Safaricom shareholders will vote on 31 July on governance amendments that would allow Vodafone Kenya Limited (VKL) to nominate the company’s chief executive officer after increasing its stake in Kenya’s largest listed technology company.
The proposed changes follow VKL’s completion on 30 June of its purchase of an additional 15% stake in Safaricom from the Government of Kenya.
The transaction, agreed in December for about $1.6 billion, increased Vodacom’s holding in Safaricom to 55%, while the government’s stake fell to 20% and public investors retained 25%.
The amendments would allow VKL to nominate Safaricom’s CEO for as long as it holds more than 50% of the company’s issued and fully paid share capital. The board would retain formal appointment authority, but VKL would also nominate executive directors and shareholder-appointed directors during that period.
The proposed governance changes would transform Safaricom’s board structure.
Article 89(b) gives VKL the right to appoint one director for every complete 10% stake it holds, which would translate to five nominees based on its current shareholding.
The Cabinet Secretary to the Treasury retains an equivalent right based on the government’s remaining stake.
Article 89(a) requires Safaricom’s board to have at least seven directors, with a majority being Kenyan citizens and including independent non-executive directors. The company’s notice states the board should encourage the retention of a “predominantly Kenyan character” in senior management.
The proposed amendments also introduce a deadlock process for unresolved board matters. If disputes continue after a second reading, decisions would be determined by directors appointed by VKL and the Cabinet Secretary to the Treasury.
A separate provision would make Safaricom’s chief financial officer the automatic alternate director to the CEO while VKL holds more than 50% of the company.
Two provisions would preserve government influence over strategic decisions. Any material change to Safaricom’s brand would require both a 75% board supermajority and Government of Kenya approval, while government consent would also be required before the company expands into markets beyond Kenya and Ethiopia.
The fourteen resolutions were requisitioned by VKL under section 312 of the Companies Act and each requires 75% shareholder approval by poll to pass. Safaricom’s board has not taken a formal position on the proposals.
If approved, the amended Articles of Association must be lodged with the Registrar of Companies within fourteen days of the meeting.
A petition challenging the government’s sale of the shares remains before the High Court, although the share transfer has already been completed following an earlier Court of Appeal ruling that lifted conservatory orders on the transaction.
Dr Peter Ndegwa, Group CEO of Safaricom, has led the company since April 2020, overseeing its expansion into Ethiopia and its move towards AI-enabled platform services.
Share
