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Cedric Stephens Risk advice to Usain Bolt

A few days ago, I read that retired sports legend Usain Bolt was appointed to the board of directors of a company listed on the Jamaica Stock Exchange.

It reminded me of when some of my work colleagues and I were named to the board of a JSE-listed company many years ago. A prominent family owned controlling interest in the company. The holding company owned and operated subsidiaries in different economic sectors. The board appointees were mainly employees of the holding company’s subsidiaries.

Corporate governance has existed as a concept for centuries. The phrase, however, came into vogue in the 1970s and was used only in the United States.

This may explain why governance standards and best practices that are now considered the norm, especially for companies whose shares are publicly traded locally and even for public bodies, were outside the corporate agenda during the first half of the 1990s.

None of the icons that populated the board I joined, the PhDs, or the newly-minted MBAs, used the two words that are now fashionable in corporate circles. I do not recall attending any orientation programme or training courses about my role and responsibilities as a director. If new directors received coaching from their more-experienced elders, I was excluded.

The culture was that one either swam or sank. No one ever explained that I was exposing myself to risks by accepting to serve as a director, who was ineligible to receive a fee for participating in meetings. Years later, I wondered if the benefits of that office outweighed the costs.

The Jamaica Stock Exchange is now rating listed companies on corporate governance. It has created a Corporate Governance Index, which provides metrics about how well an entity conforms to various corporate governance principles.

Companies are assigned ratings in six categories ranging from the highest, AA, to C, the lowest, based on their responses to 99 corporate governance questions. The index aggregates the corporate governance of all listed companies. The overall index for all listed companies for 2021-22 was B. This means that their adherence to corporate governance principles, according to the JSE, was ‘fair’.

The Financial Services Commission promotes corporate governance in the insurance industry. Part XIIA of The Insurance (Amendment) Regulations 2022, market conduct, the subject of two earlier articles, is built on a corporate governance foundation.

The Organisation of Economic Cooperation and Development provides the rationale for adopting these practices: “Financial institutions whose business is accepting and managing insurable risk are expected to have sound governance practices and effective risk management to provide promised benefits to policyholders (and any relevant beneficiaries) and thus fulfil their insurance function in the economy. Moreover, given that the insurance business is, in many instances, due to its complexity, characterised by important asymmetries of information and potentially related imbalances in power between buyers and sellers, there is an expectation that insurers will treat their customers and policyholders fairly, with appropriate internal policies, processes, and procedures to ensure this outcome.”

The individual ratings of the four listed insurance entities on the stock exchange were one BB, two Bs and one CC. If these ratings represent the industry, they provide independent evidence to justify the insurance regulator’s push for market conduct regulations.

JSE’s corporate governance framework discusses one part of the responsibilities of the board as directors’ compliance with Section 174 of the Companies Act 2004. It says: “Every director and officer of a company in exercising his powers and discharging his duties shall act honestly and in good faith with a view to the interest of the company; and exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances including, but not limited to, the general knowledge, skill and experience of the director or officer.”

Section 174 discusses what lawyers call the fiduciary duties of directors. According to one source, fiduciary “is all about trust, and that’s exactly what’s required of directors under corporate governance law”.

There are three kinds of fiduciary duties: the duty of care, the duty of loyalty, and the duty of good faith. A board or board member that has breached its fiduciary duties has legal exposure.

Directors and officers liability insurance protects the personal assets of corporate directors and officers and their spouses when they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.

There is growing evidence that Jamaicans are now more prone to seek legal remedies in cases where they perceive that other persons have failed to discharge their statutory duties properly. If I were Mr Bolt, my acceptance of the board seat would be subject to two conditions: adequate D&O liability insurance being in place; and an insurer with a minimum financial strength rating of B+, or equivalent, underwrites the coverage.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: or

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