The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bank of the Bahamas yesterday gave its 35 per cent minority shareholders just one week to select independent director candidates, who must comply with a strict qualifying criteria.

The troubled BISX-listed institution has also taken the 90-day window within which it will hold its promised Extraordinary General Meeting (EGM) to the maximum, setting July 14, 2016, as the date for voting on - and ratifying - two independent directors to its Board.

That date is exactly 90 days from when the proposed EGM was announced at Bank of the Bahamas’ annual general meeting.

Dionisio D’Aguilar, one of Bank of the Bahamas’ more outspoken minority shareholders, told Tribune Business yesterday that “not a lot of time” had been given for investors to select qualifying candidates.

“It seems quite an arduous process. Let’s see who rises up,” he said.

The proposed election of two ‘independent’ directors is designed to help bring Bank of the Bahamas in line with modern corporate governance practices, and is also a response to calls from increasingly vocal minority investors to give them a voice on the Board.

The Government currently selects the entire Board, including the chairman, via its 65 per cent equity interest through the Public Treasury and National Insurance Board (NIB).

However, besides consenting to their nomination, the independent director candidates must meet strict criteria to be eligible for appointment.

Besides being nominated by two separate Bank of the Bahamas shareholders, each candidate must demonstrate their “management experience, relevant skills and expertise”, including knowledge of the Bahamas’ financial services laws and regulatory requirements.

One minority shareholder, speaking on condition of anonymity, questioned whether all members of the current Board had to go through this process, and if they possessed the necessary knowledge and experience.

Other documents made public by Bank of the Bahamas also set out criteria that would disqualify potential candidates, including whether they had previously served on the Board of a failed public company.

Those serving on the Board of another commercial bank will also be disqualified, as will persons holding more than three directorships in public and regulated companies without the Securities Commission’s prior approval.

Those with relatives and family members who have held executive posts, or received compensation from, Bank of the Bahamas within the last three years cannot stand for election.

Also barred are those who were employed by Bank of the Bahamas or any government-owned entity within the past three years, or people who obtained ‘special’ loans from the bank or who are in arrears.

Those connected to persons who control the voting intentions of more than 10 per cent of Bank of the Bahamas’ stock, or whose companies received payment from the bank for services rendered, representing more than 5 per cent of total revenues, are also disqualified.

The Government, which owns more than 51 per cent of voting rights via the Treasury and National Insurance Board (NIB), will not participate in the selection “to ensure fairness and transparency”.

It will only cast its vote once the two ‘minority’ directors have been chosen, as its majority interest means it is required to ‘ratify’ the election results.

The bank is finally moving to deliver on promises, made at its previous AGM in December 2014, to give minority shareholders more say and involvement with its governance.

However, much will depend on who the chosen two ‘minority’ directors are, their expertise and independence, and how involved they become in Bank of the Bahamas’ affairs.

While minority shareholder representation on the Board of Directors implies more transparency and openness, this will only happen in practice if those selected do not become mere ‘rubber stamps’ for decisions taken by the majority.

And the Government, through its majority equity interest (65 per cent, plus 51 per cent voting rights) will still control the Board through its ability to appoint the majority of directors, raising questions as to how much influence the ‘independents’ will really have.