Corporate governance for state corporations: a case for the twotier board structure
State corporations are essential as they are mandated to provide public goods and services and cater to the general welfare of members of the public. State corporations in Kenya have served different purposes in different industries since their establishment during the colonial period. However, they have been plagued by a number of issues over the years, chief among them, mismanagement. Other issues that have arisen as a result of mismanagement include pilferage, wastage and bureaucracy. This has greatly undermined the achievement of their objectives. This paper seeks to investigate the suitability of applying the two-tier board structure to correct this corporate governance failure. The paper is anchored by the concept of governance and its important role in the management of a corporation. Corporate governance guidelines, frameworks and mechanisms are implemented to ensure that the management team of a corporation act and administer their duties in the interest of all stakeholders. With this in mind, the paper shall look into the state of state corporations in Kenya and the laws that govern their administration. It shall particularly look into the one-tier board structure, the rationale behind its use, its benefits and the shortcomings and how these shortcomings have undermined the activities of state corporations. The paper shall discuss the applicability of the two-tier board structure as a remedy to the corporate governance failures that plague state corporations. In order to do so, it shall delve into the application of the two-tier board structure in two jurisdictions; namely Germany and the Netherlands whose economic success can be partly attributed to the nature of their corporation laws. Finally, the paper shall give recommendations that can be tailored to meet the needs of Kenyan state corporations.