For a time, a number of former senior bank executives and semi-retired accountancy firm partners were being regularly contacted to sit on boards of newly registered companies with foreign shareholders.
Board directors expect to receive what they consider a standard board agenda. It includes management accounts, (perhaps) a sales and operations report, (hopefully) budgets, a request for approval of a capital expenditure project, besides the even more standard corporate governance items of approval of half yearly or end of year financial statements, auditors’ reports etc.
When it comes to corporate governance, we need to go beyond the written down rules and regulations. What matters is what is right or wrong and not what is articulated in the regulations.
I was surprised to read the David Tang’s reply to a question on the British Airways’ debacle of complete shutdown of its computers a couple of weeks ago (FT 10th June 2017). David Tang is my favourite FT Weekend columnists and it is the first column that I go to every Saturday for these last ten years.
The boards of directors of listed and regulated companies have been hardened further during these last ten years as regulators’ tentacles have reached the board rooms and company secretary offices of thriving business and financial institutions.
The selection of directors on boards is often criticised for the fact that it is always the same persons who are invited to sit on various corporate boards as independent, non-executive directors. Usually, these are persons of extensive experience and social standing that give prestige to the board of directors besides the benefits of competence and experience. Truly, blue ribbon boards with a list of important well-known names sitting around the table.
The confusion on the purpose of boards of directors and who qualifies as a board director lives on despite greater awareness on corporate governance by means of conferences and seminars and more restrictive criteria exercised by the MFSA on regulated or listed companies.
Directors have a long list of duties most of which are of a fiduciary nature. These are obligations that have to be taken seriously by all directors including non executive directors.
Some statistics from the United States of America – courtesy of Bloomberg Business Week: 64 per cent of directors on the Standard & Poor’s 500-stock index have served ten to fifteen years on a board of directors.
There is more than ample evidence that boards of directors in Malta are steadily, although quietly, changing. A number of factors have contributed to this.
