The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bank of the Bahamas will hold an Extraordinary General Meeting (EGM) within the next 90 days to elect two minority shareholder representatives to its Board of Directors.

The move, unveiled by Richard Demeritte, the bank’s chairman, as designed to ensure compliance with corporate governance “best practices”, was largely welcomed by minority investors at Friday’s annual general meeting (AGM).

Bank of the Bahamas’ minority shareholders, who collectively hold 35 per cent of the BISX-listed institution’s equity, can now nominate candidates to represent their interests for election to the Board of Directors.

Bank executives promised that the Government, which owns more than 51 per cent of voting rights via the Treasury and National Insurance Board (NIB), will not participate in the selection “to ensure fairness and transparency”.

It will only cast its vote once the two ‘minority’ directors have been chosen, as its majority interest means it is required to ‘ratify’ the election results.

Mr Demeritte said that “time constraints” on electing directors, and the Securities Industries Act’s requirements, meant the election of ‘minority’ Board directors could not be held at Friday’s AGM.

“The bank is undertaking corporate governance reforms, which are designed to ensure compliance with best practices and enable minority shareholder representation on the Board of Directors,” Mr Demeritte said.

“We shall be convening an EGM of shareholders within 90 days to facilitate the election of independent persons to be appointed to the Board of Directors.

“Shareholders will be invited to nominate persons to serve as directors once the notice of this EGM is issued.”

Mr Demeritte’s announcement means Bank of the Bahamas is finally moving to deliver on promises, made at its previous AGM in December 2014, to give minority shareholders more say and involvement with its governance.

However, much will depend on who the chosen two ‘minority’ directors are, their expertise and independence, and how involved they become in Bank of the Bahamas’ affairs.

While minority shareholder representation on the Board of Directors implies more transparency and openness, this will only happen in practice if those selected do not become mere ‘rubber stamps’ for decisions taken by the majority.

And the Government, through its majority equity interest (65 per cent, plus 51 per cent voting rights) will still control the Board through its ability to appoint the majority of directors, raising questions as to how much influence the ‘independents’ will really have.

Raquel Wilson, Bank of the Bahamas’ in-house attorney, explained that candidates for election to the Board had to be nominated in writing by two existing shareholders.

Nominations, she added, had to be submitted “no less than 14 days, and “no more than 21 days” prior to the EGM. The candidate also had to provide their written consent to being nominated.

“In an effort to ensure fairness and transparency, the majority shareholder will not participate in the selection of minority directors,” Mrs Wilson said.

“The majority shareholder will not cast a vote at the EGM until such time as a majority among the minority identify to candidates to represent their interests on the Board of Directors.”

Mrs Wilson said the Treasury and NIB would merely approve the minority investor choices, and “ratify the will of the majority”, and not oppose the chosen duo’s election to the Board.

“The majority investor must cast a vote to ensure the vote is carried, but will only do so when the directors are selected,” she explained.

“The majority shareholder will approve, in totality, the wishes of the majority at that time.”

Mrs Wilson said Bank of the Bahamas wanted the corporate governance changes to go “into effect in a very short timeframe”.

She added of the ‘minority’ directors: “This is an imperative matter that we feel needs to be addressed at this juncture. It’s a critical matter that needs to be addressed at this stage.”

Sterling Quant, the former Registrar General and a Bank of the Bahamas shareholder, expressed concern that the appointment of directors to represent minority directors could be delayed by the Central Bank of the Bahamas.

The Central Bank must approve all persons nominated to serve on the Boards of Bahamas-based banks, and they have to pass stringent due diligence tests to ensure they are ‘fit and proper’ persons with the necessary skills and experience.

Mr Demeritte replied by suggesting that minority investors needed to first select the candidates to represent them, then worry about the necessary Central Bank approvals.

He suggested that Bank of the Bahamas own corporate governance committee would first assess the nominations received to determine whether the candidates were ‘up to the mark’.

The former auditor-general suggested that four candidates was the ideal number, with two subsequently voted on to the Board.