The recent decision by the Capital Markets Tribunal in the Limuru Tea case (Limuru Tea PLC vs. Capital Markets Authority (Appeal 11 of 2022) [2025] KECMT 3 (KLR)) signifies a pivotal moment in the changing dynamics between corporate boards and their regulators. The matter was not only about governing a single listed company but also raised a broader issue regarding how far a regulator can go in defining the internal governance structure of corporations. The Tribunal’s ruling has transformed that debate and will have far-reaching impacts on the country’s corporate governance landscape.

Brief Facts of the Case

In 2022, the Capital Markets Authority (CMA) issued a governance assessment report on Limuru Tea PLC that was as ambitious as it was controversial. It faulted the company’s board structure, questioned its secondment arrangements, and even suggested that directors should be appointed to reflect specific shareholder blocs. The report also pressed for changes to the composition of the nomination committee and invoked conflict of interest rules in ways that seemed to expand its established boundaries.

Limuru Tea contested these findings, asserting that the CMA had exceeded its statutory authority, depended on unverified press cuttings, and denied the company a fair chance to respond. The dispute resulted in a Tribunal decision in September 2025 that both upheld and limited the Authority’s actions. On one side, the Tribunal confirmed the need for certain basic safeguards, notably that boards must be made up of a majority of non-executive directors and that nomination committees should be led by independent members. On the other side, it ruled that regulators cannot determine shareholder representation, second-guess legitimate secondment arrangements, or rely on speculative press reports to damage corporate reputations.

The effect was to redraw the boundary between oversight and autonomy. Oversight is essential for investor protection, but the sovereign space of the boardroom must also be maintained. In invalidating parts of the CMA’s report, the Tribunal reminded regulators that legitimacy is based not on ambition but on law, evidence, and due process. That procedural aspect is perhaps the most instructive.

 The CMA took over 200 days to prepare its draft findings, but only gave Limuru Tea two days to respond. The Tribunal found such disparity clearly unfair. This is not a minor detail: it highlights that procedural fairness itself is a key standard of governance. Regulation, if it is to maintain investor confidence, must be proportionate, consultative, and transparent. Similarly, companies must not remain passive. Limuru Tea’s failure to formally request an extension weakened its challenge. Both regulators and issuers must, therefore, take the process as seriously as the substance.

Far-Reaching Implications of the Ruling

• Board independence has become not only best practice but also a legal obligation.
• Fiduciary duty has been clarified: directors serve the interests of the company as a whole, not specific blocs of shareholders.
• The threshold for establishing conflicts of interest has been raised; they must be proven, not assumed.
• Fair process has been recognised as equally important as board structure in governance evaluations.
• Investor confidence has been prioritised, requiring assessments to be based on evidence and free from conjecture.

Comparative Analysis

Notably, the Tribunal’s reasoning does not distinguish Kenya from global practice but positions it squarely within it.

In the United Kingdom, the Financial Reporting Council enforces governance mainly through disclosure and the principle of “comply or explain”.

South Africa’s King IV Code emphasises principles and outcomes rather than prescriptive rules. At the same time, in the United States, the Securities and Exchange Commission oversees disclosure obligations without dictating the representation of shareholder blocs.

In all these cases, regulators establish minimum safeguards and demand transparency, but the final authority of the board is upheld. The Kenyan ruling confirms that Nairobi’s market will be managed on the same basis.

The Bigger Picture: Proportionate Vigilance and Corporate Trust

For policy and regulatory affairs, the message is twofold. The CMA must recalibrate how it exercises its mandate, ensuring that its findings are proportionate, procedurally sound, and firmly rooted in statute. Listed companies also need to move away from minimal compliance and treat governance as a strategic priority, thoroughly documenting both the form and substance of their practices. Investors, in turn, should demand governance assessments that are not merely punitive but fair, accurate, and credible.

Kenya’s capital markets landscape is no longer in its early stages, having become regionally significant and increasingly mature. The Limuru Tea decision illustrates not fragility but institutional resilience: regulators that can be checked, companies capable of defending themselves, and tribunals that can establish principled boundaries. In this context, the case is less about conflict and more about consolidation. It reinforces the idea that governance is not just about rules but also about trust: the trust of investors in regulators, of shareholders in boards, and of markets in the fairness of their institutions.

The key lesson from the Tribunal’s decision is that governance is most effective when it rests on three pillars: independence, fairness, and credibility. Vigilance should persist, but it must be regulated by law and legitimacy. By embedding this balance, Kenya can enhance its reputation as one of Africa’s most credible and investable markets.