Financal sector rules updated
The Central Bank of Barbados has issued revised Corporate Governance Guidelines for financial institutions which include, among other requirements, the expectation that boards have written conflict of interest policies and adequate professional indemnity insurance in place for directors.
The February 2013 update is based on international standards established by the Basel Committee on Banking Supervision, specifically the Principles for Enhancing Corporate Governance. It is informed by the Core Principles for Effective Banking Supervision which were most recently revised last September.
The guidelines outline the minimum standards for corporate governance practices by all entities incorporated in Barbados and licensed under the Financial Institutions Act and the International Financial Services Act.
In addition to indemnity insurance for directors “when discharging their fiduciary duties in good faith”, the new guidelines recommend that in discharging their responsibilities, boards should take into account the “legitimate interests of shareholders, depositors and other relevant stakeholders.
“[The board] should also ensure that the licensee maintains a good relationship with its regulators.
“The board is ultimately responsible for all acts and omissions including compliance with legal and regulatory obligations. It is imperative that licensees communicate to the Bank any breaches or other material issues that may impact the safety, soundness or reputation,” the document said.
The Bank also notified financial institutions that they should have a corporate culture in place that supports and provides incentives for professional and responsible behaviour.
“In this regard, the board should take the lead in establishing the ‘tone at the top’ and in setting professional standards and corporate values that promote integrity for itself, senior management and other employees,” the document stated, before setting out the minimum requirements for the relevant code of conduct.
The Bank also said that employees should be encouraged and be able to communicate legitimate concerns about illegal, unethical or questionable practices while being protected from reprisal.
In addition, it indicated that boards should have a formal, written conflicts of interest policy and an objective compliance process for implementing the policy.
Moreover, it advised that board members should possess, both at the individual and the collective levels, appropriate experience, competencies and personal qualities, to enable them to exercise their duties.
It also said directors should have access to tailored programmes for initial and ongoing awareness and education on relevant issues. (NB)