Kenya Re to lock out politicians in new board shake-up rules

Kenya Reinsurance Corporation (Kenya Re) has proposed the restructuring of its governance framework in a move to lock out political appointees from its board, even as the board gets full powers to fire and hire the managing director (MD).

The reinsurer, whose 60 per cent owned by the government, has proposed major amendments to its Articles of Association, which will also see the number of board members reduce to nine as well as its shares reclassified into two categories – one of shares owned by State and the other category being shares owned by other investors; in a move that could see Treasury solidify its hold on the firm.

The company has also proposed new stringent requirements for board members, including the requirement that they should not have “been affiliated with any political party in the preceding five years”. The new clauses to the Articles of Association will be debated and voted on by shareholders at a special general meeting that Kenya Re has called for on February 11. 

Locking out politicians from its board aligns with the recently enacted Government Owned Enterprises (GOE) Act, 2025, which emphasises merit-based appointments to boards, discouraging current practice where politicians who fail to clinch elective posts but are friendly to the administration of the day are rewarded with appointments to boards of parastatals.

The amendments to Kenya Re’s Articles of Association also take away the immense power shareholders currently have to hire and fire a managing director, while also limiting the term of the MD  to a three-year term that is renewable once. 

In the current scenario, the Articles of Association say that the CEO could be terminated if the company makes a resolution in a general meeting, giving leeway to shareholders to dismiss the managing director through resolutions made through such meetings, annual general meetings (AGMs) and special general meetings.

The current Articles of Association do not provide term limits, only noting that the directors can appoint a managing director “for such a period and on such terms… as they may think fit”.

The framework also requires the directors to appoint “one or more” of their own to the office of managing director, which then meant that one had to be a director first before they could become the MD. However, in the proposed dispensation, the hiring and firing of the MD will be made by the directors.

“The directors shall be responsible for the recruitment, appointment and removal of the managing director for a term of three years, renewable once and on such terms and with such powers, and at such a remuneration… as they may think fit and subject to the terms of any agreement entered into in any particularly case, may revoke an such appointment,” reads the proposed amendment. 

The hiring and firing of managing directors at Kenya Re has over the years been characterised by high-octane drama and has been contested not just through Kenya Re’s internal mechanisms, but also lawsuits.

The proposals also lock out recent employees as well as professionals advising or consulting with the company from board appointments.

Persons being appointed to the Kenya Re board will also be required to have expertise and experience in areas such as finance, accounting, auditing, risk management, economics, law, engineering or corporate governance. They will also need to have at least 10 years of professional experience, five of which should be in senior management.

During the special general meeting, the shareholders will also vote on a proposal to reclassify the firm’s shares into Class A – which will be shares held by retail and institutional investors – and Class B - which will be shares owned by the National Treasury. 

“The holders of Class A and B Shares shall have the same rights and privileges except with respect to nomination and election of directors,” reads one of the clauses that will be introduced in the company’s Articles of Association if the proposal sails through. 

It has also proposed a reduction of the number of directors from 11 to nine, with Class A shareholders getting to appoint three directors, while Treasury will appoint five of the directors to the board.