Last week we discussed certain matters relating to no-executive directors and the fact that such a position requires due care and responsibility. This week we will continue with our discussion regarding directors’ responsibilities. This discussion is not all comprising and does not contain a complete list of directors responsibilities and duties, this is just the start of the discussion. We will use the Corporate Governance Code for Namibia, the Namibian Companies Act and established Mercantile Law Principles in these discussions without referring to each individually.
The ultimate responsibility for the affairs of a company ends with the Board of Directors. The Board is ultimately responsible for the actions of the company and has a duty to control and monitor the company on behalf of the shareholders, even in the case of a State Owned Enterprise, and whether for a profit or not. The Board of Directors cannot claim ignorance or delegate this responsibility to anybody, not even management. The Board is responsible to ensure that the company is a responsible corporate citizen. The Board needs to set the tone at the top and ensure that the company has a strong policy and culture of ethics. The Board needs to ensure that the company’s ethics policies and procedures are managed effectively. The Board must ensure that the company has a documented and monitored strategic plan. The strategic plan should become the culture of the business in order to ensure that every stakeholder buys into the plan, otherwise it would be a futile process.
The company must have a documented and monitored risk matrix and appropriate mitigating procedures, which should be updated regularly and reported on to the Board of Directors. The Board is responsible to ensure that the company have identified all the various risk factors applicable to its business and industry. The Board must ensure that the company has an internal control function that reports to it directly, which must assist the board in managing the identified risk factors. The internal audit function will differ in size and complexity for different sizes of companies and in some instances may be out sourced.
The Board is responsible for ensuring that the information technology of the company are governed and protected. This includes the risk of hacking, which we have seen so many cases of in the past couple of months. This includes the internet usage, social media usage and culture of use by members of staff. This includes the protection of the company’s data and trade secrets.
The Board is responsible for the company’s reporting, both financial and non-financial, and ensuring that all stakeholders are informed about the operations and results of the company. The Board is also responsible to ensure that such reporting include an audit report and that such reporting is done timeously and within the required time periods set by the Companies Act of Namibia.
The Board must always act in the best interest of the company and not in their own interest or even the interest of shareholders. The Board is responsible for the good reputation of the company and ensuring that it stands the test of time.
The Board of Directors should consist of a combination of skills and knowledge that will ensure that the company benefits ultimately from their decisions. The Board should ensure that they remain up to date with new developments, new legislation and new best practices at all times, even if it means getting outside advise on certain matters or training.
As can be seen from the short analysis above, the buck stops with the Board at all times. The future of companies and the future of Namibia’s economy will depend on how we implement, monitor and regulate these responsibilities. There must be consequences for non-compliance otherwise we will never be in a position to ensure the sustainable growth of Namibia for all its people.