Report cites lack of info on listed companies, poor knowledge of share trading
If Guyana is to attract more external investment and stimulate increased trade it is important that the country focus more attention on improving its corporate governance framework for investors and trade partners. Additionally, heightened emphasis on corporate governance will prepare Guyana for changes in the regional and global marketplace including the path towards the creation of a Caricom Single Market and Economy (CSME) and emerging potential international trade frameworks such as the Free Trade of the Americas (FTA) initiative being promoted by Canada. This was one of the observations contained in a report on a March 25th, 2009 Seminar on Cor-porate Governance hosted by the Cana-dian High Commission in Georgetown and released to the Stabroek Business by the High Commission.
Coming as it did in the wake of the dramatic collapse of CLICO (Guyana) earlier this year the seminar saw private sector discussants advocating both a tightening of the local financial regulatory framework as well as stronger regulations to protect investments and regular inspections of local banks and other financial institutions by the Bank of Guyana.
And during a panel discussion staged as part of the seminar the view was expressed that greater confidence in the local stock exchange might be realised if there was more effective communication between local companies and the regulatory agencies. The report quotes a senior private sector official as saying that “if there was greater communication between regulatory bodies and companies, more companies might be enthused to be listed on the stock exchange.”
The report noted that publicly traded companies and “related corporate governance mechanisms” are relatively new in Guyana. According to the report since the advent of the Guyana Association of Securities Companies and Intermediaries Inc. (GASCI) in June 2003.only thirteen companies have traded on the stock exchange. It noted that trade volume is “very low” with approximately 10 million shares being traded in an average year. The report said that despite the small size of the Guyana economy these trading statistics “indicate that investors are choosing to forego purchasing shares on the exchange either because they lack adequate
information about a company or because they are not familiar with the trading process, existing opportunities, and/or potential investment returns.”
According to the report, the fledgling nature of the stock market means that in, many market stakeholders including government officials, regulatory agencies, the judiciary, publicly traded companies and financial
intermediaries “are not necessarily familiar with the role corporate governance plays in capital formation and economic development.”
The report states that Guyana is only just beginning to understand the potential benefits that good corporate governance brings to business, and can bring to the country as a whole. These, the report said, include contributing to country’s development objectives, creating a preparedness among investors to pay a premium to invest in well-governed Guyanese companies, providing
access to alternate financing and cheaper debt financing for Guyanese companies, improving the overall operations and performance of companies, reducing reputational and financial risk, and contributing to sustainable economic development.
Last May’s corporate governance seminar, which the report said was staged by the Canadian High Commission to help develop a better understanding of the “potential benefits” of good corporate governance among Guyanese market stakeholders and to “foster further discussion of the strengths and weaknesses of the current corporate governance framework in Guyana” was attended by several of the country’s leading private sector officials, businessmen and economists and other professionals. The report said that the seminar was designed to commence a process towards creating a condition of more effective corporate governance in Guyana among publicly listed companies as well as privately held and state-owned companies.
Additionally, the forum sought to highlight examples of corporate governance best practices from Canada and other regional and international locations. Additionally, the report said that the occasion was intended to serve both as a catalyst for dialogue, discussion and debate on these issues among policy and decision-makers and members of the business sector
Other objectives of the forum included the creation of a mechanism for the promotion of trade and investment mechanisms to support the on-going FTA process with Guyana, the promotion of inter-departmental and inter-institutional learning with the Guyana government and the business sector as well as other stakeholders.
According to the report the seminar also “allowed delegates to participate directly in assessing Guyana’s current corporate governance framework against the OECD Principles of Corporate Governance and provided some very preliminary feedback on areas for improvement.”.
