Directors Warned: Boardroom Indifference Can Collapse a Company

Joseph Cudjoe, Minister of Public Enterprises, has cautioned Board of Directors of State-Owned Enterprises (SOEs) and other entities to avoid conflicts and indifference within boardrooms, warning that such issues could lead to the collapse of companies.

Speaking at the “Boardroom Governance Summit” in Accra, organized by the State Interest and Governance Authority (SIGA), Ministry of Finance, and the Institute of Directors, Ghana, Mr. Cudjoe emphasized the importance of swift decision-making in the boardroom.

“When boardroom conflict drags on, the market will not wait for you, and before you come back, your turnover will be shrinking,” Mr. Cudjoe noted. He further stressed that decision-making should not be driven by personal feelings or emotions, cautioning against conflicts that could jeopardize the company and the economy.

The summit, themed “Boardroom Governance, Accountability, and Sustainable Development: The Inextricable Link,” highlighted the role of Board Directors in guiding their companies. Mr. Cudjoe expressed concerns about the tendency of some boards to issue directives instead of developing strategies and generating cash flows.

“As a country, I think we are afraid of developing large corporates… I’ve witnessed others say, ‘This company is becoming too big, if we are not careful it will become too powerful,’” he said. He added that despite having laws in place, there is often resistance to complying with them in boardrooms, as leaders may feel restricted by legal guidelines.

The Minister urged board members to make sound decisions that support economic growth, as the health of the economy is closely tied to the success of business enterprises.

Reverend Dr. Angela Carmen Appiah, President of the Institute of Directors Ghana, emphasized that Board Directors are responsible for providing strategic leadership, ensuring governance according to principles, and managing risks. Directors must also act in the best interest of shareholders and stakeholders, avoiding conflicts of interest and ensuring transparency and sound financial management.

Dr. Appiah acknowledged that Directors face legal and fiduciary liabilities if they fail to fulfill their duties or comply with legal requirements. She advised potential directors to assess the company’s financial standing, governance structure, and personal liability coverage before accepting a role.

“Becoming a Director carries significant burdens, responsibilities, and risks, so please ensure that you fully understand the legal obligations and liabilities involved before joining the company,” she said.

Dr. Mohammed Amin Adam, Minister of Finance, highlighted the importance of good governance for improving development outcomes and advised Directors to conduct thorough due diligence when considering government proposals for projects. “Please make sure you do due diligence with your work and don’t leave government with contingent liabilities,” he urged.

At the summit, a book titled Practical Perspectives on Boardroom Governance by Professor Douglas Boateng was launched. The book aims to guide Board members, Chief Executives, and Chairpersons in promoting effective governance.

Professor Boateng emphasized the need for leaders to take responsibility for confronting challenges and promoting accountability. “We must rise, we must learn, and we must accept that accountability is the key to progress,” he said. He noted that countries like China, the United States, and South Korea have successfully used industrialization to lift millions out of poverty, and it is now Ghana’s turn to harness this power for the benefit of its citizens.

Source:thehighstreetjournal.com