Law silent on board membership

Business

THE Companies Act 1997 does not specify the composition of directors on the boards of companies, an official says.
Securities Exchange Commission of PNG executive chairman Christopher Hnanguie, pictured, told The National that there were cases where someone would be on the boards of several companies – which could allow a conflict of interest.
“There are certain individuals rotating across several boards so there is bound to be conflict of interests when it comes to decision making,” Hnanguie said.
“In State entities, many are ministerial appointees. But in private companies, it’s normally according to shareholding.
“The most relevant law (the Companies Act 1997) does not specify the composition of board membership.
“So there is no fit and proper requirement (due diligence) for members.”
The commission is a division of the Investment Promotion Authority which regulates capital markets.
Hnanguie previously told The National that the commission was an autonomous government entity established by the Securities Commission Act 2015.
Its three objectives are to protect investors, ensure that the market is fair, efficient and transparent, and to reduce systemic risk.
To achieve the objectives, it is moving towards adopting most of International Organisation of Securities Commissions principles of capital markets regulation and supervision.
Meanwhile, the commission recently issued a notice to the public alerting them to the major reforms in the country’s capital market s following the legislative review in 2015.
The reforms followed a National Executive Council decision in 2011 and has seen new initiatives and approaches in terms of structure and operations.