KPLC is setting standard for State-owned firms

In 1934, the Philadelphia Electric Company became the first utility licensed to use the Reddy Kilowatt trade and service marks. Thereafter, over 200 electricity utilities worldwide used the icon under licence.

Fun facts aside, KPLC is, surprisingly, a trailblazer in the corporate governance space in Kenya. How, you ask, as you scramble to buy prepaid tokens when your phone battery is hovering at two percent and the beeping warning on your electricity meter has slowly turned into a mind-numbing screech?

Over the last few weeks, I have been commenting on the rollout of the Government Owned Enterprises (GOE) Act 2025, a piece of legislation whose objective is to bring world-class professionalism to the way state-owned corporations are managed in Kenya. In practical terms, it is intended to move public ownership away from a fragmented parastatal model and towards a more disciplined, transparent and commercially driven ownership framework.

At least two years before the GOE Act was assented to, KPLC began a governance improvement process to remove the majority shareholder's involvement in the nomination of independent directors. In November 2023, the company held an Extraordinary General Meeting to make changes to its Articles of Association.

First, the Articles, which had provided for not less than seven and not more than ten directors, were amended to specifically provide that at least a third of those directors should be independent non-executive directors (INEDs).

Secondly, the amendments required that the board composition should fairly reflect the company's shareholding structure. The key operative word here is "fairly". Given that the Kenyan government's shareholding stood at 50.1 percent, it became crystal clear what the board composition should reflect.

Thirdly, and more interestingly, the proposed amendments to the Articles of Association created two classes of ordinary shares to distinguish voting rights. Class A shares were held by anyone other than the National Treasury, while Class B shares were those held by the National Treasury.

Class A shareholders were entitled to elect four directors to the KPLC Board. Class B shareholders, or the government as it were, were entitled to appoint the rest of the Board. The stage was now set for an interesting Annual General Meeting (AGM) the following month.

Who would those independent directors be, given that they were supposed to be nominated by the minority shareholders?

Having been electrified by a bolt of new governance, the company embarked on a process to professionalise its board composition.

An Appointment of Directors Policy was adopted by the company, a simply written and easy-to-understand eight-page document that clearly set out the process for the who, the what and the how of building the KPLC Board. Most importantly, it was here that the new governance framework was embedded: the National Treasury would not be involved in the selection process for INEDs, thereby ensuring that they reflected professional skills and diversity.

The policy made it clear that at the AGM, director nominees from minority shareholders would be presented for election, while the appointment of the National Treasury nominees would only be noted.

Even though the policy provided for a clearly defined array of professional skills, an external independent adviser was appointed to conduct a skills assessment, identifying the expertise needed for electing INEDs.

The identified skills were engineering, finance, technology and governance. Minority shareholders were invited to submit their nominees.

Forty-eight candidates were nominated for consideration. A board committee, from which the government appointees were recused, reviewed the nominations and submitted the names and professional profiles of the final nominees to shareholders at the December 2023 AGM.

Elections were held without gnashing of teeth or tearing of sackcloth. The minority shareholders exercised their governance-given right to elect their preferred candidates, with zero interference by the majority shareholder from start to finish.

The result: a strong, professionally driven group of INEDs now sits alongside the National Treasury and Ministry of Energy appointees, the managing director and two government-appointed individual directors.

The level of transparency that KPLC demonstrated ahead of the enactment of the GOE Act is not only admirable, but also sets a very public precedent that other Nairobi Securities Exchange-listed GOEs cannot ignore.

The shambolic Kenya Re AGM held in June 2026 is a case in point. Perhaps they should dial *977# to report the governance blackout in their boardroom.

Will the Capital Markets Authority bell the cat on the new governance order currently envisaged by the GOE Act? We wait and see.

Carol Musyoka is a former banker and is currently a corporate governance specialist.