BACHELOR OF COMMERCE CORPORATE GOVERNANCE AND SUSTAINABILITY CENTUM INVESTMENT COMPANY PART ONE Company Profile Centum is a publicly owned investment company with headquarters in Nairobi, Kenya. It operates as an affiliate of the Kenyan government-owned Industrial and Commercial Development Corporation (ICDC) which was founded in 1954 and shareholders changed its name to Centum Investment company Limited in 2008. Its shares have been publicly traded on the Nairobi Securities Exchange (NSE) since 1967 and the Uganda Securities Exchange (USE) from 2011. It ‘s both a provider and manager of funds and positions itself as an investment channel through which other investors are able to access diversified investments and management expertise for a superior return. The company invests in enterprises in the agricultural, education, healthcare, energy, financial services, insurance, information and communication technology, food and beverages, catering, automotive, publishing, real estate, power and FMCG sectors. Centum Board charter against the NSE codes and Chapter 4 class discussions. The board charter defines the governance parameters within which the board exists, sets out specific responsibilities to be discharged by the Board of directors collectively, as well as certain roles and responsibilities incumbent upon directors as individuals. 1.1 Appointment, composition, size, and qualifications of Board members 1.1.1 Appointment and qualifications of Board Members There is a formal and transparent process for all appointments to the Board. The Board is directly involved in the sourcing and appointment of new directors which are based on merit and against objective criteria. The criteria are financial literacy, crisis management skills, integrity and standing in society, a history of high standards of performance, communication skills, effective management skills, leadership qualities, industry specific technical skills and a commitment to the company. A nomination and Governance committee is formed, and they shall invite as many applications as possible from qualified persons who should disclose any conflict of interest that may undermine their position. The committee will then screen the list and picks at least 2 according to the set criteria and recommend them to the board for approval. The nominees will be appointed when a majority of shareholders/directors vote to appoint them after which they are issued with official letters of appointment. Every year the board reviews and assesses the composition and performance of the Board. In Succession Planning, the nomination and governance committee ensures that the term of office of the members of the Board ends at different times and where applicable no more than one third of the members shall retire at the same time ensuring retention of institutional memory and smooth transition. 1.1.2 Board composition and size. According to Centum’s Company Articles of Association the company has to comprise of not more than eleven directors; currently they have 10 members. On the Board composition, Centum aims at attaining a desirable ratio and balance of executive and nonexecutive directors with the independent directors forming one third of the Board to avoid particular individuals' interest overriding the interest of the company. The members of the board are diverse and have experience, knowledge, skills, and a mix of personalities necessary to ensure its sound performance.All directors have an initial term limit of 3 years which can be renewed on satisfactory performance. The board members, their qualifications and remuneration. Name Position Qualification Remunerati on Dr. Donald Chairman, non- · Kaberuka executive director university of Glasgow Dr. Leila Macharia Vice Chairperson and independent non-executive director PHD in Economics from 2,472,000 3,048,000 · B.A in planning and public policy from University of Oregon. · A Juris Doctor and LL.M from Cornell University. · A Doctorate from Stanford University Catherine Igathe Independent · Bachelor of science in non-executive director Business Administration from 2,928,000 United States International University · Advanced Management program from Strathmore Business School and IESE Business school James Mworia Executive director and · CEO from University of Nairobi · Bachelor of law degree 46,241,000 Doctorate in Business (Honoris Causa) from Machakos University Susan Githuku · CFA and CPAK holder Independent · Bachelor of science non-executive director degree in economics and Psychology from St. Lawrence University · Master of Science degree in development Economics from university of Strathclyde 2,508,000 Mary Ngige Independent · non-executive director from university of Nairobi · Bachelor of commerce 2,928,000 Master of Business Administration from Strathmore University Andrew Mukite Non-executive director Musangi Moses Ikara · Holder of CPAK · Bachelor of law from the university of Hull in UK Independent · PhD in environmental Non-executive director science and Natural 3,228,000 Resources from university of Amsterdam · Master’s degree in economics and bachelor’s in agriculture from University of Nairobi William Byaruhanga Non-executive director · Bachelor of law degree from Makerere University · Diploma in legal Practice from Law Development Centre in Uganda. 1,908,000 William Haggai Representative of ICDC · Bachelor’s degree in (industrial and management science and commercial master’s in business development administration in corporation) management science from 1,925,000 university of Nairobi TOTAL 67,186,000 1.2 Structure of the board. 1.2.1 Skills and experience. The board of Centum consists of individuals with an appropriate balance of skills, knowledge and experience that benefits the company. Some examples would include, the Chairman, Dr. Kaberuka his experience includes, he was previously the president and Chairman of African Development Bank and served as the Minister of Finance in Rwanda. Mrs. Githuku, who is an independent non-executive director, was previously working as the Founder and managing director in Human Performance Dynamics Africa and as the head of talent management and director of Coca-Cola University. These examples show that the company selects its directors’ to ensure a good balance and value addition. 1.2.2 Committees Without giving up its ultimate authority, the Board has assigned certain functions to committees with authorized formal terms of reference which are reviewed annually. They currently have four committees that serve various responsibilities. These are Audit, Risk, Nomination and Governance and the Finance and Investment Committees. 1.3 The functions of the board. 1.3.1 The Board. Centum has clearly defined roles and functions of the board distinct from those of management. They demonstrate leadership, enterprise, honesty, and judgment in order to maintain the company's prosperity while maintaining transparency, accountability, and responsibility. The Role of the board · The board has the responsibility to retain full and effective control over centum and monitor the implementation of strategic plans. · Ensure that there are comprehensive policies and procedures in place for smooth governance and efficient and prudent stewardship of the company. · Ensure that the company carries out its activities in an ethical manner in all its dealings and exercise corporate social responsibility. · Ensure that Centum complies with all the relevant laws and regulations, audit and accounting principles which may be revised by the board from time to time. · Appoint the CEO senior management staff, consultants and external auditors · Approve annual financial statements and communicate key policies to senior management team. · Approve the company’s risk appetite and maintain the desired risk profile · Ensure proper succession planning and nominate board members who will add value to the company. 