The Capital Markets Authority (CMA) will begin rewarding whistle-blowers 3% of the reported and recovered penalties or illicit gains, in order to promote investor protection and confidence.
The Capital Markets Whistle-blower Regulations, 2022 empowers the Capital Markets Authority to reward whistle-blowers and will outline how the rewards to such whistle-blowers will be implemented.
The reportable misconduct includes capital markets fraud, failure to comply with legal and regulatory obligations, and other offenses prescribed in the Capital Markets Act and Regulations.
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CMA Chief Executive Officer Wyckliffe Shamiah says under the reward scheme, whistle-blowers whose identity would be protected, would get up to 5 million shillings. The reward granted to whistle-blowers would include even penalties imposed but is however limited to 5 million shillings.
On the other hand, the information offered by the whistleblowers may still be released to the office of the Director of Public Prosecutions.
The Capital Markets Authority maintains that any person who presents incontestable evidence either anonymously or in-person will gain reasonable protection measures on their identity as per the Witness Protection Act.
The expose should include substantial details and evidence of misconduct or contravention of laws, which would then be used to lead investigations that recover illicit gains.
Capital Markets Authority CEO Wyckliffe Shamiah argues the new policy would encourage CMA licensees and listed companies to comply with the Capital Markets Act and Regulations.
In its latest annual publication – CMA’s independent assessment of companies listed on the Nairobi Securities Exchange (NSE) and the issuers of corporate bonds are applying the principles and recommendations contained in the Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 (CG Code).
CMA Chief Executive Wyckliffe Shamiah noted;
“Out of the seven governance principles assessed, there was improved performance on rights of shareholders, stakeholder relations and ethics and social responsibility’ The overall weighted average score for 2020/2021 assessment was 70.2% (good rating) compared to 72% (good rating) for the previous assessment”.
The number of issuers in the leadership category remained 25, those in the good rating category decreased from 11 to 8, those in fair rating increased from 8 to 10 while those in needs improvement rating increased from 4 to 5. A total of 49 issuers were assessed during this period.
Sector analysis of performance revealed that the banking sector had the best-weighted score with a leadership rating across all the principles of the Code while the agricultural sector had the least weighted score with a fair rating.
11 banks with shares trading at the Nairobi Securities Exchange topped the table with a leadership rating and a weighted overall score of 81.74 percent across all principles in the financial year 2020/2021.
The authority says under the new Whistle-blower Regulations the policy would promote market integrity and accountability in the conduct of business by all market players and the balance recovered would then be transferred and held in the Investor Compensation Fund.