars, we offer expert governance audits delivered by accredited professionals with in-depth understanding of the CMA Code, corporate governance frameworks, and sector-specific best practices.

Our Approach at Scribe Services

We tailor each governance audit to your organization’s unique structure and regulatory environment. Our process includes:

• Review of governance policies, board minutes, and organizational structure
• Interviews with board and senior management
• Compliance checklists based on sector-specific codes
• A detailed report with a governance score, findings, and actionable recommendations

Final Thoughts

Governance audits are not just a regulatory checkbox — they are an opportunity to strengthen your organization’s leadership, resilience, and reputation. Whether you’re preparing for a governance audit or seeking to build investor confidence, the time to act is now.

Contact Scribe Services Registrars today to schedule your governance audit and take the next step in your governance journey.

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