The Capital Markets Authority (CMA) has been dealt a blow after the Capital Markets Tribunal ruled that it cannot direct or recommend who should sit on the boards of publicly listed companies. The landmark decision came in a dispute involving Limuru Tea Plc, where the tribunal clarified that only shareholders can appoint or remove directors through annual general meetings.
The ruling effectively curtails the CMA’s efforts to shape board composition under its corporate governance mandate. The regulator had argued that Limuru Tea’s board lacked agricultural expertise and minority shareholder representation, citing the 2015 Code of Corporate Governance as grounds to restructure the board. However, the tribunal held that the code cannot override statutory law or empower CMA to act on behalf of specific shareholder blocs.
In its judgment, the tribunal also criticized the CMA for relying heavily on media reports and emphasized that directors are fiduciaries for the company as a whole, not for individual shareholders. The verdict now shifts greater authority to shareholders, raising questions about the regulator’s capacity to enforce diversity, expertise, and accountability in boardrooms.
The ruling also has direct implications for the ongoing tussle at Limuru Tea, where Africa Reit claimed a 27.31 percent stake through an alliance with the late businessman Joe Wanjui. CMA had previously blocked a Sh596.7 billion global buyout deal over governance concerns, but the tribunal’s verdict limits its power to intervene in such disputes.
This setback is expected to weaken CMA’s oversight tools and may embolden shareholder blocs to resist governance changes, complicating efforts to promote skills-based board structures and fair representation in Kenya’s listed companies.
