DA­REECE PO­LO

Se­nior Re­porter

da­reece.po­lo@guardian.co.tt

A change in gov­ern­ment should not au­to­mat­i­cal­ly mean a change in the board­rooms of state en­ter­pris­es, ac­cord­ing to the UWI Arthur Lok Jack Glob­al School of Busi­ness, which is call­ing for a shift away from po­lit­i­cal pa­tron­age in board ap­point­ments and to­ward gov­er­nance based on mer­it, ac­count­abil­i­ty, and the le­gal frame­works that gov­ern state-owned en­ter­pris­es (SOEs).

De­spite the idea that board mem­bers must im­me­di­ate­ly re­sign fol­low­ing a change in ad­min­is­tra­tion, the in­sti­tu­tion stress­es that di­rec­tors ap­point­ed to SOE boards, par­tic­u­lar­ly those in­cor­po­rat­ed un­der the Com­pa­nies Act, are legal­ly ob­lig­at­ed to act in the best in­ter­est of the com­pa­ny and its share­hold­ers, not the gov­ern­ment or any po­lit­i­cal par­ty.

“The man­age­ment of SOE Boards should not be dic­tat­ed by changes in po­lit­i­cal lead­er­ship,” the in­sti­tu­tion states. “Di­rec­tors, par­tic­u­lar­ly in com­pa­nies gov­erned by the Com­pa­nies Act, are legal­ly bound to serve the in­ter­ests of the en­ti­ty and its share­hold­ers, not the par­ty in pow­er. While statu­to­ry bod­ies may in­volve di­rect min­is­te­r­i­al ap­point­ments, even these should aim for pro­fes­sion­al­ism and con­ti­nu­ity.”

The Arthur Lok Jack School al­so sought to clar­i­fy the le­gal and gov­er­nance frame­work sur­round­ing SOEs. State en­ter­pris­es fall in­to two main cat­e­gories: statu­to­ry cor­po­ra­tions and com­pa­nies in­cor­po­rat­ed un­der the Com­pa­nies Act.

Statu­to­ry cor­po­ra­tions such as WASA and T&TEC are cre­at­ed by leg­is­la­tion, which out­lines their gov­er­nance struc­ture and of­ten grants the line min­is­ter pow­er to ap­point or re­move di­rec­tors.

Cor­po­rate law, not po­lit­i­cal con­ven­tions, gov­erns com­pa­nies un­der the Com­pa­nies Act, which in­clude both pub­licly list­ed and un­list­ed en­ti­ties. In these en­ti­ties, di­rec­tors can on­ly be re­moved ac­cord­ing to the com­pa­ny's by­laws, typ­i­cal­ly dur­ing an An­nu­al Gen­er­al Meet­ing (AGM), or if need­ed, via a Spe­cial or Ex­tra­or­di­nary Gen­er­al Meet­ing con­vened by share­hold­ers.

Im­por­tant­ly, the State En­ter­prise Man­u­al, used as a guide for SOE op­er­a­tions, is silent on whether board mem­bers should re­sign with a change of gov­ern­ment.

Pub­licly list­ed com­pa­nies in which the Gov­ern­ment holds shares, such as An­gos­tu­ra, First Cit­i­zens Bank, Na­tion­al En­ter­pris­es Lim­it­ed, and Re­pub­lic Fi­nan­cial Hold­ings, are sub­ject to over­sight by the Trinidad and To­ba­go Stock Ex­change (TTSE) and the Se­cu­ri­ties and Ex­change Com­mis­sion (SEC). These en­ti­ties are re­quired to fol­low best prac­tices in cor­po­rate gov­er­nance, with sta­bil­i­ty and in­vestor con­fi­dence at the fore­front.

The school warned that fre­quent board changes dri­ven by po­lit­i­cal shifts can dis­rupt op­er­a­tions and weak­en mar­ket con­fi­dence. It cites a re­cent ex­am­ple where an at­tempt to place two new di­rec­tors on the board of One Caribbean Me­dia dur­ing the pre­vi­ous ad­min­is­tra­tion was re­ject­ed by share­hold­ers at a gen­er­al meet­ing, demon­strat­ing that share­hold­ers, not politi­cians, have the fi­nal say in such mat­ters.

Lok Jack warned that in­for­mal con­ven­tions, such as the ex­pec­ta­tion that di­rec­tors of non-list­ed SOEs of­fer their res­ig­na­tion when a new gov­ern­ment takes of­fice, can lead to sub­op­ti­mal board per­for­mance and poor gov­er­nance.

“Ap­point­ments may some­times be per­ceived as po­lit­i­cal­ly mo­ti­vat­ed,” the state­ment notes. “How­ev­er, the goal should be clear: ap­point­ing di­rec­tors based on mer­it, ex­per­tise, and align­ment with the com­pa­ny’s strate­gic goals—not po­lit­i­cal loy­al­ty.”

The school al­so cau­tioned against pass­ing leg­is­la­tion to ad­vise on this is­sue, warn­ing that such moves could in­ad­ver­tent­ly deep­en the politi­ci­sa­tion of SOEs. In­stead, Arthur Lok Jack said the fo­cus should be on fos­ter­ing a pro­fes­sion­al, trans­par­ent cul­ture of gov­er­nance.

“What’s need­ed is not just rules but a cul­ture shift to­wards pro­fes­sion­al­ism, mer­i­toc­ra­cy, and ac­count­abil­i­ty across all state boards.”

“If SOEs are to be used to im­ple­ment pub­lic pol­i­cy, then a law should be de­vised to re­flect this pur­pose with clear lines of ac­count­abil­i­ty to par­lia­ment as was done in New Zealand.”