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CORPORATE GOVERNANCE is the process
by which companies are directed and controlled with the objective
of increasing shareholders value and satisfying shareholders.
This is achieved by establishing a system of clearly defined
authorities and responsibilities which result in the system
of internal controls that is regularly tested to ensure effectiveness.
At Imperial, the board places a high degree of importance
on maintaining a sound control environment and applying the
highest standards of business integrity and professionalism
in all areas of the bank's activities. The board has adopted
the Code of Best Practice for Corporate Governance issued
by the Centre of Corporate Governance as its benchmark in
developing the corporate governance principles.
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RESPECTIVE RESPONSIBILITIES
The shareholders' role is to appoint the board of directors
and the external auditors. This role is extended to holding
the board accountable and responsible for efficient and effective
governance.
The board of directors is responsible for the governance
of the bank, and to conduct the business and operations of
the bank with integrity and in accordance with generally accepted
corporate practices, in a manner based on transparency, accountability
and responsibility.
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BOARD OF DIRECTORS
The composition of the board is set out on page 3. The board
is chaired by a non-executive chairman and comprises the managing
director and five other non-executive directors. All non-executive
directors are independent of management. The board has varied
and extensive skills in the areas of banking, business management,
accountancy and information communication and technology.
The directors' responsibilities are set out in the Statement
of Directors Responsibilities on page 16.
The directors are responsible for the development of internal
financial control which provide safeguards against material
mis-statements and fraud and also for the fair presentation
of the financial statements.
The chairman provides the overall leadership to the board
without limiting the principle of collective responsibility
for board decisions. He acts as the link between the board
and the managing director and plays a lead role in consensus
building between the board members, the managing director
and senior management. The chairman has the casting vote on
all decisions of the board. The board has delegated the authority
for day to day management to the managing director.
It however retains the overall responsibility for financial
and operating decisions and monitoring performance of senior
management.
The board meets quarterly and has a formal schedule of matters
reserved to it. Board papers are generally circulated two
weeks prior to the board meetings. Directors are required
to disclose all areas of conflict of interest to the board
and are excluded from voting on such areas of conflict. The
board has access to the company secretary and legal counsel.
The key function of the board is the identification of current
and future risks and to ensure that the necessary systems
and controls are in place to enable such risks to be measured,
controlled and effectively monitored. The board approves the
annual budgets, credit facilities of over 5% of the banks
core capital to a single group and the quarterly and annual
financial reports.
New directors are required to undergo a formal induction
process to ensure that they are fully familiar with the banks
policies, organization structure and corporate governance
principles. The board of directors' performance evaluation
is carried out annually including the chairman who is evaluated
separately by other directors. The managing director is again
evaluated annually by the board against pre-set performance
criteria. Directors are not subject to retirement by rotation.
The board has appointed various sub-committees to which it
has delegated certain responsibilities with the chairman of
the sub-committees reporting to the board. The composition
of the sub-committees is set out on
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BOARD COMMITTEES
EXECUTIVE COMMITTEE
The committee which is the working committee of the board
is chaired by the chairman and whose other members are the
managing director and five non-executive directors. The committee
meets on a monthly basis and is responsible for financial
management and review of financial performance, overseeing
the strategic planning function, establishing and maintaining
a system of internal controls and developing the code of corporate
conduct for senior management and overseeing the credit risk
and approving credit facilities over the management limits.
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BOARD AUDIT COMMITTEE
The committee comprising three non-executive directors is
chaired by a non-executive director who is a member of ICPAK.
The committee meets on a quarterly basis and its functions
include:
• Monitoring and strengthening the effectiveness of management
information and internal control systems.
• Review of financial information and improving the quality
of financial reporting.
• Strengthening the effectiveness of internal and external
audit functions, and deliberating on significant issues arising
from internal and external audits, and inspections carried
out by the Bank Supervision Department of Central Bank of
Kenya.
• Increasing the stakeholders' confidence in the credibility
and stability of the institution.
• Monitoring instances of non-compliance with the International
Financial Reporting Standards, applicable legislation and
Central Bank of Kenya Prudential Regulations and other pronouncements.
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ETHICS COMMITTEE
To strength the corporate governance structures, the Ethics
Committee is mandated with the task of setting and reviewing
the ethical standards for the board and management. It is
chaired by a non-executive director and includes the managing
director and members of senior management. The committee meets
on a need basis.
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AUTOMATION COMMITTEE
The committee, headed by a non-executive director with extensive
experience in the field of information communication and technology,
develops the long term automation plan for the board approval.
The committee appraises the capital budgets for all hardware
and software purchases for recommendation to the board and
meets on a need basis.
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HUMAN RESOURCES COMMITTEE
The committee is headed by the chairman and comprises the
managing director, a non-executive director and the general
manager. The committee develops and reviews human resources
policies and approves senior management appointments and remuneration.
The committee meets on a need basis. The committee is currently
developing a new organization structure for the bank and setting
performance based remuneration structure for all senior management
staff.
CREDIT COMMITTEE
The committee is chaired by the managing director and comprises
the general and the advances managers and meets at least once
monthly. The functions of the committee include appraisal
and approval of credit applications based on limits set by
the board. The committee also monitors and reviews non-performing
vances and ensures that adequate loan loss provisions are
held against delinquent accounts in accordance with the guidelines
issued by the Central Bank of Kenya and the board and provides
monthly reporting to the board through the executive committee.
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MANAGEMENT COMMITTEES
The managing director has also set up various committees to
assist him in the day to day operations of the bank.
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ASSET AND LIABILITY COMMITTEE
The committee chaired by the managing director and comprising
all departmental heads meets on a weekly basis to discuss
operational issues and to monitor and manage the balance sheet
to ensure that adequate resources are available to meet anticipated
fund demands and to monitor compliance with all statutory
requirements. The committee is also responsible for developing
a framework for monitoring the banking risks including operational,
liquidity, maturity, interest rate and exchange rate risks
for approval by the board.
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DIRECTORS REMUNERATION
The remuneration to all directors is based on the responsibilities
allocated to the directors, and is subject to regular review
to ensure that it adequately compensates them for the time
spent on the affairs of the bank. The remuneration paid to
the director and key management staff is disclosed in note
31 to the financial statements.
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RELATIONSHIP WITH SHAREHOLDERS
The company is a private company with the details of the shareholders
set out on page 4. There is no particular shareholder who
has any powers whether direct or implied to control the company.
Shareholders have full access through the managing director
to all information they require in respect of the bank and
its affairs. In accordance with the guidelines issued by the
Central Bank of Kenya, the bank publishes quarterly accounts
in the dailies.
Alnashir Popat
Chairman
16 March 2007
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