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"id": 45843,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/45843/?format=api",
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"type": "speech",
"speaker_name": "Mr. Baiya",
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"speaker": {
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"legal_name": "Peter Njoroge Baiya",
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"content": "Mr. Temporary Deputy Speaker, Sir, perhaps, I also want to uphold the Bill especially for the provisions regarding the directors. I want to support the speakers who have spoken before me. In this country, we have cases of people who have established companies and are allowed to--- It is like they become rogue directors. They operate completely oblivious of the law. They conduct themselves in complete abuse of the laws and so on. In other words, the standard expectations are that the directors of a company will act in the best interests of the company, will not involve themselves in conflict of interest and that they will also ensure that proper records, returns and all other documents are maintained and held appropriately. All those things have been disregarded in practice and, as long as the Office of the Registrar of Companies and the Minister are not sufficiently in a position to monitor and enforce the law, we may have the best of legislation but impunity that has been allowed to thrive will continue to thrive if the consequences and penalties are not visited upon those who are tempted to default. The current law is very clear. Mr. Temporary Deputy Speaker, Sir, the law is also very clear in providing for situations where the Corporation Bill would deny those who are guilty or those who are involved in malpractices to enjoy the protection of the Companies Bill. The challenge again, even under the current law, has been impunity. There are many incidences where the law ought to have taken its course but nothing has been done. In this regard, we are saying that irrespective of the kind of law we come up with, in the absence of a clear enforcement mechanism, it would still not deliver to Kenyans. We have some cases in mind that have also been mentioned like the pyramid schemes. These are companies that were formed by Kenyans. They were registered and after they committed serious crimes; collected money from ordinary Kenyans, some of whom relied on their trusted peers to make decisions to invest in these companies, they closed shop and disappeared. The Government cannot tell Kenyans who these directors were and what action has been taken against them, if not for anything else, to deter similar conduct in future and more so, to restore the confidence of people of this country with regard to governance of companies. There are also issues that have been touched on in this new Bill that are also very relevant particularly to governance issues and management of companies, more so, the area of financial providence. Public companies are public institutions that are supposed to interact, not just with the shareholders but also with other members of the public in general. They deal with financial institutions and those that they engage in business with. So, the stakeholders of these companies are the entire economy and the entire public. This also includes the employees. The manner in which these companies are run is not just a matter for the directors alone or even the shareholders, but all stakeholders have legitimate interest. This is a welcome aspect that this Bill has made provision for, particularly with regard to the management and transfer of shares. Under the current law, we have a situation where companies that are expected to maintain a share register do not do it. Even where they do it, you will find that there is no established mechanism of upgrading shares. You may find that a member who bought shares 10 years ago at Kshs1, 000, it becomes a matter of guess work to determine what that member is entitled at the end of the year because the share register is not maintained. This is particularly serious when the shareholders are gullible citizens, as some of our people have entrusted the companies to themselves. The aspect of share management has been notorious when it comes to transfer. It has been found to be a standard practice that when companies and directors want to defraud members, they use the share register to duplicate shares without due regard to the maintenance of the original value of the shareholders and they distribute the shares to their cronies, friends and supporters whom they expect to depend on, in order to maintain them in offices. At the end of the day, you will find old shareholders whose contributions have helped to bring up the company losing out to newcomers who take up the benefits. This is a practice all over the country. We expect that the Office of the Registrar, having been furnished with the right information, will ensure that there is clear and proper filing of returns to check on potential abuses that would affect the whole concept of running a company. Lastly, I would like to say that the role of the Judiciary is very critical. We have seen that even with the best law, if you do not have a proper functioning court, the interpretation and enforcement of these rights takes the shareholders and all the players nowhere. In case of a dispute relating to directors and shareholders with regard to elections and handling of the companyâs assets and properties, we have seen serious flaws arising from our judiciary. It cannot be said to have established any system that lawyers can use to competently advise their clients. They cannot say that based on what the court may have decided on previous cases, this is what we predict. Instead, we find litigations pending within our court system year in, year out, while the problem that those who went to court wanted to solve lingers on. We have notorious cases, for instance, where one company in my area in Kiambu, belonging to ordinary shareholders lost a piece of land of about 530 acres to a forced sale by the court for a paltry Kshs1 million. This process was sanctioned by the court. That tells you that our courts have played a very big role in causing the problems we have today in the Company Law System. Otherwise, the Register is very much welcome. However, we still expect to continue to monitor the implementation, identify where there may be weaknesses and loopholes and continuously ensure that we update the registration so that it delivers to the best interests of the economy and to the country. With those remarks, I beg to support."
}