By Geeanduth Gopee
‘Corporate Governance – The Unfinished Revolution’ by Geeanduth Gopee, recently launched at the CLBS Business School in the presence of Jean-Claude de l’Estrac as Chief Guest, and with Dan Maraye, Eric Ng and Suraj Ray in attendance, raises five questions, each of crucial importance for corporate leaders, business, executives, and board directors, university students and enthusiasts of corporate governance.
In his Preface, Geeanduth Gopee states that “unfortunately, economic and financial crises, the reprehensible conduct of several directors, corporate scandals, business failures and confused expectations by numerous stakeholders, all converge to undermine the evolution of corporate governance to greater heights”.
Corporate governance, he adds, remains an enigma for many people, who whether as laymen or experts have divergent views on this complex subject.
Very early, the author differentiates between corporate governance and good governance. Each question is treated in a separate chapter.
What is Managing, Leading and Governing?
The author warns managers, executives, and directors to the dangers of corporate myopia and to have an open mind and a wide outlook on the practices of management, leadership, and governance.
At the outset a distinction is made between Management and Governance.
The book then goes on to elaborate on the various risks in relation to cyber security, fraud and singularity and unilateralism.
The book recalls that corporate governance is expected to deliver on certain promises.
Corporate governance is after all about leadership. But one must see whether corporate executives and board directors are good leaders?
Finally, the author introduces the mechanics of the SOH-Quadrant, a framework that situates and assesses the valued leadership potential of leaders and directors, first between two lateral polarities of Weakness and Power and secondly between two horizontal polarities of Self-interest and Love. This is necessary as board directors must have the right profile, competency, and skills to exercise their role and function in this volatile, uncertain, complex, and ambiguous world.
The chapter is concluded by urging board directors and top executives to exercise valued leadership, thereby doing justice to their own role and to that of their organisation.
Who owns companies? Who controls companies?
Ownership and control should not be in the same hands. This is in line with the system of checks and balances. The mechanism for ownership and control is different in the public sector organisations and in the private sector companies.
The author emphasises the key role of the Company Secretary, the conscience of the Board, in helping the board of directors achieve its function and outcomes.
Three key stakeholders have traditionally battled for power and control: shareholders, directors, and executives. Add to this to their need to comply to a regime of regulations or be subject the vagaries of the market, and you will imagine the turbulences inside and outside the boardrooms.
What is the role of a Board of Directors?
The Code of Corporate Governance of Mauritius outlines eight principles:
- Companies must have a proper governance structure at their helm.
- Boards of directors must be composed with the right mix of executive, non-executive and independent directors, and should be properly structured with an effective main board and specialised sub-committees.
- Directors must be appointed after a rigorous and transparent process.
- They should have properly defined responsibilities such that they perform to the satisfaction of the owners and other stakeholders.
- Companies should have adequate internal controls and manage risks stringently.
- Companies must publish their performance results publicly, with integrated reports that provide true and reliable financial and non-financial information.
- Internal and external auditors have the important responsibility to assure internal and external stakeholders of the existence of sound systems and procedures of control, performance, and reporting.
- Companies have a social responsibility role and should nurture good relations with stakeholders and society.
It is still a voluntary code. This has its own risks and benefits.
The Cadbury Report was published in the early 1990s because there were too many failures in the above the above principles by listed companies. Enough was enough was the outcry. It made recommendations to improve the corporate landscape.
Why are some Boardrooms chastised?
Despite tangible progress for nearly three decades, corporate governance is often decried as an ineffective system by many stakeholders. Boards must operate collegially and bring value to the organisation.
They must guard against catering only for limited vested interests as the shareholder-centric model is no longer appealing to society, given that it is felt that the economic system is rigged in favour of the powerful few stakeholders.Boards are viewed as being ineffective and unworthy of public trust as income inequalities get perpetuated, misreporting by companies incessant and failures of corporate governance are not adequately sanctioned. Boards of too many public sector organisations continue to flout even basic principles of corporate governance.
Is Corporate Governance on slippery ground?
The author uses the example of exceptional world class footballer Lionel Messi to explain that companies and organisations should view and practice good corporate governance as both simple and complex as the four pieces of a perfect pie: Dare, Care, Deliver and Prosper.
The exercise of balance of power, integrity, trust, fairness, inclusiveness, enforcement of rules, bold reforms and valued leadership is called for.
The author briefly delves into the history of corporate governance and points out that unless governance failures are dealt with and corporate governance is defined more broadly, there is the looming risk that the revolution started by Cadbury will stay unfinished.
The debate for better corporate governance is already raging loudly. There is still no consensus on its purposes, objectives, functions, performance, and principles.
‘Corporate Governance – The Unfinished Revolution’ is available at bookstores or by contacting Niroo on 57 600491, or the author at email@example.com
Mauritius Times ePaper Friday 17 November 2023
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