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[July 03, 2014]
NSX Introduces New Guidelines for Company Directors
(AllAfrica Via Acquire Media NewsEdge) THE Namibia Stock Exchange (NSX), CEO Tiaan Bazuin, has revealed that the bourse has come up with a set of guidelines for company directors.
The guidelines called 'NamCode' are a local version of the King III Report in South Africa.
The King Report on corporate governance is a ground-breaking code of corporate governance in South Africa issued by the King Committee on Corporate Governance. Three reports were issued in 1994 (King I), 2002 (King II), and 2009 (King III).
Bazuin said during a breakfast meeting in Windhoek last Friday the guidelines will be officially launched next week. He said some of the financial failures and scandals experienced by local companies recently could have been avoided if the boards had guidelines on running the companies.
Bazuin said companies listed on the NSX will be required to follow the guidelines.
"The current status is quite bad," he said about lack of guidelines for directors.
John Burke, director of Issuer Regulations at the Johannesburg Stock Exchange said the duties of directors include looking at risks, strategy, running the business and sustainability. He mainly spoke of his experiences in South Africa.
"It is really strange that some of the biggest corporations in the world that failed, failed precisely because of the lack of attention to risk," he said.
He said the second most important duty of the non-executive director is the formulation of strategy.
"I think it is for this reason that a non executive director exists. Although management should know most of what is happening in the company and in the companies industry, it is the non-executive director that needs to bring 'outside the box' thinking to the company," said Burke.
He said he was a firm believer in the fact that if a board gets too involved in the business then it is time for the CEO to go.
"It is, however, absolutely crucial that a non-executive director fully understands the business and makes it his or her duty to ask the questions and acquire the knowledge. To me, there is nothing more dangerous than a non-executive director shooting from the hip," said Burke.
On sustainability, he said most of the successful companies today must reinvent themselves at least once every five years.
"Just imagine a life without Google and yet Google is busy reinventing themselves as they see Facebook as their biggest threat. Microsoft, IMB, and Apple have done this and the role of the non-executive director is of immense value, not only to help with the process but also to raise the alarm that this is a problem," he said.
On selecting board members, he said the most important skill for a director is experience.
"With experience I mean life experience and business experience. It is very important that directors can draw from the previous experience in order to guide the executive," he said.
In a recent PWC report the most sought after skills are ranked as industry expertise (29%), financial expertise (17%), and racial diversity (17%).
The lowest ratings were human resources expertise (0%) legal expertise (0%) and marketing expertise (0%).
The PWC report states that the average CEO is 50 and that the average chairman is 56.
Copyright The Namibian. Distributed by AllAfrica Global Media (allAfrica.com).
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