New capital market rules tighten board oversight, disclosure

Companies covered by Rwanda’s capital market corporate governance rules will have to separate the roles of board chairperson and chief executive officer, while giving independent directors a stronger role in oversight. Under new regulations issued by the Capital Market Authority (CMA), the CEO cannot serve as chairperson of the board, while the chairperson must meet the criteria for an independent director. ALSO READ: 2025 marked a turning point for the capital market The regulations apply to listed companies and issuers of securities to the public or a section of the public, as well as companies intending to issue securities to the public. They also cover public companies, state-owned companies, private companies and small and medium-sized enterprises. ALSO READ: What you need to know about Rwanda’s new capital market bill The rules, contained in 2026 regulations relating to capital market corporate governance, replace the 2012 capital market corporate governance code and came into force on October 2, when they were published in Official Gazette. Boards to have at least seven directors For companies covered by the rules, boards must have between seven and 11 directors, depending on the size, nature and complexity of their operations. SMEs are required to have between three and five directors. ALSO READ: VIDEO: CMA steps up drive to spur youth investment in capital markets At least half of a board must be made up of non-executive directors, while at least one-third of those non-executive directors must be independent. Independent directors will only be compensated through sitting allowances. The regulations also require directors to have sufficient knowledge to understand financial statements and the financial implications of decisions, as well as relevant business and industry knowledge. A director may not sit on the boards of more than three listed public companies. Related-party transactions must be disclosed The new rules require directors and senior managers to declare any interest they have in a transaction or proposed transaction involving a related party. A director or senior manager with such an interest must declare its nature, extent and, where possible, monetary value to the board before the transaction is considered. They cannot take part in the decision or seek to influence it. Boards must also establish and publish a policy governing related-party transactions. Such transactions must be conducted independently and on normal commercial terms, undergo an approval process and be disclosed in the company’s annual report. Shareholders get more information The regulations set out new requirements on how companies engage shareholders through general assemblies. Companies must publish annual general assembly documents on their websites, including the agenda, registration procedures, voting rules, proposed resolutions and information needed by shareholders to make informed decisions. Separate resolutions must be taken on substantially separate issues, rather than bundling unrelated matters into one vote. Companies may also allow shareholders to participate and vote electronically, provided their articles of association make provision for electronic general assemblies and voting in absentia. The regulations retain the principle of “one share, one vote”, with shareholders within the same class having equal voting rights. Minutes and outcomes of general assemblies must be published or otherwise made accessible to stakeholders within 10 days. More oversight through board committees Boards are required to establish three committees: the Nominating Committee, Remuneration Committee and Audit Committee. The Nominating Committee must have at least three non-executive directors, with a majority being independent. Its chairperson must also be an independent director. The Remuneration Committee must have at least three directors, including at least one independent director. It oversees remuneration for management and non-executive directors, as well as the company-wide employee remuneration policy. The regulations also strengthen audit and internal control requirements. Listed companies must have a properly resourced and competent internal audit function that operates independently of management and provides objective assurance to the board on risk management, controls and governance. Companies must disclose more The regulations require companies to provide stakeholders with timely and accurate information on key matters, including their financial and non-financial position, strategy, risk management, business model, performance, ownership, and environmental and social matters. Companies must publish comprehensive, understandable and balanced annual reports and regularly use their websites for disclosure. Websites are expected to provide updated annual and interim reports, investor briefings, company policies, board and committee charters and other relevant documents. Annual reports must also disclose information about board committees, including their members, qualifications, experience, independence, responsibilities, activities, meetings and attendance. Sustainability and whistleblowing enter annual reports Companies must disclose sustainability and other non-financial information in their annual reports, including environmental and social risks and opportunities, measures taken to manage them, targets and performance indicators. They must also disclose whether they have a grievance and whistleblowing mechanism, the general themes of complaints, how complaints were handled and the number that remain unresolved. The regulations also require companies to protect people who report wrongdoing in good faith from negative repercussions resulting from their reports.

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New capital market rules tighten board oversight, disclosure