The Tribune

CORPORATE governance incorporates the principles and practices that guide how a company is directed, managed and controlled. It is critical for building long-term value for all stakeholders, including shareholders, employees, customers, suppliers and the broader community. Effective corporate governance is essential in The Bahamas, where the country’s economic success depends on attracting foreign investment and building strong, resilient businesses that can weather economic and environmental challenges.

Based on the overwhelming feedback regarding this writer’s most recent article on the need for Board of Directors diversity, we will today highlight four additional aspects of corporate governance.

Transparency and accountability

A critical element of corporate governance in The Bahamas is transparency and accountability. Companies in The Bahamas should be transparent about their financial performance and disclose all material information to their stakeholders, including shareholders, employees and regulators. This transparency helps build trust with stakeholders and ensures that companies are held accountable for their actions. For example, the Securities Commission of The Bahamas, Central Bank of The Bahamas and the Insurance Commission of The Bahamas require their registrants to file annual financial statements and disclosures about any material events that may impact the company’s performance or value. This reporting requirement helps ensure that investors have access to accurate and timely information about the companies in which they invest.

Corporate Social Responsibility

Sustainability and social responsibility are also important aspects of corporate governance in The Bahamas. Companies should prioritise environmentally-sustainable practices, promote diversity and inclusion, and engage with stakeholders to understand their needs and concerns. Companies should also establish mechanisms for reporting and investigating potential breaches of corporate social responsibility policies and take appropriate action to address any violations.

Ethical behaviour and integrity

Effective corporate governance requires a culture of ethical behaviour and integrity. Accordingly, companies in The Bahamas should establish a code of conduct that sets out clear expectations for ethical behaviour and conduct regular training and awareness programmes for employees to ensure they understand and adhere to these standards.

Internal Audit

Internal audit plays a crucial role in corporate governance by providing an independent and objective assessment of a company’s internal controls, risk management processes and governance practices. An effective internal audit function can help companies identify and mitigate risks, improve operational efficiencies, and ensure compliance with laws and regulations. In addition, by providing management and the Board with regular reports on the effectiveness of internal controls and risk management, an internal audit helps ensure the company operates transparently, ethically and in ways where it can be held accountable. This, in turn, helps protect the interests of shareholders and other stakeholders, enhances the company’s reputation, and ultimately contributes to its long-term success.

In conclusion, effective corporate governance is critical for building sustainable businesses in The Bahamas. Companies prioritising corporate governance are more likely to operate ethically, manage risk effectively, and make decisions aligning with their goals and values. To establish effective corporate governance, companies in The Bahamas should focus on establishing transparent and accountable policies and procedures, prioritising corporate social responsibility, fostering a culture of ethical behaviour and integrity, and ensuring an active internal audit function. By doing so, they can create long-term value for all stakeholders and help drive economic growth in The Bahamas.

NB: About Derek Smith Jr

Derek Smith Jr. has been a governance, risk and compliance professional for more than 20 years. He has held positions at a TerraLex member law firm, a Wolfsburg Group member bank and a ‘big four’ accounting firm. Mr Smith is a certified anti-money laundering specialist (CAMS), and the assistant vice-president, compliance and money laundering reporting officer (MLRO) for CG Atlantic’s family of companies (member of Coralisle Group) for The Bahamas and Turks & Caicos.