RIGHT OF CENTRE: Some like old boys’ network
The role of directors as it relates to public and non-public or private companies is set out in the Companies Act of Barbados Cap. 308.
Nowhere in the act are there details of what the qualification of directors ought to be except that in Section 4(2) it clearly states that an individual under 18 years of age cannot form or join in the formation of a company or be a director of a company under Section 63(1).
The act is very clear about the duties of directors and officers of a company and it may be instructive how many people read the act and understand their role before accepting appointment to the board of a company.
It would also be enlightening to ascertain from companies what qualifications and skills they look for in people selected to serve on boards, and whether there is ongoing training in such areas as ethics, leadership, business risk and development, and conducting meetings.
The act sets out the duties of directors as follows: (a) s/he must act honestly and in good faith with a view to the best interests of the company, and (b) must exercise the care, diligence and skill of a reasonably prudent person in comparable circumstances.
The act goes on to state that in determining the best interests of a company, a director must have regard for the interests of the company’s employees in general as well as for the interests of its shareholders.
Directors are required to exercise the powers of the company directly or indirectly through the employees and agents of the company, and direct the management of the business and affairs of the company.
However, the powers of the directors to manage the business and affairs of the company can, in whole or in part, be restricted by the articles of the company.
Section 95(4) requires every director and officer of a company to comply with the act and its regulations, and with its articles and by-laws. Therefore, the question that must be asked is, are people who accept appointment to the boards of companies aware of the requirements of the act, and if not, do they seek to become aware or failing that, resign forthwith from the board?
In Barbados, it is generally felt that people who have served at management or executive level are best positioned and qualified to serve as directors. The truth is some boards operate similar to the “old boys’ network” where directorships are handed out based on family ties, favours, school associations, extracurricular activities and personal friendships.
Let us look at the practices of some of our public companies and try to understand whether the directors are prepared and equipped for their jobs.
It has been customary for members of a company’s executive management team to sit on the board of directors.
The result of this is that management ends up reporting to themselves at meetings of the board.
How likely would an incompetent manager report himself to a board on which s/he is serving?
Directors can be appointed by shareholders at special and/or annual meetings. However, the norm in Barbados is that whenever directors retire by rotation or a casual vacancy filled by the directors is to be approved at the next annual meeting, shareholders are excluded from participating “meaningfully”. Often one has to ask, in whose interests are the directors acting?
Shareholders who attend annual meetings can attest to a reluctance to respond to reasonable questions from the floor and in some cases shareholders are told to shut up.
Do directors understand that they are the shareholders’ servants and not their masters?
There is a culture in Barbados as it relates to the appointment of people to serve as directors of companies. It is outdated and in need of urgent change.
• Douglas Skeete is interim president of the Barbados Association of Corporate Shareholders.