1.3.2 The Chairperson The chairperson’s primary role is to direct and facilitate the board’s business. The codes specify that the chairperson should be a non-executive Board member and in Centum Dr. Donald Kaberuka, the Chairman, is an Independent Non-Executive Director. Roles of the chairperson · Providing leadership to the board · Chairing the board meeting and ensure the directors receive accurate information · Keeping track of the contribution of individuals and ensuring visible contribution · Monitoring the activities of board committees. 1.3.3 Conflicts of interest The directors are supposed to avoid putting themselves in any positions where self interest may conflict with their duty to act in the best interest of the company. A policy is set that the directors, their immediate family and companies where they have interests should not transact any business with the company, without approval from the board. Annually the directors sign a declaration of any possible or actual conflict of interest. In case of solving a conflict of interest, they can either disclose the conflict and refrain from voting, refrain from discussion if it is minor in nature or exclusion, where the director will be excluded from meetings where the matter is discussed. 1.3.4 The company Secretary The board appoints the company secretary to assist and advise all members of the Board. The company secretary is the secretary of the board. Company Secretary responsibilities · The company secretary has the role of advising the board and provide guidance to the board on its duties and responsibilities. · Ensure that the board complies with the articles of association and its obligation · Assist the chairperson in organizing board activities · Maintain and update the register of conflict of interest · Facilitate effective communication between the organization and the shareholders and carry any duty assigned by the board. 1.4 Board Independence The Board in Centum has six independent directors but they may lose such independence after associating with the company for more than nine years, consecutively or intermittently. 1.5 Board tools The Board has the essential tools and support in place to carry out its duties and obligations effectively. These are the Board Charter, Annual Board work plan, Code of ethics policy and an insider trading policy. 1.6 Board Induction and continuous skill development. The board ensures that new members are inducted into the company in accordance with the Board Induction Policy. Each member of the Board is required to attend a minimum of twelve hours of Board development per year by a reputable source on areas of governance. 1.7 Annual evaluation of Board members An annual Board evaluation is conducted on the performance of the Board, committees, the CEO, and the company Secretary. 1.8 Remuneration of Board members Remuneration of the Board is reviewed and determined by the nomination and governance committee. The charter states that the remuneration should be sufficient to attract motivate and retain directors. The Board periodically reviews the remuneration of directors which is approved by shareholders at the AGMs. 1.9 Compliance with Laws, Regulations and Standards The company’s legal team and compliance function developed a compliance matrix for all applicable laws and regulations and conducted regular assessments to ensure the company remains compliant with them. 1.10 Governance Audit The Board ensures that a governance audit is carried out annually after which they provide an explicit statement on the level of compliance. PART TWO The Whistle Blowing Policy The Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 requires publicly listed companies to provide a platform for the disclosure of serious malpractices. Centum whistle blow anonymous provides a platform where all stakeholders, that is, employees, shareholders, customers, suppliers and the general public, can report on serious malpractices in a safe, confidential and secure way. Whistleblowing is the process through which an individual raises a concern or disclosure about wrong doings or serious malpractices within an organization. A whistleblower is an individual who alerts an organization on serious malpractice or actions that endanger the firm’s employees or assets via the appropriate channels. The individual could be an internal party like an employee or an external party like suppliers, customers or the general public. Serious malpractice is defined as improper behavior being committed or likely to be committed, which includes but is not limited to the following: 1. A criminal offence, including bribery, corruption, fraud, misuse of office or breach of government regulations/laws. 2. Breach of any legal obligation. 3. A miscarriage of justice. For example, an unreasonable verdict or a significant misdirection by the judge. 4. Endangering health and safety. 5. Unethical practice in accounting, internal accounting controls, financial reporting and auditing matters. 6. Conduct contrary to Centum’s ethical principles and values. 7. The cover up of any of the above. Serious malpractice does not usually include general complaints or personal employment grievances such as bullying, harassment, discrimination, unsatisfactory probation reports, performance evaluation, discriminatory work assignments, equal employment opportunities and sexual harassment. These should be dealt with through the channels provided for in the Group Human Resources (HR) policy. However, in cases where an employee genuinely considers the issue to be endemic within the organization or their department and no action has been taken in response to a complaint directed to HR, then a whistle-blow may be appropriate. The Ethics Committee is constituted at Centum Group Level and is a management committee which is responsible for receiving and investigating whistleblowing disclosures, making a decision based on the investigation and reporting the outcome to the CEO and the Board. It also ensures that there is protection of the whistleblowers. Raising Whistleblowing Concerns A whistleblowing concern can be made confidentially or anonymously. a. Confidential whistleblowing - the whistle blower’s name is known but will not be disclosed, without their consent, unless required by the law. b. Anonymous whistleblowing - the whistle blower does not identify themselves to anyone. If a whistleblowing concern is made anonymously, enough information must be provided to facilitate a thorough investigation on the allegations. The Group Whistleblowing Policy encourages that whistleblowing concerns are made promptly and at least within 3 months following the date of occurrence of the serious malpractice disclosed. All whistleblowing concerns must be raised through channels such as: a. The Centum whistle blowing portal which can be accessed through the company’s website. b. An email address where emails