Raphael John-Lall

CEO of the T&T Stock Ex­change Eva Mitchell is warn­ing the cor­po­rate world that there could be a very high cost for those who do not ad­here to cor­po­rate gov­er­nance prin­ci­ples.

“The cost of poor cor­po­rate gov­er­nance prac­tices con­tin­ues to be spec­tac­u­lar. In the Unit­ed States, weak cor­po­rate gov­er­nance fa­cil­i­tat­ed over $1.5 tril­lion in in­vest­ment loss­es from 2000 to 2016 in just 17 pri­mar­i­ly US pub­lic com­pa­nies.”

She re­ferred to Sir David Tweedy, the for­mer chair of the In­ter­na­tion­al Ac­count­ing Stan­dards Board, who said, “The scan­dals that we have seen in re­cent years are of­ten at­trib­uted to ac­count­ing al­though, in fact, I think the US cas­es are cor­po­rate gov­er­nance scan­dals in­volv­ing fraud.”

She said the mes­sage from these ex­am­ples is clear, poor cor­po­rate gov­er­nance re­sults in loss­es of mon­ey, trust, con­fi­dence in fi­nan­cial in­sti­tu­tions and economies.

Mitchell spoke at a pan­el on the adop­tion of the Cor­po­rate Gov­er­nance Code host­ed by the Caribbean Cor­po­rate Gov­er­nance In­sti­tute last Thurs­day at the Hilton Ho­tel, St Ann’s.

She al­so said good cor­po­rate gov­er­nance prac­tices by the T&T Stock Ex­change and pub­licly list­ed com­pa­nies can help to set the ground­work for fi­nan­cial suc­cess and pro­vide lead­er­ship in the se­cu­ri­ties sec­tor.

“This is why the T&T Stock Ex­change has con­tin­ued its piv­otal role in the de­vel­op­ment of a cor­po­rate gov­er­nance code for T&T with its part­ners the Trinidad and To­ba­go Cham­ber of In­dus­try and Com­merce and the Caribbean Cor­po­rate Gov­er­nance In­sti­tute.”

When this code is adopt­ed, she said they ex­pect that it will:

• ↓En­hance in­vestor con­fi­dence;

• ↓Sup­port a cul­ture of com­pli­ance;

• ↓En­cour­age stake­hold­er en­gage­ment

“In 2025, the mod­ern world is an era of in­stan­ta­neous com­mu­ni­ca­tion, with pow­er­ful av­enues for mis­in­for­ma­tion and ru­mours which can af­fect in­vestor con­fi­dence and trust. Trans­paren­cy in in­vestor re­la­tions in a dig­i­tal-first en­vi­ron­ment, re­sults in many op­por­tu­ni­ties for in­vestor re­la­tions to ex­tend be­yond the com­pul­so­ry re­quire­ments for dis­clo­sure,” she said. She added that com­pul­so­ry dis­clo­sures on fi­nan­cials and ma­te­r­i­al changes by list­ed com­pa­nies are a base­line of com­mu­ni­ca­tion to in­vestors.

“What is emerg­ing with the ex­plo­sion of so­cial me­dia and bad ac­tors in cy­ber­space is that com­mu­ni­ca­tion to in­vestors is a com­pul­so­ry strate­gic tool for sur­vival. Al­so, the COVID-19 pan­dem­ic has taught us that com­mu­ni­ca­tion to in­vestors has to be more adapt­able and read­ier for un­ex­pect­ed chal­lenges. Suc­cess­ful com­mu­ni­ca­tions strate­gies are com­pli­cat­ed as may be ex­pect­ed as stake­hold­ers have di­verse per­spec­tives and in­ter­ests.”

She al­so said there are some con­sid­er­a­tions to im­prove in­vestor aware­ness and con­fi­dence:

• ↓Ac­ces­si­bil­i­ty to in­for­ma­tion—in­vestors are now ac­cus­tomed to a world of in­for­ma­tion in an in­stant. This means that list­ed com­pa­nies have to be ac­ces­si­ble and re­spon­sive to the con­cerns of in­vestors, while pri­ori­tis­ing their re­sources. Mar­ket en­gage­ment may mean more com­mu­ni­ca­tion oth­er than the com­pul­so­ry base­line of an­nounce­ments and a pro­gramme of in­vestor re­la­tions fo­cussing on crit­i­cal is­sues and com­mu­ni­cat­ing to in­vestors reg­u­lar­ly;

• ↓Con­sis­ten­cy of in­for­ma­tion—in­vestors will have a mul­ti­tude of sources of in­for­ma­tion, and list­ed com­pa­nies should en­sure con­sis­ten­cy of their mes­sag­ing. Re­li­able in­for­ma­tion to the mar­ket means that ad­ver­tis­ing, in­ter­views and any pub­lic­i­ty (whether by so­cial me­dia or oth­er­wise) is con­sis­tent, clear and ac­cu­rate. In­con­sis­ten­cies can lead to mis­trust and mis­trust un­der­mines in­vestor con­fi­dence;

• ↓Con­sid­er the wider im­pact—in 2023, the col­lapse of Sil­i­con Val­ley Bank (SVB) start­ed with a press re­lease with a short an­nounce­ment that the bank in­tend­ed to raise US$1.75 bil­lion. The law of un­in­tend­ed con­se­quences went in­to play as the an­nounce­ment did not ex­plain its ac­tions to cus­tomers, nor was there un­der­stand­ing of how fast so­cial me­dia can af­fect stocks. Word spread quick­ly on so­cial me­dia ac­counts such as Twit­ter and What­sApp in­duc­ing pan­ic. Cus­tomers start­ed to with­draw mon­ey in waves. SVB’s stock plum­met­ed by 60 per cent on March 9 af­ter its cap­i­tal rais­ing an­nounce­ment. The need to un­der­stand the mar­ket en­vi­ron­ment, to pro­vide trans­paren­cy in com­mu­ni­ca­tions and to pre-empt such re­ac­tions is re­flect­ed in this un­for­tu­nate ex­pe­ri­ence.

