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REPORT ON CORPORATE GOVERNANCE
The Commission practises principles of good governance when carrying out its functions under the Act. The Board of Commissioners (the Board) is accountable to its stakeholders for the proper conduct of the Commission’s affairs. This report sets out some of the corporate governance practices of the Commission.
The Role Of The Board Of Commissioners
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The Board discharges its functions through the exercise of various powers which are conferred on the Commission by section 7 of the Act. These include the power to:
• Register and regulate market actors;
• Review, approve and regulate takeovers, amalgamations and all forms of business combinations in accordance with the Act or, any other written law;
• Review the contents of prospectuses, and review the advertisements and solicitation documents for the distribution of securities;
• Take enforcement action against any person for failing to comply with the Act;
• Recommend By-Laws to the Minister of Finance;
• Formulate, prepare and publish notices, guidelines, bulletins and policies regarding the interpretation, application or enforcement of the Act;
• Make Orders; and
• Monitor the risk exposure of registrants and the self-regulatory organisations and take measures to protect the interest of investors, clients, members and the securities industry.
Meetings of the Board are held regularly to make decisions concerning the exercise of the aforementioned statutory powers. Decisions on regulatory matters are generally set out in an Order which is disseminated to the relevant party. In making an Order, the Board will consider the public’s interest. These Orders or a summary thereof are published (unless exempted from publication) on the Commission’s website and in the Trinidad and Tobago Gazette. A notification of such publication is also posted in two (2) daily newspapers in general circulation in Trinidad and Tobago. However, the Commission can publish the full text of an Order in a daily newspaper if necessary.
All Decisions, Resolutions, Orders or Rules made, and By-Laws recommended by the Commission or a committee thereof, are set out in the minutes which are recorded and kept under the direction of the Commission’s Secretary (the General Counsel).
The Role Of Management
The Board, under section 8 of the Act, by Order is permitted to delegate some of its powers, functions and responsibilities to any: a. Commissioner; b. Senior Officer of the Commission; or c. Self-regulatory organisation registered under the Act.
However, the power to make By-Laws and to hear appeals cannot be delegated.
The CEO, as head of the Management Team, has delegated authority to carry out certain powers of the Commission in order to assist in its efficient operation. These powers once exercised, are immediately notified to the Board which maintains general oversight of all delegated powers. The Consolidated Delegation of Powers Order 2016, under which this delegation to the CEO has been made, is published on the Commission’s website.
TABLE 12
The Management Team is in charge of the day-to-day operations of the Commission. In particular, Management is responsible for the initial review of registration matters, monitoring breaches of the Act and conducting investigations into same, taking enforcement action for contraventions, and the conduct of inspections and compliance reviews. Recommendations on these matters are made to the Board for its consideration.
Board Oversight
In fiscal 2016, the Board surpassed the requirements as set out in section 15(1) and (5) of the Act to ordinarily meet for the dispatch of its business at least every two (2) months with a quorum of the majority of Commissioners at every meeting. Details of the number of meetings held and attendance at those meetings are set out in Tables 12 and 13.
MEETINGS HELD AND ATTENDED BY THE FORMER BOARD OF THE COMMISSION FOR THE PERIOD OCTOBER 2015 TO MARCH 2016
Members of the Board Scheduled Audit and Tenders Human Expiry of the Commission Board Finance Committee Resources of Current Meetings Committee Committee Term of Office during Term of Office
TABLE 13
MEETINGS HELD AND ATTENDED BY THE CURRENT BOARD OF THE COMMISSION FOR THE PERIOD JUNE TO SEPTEMBER 2016
Members of the Board Scheduled Audit and Tenders Human Expiry of of the Commission Board Finance Committee Resources Current Meetings Committee Committee Term
During the course of the year, the Board also fulfilled all of its functions under the Act.
Independence Of Commissioners
The Commissioners are non-executive, independent and have been appointed by the President of the Republic of Trinidad and Tobago as required under section 10(2) of the Act.
The Commission also adheres to section 11 of the Act which prohibits the appointment of persons as Commissioners if they - directly or indirectly, as owners, security holders, directors, senior officers, partners and employees or otherwise - have a material pecuniary or proprietary interest in registrants or selfregulatory organisations.