are received by a designated officer of the Ethics Committee. c. Toll-free/Hotline number where calls will be directed to a designated officer of the Ethics committee. The Ethics Committee has the ultimate responsibility to determine whether the disclosure falls within the scope of the whistleblowing policy. Handling of whistleblowing Centum welcomes and supports the disclosure of suspected or alleged major malpractice, and has put in place measures that allow for independent, objective, and prompt investigations. This approach ensures that the person making the disclosure is shielded from potential harm as a result of actions taken by those inside or outside the Group, while also ensuring anonymity when requested. Protection of whistleblowers All whistleblowing issues must be addressed in strict confidence, and Centum promises to take all reasonable means to protect whistleblowers' identities from being used against them within the firm, such as not disclosing their names without their consent unless required by law. For a disclosure to be protected it must be made through the right channels to the right person, as provided for in this policy. The whistle-blower must: a. Make the disclosure in good faith - with honest intent and without malice. b. Reasonably believe that the information is substantially true. As a result of raising a whistleblower concern, an employee should not face retaliation. For example, continued employment, prospects for future promotion and training of an employee must not be negatively affected because he/she has made a whistle-blow. Subjecting any member of staff to any form of detriment as a result of a protected disclosure, including the member of staff who is being investigated as part of the disclosure, is considered gross misconduct and will result in disciplinary action as outlined in the Group HR policy. If an employee is harassed or victimized, he or she should report the incident to any member of the Ethics Committee. While this policy provides protection, intentional, false, or malicious allegations will not be accepted. Anyone detected making purposeful, false, or malicious claims faces disciplinary action, which might include dismissal, according to Group HR policy. Furthermore, any costs incurred as a result of investigations conducted on the basis of false claims would be sought by the Group as damages from the employee who made the false and malicious allegations. Giving or accepting instructions to cover up serious malpractice is unacceptable and may result in disciplinary action. Disclosure Response Plan This section of the policy documents the whistleblowing disclosure response plan, clearly detailing the process for investigating whistleblowing concerns: a. Making Disclosures. b. Assessing Disclosures. c. Addressing Disclosures - All whistleblowing issues will be handled by the Chairperson of the Ethics Committee. When the implications are potentially serious or far-reaching, the investigation's independence and oversight should be maintained. When a member of the Ethics Committee is referenced in a disclosure, he or she is conflicted and should step aside so that an independent investigation can be conducted. It's also crucial to follow through on assurances of confidentiality. d. Investigating Disclosures - All investigations will be conducted in confidence and will only be shared with those who have a valid need to know such information. e. Possible Outcomes. Employee Training The Ethics Committee, which will be responsible for handling whistleblowing arrangements, should be trained on the operations of the policy and how to deal with allegations that are raised. During their initial orientation at Centum, all new workers must be made aware of the company's whistleblower policies. All other employees must be reminded of whistleblowing arrangements at least once a year through refresher training so that they can continue to identify and report malpractice suspicions, understand Centum's legal requirements for whistleblowing, and the protection that whistleblowers must receive. Records of training must be kept showing who received training, the training content and the date the training was received. Training on the Whistleblowing policy shall be coordinated and conducted by the Group Risk and Compliance Function. The whistle blowing policy shall be made available on the Group’s intranet and website. Legal and regulatory obligations To ensure that they stay locally compliant and can report any conflicts with local legislation, each business in Centum must determine the extent to which local legal and regulatory obligations apply. Compliance It is the responsibility of all employees to follow the whistleblowing policy and report any violations or suspected violations. If a member of staff fails to report an occurrence that is included in, but not limited to, the list of categories of whistleblowing concern described above, he or she may be considered to have engaged in significant misconduct that is addressed under the Group HR policy. Independent Assurance Internal audit will determine how successful risk management and governance processes are, as well as whether control systems are operating as intended in relation to perceived risk. External Reporting Whistleblowing events must be reported by the appointed Chairperson of the Ethics Committee to local law enforcement, regulatory bodies, or government agencies where appropriate, for example, where criminal behavior such as fraud, bribery, and corruption and/or local regulatory breaches have been identified, unless this is impractical or unsafe, in which case they must be reported to the Group CEO and Board Risk Committee. Within the confines of local law, Centum must fully cooperate with law enforcement and regulators. Cooperation Employees who refuse to cooperate in an investigation or intentionally offer false information during an investigation may face disciplinary action, up to and including dismissal, as outlined in the Group HR Policy. Before any action is taken, anyone named in a report will be given the opportunity to be heard and defend themselves. Records Keeping All records of the investigations are delivered to the Ethics Committee at the conclusion of the proceedings, who must maintain them for a minimum of seven years after the conclusion of the proceedings and ensure that they are backed up. Insider trading policy Centum is subjected to various laws that relate to transacting securities whether the director is an insider. Centum directors, agents, employees and consultants are required to be fully aware of restrictions on the company. Insider information Insider information is any non-public information that is only available to insiders, and which is material enough to affect the price of the company’s securities. Centum considers the following information to be insider information. ü Earning and losses that are significantly higher or lower than generally expected by the capital markets. ü Proposed merger, acquisition, public issue of securities or divestiture of the company or its investments ü Significant board of management changes ü Proposed stock split or stock dividend ü Significant new innovations, technologies or intellectual property. ü Imminent financial distress or bankruptcy of the company ü Proposed partnership agreements Insider trading guidelines Restricted period People