BLA members say:
• Raising nomination, voting right period to 2 years is ‘outrageous’
• ‘Raise the bar’ on who can be a director
• New criteria for director nomination biased towards academic qualification
Shareholders of the Building & Loan Association (BLA) on Thursday rejected the new rule that only persons who are members for two years or more can nominate or vote at the general meeting on Aug. 29.
One woman described the proposal as “outrageous” even as she called on members to “lift the bar” for who can be a director.
“If they (FSA) say two years for the person to be on the board, we can live with that,” she said.
The objections came as BLA members discussed the implications of proposed changes to the rules governing the election of the association’s directors.
The Financial Services Authority (FSA), which took over management and control of the BLA in February, has proposed new rules to govern the election of a board on Aug. 29.
Among other things, a person now has to be a member of the BLA for two years before they can nominate or vote — four times longer than was previously the case.
If a nominee is also a borrower, s/he must not be in arrears and candidates must be Vincentians effectively residing in SVG.
They must be a graduated or licensed professional in areas relevant to finance and/or management, including certified public accountant, attorney, financial expert, chartered surveyor, real estate agent, or similar.
Candidates can also be businesspersons (owner or management capacity); or be an academic at college with relevant expertise relating to business, banking, accounting, finance, or a similar field.
Thursday’s meeting was convened by the BLA Shareholders Committee, which has been interfacing with the FSA to restructure the financially troubled 72-year-old building society.
The meeting came just over a week after the FSA met with BLA members to update them on work done over the past four months.
‘biased towards person with academic qualifications’
Jerry George, public relations officer of the Shareholders Committee, said the rules are giving a “direction, … or … a mandate” regarding how the director are elected and what their qualifications must be.
“And what is apparent, it is very much biased toward persons with academic qualifications,” he said.
An insurance executive noted that at the meeting with the FSA the previous week, there were “sentiments supporting the election of ordinary members, just as in other organisations.
“In support of that, it is quite obvious that the former board was packed with very skilled and talented and qualified persons, and so it stands to reason that a wide cross-section of representations would have prevented many of the things which happened,” he said of the previous board of the BLA.
The FSA took over management and control of the BLA after a run on the institution triggered by a newspaper article in January that raised questions about the BLA’s management and financial health.
Following the letter, persons were able to withdraw their savings without giving or observing the notice period as mandated by the BLA’s own rules.
The insurance executive further said that at the FSA’s meeting with BLA members the previous week, he got the impression that the FSA “realised that the sentiments of the members would be in favour of a wide cross-section of the membership” being on the board of directors.
But George wanted to know if the BLA could be dictated to with respect to how it selects it board.
“That’s basically one of the fundamental issues that we need to deal with this evening,” the public relations professional said.
Qualification versus credibility
An accountant, who said he is not a member of the BLA but has deposits there and has clients overseas who have asked him to attend the meeting, said he could understand the need for board members to have some level of financial literacy.
“That is acceptable,” he said, but added that according to the Corporations Act, the only requirement to be a director is that you have to be at the age of majority.
He further said that it is reasonable to expect directors to understand the type of business, adding that that would suggest certain qualification.
The accountant, however, said that by qualification, he was speaking primarily about experience.
A female member from the floor observed that former directors of the BLA were qualified.
“The big set of qualifications did not work. What happen to people with credibility? We need to balance it,” she said, adding that the requirements laid out by the FSA are “too stringent”.
“I want to say I condemn this sort of qualification,” she said.
And, Sylvia Sutherland, an accountant and member of the Shareholders Committee, said she does not think that people would accept nominations “if they feel inadequate to be there”, adding that it is not necessary to specify qualifications for board members.
“Because we are talking about the survival of this thing (BLA). This organisation will survive if it has members. But if we actively alienate the majority of the members and they decide, ‘Ok we are not wanted here’, and they take their business and go elsewhere, what would happen to the organisation? Water finds its own level. Just leave the thing open as it was before, and the requisite people would come forward,” she said.