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Safaricom AGM 2026: What the Vote Changes

Market CommentaryNSE

Safaricom experienced a change of ownership on 30th. June 2026 with Vodafone Kenya (VKL) acquiring an additional 15% to bring its total ownership to 55% (Safaricom PLC, 2026b). The register now reads VKL 55%, Government of Kenya 20%, general public 25% (percentages the company gives as approximate). Part of the exchange terms, their outcome and interests of the main shareholders have triggered a need for change in the articles of association of the company, changes that would require a shareholder election. This voting is scheduled for the next AGM on 31st. July. A part of the agenda is regular housekeeping; the full list is in the table below. Here are the most impactful items that shareholders will consider.

SR10: Who Wins a Tie

One of the amendments requisitioned by VKL answers the question on what happens when the board of directors is deadlocked on a decision with no majority. The current constitution provides that questions at board meetings are decided by a majority of votes, and that the chairman "shall not have a second and casting vote in the event of any deadlock" (Safaricom Limited, 2008, art. 116(a)). The implication is that nobody breaks a tie, a matter the board cannot agree on simply fails and status quo stands. A similar rule denies the chairman a casting vote at shareholder general meetings and board committees (Safaricom Limited, 2008, arts. 74, 122). This design has a logic to it. A deadlock that fails protects the status quo, which means no shareholder, however large, can force a contested decision through a divided board. That protection sits alongside others in the current laws, VKL board appointees are capped at four and the governments at three on a board of at most eleven and no board quorum can form, nor any written resolution pass, without at least one appointee of each present and participating (Safaricom Limited, 2008, arts. 89, 117, 124).

The new amendment reverses this mechanism. If approved, each director still has one vote, but a deadlocked matter must be brought back the next scheduled meeting or a special one. If the board deadlocks a second time, "the decision of the board… shall be the decision that was approved by the majority of the directors appointed in terms of article 89(b) and 89(c)" (Safaricom PLC, 2026a, res. SR10). These articles refer to directors nominated by VKL and the Treasury. The independent directors vote in both rounds, but if the split persists, their votes stop counting and the tiebreak belongs exclusively to the two bloc holders' nominees. The outcome is binding. Such changes would require additional amendments, which the companion resolutions cover to complete the picture. SR5 removes the cap on VKL's appointees so that VKL gets a board seat for every complete 10% of shares it holds. SR4 removes the board's maximum size, and SR11 and SR12 delete the requirements that each bloc holder's nominee be present for a quorum or a written resolution (Safaricom PLC, 2026a). The substance of the change, then, is a reversal of direction from a deadlock meaning no, to a deadlock meaning the bloc holders decide.

SR5 and SR4: Seats That Track the Stake, and Outlast It

VKL also proposes a change in how the board of directors is composed. Today, the board can hold a maximum of eleven and currently seats all eleven (Safaricom Limited, 2008, art. 89(a); Safaricom PLC, 2025): the chairman, the CEO, three VKL appointees, two government appointees, three independent directors, and one other non-executive director. Neither VKL nor the government uses its full paper entitlement today, VKL holds 3 of 4 while the government holds 2 of 3. This change will anchor the two bloc holders' seat entitlement to their ownership. VKL and the Government will each nominate a director for every complete 10% of shares held. At 55% shareholding, VKL will nominate 5 directors to the board and the government will nominate two at 20%. The right is personal, not general: the Articles grant it by name to VKL and to the government's holding entity, and to no one else. A third investor who built up 30% would hold thirty percent of the company and no seats by right. SR4 removes the maximum board size altogether, setting a minimum of seven directors and no ceiling. So, this necessitates no displacement and allows the board to grow around the independent directors.

The subtlety is durability. This seat right will live in the Articles, not in the shareholding. If VKL's stake later slipped to 42%, it would still appoint four directors, and unwinding the arrangement would itself require another special resolution at 75% of votes cast, which a holder of anything above 25% can block alone. Amending the Articles is a one-way door: 75% to open it, a little over 25% to hold it shut. After 31st July, VKL holds the shut side by itself.

The more profound implication of this change coupled with SR8 is the departure of the company's control from joint-venture approaches to conventional controlled company governance. What exists today is a supermajority rule sitting on top of a particular seat count. Safaricom's current Article 102 reserves five decisions such as appointing the CEO or material change to the brand and provides that none of them passes unless at least seventy-five percent of the directors vote in favor (Safaricom Limited, 2008, art. 102). On the current board of eleven, 75% means nine votes. Now count the seats; VKL appoints three directors, the government appoints two, and the CEO who in practice, seats with the controlling side. Six is well short of nine. So, on the biggest decisions a board takes, the bloc holders' votes are short three and must persuade the independent directors. The outcome is a coalition forcing device, a common feature in joint ventures where shareholders agree that in strategic matters, ownership alone must not suffice.

