New CMA code brings complete overhaul in how companies are governed

A new corporate governance code that has been launched by the Rwanda Capital Market Authority (CMA) will bring necessary overhaul in how public companies and issuers are governed. The new code replaces a 2012 code that governed public companies and issuers. It’s been long overdue given the pace at which Rwanda’s financial markets have evolved. When the code was launched in 2012, the Rwanda Stock Exchange (RSE) had just been incorporated and there was barely any company that had publicly listed on the exchange. Almost 12 years down the road, the exchange is home to 10 companies including foreign firms, not to mention companies that have issued corporate bonds to raise funding. The financial landscape has changed and markets are becoming sophisticated . As soon as last month, the RSE announced new listing rules for exchange-traded funds (ETFs) and real estate investment trusts (REITs). In the same period, the bourse saw its first small and medium sized enterprise (SME), Mahwi Grain Millers, to list its corporate bond. The new governance code, therefore, is timely. With all the developments that have happened, there couldn’t have been any better time to have a new governance code. All companies issuing securities to the public, regardless of their size or nature, must comply with the new corporate governance code and disclose their adherence. This includes listed companies, state-owned entities, private companies, and SMEs. The new rules also incorporate environmental, social and governance (ESG) principles, a set of rules requiring companies to be transparent, responsible and conscious of their impact on society and the environment. These rules are important as they guide public companies about how they should be ethically and effectively led in order to maximize shareholder value and that of stakeholders. By adopting the new rules, companies can enhance their reputation, attract investors, and contribute to the sustainable development of Rwanda's economy. The task ahead for CMA now is to ensure that these rules are enforced by monitoring and evaluating how companies effectively implement them. This can be tracked through how companies constantlyreport how they adhere to these rules.

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New CMA code brings complete overhaul in how companies are governed