The law governing directors in Kenya: a comparative review

Abstract

This thesis seeks to understand why despite adopting England’s corporate framework, poor corporate governance remains one of the main challenges facing Kenya today. In so doing it carries out a comparative review of Kenya’s framework primarily comparing it to that of England, with the aim of making suggestions on how Kenya’s legal framework for governing directors can be adapted to reflect local conditions and ideologies so as to improve accountability in Plcs in Kenya. It starts off by examining the legal transplants debate and the proposition that a weak legal system may be the main explanation for poor corporate governance in Kenya as claimed by the ‘law matters’ thesis. This thesis challenges the proposition of the ‘law matters’ thesis and argues that other path-dependency factors matter: particularly culture through ethnic diversity. As such, this thesis argues that for a transplant to take matters such as whether it is institutionally compatible and culturally acceptable need to be taken into consideration. The contribution of this thesis is that it provides a description of Kenyan culture and an illumination of how this culture affects the effective function of corporate law. In this regard it finds that ethnicity, particularly through kinship plays a key role in the efficacy of the Anglo- American model of corporate governance when it is transplanted to the Kenyan context. This thesis states the law in England and Kenya as it was on 27th January 2012.