• ↓Be pre­pared for cri­sis com­mu­ni­ca­tion—Crises can arise from cy­ber­at­tacks, ac­ci­dents, and oth­er events. Hav­ing a plan that is reg­u­lar­ly test­ed means that com­mu­ni­ca­tion to the mar­ket can oc­cur in a time­ly man­ner for there to be an of­fi­cial trust­wor­thy source to ad­dress in­vestor con­cerns.

She point­ed out that this is es­pe­cial­ly true in T&T, where ru­mours spread at light­ning speed and with full trans­paren­cy to the world once post­ed on so­cial me­dia.

“Trans­paren­cy is a key cor­po­rate gov­er­nance is­sue for list­ed com­pa­nies and com­pa­nies con­sid­er­ing en­ter­ing the stock mar­ket. Trans­paren­cy in in­vestor com­mu­ni­ca­tions is a pre­con­di­tion to suc­cess. In­vestor con­fi­dence leads to in­vestors putting their mon­ey and trust in the func­tion­ing of a fair and trans­par­ent stock mar­ket which pro­vides price dis­cov­ery and a re­li­able in­fra­struc­ture for in­vest­ment. I urge com­pa­nies to in­vest in ac­tive in­vestor com­mu­ni­ca­tions to har­ness the pow­er of trans­par­ent and strate­gic com­mu­ni­ca­tion in this dig­i­tal age which will in turn con­tribute to suc­cess in the stock mar­ket.”

New code

Found­ing di­rec­tor and a for­mer chair­man of the Caribbean Cor­po­rate Gov­er­nance In­sti­tute, Ron­nie Bisses­sar, who al­so spoke at the event, not­ed the dif­fer­ences be­tween the old­er cor­po­rate gov­er­nance code and the up­dat­ed 2024 ver­sion.

The 2024 code cov­ers a wider cross-sec­tion of so­ci­ety.

“First­ly, the 2024 Code, un­like the 2013 ver­sion, ap­plies to all forms of busi­ness en­ter­prise. The 2024 Code, there­fore, ap­plies equal­ly to pri­vate and pub­lic com­pa­nies, SMEs, state agen­cies, not-for-prof­its, NGOs, char­i­ties, fam­i­ly-owned busi­ness­es, mem­ber­ship or­gan­i­sa­tions, sport­ing and recre­ation­al clubs. The 2013 Code on­ly ap­plied to pub­lic com­pa­nies.”

He said these dif­fer­ent forms of busi­ness en­ter­pris­es are re­ferred to in the 2024 Code as, sim­ply, or­gan­i­sa­tions and it is able to do so be­cause it de­scribes the or­gan­i­sa­tion’s con­troller, whether it be a board of di­rec­tors, ex­ec­u­tive com­mit­tee or man­ag­ing part­ners as, uni­ver­sal­ly, the gov­ern­ing body which is ac­count­able to the or­gan­i­sa­tion and its own­ers with over­sight re­spon­si­bil­i­ties for its man­age­ment, sus­tain­abil­i­ty and en­dur­ing val­ue cre­ation.

He added that the five key prin­ci­ples in the 2013 Code have now cas­cad­ed to four foun­da­tion­al prin­ci­ples, in the 2024 Code, name­ly:

(1) ↓Gov­ern­ing body ef­fec­tive­ness;

(2) ↓Over­sight and ac­count­abil­i­ty;

(3) ↓Stake­hold­ers and dis­clo­sure;

(4) ↓Cor­po­rate sus­tain­abil­i­ty, ethics and en­dur­ing val­ue cre­ation.

He ar­gued that ex­em­plary gov­er­nance is the back­bone of sus­tain­able busi­ness suc­cess. Or­gan­i­sa­tions that pri­ori­tise gov­er­nance out­per­form their peers in terms of fi­nan­cial per­for­mance, stake­hold­er trust, and re­silience.

“Im­por­tant­ly, gov­er­nance is more than just com­pli­ance—it’s about fos­ter­ing eth­i­cal lead­er­ship, ac­count­abil­i­ty, and trans­paren­cy to dri­ve long-term val­ue cre­ation. To that end, the 2024 Code speaks to glob­al best prac­tices while be­ing tai­lored to the unique con­tem­po­rary char­ac­ter of T&T busi­ness­es, of­fer­ing or­gan­i­sa­tions a strate­gic frame­work to el­e­vate their gov­er­nance stan­dards.”

He added that there are oth­er rea­sons for ex­press­ly adopt­ing the 2024 Code.

“First­ly, strength­en­ing lead­er­ship and de­ci­sion mak­ing. The code’s gov­ern­ing body ef­fec­tive­ness prin­ci­ple en­sures that boards, ex­ec­u­tive com­mit­tees or man­ag­ing part­ners are equipped with the right mix of skills, in­de­pen­dence and ac­count­abil­i­ty to make in­formed de­ci­sions. To that end the code al­so em­pha­sis­es the im­por­tance of di­ver­si­ty, train­ing and on­go­ing eval­u­a­tion, en­sur­ing lead­er­ship is adapt­able and for­ward-think­ing.”