Sharechat Logo

Good NZ directors too wary of joining SME boards, FMA's Everett says

Monday 30th May 2016

Text too small?

New Zealand's small- and medium-sized businesses are struggling to attract high-quality directors to their boards, leaving a gap for firms just when they need an experienced hand on the tiller, Financial Markets Authority boss Rob Everett has warned. 

Speaking at a media briefing in Auckland last week, Everett said the Financial Markets Conduct Act hadn't led to the feared chilling effect claimed by business lobbies that talented leaders would turn their backs on governance roles, with large companies still attracting well-qualified professional directors. However, Everett said he has concerns about encouraging that same talent to join the boards of smaller, riskier companies. 

"The challenge for New Zealand, given the make-up of its economy, is how to encourage good, experienced directors to get involved with businesses that have a much higher chance of failing, because that's actually where you want your best directors," he said. "There we do see a reluctance for people to get involved because they do think, irrespective of the legal position, they'll get stigmatised if they get involved with a business that fails."

The FMA is into the final phase of the staggered introduction of the Financial Markets Conduct Act, an overhaul of securities law putting behaviour at the forefront of the legislation. 

Everett said the new legislation was a better environment for directors to operate in and he rejected any suggestion the act made it more difficult or riskier for directors. 

"I just don't buy the position that under the FMC Act, particularly around financial products and capital raisings, that actually the situation for directors is anything but clearer and more flexible than it would have been before," he said. 

Still, more needs to be done to entice directors to join boards at the "lower end" where they will probably have to be more engaged and take a smaller pay packet, he said.

Last year well known professional director Rob Campbell pushed for directors to take a more hands-on role and work more closely with management, saying "most business needs activist, effective, participant directors."

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report