By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Leading shareholder critics of Bank of the Bahamas yesterday said they were unaware of last week’s Extraordinary General Meeting (EGM), with one criticising the “silly process” to find two independent directors.

The troubled BISX-listed bank, in a statement, said it had effectively gone back to the drawing board by extending the deadline for independent director nominations for further two-and-a-half months to October 1, 2016.

Although no explanation was given for the 10-week extension, the implication is that Bank of the Bahamas did not receive enough nominations of sufficient quality for the two Board posts.

Richard Demeritte, Bank of the Bahamas’ chairman, conceded that the single week provided for minority shareholders to select and agree candidates from among themselves may have been too tight a timeline.

“The Bank’s articles currently allow only a very short window to receive and review nominations. Therefore, we have introduced a motion to amend the Articles of Association to extend the nomination period,” said Mr Demeritte.

The motion was carried at the EGM, giving minority shareholders until October 1, 2016, to submit nominations prior to the bank’s Annual General Meeting (AGM).

Several shareholders, including outspoken Bank of the Bahamas critics, Mike Lightbourn and Dionisio D’Aguilar, both told Tribune Business that they had received no information on the EGM.

Both were unaware it was held on Thursday, July 14, until contacted by this newspaper the following day. However, Bank of the Bahamas had publicised that date previously, according to Tribune Business’s files.

Mr Lightbourn, Coldwell Banker Lightbourn Realty’s president, said: “I didn’t know they had an EGM. They certainly didn’t send out any notice.

“If they did, mine didn’t arrive. I don’t think I received notice of the previous AGM.”

Mr D’Aguilar, president of the Superwash laundromat chain, confirmed he was also unaware of the EGM, adding: “I didn’t even know it was last night.”

He then criticised the process chosen by Bank of the Bahamas for finding two ‘independent’ directors, arguing that standard capital markets practice was for the company - rather than the shareholders - to identify and select the candidates would be voted on.

“It’s a silly process,” he told Tribune Business. “You’re expecting people to step forward, but you’d normally expect the bank to go out and find people who are regarded as independent and ask them if they wish to serve.

“If they agree, bring them to the meeting. If three to four agree to serve, then the shareholders can take their pick. You can’t expect someone to get up and say: I want to do it. It’s not done that way.

“Every Board goes out and selects its directors. If you want a run-off, go out and get three or four, and vote on them,” he reiterated.

“The shareholders have expressed an interest to have independent directors not appointed by the Government, so you go out and find people of that ilk, and see if they’re willing to serve.”

Whether Bank of the Bahamas’ government-appointed Board would put forward truly independent candidates is another question, but the 35 per cent minority investors still have a chance to put forward two candidates of their own.

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.

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.

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.

“We also look forward to the representation of minority shareholder interests, which will commence with the nomination and confirmation of the additional two directors,” Mr Demeritte said.