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Plans to set up corporate governance resource centre in Malta
by David Kelleher
Discussions are underway for the setting up of a Corporate
Governance Resource Centre that will cater not only for Malta’s
requirements but also for countries in the southern Mediterranean.
“The centre will act as an advis-ory centre and provide
certification and training for directors in Malta. However,
since a similar centre does not exist in the region, the Malta
centre would be important to countries in the Mediterranean,”
James Satariano, chairman of the Institute of Directors Malta
(IoD Malta) told The Malta Business Weekly.
The centre is expected to be established by next year.
He said the Corporate Governance Centre would have the necessary
resources and the “teeth” to act accordingly. “This
is an IoD initiative in conjunction with Peter Barrett from
IoD Hong Kong and local management consultant Martin Testa.
Mr Barrett has just been appointed to the Pacific Economic Cooperation
Council (that prepares papers for APEC) Task Force on Corporate
Governance and Financial Regulation, so will be able to bring
the latest thinking from developing countries out here. Mr Barrett
is setting up a certificate programme in Singapore on the subject.
A board of Trustees will be appoin-ted and this will comprise
IoD people, institutional partners, banks, large companies and
possibly the privatisation unit,” Mr Satariano said.
Education is another important aspect that the Centre will also
be focusing on. “Creating more awareness on the importance
of Corporate Governance among directors and family-owned businese
s is a must,” Edwin Ward, the IoD’s communications
adviser, said.
IoD Malta also intends building a better rapport with the Social
Partners to be able to address problems that their members may
have and if necessary become directly involved.
“We feel the need that a review body should be set up to
see what progress is made on corporate governance. If these
organisations tell their members what is happening, the concept
of corporate governance will filter through at grass roots level,”
Mr Satariano added.
The IoD firmly believes that through better education, standards
can be improved. This, in turn, brings about improvements in
business and the economy. “We must continue repeating that
good governance brings good investment,” Mr Ward said.
At present, the local branch of the IoD has around 90 members
representing over 400 companies with an aggregated turnover
of over Lm70m per annum, however a lack of awareness among directors
in Malta could be one reason why the membership base is relatively
low. With around 30,000 companies in Malta, this means that
there are a minimum of 30,000 directors.
With the majority of companies in Malta being family-run businesses,
the IoD will be organising a half-day workshop in association
with the MFSC on 26 September with the theme “Corporate
Governance for the Maltese family-run business”. The event
will be held at the MFSC’s premises in Mriehel.
“We felt the need to organise the workshop after feedback
we received from participants at our last conference earlier
this year and have Mr Barrett coming down from Hong Kong to
conduct the workshop,” Mr Satariano said.
Awareness among local directors is still low. In fact, very
few directors understand the importance of the changes made
to the Companies Act in 1995. Many are still under the impression
that they enjoy limited liability if something goes wrong. This
is not the case, however. Directors have a distinct and legal
responsibility from that of the company they represent.
“Directors are individually and collectively responsible
for whatever they do. While the owners are protected by limited
liability, directors are not and can be held fully responsible
if it is proven that the company suffered as a result of their
actions,” Mr Ward said.
“No one really pays attentions to the Companies Act, except
for a few lawyers. The 2000 conference helped to get things
moving,” Mr Satariano said.
Another misconception is that corporate governance is solely
concerned with accountability.
“Accountability is but a small part of corporate governance.
The IoD aims to give a broader picture in terms of all the issues.
There are four main tasks for directors. The first is policy.
The second is strat-egy. These two are linked together and form
the basis of how a company should perform. The third role is
supervision of the management team, followed by accountability.
These two are the conformance aspects,” Mr Ward explained.
“These are a few of the issues that the IoD Malta wants
to pass on to directors in Malta,” Mr Satariano said.
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