deemed to be insiders are expected to obtain written consent from the company’s secretary outside the open period which is 30 days following the public announcement and they should exercise high degree of caution to avoid any accusation of insider trading from capital markets. They are expected to consult the company secretary if they are unsure where their action will lead to insider trading Confidentiality Insiders are prohibited from discussing any insider information in the public unless permitted by the company. People guilty of insider trading will face huge penalties which include fines, dismissal or termination of contract and legal prosecution. PART THREE SHARE PRICING The average share prices of Centum Investment Company Limited for the past five years are; 2017 – sh 39.19 2018 – sh 37.04 2019 – sh 31.85 2020 – sh 23.14 2021 – sh 16.41 The share price has gradually reduced over the years. In the year 2017-2018, Centum Investment reported lower asset valuations, a prolonged election period, political uncertainty, an interest rate cap regime that led to a dismal performance in their banking subsidiary, Kenya's slowing economy, and delays in closing disposed investments. The combined effect of lower property valuation gains and deferral of recognition of realized gains on investment disposal to the year 2018 resulted in a reduction of at least 25% in the Group's consolidated net profit. Centum Investment Company however, affirmed to its shareholders that it would receive a dividend despite the company's earnings falling by at least 25%. The directors recommended the payment of a first and final dividend of Ksh 1.2 per share. The Group's near-term priorities included closing the gap between net asset value and share price while continuing to grow net asset value through key activities identified by management, such as optimizing gross return, asset redeployment, third-party capital leverage, debt reduction at the Centum level, and gradually increasing dividend yield thereby leading to improved share prices. In the year 2018-2019, the share prices average slightly reduced. The Board of Directors nevertheless, recommended a first and final dividend payout of KES 1.20 per share, amounting to KES 798 million. The Group reported a profit after tax of Ksh 4.1 billion, a 48 % rise driven by higher realized gains, improved publishing business, and increased property valuations. Total trading revenue increased by 7% to Ksh 10.9 billion, driven by publishing businesses, while beverage business revenue remained resilient in the face of cold weather, distribution disruptions, and a challenging economic environment. Financial services income increased by 23% to 3.5 billion, as non-funded income from the banking business continued to grow throughout the year. Interest income growth remained subdued as interest capping regulation remained in place. In the year 2019-2020, the share price of the company reduced by about sh 8. This is because they spent the year in many real estate units constructions, and they spent 14.4 billion on repaying bank term loan by 31 March 2020 and a maturing bond retired post-balance sheet date on 8 June 2020. Even so, Centum Investment performance was remarkable as its marketable securities and cash holdings of KES 8.9 billion at 31 March 2020, rose up from KES 4.1 billion at 31 March 2019. The Centum Board of Directors had recommended the payment of a first and final dividend of KES 1.20 per share to their shareholders amounting to KES 798 million. Centum made a 4.0 scorecard for the years 2020-2024, the Group's five-year strategic plan, that outlines strategic pillars that will institutionalize Centum by focusing on delivering consistent and sustainable returns to both our investors and shareholders. Return and dividend payout, capital structure and liquidity, operating costs, portfolio focus, and organizational effectiveness are the pillars that these companies are built on. In the year 2020-2021, the share prices further decreased. The total assets of the company declined by 9.3 billion. This reduction was due to debt repayment of 4.1 billion, impairment provision of 1.1 billion, finance costs of 608 million, operating expenses of 858 million and revaluation losses of 4.2 billion. The Board of Directors recommended a final dividend of KES 0.33 per share amounting to 218 million which was charged from the 245 million profit attained on the operating profit. Centum Investment closed some of the hottest business deals across East Africa that would have created billions of shillings for shareholders. This year, the deals have dried up and the company has found itself in unfamiliar loss-making territory. This was a drop of 127.5 per cent from Sh6.8 billion profit after tax that the company reported in the same period last year, attributed to a decline in investment income. With the current economic situation in the country and in comparison to other companies in the investment sector, I would recommend any investor to put their money in Centum. To begin with, Centum Investment has returned cash to its owners by paying out dividends. The dividend payout to their owners is, the higher of 30% of the cash annuity income (excluding its capital gains) and the previous year’s dividend pay-out. Centum Investment pays dividends; they don't buy back the shares. Even when the company receives less profits, an investor is assured that the Risk Committee will act in their best interest and the company will put their equity and assets into income and profit generating projects. Moreover, Centum holds a lot of businesses and thus uses both the residual and constant dividend policy . In case of any excess cash they could increase the ratio of the cash dividend and also consider the bonus share type of dividend payment. Centum also has a policy that requires them to have a maximum operating cost to cash annuity income ratio of 30% and to optimize dividend payout to the higher of 30% of the cash annuity income and the previous year’s dividend income. It is stated in the 2020 report that since 2016, Centum has returned Ksh 3.1 billion in dividends to shareholders. The Board of Directors had recommended the payment of a dividend equivalent to Ksh 1.20 per share (equivalent to Ksh 799 million) for the financial year ended 31 March 2020. This brings the total dividends paid in the last four years to Ksh 3.9 billion. With the current share prices it is more affordable and cheaper for a person to invest and if one prefers to forego the opportunity, they could sell their shares at a higher price when the share prices increase to another potential investor. In circumstances when there are no credible value-creating opportunities to invest in the business, Centum Investment should only maintain assets that maximize value and return cash to shareholders. This not only allows investors to earn a higher return elsewhere, but it also decreases the possibility of management misusing the additional capital. COMMITTEES Without abandoning its ultimate responsibility, the Board has delegated certain functions to committees with approved formal guidelines, which are reviewed yearly. The guidelines clearly identify matters reserved for decision by the Board and Committees. The Board reviews the membership and Chairmanship of these Committees on a regular basis and is responsible for filling any vacancies. The Board is cognizant that members collectively have sufficient qualifications and experience to fulfill the duties of the respective Committee. The elected Chairman appraises the full Board of their activities on a quarterly basis through oral and/or written reports. The Chairman of the committees participates in setting and agreeing the agenda for meetings. There are four committees in Centum. 