Several Listed Companies Relaunch Calls for Independent Administrators and Minority Representatives
Several listed companies have recently relaunched their calls for independent administrators and/or minority representatives to join their Boards of Directors. These companies are not necessarily small-cap or loss-making. The issue is more profound and concerns the rarity of suitable profiles.
In fact, the regulatory framework has evolved over the past two years, making the selection criteria very complicated to find in common profiles. The independence of Boards of Directors or Supervisory Boards has become a priority for investors, a pillar of good governance.
To understand the practical complexity of the choices, we recall the criteria to be met. An administrator is considered independent if:
- They do not hold, directly or indirectly, a stake in the company's capital, nor do their spouse, ascendants, and descendants of the first degree.
- They have not held a management position or been a member of the company's management body in the five years preceding their appointment as an independent member.
- They are not a member of the management body or board of directors of an entity with links to the company in the five years preceding their appointment.
- They have not been an employee of the company in the three years preceding their appointment as an independent member.
- They do not act on behalf of a client, supplier, or significant service provider to the company.
- They do not have direct or indirect contracts with the company or an entity with links to the company.
- They do not hold a partisan responsibility at the central, regional, or local level.
Furthermore, having links with the company concerns:
- Any shareholder with a stake exceeding 5% of the company's capital, directly or indirectly.
- Any spouse, ascendant, and descendant of a physical person with a stake exceeding 5% of the company's capital, directly or indirectly.
- Any company in which the bank or establishment holds a stake that allows it to control or significantly influence its activity.
- The chairman of the board of directors of a bank or financial institution, the general manager, members of the board of directors, deputy general managers, members of the supervisory board, members of the management committee, and auditors, as well as their spouses, ascendants, and descendants.
- Any company owned or managed by one of the above-mentioned persons or in which they are a director or member of the board of directors or management committee.
The verification of compliance with all these criteria is carried out annually by the nomination and remuneration committee of the establishment.
Considering all the criteria, we understand that it is necessary to attract a new generation of competence to these Boards. This remains difficult because competencies are expensive to recruit. Moreover, they can calculate their steps, preferring to join the restricted circle of financial institutions that, in addition to their prestigious status, offer three-figure fees. In practice, sitting on a renowned bank's board is more lucrative than being a private practice doctor.
Furthermore, we cannot deny that the criminal liability of an administrator enters into these considerations. Who can guarantee that in a few years, the reference shareholder of a company will not be indicted, and the entire Board behind? It is a heavy responsibility, and the country seems to be changing its software these days, sanctioning all excesses that have taken place. No one, regardless of their position, is spared, something to which Tunisians are not accustomed.
We therefore risk seeing other entities renew their calls for independent administrators. Good governance is a long road, and we are barely halfway there.