COMPARATIVE CORPORATE GOVERNANCE

1. COMPARATIVE CORPORATE GOVERNANCE

S1 Winter semester

2. TOPIC #1- “Setting the Scene”

Overview of the Caribbean’ legal framework ; Corporate law in the Commonwealth Caribbean; Relevance of US initiatives; Commercial regulation- Super structures;

4. Caribbean Court of Justice -CCJ

Regional judicial tribunal established in February 2001; www.caribbeancourtofjustice.org/

6. Areas of departure:

Jamaica Companies Act of 2004 pages 55-120, Manual; St Kitts & Nevis Companies Act No 35 of 1995; Hybrid legislation reflecting both English legislation & Canadian Position.

7. Rationale for the Jamaica Companies Act of 2004….Page 199

Walcott , see footnote 6 , in the articles, as an explanation for the collapse of the domestic sector in Jamaica in 1996 [ONLY].

8. What does this demarcation really mean?

Difference in the method of incorporation; Difference in the rules relating to corporate finance; Implications for minority shareholder’ rights; Easier access under new law rubric.

9. Method of incorporation:

11. Articles of Incorporation

(Section 5) ARTICLES OF INCORPORATION Name of Company Company Number 2. The classes and any maximum number of shares that the Company is authorized to issue 3. Restriction if any on share transfers 4. Number (or minimum and maximum number) of Directors 5. Restrictions if any on the business the company may carry on 6. Other provisions if any 7. Incorporators: Date: Name Address Signature For Ministry use only Company Number:

12. OLD LAW TERRITORIES

Memorandum of Association & Articles of Association

16. CLI

The Caribbean Law Institute (CLI) was established in 1988 under a grant from the United States Agency for International Development to promote such activities that would further clarify the laws affecting trade, commerce and investment in the Region, while at the same time respecting the unique needs of local jurisdictions. This joint project between Florida State University (FSU) and the University of the West Indies (UWI) has its offices in Tallahassee and at the Caribbean Law Institute Centre (CLIC) in Barbados, which was created in 1994 as a unit of research in the Faculty of Law at UWI. The Centre works in parallel with the CLI office at FSU.  

17. … CLI

Early in its history, CLI identified certain law reform priorities. One of CLI's first tasks was to develop and administer the Commercial Law Survey, which defined the state of commercial law in the Region and provided background information to guide the selection of other projects. CLI's projects have included Company Law, Shipping Law, Treaties, Environmental Law Survey, Insurance Law, Consumer Law, Banking Law, Bankruptcy, Insolvency, and Alternative Dispute Resolution. . For more information please go to http://www.law.fsu.edu/centers/cli/index.php

18. CLI. COMPANIES BILL 1991-[Page 47 Manual]

HARMONIZATION; ENCOURAGE ENTREPRENEURSHIP; PROMOTE CERTAINTY AND CONSISTENCY THROUGHOUT THE REGION;

19. CARICOM

Caribbean Community & Caribbean Common Market [http:/wwmfaft.gov.jm/Intl_Community/ Caricom.htm]

20. … CARICOM

Caricom was established at Chaguaramas in Trinidad & Tobago by countries of the Commonwealth Caribbean on July 4th 1973.

21. Treaty of Chaguaramas- The integration process, 1973

Series of Accords & Protocols Culminating in the Revised Treaty of Chaguaramas 2001

22. Observations therefore - Importance of regional integration

Relevance of the regional integration movement - Memoranda of Understanding; Caricom Financial Services Agreement Informal co- operation and dialogue among regulators; Increased awareness as to what is going on in other territories.

23. Institutional reform

From a segregated approach to a consolidated one- Jamaica; Barbados; Trinidad & Tobago; FINANCIAL SERVICES AUTHORITIES

24. Continued ………

Emergence of Super – Regulators; Financial Commissions /Monetary Authorities- governing pensions, insurance companies , credit unions, securities and banks. Stringent financial regulation in a post- Enron environment.

25. Purposes of reform- inter alia

Comply with the Revised Treaty ; Enhance transparency of regulatory supervision ; Increase cross- border access; Enhance the overall liquidity of the capital market; Ensure the safety and soundness of the financial systems.

26. Rationale?

Recognition of the obvious synergies that exist; Cost – saving mechanism to avoid duplications of resources; Mimicking of international ideals and norms .

27. Examples:

Jamaica –Financial Services Commission 2001. [Act No 2 FSA] Insurance Act No 26 of 2001 Trinidad & Tobago Insurance Act No 15 of 2004 Insurance (Amendment) Act No 15 of 2004 Board of Directors of the Central Bank Inspector of Financial institutions appointed pursuant to the Financial institutions Act, 1993. [Cayman Monetary Authority Law No 16 of 1996; Virgin Islands Financial Services Commission Act No 12 2001.]

28. Sarbanes – Oxley Act 2002

29. Socio economic observations : Relevance of Sarbanes – Oxley Act .

Impact on auditing and accounting profession; Impact on directors. Burdensome disclosure requirements; Consequent revamping of domestic rules and requirements eg: Jamaica Insurance Act 2001 inclusion of corporate governance requirements Appointment of an auditor – s.38 and Actuary – s.44. [Nb Trinidad & Tobago Companies Act.]

30. Duties of Auditor (example Jamaica)

Section s.39. Including The duty to draw to the attention of each director and the Commission: inter alia (a) any change in accounting policy; (b) transactions/conditions giving vise to significant visits or exposures; © Any weakness in internal control rendering company vulnerable to significant risks; (d) transactions of an irregular nature; (e) Any transaction/condition which contravenes the provisions of the Companies Act; the Financial Services Commission Act or any regulations made there under relating to capital adequacy.

31. Caribbean Technical Working group

(1)Transparent and efficient markets ; (ii) Protection of shareholder rights; (iii) Equality of treatment of all shareholders; (iv) recognize the rights of stakeholders; including family owned businesses and state owned enterprises, and stakeholders in creating wealth , jobs and the sustain ability of financially sound enterprises.( All encompassing approach embracing the family owned business ) (v) Timely and accurate disclosure ; (vi) Ensure the strategic guidance of the entity the effective monitoring of management by the Board and the Board’s accountability .

32. Relevant articles in Revised Treaty

Article 32- Right of establishment; Article 33- Removal of restrictions on right of establishment; Article 36- Prohibition of new restrictions on the provision of services; Article 38 Removal of restrictions on Banking, Insurance and other financial services.

33. The integration effort

Articles 32, 34, 37, 38, 39 and 40 of Chapter three of the Revised Treaty provides for the removal of restrictions on Banking, Insurance and other financial services.

35. Layers of initiatives

36. Layers of initiatives

Judicial decisions Committees Caricom Super structures Patriot Act 2001 Sarbanes- Oxley

37. TRIGGERING EVENTS

BCCI( Bank of commerce & credit) Maxwell group ( pension funds) BARINGS Financial crises in Asia ENRON

38. Consequently increased scrutiny

WORLD BANK Organization For Economic Cooperation & Development; OECD United Kingdom- Cadbury report, Hampel reports and Greenburg reports; US SEC.

39. CORPORATE GOVERNANCE?

A system by which companies are directed and controlled so as to maximise profits and value of the corporation to its shareholders.