1) Audit committee Membership The Audit Committee consists of five non-executive directors, the majority of whom qualify are independent non-executive directors. The Chief Executive, the Chief Finance Officer, the Head of Internal Audit and the lead audit partner in charge of the internal and external audit are in attendance at meetings. The Chairperson of the Audit Committee is an independent Non-Executive Director. Mandate The role of the Board of Directors in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control, the audit process, and the company's process for monitoring compliance with laws and regulations. Responsibilities The primary responsibilities of this Committee are to; 1. Provide oversight and integrity of the Company’s financial reporting. 2. Gauge the independence, qualifications and performance of an external auditor. 3. Provide oversight in relation to the Company’s internal audit functions. 4. To provide oversight on non-financial audit processes (Governance Audit and Environmental Social and Governance (ESG) Audit). 5. Review the effectiveness of the internal audit function. 6. Consider the effectiveness of the Company’s internal control systems. 7. Review updates from management and external counsel on compliance matters affecting the Company. Board audit committee charter Responsibilities ● Financial statements- The committee; review significant accounting and reporting issues, recent professional and regulatory pronouncements and understand their impact on the financial statements, review the annual financial statements, consider whether they are complete, consistent with information known to committee members and reflect appropriate accounting principles and understand how management develops interim financial information, and the nature and extent of internal and external auditor involvement. ● Internal controls- The committee; consider the effectiveness of the company’s internal control systems, including information technology security and control and understand the scope of internal and external auditors; review over financial reporting and obtain reports on significant findings and recommendations, together with management’s responses. ● Internal audit- They approve the internal audit charter, review with the Head of Internal Audit the internal audit budget, resource plan, activities, and organizational structure of the internal audit function and be consulted in decisions regarding the appointment, removal of the Head of Internal Audit and ensure there are no unjustified restrictions or limitations in its function. ● External audit- The committee reviews the performance and remuneration of the external auditors, makes recommendations to the Board for approval of the appointment or discharge of the external auditors by the shareholders and also confirms the independence of the auditors. ● Compliance- Obtain regular updates from management and company legal counsel regarding compliance matters. ● Corporate governance responsibilities- Set out the corporate governance responsibilities that are appropriate for the nature and scope of the Company’s business, establish policies and strategies for achieving the Company’s corporate governance responsibilities and annually assess the extent to which the company has observed its corporate governance policies and strategies. Meetings Meetings of the Committee will be held as frequently as the Committee considers appropriate, but not less than four times a year. The Chairperson or any member of the Committee may call further special meetings. Reasonable notice of meetings and the business to be conducted shall be given to the members of the Committee and any other executives invited to attend the committee meetings including the Chairperson, the Chief Executive, the Chief Finance Officer and the Head of Internal Audit. The Chairperson, at his/her discretion, may invite other executives to attend and to be heard at meetings of the Committee. Voting Where the Chairperson calls upon Members to vote on any issue, decisions will be made by simple majority. In the event of a tie, the Chairperson shall exercise a casting vote to determine the outcome. Only Committee Members shall be entitled to vote at meetings of the Committee. Proceedings of the committee ● Meetings and proceedings of the Committee shall be governed by the Company's Articles of Association and applicable laws and regulations regulating the meetings and proceedings of the Board and committees. ● The Company Secretary or a representative appointed by the Company Secretary shall take minutes of meetings. These shall be reviewed and approved by the members of the Committee at a subsequent meeting. ● The minutes of all meetings of Committee, or summaries thereof, shall be submitted to the Board at a subsequent Board meeting. The Chairperson shall be entitled to an opportunity to report orally or in writing at any meeting of the Board on any matters of importance as well as on the Committee's findings and shall recommend actions. 2. Risk committee Membership The Risk Committee consists of five non-executive directors, the majority of whom qualify are independent non-executive directors. The Chief Executive Office, the Head of Risk, the Head of Tax and the Company Secretary in attendance. The Chairperson of the Risk Committee is an independent Non-Executive Director. Mandate The role of the Risk is to assist the Board in discharging its duties relating to corporate accountability and associated risks in terms of management, assurance and reporting for the Company and major subsidiary undertakings that do not have individual risk committees. Responsibilities The primary responsibilities of this Committee are to; 1. Review of the Company’s statement on internal control systems prior to endorsement by the Board. 2. To consider and recommend to the Board the Company’s risk appetite. 3. Commission, receive and consider reports on key financial and operational risk issues. Board risk committee charter Composition and membership ● The Committee shall be made up of at least 4 members, majority of whom shall be nonexecutive directors, with the Chief Executive Office, the Head of Risk, the Head of Tax and the Company Secretary in attendance. ● The Chairperson of the Committee shall be appointed by the Board and shall be a non-executive director. The Chairperson of the Board shall not be the Chairperson of the Committee. ● The Board shall have the power at any time to remove any member from the Committee and fill any vacancies created by such removal. ● The Company Secretary or a representative appointed by the Company Secretary shall be the secretary of the Committee. Scope and authority The Committee shall assist the Board in the discharge of its duties relating to corporate accountability and associated risks in terms of management, assurance and reporting for the Company and major subsidiary undertakings that do not have individual risk committees. The Committee will also be responsible for reviewing the Company's risk