Corporate governance of state-owned enterprises outlined in tabled rules
The government tabled the Securities Industry (Corporate Governance) Rules 2019 yesterday. When passed in Parliament, it will mean that state-owned enterprises (SOEs) will be subject to the rules related to established principles of corporate governance as set out by the Organization for Economic Cooperation and Development (OECD), though not in all instances.
The rules, as explained in a consultation document from the Securities Commission of The Bahamas (SCB), states that the rules laid in the House of Assembly yesterday apply to public issuers, SOEs and any private company seeking to raise funds in the capital markets or seeking a listing by introduction.
“The Securities Industry (Corporate Governance) Rules, 2018 were drafted to create a legislative framework that is compliant with international standards enunciated in the OECD principles on Corporate Governance and Guidelines on Corporate Governance of State-Owned Enterprises,” the SCB document states.
“These rules address gaps in the legislative regime for companies and require public issuers to implement corporate governance principles and procedures in the operation of their companies under Part XI section 106 of the Securities Industry Act, 2011.”
While SOEs will be subject to the corporate governance rules, in some instances the rules will not apply to SOEs based on several factors.
The rules document explains that the rules will not apply to SOEs when their purpose is to regulate the activities of licensees. It will also not apply to those that have the authority to determine and set their own fees, and those whose fees or revenue do not form part of the Consolidated Fund.
However, SOEs can adopt any provision of the rules when relevant legislation establishing the corporation does not contain governance provisions, and when the adoption of the rules would strengthen the governance structure of the corporation.
The rules document also states that should any corporation adopt the provision of these rules, it should gazette the intention, and “acknowledge compliance with these rules in a separate corporate governance statement in its annual report”.
The document lays out what is expected of SOEs, public issuers and private companies in terms of the structure of their board of directors, relationship with shareholders, risk management and internal control, audits, and accountability and reporting.
There is even a section that calls on the company to enact whistle-blowing policy.