Corporate Boards capacity to be certified

…requirement inserted into Companies Code

Mr. Rockson Dogbegah, IoD President

Recent several engagements between the Registrar General’s Department and the Institute of Directors (IoD) have resulted in a specific clause aimed at ensuring good corporate governance, being inserted into the Companies’ Code, subject to Parliamentary approval.

The clause requires that in the course of submitting annual returns, shareholders and owners of public and private institutions respectively must provide verifiable evidence that their board of directors have received training and certification in corporate governance.

The bill containing this requirement – the Companies Bill 2018 – is currently before the Committee on Constitutional, Legal and Parliamentary Affairs of Parliament which is expected to be discussed and approved when Parliament resumes sitting on February 9.

When the bill is passed, it will make Ghana one of the few countries in Africa to have legislation in place that mandates directors to have extensive training and certification in corporate governance.

The Registrar General Department has already created a window to ensure that directors go through continuous professional development.

The idea is to ensure that directors that serve on corporate boards, including the boards of public companies, have the requisite knowledge and capacity on corporate governance to be able to discharge their duties and fulfill their responsibilities properly, and be better positioned to make adequate decisions that inform corporate/institutional policy.

This has become necessary due to the continuous effects of some serious infractions and shortcomings with regards to corporate governance principles and their undesirable negative effects on corporate performance.

The shortcomings with regards to corporate governance have been thrust into the public spotlight by the recent involuntary liquidations and subsequent forced mergers of nine indigenous banks into one state owned bank, as Bank of Ghana (BoG) took some stringent initiatives to boost investor confidence and strengthen the banking sector.

Speaking exclusively to the Goldstreet Business, president of IoD Mr. Rockson Dogbegah said his outfit saw the need for the companies’ code to be revised owing to the need to have strategic interventions to stimulate and sustain good corporate governance practices.

“The step taking by IoD and the Registrar General’s Department will bring strategic enhancement in corporate governance practices and effective leadership”, he noted.

Codes of best practices in corporate governance in some countries require boards of directors to undergo periodic training and certification to improve their skills and knowledge to enable them have the capacity to effectively manage their respective institutions.

According to the International Finance Corporation (IFC), which is the private sector support arm of the World Bank Group, common problems inhibiting some boards ability to perform their respective roles effectively range from lack of full understanding on the part of directors of their core mandates, unclear board roles and responsibilities, overlap with management functions and among a host of others problems.

To address this, the IFC has already developed and launched the Corporate Governance Board Leadership Training Resources Toolkit. This provides comprehensive training aimed at enhancing the role directors play in their boards and also ensures board managers adhere to best practices. However, it is hardly used in Africa, Ghana inclusive.

By Dundas Whigham