Assessing whether codification of directors’ fiduciary duties will facilitate at least partly improved corporate governance in Kenya: a critical analysis of the duty to promote the success of the company

Abstract

Kenya has in the past witnessed numerous collapses of banks, insurance companies, stockbrokers as well as state corporations. These failures have highly been attributed by numerous authors to the weak regulatory framework governing directors’ duties. The new Companies Act which was assented to on September 2015, proposed to introduced a written statutory statement of directors’ duties, and this was seen as a positive change within the realm of Kenya’s corporate governance, at least on the face of things. However, these duties, particularly that set out in section 143 (1) (af), are coupled with uncertainties and it begs the question as to whether these uncertainties will curtail the achievement of that which was intended by the codified duties. This research paper therefore attempts to analyze the duty set out in section 143 (1) (a-f) which obligates directors to promote the success of the company for the benefit of its members as a whole with due regard to a list of factors set therein. This analysis shall seek to identify the advantages of codification as well as the uncertainties associated with the duty. It shall endeavor to explore a comparative analysis of the corporate law in the United Kingdom and attempts to analyses the manner in which the identified uncertainties in the new Act have been resolved