management strategy and policies, as well as reviewing reports from the risk and compliance function. The Committee is responsible for ensuring compliance with such policies and providing guidance on significant issues that require, or are subject to, remedial action or recommendation as a result of the communication's deliberation regarding internal risk policy, standards, and agreed risk limits. Risks covered In discharging its duties, the committee shall cover risks in a wide sense, including market risk, credit risk, liquidity risk; operation risk and commercial risk, which together cover detailed combined risks such as interest rate risk, currency and foreign exchange risk, technology risk, price risk, disaster recovery risk, operational risk, reputational risk, competitive risk, legal risk, tax risk, compliance and control risks, sensitivity risks (e.g. environmental, health and safety), concentration of risks across a number of portfolio dimensions, investment risk, human resource risk and any other risks that may affect the Group. Information technology governance The Committee shall oversee and advise the Board on the Company's overall information technology governance system and in particular: ● Consider the adequacy and effectiveness of the technology infrastructure supporting the risk management framework. ● Review the Company's information technology processes that govern the company's operations. ● Review and approve the policies with relation to information technology. ● Review the company's ability to identify and manage new risk types with relation to information technology. ● Consider other relevant matters referred to it by the Board. Meetings Meetings of the Committee will be held as frequently as the Committee considers appropriate, but it will normally meet not less than times a year. The chairperson or any member of the committee may call other special meetings. Reasonable notice of meetings and the business to be conducted shall be given to the members of the Committee and any other executives invited to attend the committee meetings including the Chairperson, the Chief Executive, the head of tax and the head of risk. The Chairperson, at his/her discretion, may invite other executives to attend and to be heard at meetings of the committee. Voting Where the Chairperson calls upon Members to vote on any issue, decisions will be by way of simple majority. In the event of a tie, the Chairperson shall exercise a casting vote to determine the outcome. Only Committee Members shall be entitled to vote at meetings of the Committee. Proceedings of the committee ● Unless varied by this Charter, meetings and proceedings of the Committee shall be governed by the Company's articles of association and applicable laws and regulations regulating the meetings and proceedings of the Board and committees. ● The Company Secretary or a representative appointed the Company Secretary shall take minutes of the meetings. These shall be reviewed and approved by the members of the Committee at a subsequent meeting. ● The minutes of all meetings of Committee, or summaries thereof, shall be submitted to the Board at a subsequent Board meeting. The Chairperson shall be entitled to an opportunity to report orally or in writing at any meeting of the Board on any matters of importance as well as on the committee’s findings and shall recommend action. Authority of the committee The Committee, in carrying out its tasks under this Charter: ● Is authorized to investigate any activity within this Charter. ● May, at the discretion of the Committee, require other employees of the Company to attend meetings or parts of meetings. ● May consult with and seek any information it requires from any employees, and all employees shall be required to cooperate with any request made by the Committee in the course of its duties. 3. Nomination and Governance committee Membership The Nomination and Governance Committee (NGC) consists of five directors who are all non-executive directors. Mandate The role of the NGC is to develop and implement policies with respect to both the strategic priorities of the Board and human resources on matters of governance. Responsibilities The primary responsibilities of this Committee are to; 1. Provide oversight in the development and monitoring of governance-related policies as may be determined by the Board. 2. Consider the competencies and skills of the Board as a whole. 3. Develop and recommend to the Board a succession plan for the Board and senior management that is responsive to the needs of the Company and shareholders. 4. Review and approval of the structure of staff remuneration and incentive plans. 5. Advising the Board on staffing issues for senior management. Board nomination and governance committee charter Composition and membership ● The Committee shall be made up of at least 3 members, majority of whom shall be independent non-executive directors. ● The Chairperson of the Nominations and Governance Committee shall be an independent non-executive Director. The Chairperson of the Board shall not be the Chairperson of the Committee. ● At least one of the Committee members shall have expertise in Human resources. ● If a member of the Committee retires, is removed or resigns from the Board, that member shall cease to be a member of the Committee. ● The Committee may invite any executive management team members or other individuals to attend meetings of the Committee, as they consider appropriate. ● The Board shall have the power at any time to remove any members from the Committee and fill any vacancies created by such removal. ● The Company Secretary or a representative appointed by the Company Secretary shall be the secretary of the Committee. Delegations The Committee holds delegated authority to: ● Approve the appointment of senior managers as recommended by management. ● Receive reports and, on behalf of the boards, evaluate appeals and evaluate decisions on promotions and confirmations by the relevant committees. ● Appoint a conciliator of disputes and, where necessary, a reserve conciliator, and receive reports from those officers. ● Authorise the use of human resources (including payroll) systems generally; and ● Establish such sub-committees and working groups as it finds necessary to carry out its functions. The membership and terms of reference of any standing sub-committees established must be forwarded to the board for its endorsement. ● The committee holds delegated authority to approve the following prior to implementation: ● Changes to the governance or contract terms of executive directors and direct reports to the managing director. ● The design of new, or amendments to current, executive cash-based incentive plans or equity plans. ● Total level of award proposed from or executive cash-based incentive plans or equity plans, and termination payments to executive directors or direct reports to the managing director Meetings ● The Committee shall meet as frequently as required but not less than three (3) times a year ● Any Committee member, through the Secretary, may call any further special meetings of the Committee. ● A notice of each meeting confirming the date, time, venue and agenda shall be forwarded to each member of the Committee in the week prior to the date of the meeting. The notice for members will include relevant supporting papers for the agenda items to be