For decades, many parastatals operated within administrative frameworks characterized by centralized oversight, overlapping mandates and political appointments, blurred lines between ownership and regulation and inconsistent performance accountability. Public service functions were often intertwined with commercial operations, leading to opacity in financial performance and recurring fiscal strain.
At its core, the reform separates ownership from policy. GOEs must be incorporated as companies, governed by boards with a majority of independent directors appointed through a structured and competitive search process as per Section 10 of the Act. Performance contracts are mandatory and audit committees are compulsory. Disclosure obligations are enhanced while Public Service Obligations must be separately costed, audited and fully funded under Section 21. This being a move away from administrative supervision towards structured corporate governance.
The new Act under Section 9 introduces a deliberate and structured departure from this approach ensuring that GOEs operate for profit, are self-sustaining, self-financing and accountable to the public through the National Treasury. Where they undertake Public Service Obligations, those functions must be accounted for and supported by transparent budgetary allocations as per Section 30 (4), 31 & 34 of the Act. The era of hidden subsidies and cross-subsidization is being curtailed. The expectation is clear: public enterprises must justify their existence through measurable performance and fiscal responsibility.
This inevitably raises a difficult but necessary question on whether all GOEs are necessary. The Act introduces criteria for establishing new entities, including proof of financial viability, avoidance of duplication and demonstration that the market gap cannot be filled by the private sector. Loss-making state corporations that cannot demonstrate commercial sustainability will increasingly face restructuring, consolidation, merger or privatization. The reform framework implicitly recognizes that viability, not historical existence, must determine survival.
Beyond structure, the Act transforms governance culture. Previously, board appointments often lacked structured independence criteria. Now, independent directors must meet strict qualification and disqualification standards with a regulated tenure and formalized performance evaluation according to Part 3 of the Act. Anti-corruption reporting must be publicly disclosed. Audit and risk governance are strengthened. This shift enhances transparency, accountability, promotes merit-based leadership and builds investor and stakeholder confidence. GOEs are being repositioned as commercially oriented entities serving public interest, not politically insulated bodies shielded from performance scrutiny.
The impact on corporate governance in Kenya is profound. The Act aligns GOEs with recognized governance principles: clear shareholder roles board independence, structured performance management, risk oversight, succession planning, and disclosure discipline. It introduces a performance-driven leadership culture and a measurable framework for sustainability. In doing so, it enhances credibility not only domestically but also in the eyes of investors and development partners.
Within this reform architecture, the role of the Company Secretary becomes central. Under Sections 244 and 246 of the Companies Act, every public company must have at least one qualified Company Secretary holding a valid practicing certificate and failure to do so constitutes an offence. Because GOEs will now be companies, compliance is mandatory. But beyond statutory appointment, the scope of the role expands significantly. The Company Secretary is no longer a procedural administrator. In this new governance environment, the Secretary becomes a governance architect and statutory gatekeeper. The office is responsible for advising on director independence requirements, guiding structured board processes, ensuring compliance with performance contracts, overseeing disclosure obligations, supporting audit committees, monitoring risk governance frameworks, ensuring proper succession planning and safeguarding board integrity. During transition, the Secretary will be instrumental in aligning legacy governance structures with the new legal framework.
The transition itself will be wholesome and demanding. Boards will need reconstitution while Articles of association will require harmonization and performance frameworks must be drafted. Public Service Obligations must be separated and properly documented while loss-making entities may undergo restructuring or consolidation. Risk and internal control systems will need strengthening. The balancing act between board oversight and management execution will become more delicate and more scrutinized. Certified Secretaries will be called upon to mediate this balance, ensuring that boards exercise independent oversight without encroaching on management’s operational mandate, while also safeguarding compliance and strategic alignment.
This reform moment therefore presents significant professional opportunity. Advisory roles in board restructuring, performance governance, Public Service Obligation structuring, audit and risk oversight, compliance monitoring and governance training are likely to expand. As entities transition from bureaucratic state corporations into commercialized enterprises, the demand for governance expertise will intensify. However, opportunity must be matched by capacity. Certified Secretaries will need to deepen their understanding of government shareholding frameworks, fiscal risk management, performance contracting, advanced board evaluation systems and transparency law. Implementation will not be simple. It will require technical rigor, professional independence and strategic foresight.
Ultimately, the Government Owned Enterprises Act seeks to create better State-Owned Enterprises, entities that are commercially viable, profit-oriented, self-sustaining yet still responsive to public interest. It aims to ensure that GOEs are necessary, accountable, independent and professionally governed. This is a defining governance reform for Kenya. Its success will depend not only on the strength of the law but on the competence and vigilance of those entrusted with its implementation and Certified Secretaries stand at the heart of that transformation.
