With­in the next two months, over 1,000 in­di­vid­u­als will be ap­point­ed to the gov­ern­ing boards of more than 200 pub­lic bod­ies in T&T fol­low­ing the elec­tion and change in gov­ern­ment last week.

These new­ly ap­point­ed di­rec­tors will in­flu­ence a sig­nif­i­cant part of the econ­o­my, af­fect­ing the dai­ly lives of us all. Wa­ter, elec­tric­i­ty, rice, flour, cook­ing oil, telecom­mu­ni­ca­tions, garbage, gaso­line, bus­es, fer­ries, air­lines, bank­ing, tele­vi­sion, postal-mail, mort­gages, uni­ver­si­ty, crude oil, nat­ur­al gas, grass-cut­ting, road-clean­ing are all man­aged by state boards and the to­tal eq­ui­ty of these en­ter­pris­es was val­ued at ap­prox­i­mate­ly $8.5bil­lion in 2013.

Du­ties of di­rec­tors:

Du­ty of care

The du­ty of care is an oblig­a­tion im­posed on the board that the di­rec­tors act on and take de­ci­sions on a ful­ly in­formed ba­sis and with due dili­gence. The du­ty of care is em­bod­ied in law (sec­tion 99 (1) (b) of the Com­pa­nies Act Chap­ter 81:01) and fre­quent­ly al­so in the com­pa­ny's ar­ti­cles, bye-laws and board char­ter.

Du­ty of loy­al­ty

The du­ty of loy­al­ty means that di­rec­tors act ex­clu­sive­ly in the in­ter­est of the com­pa­ny. In de­cid­ing what is in the best in­ter­est of the com­pa­ny, the law spec­i­fies that they are to con­sid­er the in­ter­ests of the com­pa­ny's em­ploy­ees and its share­hold­ers (Com­pa­nies Act, Sec­tion 99(2)). How­ev­er, di­rec­tors shall not al­low their per­son­al, or any oth­er sin­gu­lar in­ter­est to pre­vail. Some­times re­ferred to as a di­rec­tor's "fidu­cia­ry du­ty" this re­spon­si­bil­i­ty as­sumes the di­rec­tor takes the role of

i) an agent act­ing on the com­pa­ny's be­half and

ii) a stew­ard who con­trols the com­pa­ny as­sets

In the case of di­rec­tors on pub­lic bod­ies, more specif­i­cal­ly–all per­sons in pub­lic life–are re­quired to com­ply with the con­flict of in­ter­est pro­vi­sions at Sec­tion 29 of the In­tegri­ty in Pub­lic Life Act (IPLA) Chap­ter 22:01 and the Code of Con­duct as ar­tic­u­lat­ed in Sec­tions 23-31. The IPLA states that a con­flict of in­ter­est is deemed to arise if a per­son in pub­lic life or any per­son ex­er­cis­ing a pub­lic func­tion were to make or par­tic­i­pate in the mak­ing of a de­ci­sion in the ex­e­cu­tion of his of­fice and at the same time knows or ought rea­son­ably to have known, that in the mak­ing of the de­ci­sion, there is an op­por­tu­ni­ty ei­ther di­rect­ly or in­di­rect­ly to fur­ther his pri­vate in­ter­ests or that of a mem­ber of his fam­i­ly or of any oth­er per­son.

A breach by any di­rec­tor or the board of their fidu­cia­ry du­ties ex­pos­es the in­di­vid­ual di­rec­tor as well as the board to li­a­bil­i­ty.

Re­spon­si­bil­i­ties

State owned en­ter­pris­es and gov­ern­ment mech­a­nisms must cre­ate an ap­pro­pri­ate process for se­lect­ing and con­sti­tut­ing a board that is pro­fes­sion­al and trans­par­ent, while en­sur­ing that boards have the com­pe­ten­cies and ob­jec­tiv­i­ty need­ed to car­ry out their du­ties. Pub­lic sec­tor board mem­bers should car­ry out their du­ties in a pro­fes­sion­al way and so they are en­ti­tled to re­ceive ad­e­quate train­ing and oth­er sup­port.

When ap­point­ing di­rec­tors to a state board, nine ques­tions must be an­swered (See box).

There must be a rig­or­ous and for­mal process for se­lect­ing and ap­point­ing board mem­bers. These nine ques­tions raise a num­ber of im­por­tant is­sues that the Caribbean Cor­po­rate Gov­er­nance In­sti­tute (CC­GI) will com­ment up­on and of­fer best prac­tice con­sid­er­a­tions over the com­ing weeks and months in this col­umn.

The code

In 2013, the Caribbean Cor­po­rate Gov­er­nance In­sti­tute (CC­GI), the T&T Stock Ex­change and the T&T Cham­ber of In­dus­try of Com­merce worked in part­ner­ship to pub­lish the T&T Cor­po­rate Gov­er­nance Code. This im­por­tant code ap­plies to all or­gan­i­sa­tions with­in T&T "with a pub­lic ac­count­abil­i­ty". Read­ers may be sur­prised to learn that the pro­vi­sions in the code ap­ply to all of the 59 or­gan­i­sa­tions in T&T in which the gov­ern­ment cur­rent­ly holds shares.

The rec­om­men­da­tions in the code con­cern­ing the se­lec­tion and ap­point­ment of board mem­bers are list­ed in the box.

New gov­ern­ment min­is­ters, per­ma­nent sec­re­taries, CEOs, cor­po­rate sec­re­taries, di­rec­tors and oth­er of­fi­cers of pub­lic bod­ies all have a role to play in ap­ply­ing the code.

The CC­GI works as a re­gion­al, non-prof­it, in­de­pen­dent, pro­fes­sion­al mem­ber­ship or­gan­i­sa­tion, whose man­date is to cre­ate ef­fec­tive or­gan­i­sa­tions and ef­fi­cient mar­kets through board di­rec­tors that can be trust­ed (based on their train­ing, con­tin­u­ous de­vel­op­ment, and pro­fes­sion­al val­ues that they for­mal­ly com­mit to as pro­fes­sion­al mem­bers), and the re­search, pub­li­ca­tion, and mon­i­tor­ing of cor­po­rate gov­er­nance best prac­tice stan­dards ap­pro­pri­ate for the Caribbean that are con­sis­tent with in­ter­na­tion­al good cor­po­rate gov­er­nance prin­ci­ples and stan­dards.

As part of its pro­gramme aimed at pub­lic di­rec­tor­ships, the in­sti­tute aims to sup­port gov­ern­ment min­is­ters, per­ma­nent sec­re­taries, CEOs, cor­po­rate sec­re­taries, di­rec­tors and oth­er of­fi­cers of Pub­lic Bod­ies in im­prov­ing gov­er­nance in the pub­lic sec­tor with­in T&T.

The CC­GI is a re­gion­al, in­de­pen­dent, non-prof­it, pro­fes­sion­al mem­ber­ship or­gan­i­sa­tion reg­is­tered with the Ac­cred­i­ta­tion Coun­cil of T&T. CC­GI is the award body that pro­vides the cer­tifi­cate and diplo­ma in cor­po­rate gov­er­nance and the char­tered di­rec­tor qual­i­fi­ca­tion through­out the Caribbean. CC­GI wel­comes mem­ber­ship ap­pli­ca­tions and par­tic­i­pa­tion in its cours­es and events through­out the re­gion. +1 (868) 221-8707 www.caribbean­gover­nance.org