discussed. ● The Committee shall have access to professional advice from employees within the Company and from appropriate external advisors. Voting Where the Chairperson calls upon Members to vote on any issue, decisions shall be by way of simple majority. In the event of a tie, the Chairperson shall exercise a casting vote to determine the outcome. Only Committee Members shall be entitled to vote at meetings of the Committee. Proceedings of the committee ● Unless varied by this Charter, meetings and proceedings of the Committee shall be governed by the Company’s articles of association and applicable laws and regulations regulating the meetings and proceedings of the Board and committees. ● The Company Secretary or a representative appointed the Company Secretary shall take minutes of meetings. These shall be reviewed and approved by the members of the Committee at a subsequent meeting. ● The minutes of all meetings of Committee, or summaries thereof, shall be submitted to the Board at a subsequent Board meeting. The Chairperson shall be entitled to an opportunity to report orally or in writing at any meeting of the Board on any matters of importance as well as on the Committee’s findings and shall recommend actions. Authority of the committee The Committee, in carrying out its tasks under this Charter: ● Is authorized to investigate any activity within this Charter. ● May, at the discretion of the Committee, require other employees of the Company to attend meetings or parts of meetings. ● May consult with and seek any information it requires from any employees, and all employees shall be required to cooperate with any request made by the Committee in the course of its duties. ● The Committee shall have the right to seek any information it considers necessary to fulfill its duties, which includes the right to obtain appropriate external advice at the Company’s expense. 4. Finance and Investment committee Membership The Finance and Investment Committee (FIC) is made up of seven directors and includes the executive director in addition to non-executive directors. Mandate The key role of the Finance and Investment Committee is to provide leadership in the Group’s financial and investment activities overseeing the achievement of attractive returns on the investments. Responsibilities 1. Development of Investment objectives, investment guidelines and performance measurement standards. 2. To review and evaluate investment results in the context of established standards of performance and adherence to the investment guidelines. 3. To provide leadership in the achievement of attractive returns on the Group’s investment and clear guidelines on investment policies that are consistent and structured, research based and risk sensitive approach to value investing. 4. To review the Company’s detailed strategic investment plans and to recommend them to the Board for approval. 5. To provide advice to the Board on proposals for the investment in and divestment from enterprises and projects in line with the Company’s strategy. 6. To monitor and evaluate the performance of the Company’s investments against budget. Board finance and investment charter committee Composition and membership ● The Committee shall be made up of at least four non-executive directors with financial expertise, with the Chief Executive Officer, the Managing Director, Centum Capital, the Risk Manager and the Company Secretary in attendance. ● The Chairperson of the Committee shall be a non-executive director with financial expertise. ● The company secretary shall be the secretary of the Committee. Authority and scope ● To provide leadership in the achievement of attractive returns on the Company’s investments by developing investment grade opportunities. ● The Company’s investments under the strategy period 2014-2019 include investments in real estate, power, financial services, healthcare, agribusiness, FMC, ICT, Education and other sectors that the company focuses on. ● To develop and recommend to the Board for approval plans for raising capital for investment purposes. ● To provide clear guidelines on investment policies, procedures and objectives for enabling a consistent and structured, research-based and risk sensitive approach to value investing. ● To review the Company’s risk management approach for appropriateness on an on-going basis in the light of developments in the markets for the sectors that the Company invests in and the general business and economic environment and to bring to the attention of the Board any matters deemed necessary. ● To review the Company’s detailed strategic investment plans, including short-term priorities and recommend these to the Board for approval. Meetings ● The Committee shall meet as frequently as required but not less than four times a year. ● Any Committee member, through the Secretary, may call a meeting of the Committee, in consultation with the Managing Director (for purposes of management input and preparation if required). ● A notice of each meeting confirming the date, time, venue and agenda shall be forwarded to each member of the Committee in the week prior to the date of the meeting. The notice for members will include relevant supporting papers for the agenda items to be discussed. ● The Committee shall have access to professional advice from employees within the Company and from appropriate external advisors. ● Minutes of proceedings and resolutions of Committee meetings shall be kept by the Secretary. Minutes, agenda and supporting papers, will be made available to any director upon request to the Secretary, provided no conflict of interest exists. HISTORICAL OBSERVATIONS Centum was established in 1967 as an affiliate of the Kenyan government-owned Industrial and Commercial Development Corporation (ICDC) with a nominal share capital of KES 2 million and was renamed Industrial Commercial Development Corporation Investment (ICDCI). The same year, it was listed on the Nairobi Stock Exchange. Centum, which is traded on the Nairobi Securities Exchange (NSE) and the Uganda Securities Exchange (USE), offers investors a diverse portfolio of regional investment opportunities in real estate, infrastructure, financial services, private equity, energy, agriculture, and education. In 1972 to 1973, the Permanent Secretary of the Ministry of Commerce and Industry was appointed to the Centum Board, and ICDCI issued 400,000 additional ordinary shares, resulting in a KES 4 million to KES 6 million increase in share capital. Centum Investment has grown to become East Africa's leading investment firm, with assets worth more than $1 billion and a team of over 200 employees. In 1979 to 1993, centum invested in various other companies which were; Nairobi Bottlers Limited, East African Fine Spinners Limited, Mount Kenya Bottlers Limited, Minet – ICDC Insurance Brokers, Kisii Bottlers Limited, East African Breweries Limited, Car and General (K) Limited, Dawa Pharmaceuticals Limited and General Motors East Africa. In 2008, ICDCI rebranded to Centum Investment Company Plc (‘Centum’) after acquiring a 35% stake in Longhorn Publishers Limited. Centum had $6 million in equity in 2012 and sold those shares for $190 million seven years later. Along with top-line growth, the stake's value increased more than tenfold due to increased efficiencies and margins, which were driven by macroeconomic improvements that reduced the cost of