Business Page – June 23rd, 2002


DDL's Annual Report Not Available

Introduction

Last week Business Page had indicated that it would be carrying this week its review of the Annual Report of Demerara Distillers Limited for the year ended December 31, 2001. Based on the responses to several enquiries over the past week, it seems that the Report is not yet available although the company has not seen it fit to notify its shareholders about the situation. Accordingly, Business Page apologises to readers of this column for its inability to undertake the review. The notice convening the meeting on June 28 was dated June 5  giving twenty-one clear days which is the usual minimum period for annual general meetings. It did not have the documents which the law requires.

Both daily local newspapers on June 21, carried “Excerpts from the Chairman’s Report and Audited financials” which seems to confirm the unavailability of the Report but the status of this advertisement may have little significance to the statutory requirement that the Report be delivered to or sent by post to the address of shareholders with the notice of the meeting. Both the Chairman and Managing Director who signed the balance sheet are experienced corporate practitioners conversant with the laws and they must recognize not only that the publication does not meet the requirements of the law but that they do shareholders a grave disservice by this delay for whatever reason.

As the Caribbean’s leading Corporate Services practitioner Grenville Phillips points out in his book, The Administration and Conduct of Corporate Meetings laws, regulations and practices governing the convening of general meetings are extremely stringent. This is to ensure that members are given sufficient advance notice of the meeting and of the business it will transact so as to enable them to decide whether or not to attend the meeting in person or by proxy, to consult with other members to formulate an opinion or common approach to the business of the meeting and interestingly “if the company is a public company whose affairs may attract some comment in the public media, then to consider the views expressed by business and financial analyst (sic).”

DDL stands out among Guyana’s few public companies and it is indeed regrettable that its shareholders have to wait six months after the end of the financial year before receiving any indication of the performance of the company. We hear of the imminent introduction of the Stock Exchange but this column has lamented the low standards of corporate governance in Guyana and the almost grudging reluctance if not resistance to raise those standards.

The company must be aware of the difficulties it now faces and it is hard to see how it can reasonably ask shareholders to consider and vote on the Accounts and the Report of the Directors which they have not received and had time to study. This is not a simple administrative matter but a fundamental one of law and governance. Responsible corporate citizens of the stature of DDL cannot treat lightly with such important matters. While there is a distinction between the notice and the documents to be attached, it seems that the option of a waiver to the requirement is only available if all persons entitled thereto so agree. Again to quote Grenville Phillips, “The right to notice and to waive notice, like the right to vote, is a personal individual right of shareholders and not a corporate right which may be waived by the company unless statute so provides. As such, shareholders attending a meeting cannot waive the right to adequate notice on behalf of those not in attendance.”

The company must therefore consider whether to proceed with the meeting given the circumstances. Since the period of the notice is adequate, the company can deal with all the other issues on the agenda and adjourn for consideration of the Report. It may on the other hand, revoke the notice and convene a completely new meeting that complies with the law.    

And on the question of venue, while recognising the desire to allow shareholders the opportunity to see the Diamond facilities, Business Page appeals to the directors to consider returning its shareholders’ meetings to Georgetown which is far more accessible and convenient to the majority of its shareholders.

Thirty-eight Years of Little Progress.

As the country stumbles from crisis to crisis yet another prominent Guyanese has pointed out the link between good governance and economic development.  Recent national awardee Christopher Fernandes, not someone known for speaking out on public issues has joined the growing number of persons calling on the two major political parties to recognise that “neither party can move the country forward without the help and support of the other”. Noting that little progress was made during the twenty-eight years of the PNC and the ten years of the PPP, Mr. Fernandes called on the PPP as the duly elected government with the responsibility for finding solutions to the country’s problems. He specifically asked for them to show leadership in finding ways to alleviate turmoil, attract investments and create jobs.

Mr. Fernandes’ call comes at a time when the economy and indeed the country is facing perhaps the gravest crisis in a decade. No economy can exist in the absence of law and order and all the recent events suggest that there has been a significant breakdown in the system. It is not without significance however that some of the unlawful activities are being defended and justified on “political” grounds. There is no doubt that unemployment in Guyana has been rising sharply even as successive Budget Speeches ignore it while emphasising poverty alleviation. We need to recognise that there is no wisdom in pursuing policies which create unemployment and then try to deal with the consequences without the resources. There is no poverty reduction strategy that can ever be as effective as the creation of jobs which satisfy both the physical as well as psychological needs of the citizen. People simply hate to hold out a begging bowl.

And it is from profitable investments that sustainable job-creation will come. Here again Government policy is lacking in the extreme. The out of hand rejection of the draft Investment Code coming so close to the take over of privately-owned property sent the wrong signals to both the domestic and the international investment community and showed a fundamental lack of understanding of the country’s needs and its limitations.

The unfortunate consequence of the actions of those who are protesting is that investments and therefore opportunities are in fact drying up while those with skills and money take the first exit further impoverishing the society. The society can no longer afford the perpetuation of this cycle and both major parties must surely realize this. The inexperience, intolerance, obsession with power and control, more than a fair measure of incompetence and a fire-fighting managerial culture are proving costly to this country.

Mr. Fernandes referred to the Dialogue as being constructive without specifically calling for its resumption. Business Page shares all the concerns about the limitations of the Dialogue but it is clear that it can continue to serve a useful purpose. It is not beyond President Jagdeo, Mr. Hoyte and the rest of society to restore the process with appropriate safeguards and mechanisms to address the limitations which have surfaced. In this regard, dealing with the current crime situation has to be advanced on the agenda. But these must be seen only as short-term measures while we seek more fundamental reforms to our system of governance in which everyone feels they have a stake in the society. Without these the next thirty-eight years will be no better than the last.