SR8 changes this device by shrinking its territory. The resolution deletes Article 102 and replaces it with a version in which the seventy five percent requirement survives for exactly one of the matters, the brand, now paired with the government's consent right. Other major concerns like business plans, budgets, and the appointment of the CEO fall silently to an ordinary majority (Safaricom PLC, 2026a, res. SR8). An ordinary majority of eleven is six, precisely the number the controlling side already musters. In other words, decisions that require independent directors today would become decisions that tomorrow merely permit them.

SR12, with SR11: Who Can Conduct Business

Current laws require a majority of the board to conduct business. Under Article 117, a board meeting needs a majority of the directors to form a quorum, but no quorum can form unless at least one appointee of each bloc holder is present (Safaricom Limited, 2008, art. 117). This requirement extends to paper decisions where bloc participation mandatory when the directors pass a resolution without meeting at all, signed and circulated as if voted in a physical session (Safaricom Limited, 2008, art. 124). The aim of this provision was to share control between the major shareholders in a joint venture, a meeting without its nominees can decide nothing. SR11 proposes an amendment to drop the bloc representation requirement in a quorum, 'The quorum necessary for the transaction of the business of the Directors shall be a majority in number of the Directors for the time present either personally or by Alternate' (Safaricom PLC, 2026a, res. SR11). A bare majority, nothing else. SR12 does the same to paper: a written resolution will pass on a simple majority of directors, with the requirement that each bloc holder's appointee take part deleted (Safaricom PLC, 2026a, res. SR12). On their own, these changes look like tidying. Its weight comes from its pairing with SR5 and SR6, which track seat entitlement to shareholding. A quorum will no longer require anyone outside the controlling side to show up, effectively allowing VKL to run the company.

Conclusion

Taken one by one, each resolution reads as a reasonable adjustment; together, they retire a constitution. The articles Safaricom adopted at its 2008 listing were a joint venture, nobody could break board deadlock, the biggest decisions needed three quarters of the directors, no meeting or paper resolution could proceed without bloc shareholder representation and each anchor's seats were capped (Safaricom Limited, 2008). Every one of those rules encoded the same founding assumption, no shareholder governs alone. On 30th. June, that assumption ended as a matter of ownership; on 31 July the fourteen resolutions would end it as a matter of constitution.

The Fourteen Resolutions in One Table

ResolutionArticleWhat it does, in plain English
SR1Art 1Renames the Government shareholder term from "PST" to "CST" (housekeeping)
SR2Art 1Clarifies the "VKL" definition — follows the same entity through name changes (housekeeping)
SR3Art 62Adds a CST-appointed director to those who may convene an EGM if too few directors can act (housekeeping)
SR4Art 89(a)Board of at least seven directors; the current maximum of eleven is removed; a majority of independent non-executives must be Kenyan citizens
SR5Art 89(b)VKL appoints one director per complete 10% held; the existing cap of four nominees is removed
SR6Art 89(c)The same seat right for CST; its existing cap of three nominees is likewise removed
SR7Arts 97, 97AWhile VKL holds over 50%, the CFO is automatically the CEO's alternate director
SR8Art 102The 75% board vote survives only for a material brand change, now paired with Government consent; expansion beyond Kenya and Ethiopia needs Government consent; business plans, budgets and CEO/CFO appointments fall to a simple board majority
SR9Art 103While VKL holds over 50%, the CEO is appointed from a list of VKL nominees — and, via SR8, by simple board majority rather than today's 75% board vote
SR10Art 116A (new)A board deadlock that survives a second vote is decided by the majority of VKL- and CST-appointed directors; independents are excluded from the tiebreak
SR11Art 117Board quorum stays a simple majority, but the requirement that at least one appointee of each bloc holder be present is removed (as is the safeguard against one person forming a quorum through stacked alternate roles)
SR12Art 124Written directors' resolutions pass by simple majority, with electronic approval replacing "letter, telegram, telex or fax"; the rule that the majority include at least one appointee of each bloc holder is removed
SR13Art 131Directors become bound to the board-approved dividend policy (publicly described as a consistent 80% payout of Group net income) unless shareholders in general meeting approve otherwise
SR14Art 134The directors' discretion to set aside reserves becomes subject to the dividend policy

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Disclaimer: This article is for educational purposes only and does not constitute financial advice. Investing in securities involves risk, including the possible loss of principal. Past performance does not guarantee future results. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.