doing business in Centum's primary market, Kenya. In the previous fiscal year, real estate accounted for 51.6 percent of Centum's portfolio assets, followed by 36.1 percent in private equity, 6.2 percent in marketable securities, and 7.6 percent in development. Centum began the greenfield project in 2010 as the master developer which included building a water treatment plant able to provide 3m liters of fresh water a day and installing a solar plant. In 2018, Centum began the construction of the Sabis international school in Nairobi which cost 20 million and also launched Two Rivers Mall, the largest shopping mall in Sub-Saharan Africa, outside South Africa attracting over 200,000 visitors while exiting from GenAfrica Asset Managers. Huge loan payments for Two Rivers Mall have plunged Centum Investment into a net loss of Sh1.4 billion in the year ending March 2021. In March 2020, the listed company made a profit after tax of Sh4.6 billion in a period that saw it record an investment income of Sh12.4 billion after it sold its beverage company. However, high finance costs by Two Rivers Development Ltd (TRDL), the company that manages Two Rivers Mall, in which Centum has a 58 per cent stake, booked a loss of Sh1.9 billion. AGM NOTICE Notice of the 54th Annual General Meeting Public corporations must hold an annual general meeting (AGM) every year, usually within the six - month time-frame commencing with the accounting reference date. Written notification of at least 21 days is required. Notice is normally assumed to have been provided 48 hours after posting, according to the Articles of Association. If all stakeholders who are eligible to be present and vote agree, the AGM can be convened with less notice. In this case, Centum’s Company Secretary Mwangi J. Mbogo, issued the notice on the 3rd September 2021 for the AGM meeting to be held on the 24th September 2021. As prescribed in the Articles of Association, this notice was in line with Business Law (Centum, 2021). The AGM's customary agenda includes evaluating the director's and auditors' reports, declaring a dividend, electing or re-electing directors (in cases they are privy to rotational retirement) and auditors, and authorizing the directors to determine the auditors' compensation package. Additional issues seeking shareholder permission or authorization, like alterations to the business name, may be discussed during the AGM (Notice Annual General Meeting, n.d.). The 54th Centum AGM notice was not any different. The notice proposed a first and final dividend of KES 0.327 per ordinary share for the fiscal year ended 31 March 2021 to all shareholders listed on the company’s Register of Members as the business closed on the 8th of October 2021. This was to be considered and approved as per Article 118 of the Company’s Articles of Association. It further proposed the approval of the directors’ remuneration stipulated in the company’s Consolidated Financial Statements. This was to be done as per the Companies Act, 2015, section 681(1). Following the untimely demise of the late Dr. Christopher John Kirubi, an election was to be held to elect Mr. Andrew Mukite Musangi who was appointed then by the board to fill his shoes until elections. Further elections were to be conducted to reinstate Dr. Moses Ikiara, one of the company’s directors subject to retirement by rotations but still sees fit to be re-elected as being eligible. The main agendas were to be concluded by the appointment of PricewaterhouseCoopers (PwC) as the company’s auditing firm and the authorization of a suitable remuneration to the auditors. The AGM could then dive into other businesses considered legally contractual in the context of an AGM (Centum, 2021). SHAREHOLDING The company has a total number of 665,441,714 shares as of today according to MarketScreener. The company’s outstanding shares (free-float) stand at 292,728,447 shares and are publicly owned. Their company owns no shares. The company’s private equity wing holds the highest number of shares. Details of the shareholding per shareholder are outlined in figure 1 below. Figure 1: Centum Shareholding Centum's current private equity portfolio is distributed across East Africa and is valued at KSh9 billion. A statement issued by Capital Business on 1 st November this year claimed that the private equity wing has reserved 5 Billion Kenyan Shillings for investing in different parts of the economy. Shareholders at CICP are expected to receive an Sh218 million dividend for the fiscal year ending March 31, 2021, in accordance with the company's strategy of returning a portion of its yearly dividends and capital gains to shareholders. The Sh0.33 per share dividend is to be paid following the company's Sh245 million cash operational profit registered throughout the fiscal year. Source: MarketScreener Centum's current private equity portfolio is distributed across East Africa and is valued at KSh9 billion.A statement issued by Capital Business on 1 st November this year claimed that the private equity wing has reserved 5 Billion Kenyan Shillings for investing in different parts of the economy. Shareholders at CICP are expected to receive a Sh218 million dividend for the fiscal year ending March 31, 2021, in accordance with the company's strategy of returning a portion of its yearly dividends and capital gains to shareholders. The Sh0.33 per share dividend is to be paid following the company's Sh245 million cash operational profit registered throughout the fiscal year. Recommendations The PLC seems like a nice investment venture for anyone aspiring to invest. Centum Investment PLC CEO James Mworia stated that the dividends issued are meant to buffer their shareholders against the implications of the downturns in the economy following the COVID-19 breakout while enabling the group to preserve liquidity (Corporated, 2021). This clearly suggests that the PLC has a moral obligation if not business duty to safeguard its shareholder’s investments. REFERENCES Centum. (2021, November 3). Centum Investment Company PLC: Notice of the 54th Annual General Meeting [Image]. Centum.Co.Ke. https://centum.co.ke/images/docs/Centum_AGM_Notice_54th_2021.pdf CENTUM INVESTMENT COMPANY LIMITED : Shareholders Board Members Managers and Company Profile | KE0000000265 | MarketScreener. (n.d.). Https://Www.Marketscreener.Com/. Retrieved November 29, 2021, from https://www.marketscreener.com/quote/stock/CENTUM-INVESTMENT-COMPANY-65 01113/company/ Corporated, C. (2021, July 27). Centum pays out cash dividend for FY2021 to cushion shareholders. Capital Business. Retrieved November 29, 2021, from https://www.capitalfm.co.ke/business/2021/07/centum-pays-out-cash-dividend-for-fy202 1-to-cushion-shareholders/ Kariuki, S. (2021, September). Stakeholder statement on CICP Investment in Centum RE – Centum Real Estate. Centum Real Estate. Retrieved November 29, 2021, from https://centumre.co.ke/news/stakeholder-statement-on-cicp-investment-in-centum-re/ Notice Annual General Meeting. (n.d.). Simply-Docs. Retrieved November 29, 2021, from https://simply-docs.co.uk/Company-General-Meetings/Notice-of-Annual-General-Meetig Governance. Centum Investment Company Plc. Retrieved November 18, 2021, from https://centum.co.ke/index.php/about-us/governance#audit. Our history. Centum Investment Company Plc. (n.d.). Retrieved November 25, 2021, from https://centum.co.ke/index.php/about-us/our-history.