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Commonwealth Caribbean Corporate Governance
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frameworks emerged worldwide. This is against the backdrop of the recognition, or better yet, consensus, that one of the main reasons for the various crises was poor corporate governance as demonstrated in: i) lack of transparency and accountability; ii) weak regulation; iii) limited shareholder and stakeholder involvement/empowerment; and iv) inattention to risk and risk consequences. Not only did these crises affect companies and their shareholders, but also a much wider group of stakeholders, including employees, creditors and the community in which the companies operated.
In Europe, the responses to corporate governance failures have mainly been through soft law and moral suasion in the form of codes and principles, whereas in the US, the responses were decidedly legislative. Multilateral organisations, such as the World Bank and the OECD, have established minimum corporate governance standards through their corporate governance codes. The preamble to the OECD Guidelines states, inter alia, that:
Increasingly, the OECD and its member governments have recognised the synergy between macroeconomic and structural policies in achieving fundamental policy goals. Corporate governance is one key element in improving economic efficiency and growth as well as enhancing investor confidence... Corporate governance is only part of the larger economic context in which firms operate that includes, for example, macroeconomic policies and the degree of competition in product and factor markets. The corporate governance framework also depends on the legal, regulatory, and institutional environment. In addition, factors such as business ethics and corporate awareness of the environmental and societal interests of the communities in which a company operates can also have an impact on its reputation and its long-term success.
In Commonwealth Caribbean Corporate Governance, the chapter on the ‘Duties and Responsibilities of Directors and Officers’ of companies, trace some of the legislative changes in the last 20 years in a number of Commonwealth Caribbean jurisdictions that reflect corporate governance and the interpretation of the legislation through case law. The increased exposure of directors and officers, have been adopted in pari materia with the Canada Business Corporations Act, save for a few outliers,
and reflect the corporate governance imperatives emerging from the various corporate executive abuses reflected in Commonwealth case law. The provisions also provide safe- harbour for directors and officers, to ensure that qualified persons are not discouraged from taking up directorships. The legislation in the region stops short of legislating morality, but an analysis of the current Codes of Corporate Governance in the region (Barbados, Jamaica and Trinidad and Tobago) reveals that there is a clear attempt at moral suasion. In particular, the Private Sector Organisation of Jamaica, Corporate Governance Code 2009 reflects the increasing duties and responsibilities of the directors and officers of all companies, found in the UK, Australia, South Africa (King III) and the OECD Codes. Recent developments in Corporate Governance reflect a much broader board responsibility, which includes provisions related to:
i) the long term success of the company,
ii) greater independence,
iii) shareholder “say-on-pay”,
iv) increased risk management and internal control,
v) corporate social responsibility,
vi) bribery and corruption,
vii) whistle blowing,
viii) political lobbying,
ix) employee share-dealing, and
x) appropriate behaviour and conduct.
The book chapter on ‘The Protection and Empowerment of Shareholders and Other Stakeholders’, highlights the shift from a shareholder primacy model to the modern stakeholder model of corporate governance, through a survey of the Companies Acts and corporate governance codes in the region. The case law that has emerged so far in the region reflects the variation in the levels of stakeholder protection owing to the wording of the provisions relating to it and/or the interpretation found in case law oftheseprovisions. Theselimitations,however,areameliorated by the Codes of Corporate Governance introduced in Barbados, Jamaica and Trinidad which make broad recommendations for shareholder and stakeholder empowerment through increased disclosure and accountability.
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