Apr 22, 2018 News
-lawyers warn of political interferance
Minister of Agriculture, Noel Holder, has no legal authority to appoint members of the Board of Directors of the Guyana Sugar Corporation (GuySuCo).
This is according to legal opinions by a number of lawyers.
The minister’s authority or legal standing to appoint a new board is contingent upon the Government holding more than 51% of the shares of the company.
In fact, according to Section 8 of GuySuCo’s Articles of Association: “For such time as the Government of Guyana shall hold more than fifty-one per centum of the shares of the company, the Chairman and the Vice Chairman and all of the Directors shall be appointed by the Government and such power shall be exercised in that behalf by the Minister of Agriculture…”
However, Government no longer holds the shares of GuySuCo. The Government transferred all of its shares in GuySuCo to the National Industrial and Commercial Investments Limited (NICIL), another state-owned company on 12th January, 2018.
NICIL is now the owner and majority shareholder of GuySuCo, and therefore has the authority to remove the (old) Board of GuySuCo, which it did at a special meeting held on February 14, 2018, where it resolved that the Board of GuySuCo shall come to an end and a new board appointed, according to a legal opinion of a law chambers.
It was pointed out that it would be improper in law for the Minister of Agriculture to appoint a new board or remove the current board. Any such act or appointment can be challenged and set aside.
This could be viewed as direct political interference of the kind the industry does not need at this juncture, one law chamber said.
The issue of a new board has been dominating the news recently on GuySuCo, which up to a year ago controlled the sugar industry.
However, four estates – Skeldon, Rose Hall, Enmore and Wales- are now no longer under GuySuCo and are up for divestment and privatization.
Since the transfer of the shares, there have reportedly been a tug of war in the coalition over the control of GuySuCo with the Ministry of Agriculture insisting that it should have it.
In fact, a new board was appointed in March by NICIL, as the shareholder, naming Colvin Heath-London as chairman. A number of business persons were also appointed.
The names of the new board have also been filed in accordance to the law with the business registry, cementing the new board.
It would leave the administration in a dilemma to now revoke the appointment of the old board and name a new one.
The Ministry of Agriculture is one of the portfolios in the hands of the Alliance For Change, the smaller of the two factions that make up the Coalition Government.
To compound matters on the current board, recently Finance Minister, Winston Jordan, said that there is no new chairman of the GuySuCo board and that the life of the old board under Professor Clive Thomas ends this month.
After NICIL acquired Guysuco’s shares, , by resolution dated February 14, 2018, it declared “that the life of the current Board of Directors of Guysuco is hereby brought to an end immediately and a new Board of Directors be appointed.”
The resolution then listed the new directors, and named Health-London as Chairman.
“That resolution flatly contradicts what Minister Jordan has stated, and as a matter of law the GuyCuCo board has been brought to an end by shareholder resolution. As of the date of that resolution, the then current GuySuCo Board was no longer, and a new board was appointed. Since new board members have already been given their offer letters, it’s a done deal.”
Another lawyer made it clear that Jordan’s comments that there is no new board can easily be construed to indicate that there is gross state interference with the autonomy of NICIL.
“Not only is this influence undesirable, since the purpose of a board is to function free from political interference, but in light of recent allegations of misconduct in public office against former cabinet members, the Government needs to tread cautiously here.”
That lawyer added, “It is accepted that the closure of the estates is largely seen as a mistake, and Minister Jordan recently admitted that the subvention received from Government should have been spent differently.
I would be cautious in now taking another step to unwind the new elected board of GuySuCo and remove members who are largely seen as fiercely competent and independent. Not would that be unlawful, but there could be other consequences.”
GuySuCo is cash-strapped requiring almost $32B in bailouts from Government in the last three years.
Despite those monies, the Thomas-led board was unable to reverse the downward spiral, leaving the industry tottering on one of the worse performances in decades last year.
Recently, Minister Jordan said he believed that those billions of dollars in bailout monies to GuySuCo could have been spent on retooling the industry instead of largely paying salaries and paying off for supplies.
The administration was unhappy with the previous board after three estates- Skeldon, Rose Hall and Enmore were closed within days of each other, sending thousands of workers home.
Meanwhile, the procedures for naming a new board are laid out in the Ram and McRae Companies Act Handbook.
It explained that first directors are named at the time of filing of the Articles, usually by themselves as incorporators, and a statement containing their names, particulars and consent must accompany the application for incorporation.
Otherwise, directors may only be appointed by ordinary resolution passed at a general meeting of the company, and in respect of public companies, for a period not exceeding five years but subject to reappointment on any number of occasions for the same period.
Any provision in the Articles of the company relating to the appointment of directors is void unless it is in accordance with the Act. The Act provides that subject to the articles of by-laws, a maximum of one third of the board of directors may be appointed by third parties (non-members)
such as debenture holders.
However, no automatic re-appointment will take place if an ordinary resolution is passed at a general meeting not to fill any vacant directorhip, or if a resolution for the re-appointment of the director is defeated.
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