Communication With Stakeholders
The Commission communicates with its stakeholders through many avenues including, its website, public consultations, its quarterly external communiqué, the Annual Report, and periodic market outreach sessions. Protocols for information sharing have been developed with specific local, regional and international stakeholder groups through the signing of Memoranda of Understanding.
External Auditor Independence
The Commission’s Financial Statements were audited by external and independent auditors, Deloitte & Touche (Deloitte). This is the third year that Deloitte has been engaged by the Commission in this capacity. Throughout this period the auditors have not been engaged in any other type of work with the Commission. The auditor, with primary responsibility for the audit of the Commission’s Financial Statements, has already been changed once, thereby further strengthening the independence of the external audit process.
Code Of Conduct
The Commission introduced a Code of Conduct in February 2016. This Code was designed to guide expected standards of behaviour so as to ensure that the Commission’s business is conducted with integrity and complies with all applicable laws, regulations and policies. It also assists in the understanding of responsibilities and obligations, and provides guidance where necessary. This Code is applicable to ALL Commissioners and Staff of the Commission.
Conflicts Of Interest
Section 18(1-4) of the Act requires that a Commissioner or any other person attending a meeting of the Commission who is in any way, whether directly or indirectly, interested in a matter before the Commission, shall declare his/her interest to the Commission and absent himself during the deliberations concerning the matter of interest. The Act goes on to provide that the Board shall, in the absence of the Commissioner (or other person whose interest is being considered), determine whether the interest declared is sufficiently material so as to constitute a conflict of interest. In the event the Board finds that it constitutes a conflict of interest, the Commissioner or the other person shall not take part in any deliberations or vote on that matter, and shall absent himself during such deliberations. Additional details inclusive of punitive measures for noncompliance are set out in section 18(5) of the Act.
Further provisions in relation to conflicts of interest are outlined in the Commission’s Code of Conduct which, amongst other provisions, require persons to declare upon assumption of duty, any company, business or venture in which they have an interest.
The Committees Of The Board
The Commission has also established the following Committees to assist the Board in fulfilling its responsibilities:
Audit And Finance Committee
The main purpose of the Audit and Finance Committee is to assist the Board regarding its responsibilities for the financial reporting process, financial policies and procedures, the system of internal control, the audit process, and the process for monitoring the Commission’s compliance with the Act.
The Audit and Finance Committee has authority to conduct or authorise enquiries and demand reports into any matters within its scope of responsibility as defined by the Board. It is empowered to:
• Appoint and oversee the work of any registered public accounting firm employed by the Commission;
• Resolve any disagreements between management and the auditor regarding financial reporting;
• Pre-approve all auditing and non-audit services;
• Recommend the retention of independent counsel, accountants, or other professionals/experts to advise the committee or assist in the conduct of an investigation;
• Seek further information where required from employees of the Commission; and
• Meet with company officers, external auditors, or outside counsel, as necessary.
Tenders Committee
The Tenders Committee was developed to assist the Board in presiding over the acquisition and disposal of the Commission’s assets. This Committee is authorised to:
• Act for the Commission in inviting and considering offers and tenders for the supply of goods or services, or for the undertaking of works of all kinds necessary for carrying out the functions of the Commission;
• Make recommendations to, or make decisions on behalf of the Commission in the acceptance or rejection of offers or tenders; and
• Dispose of surplus or unserviceable goods belonging to the Commission.
hUMAN RESOURCE COMMITTEE
The Human Resource Committee is responsible for assisting the Board in discharging its human resource management responsibilities in relation to:
• The high-level organisational structure of the Commission;
• The recruitment, appointment, retention/ succession plans, and termination of the CEO and senior executives;
• The performance and compensation of the CEO and senior executives;
• Employee compensation and benefit regime; and
• Human resources policies of the Commission.
New Commissioner Orientation And Education
Upon assumption of duty, new Commissioners are invited to a meeting with Executive Management and provided with information packages about the Commission to assist them in their new role. Additionally, Commissioners may be sent on relevant training courses, seminars and conferences facilitated by various professional bodies.
Compensation Philosophy
There is an active Human Resource Committee which is responsible for approving new positions within the Commission. The Commission is guided by the Ministerial Committee chaired by the Minister of Finance in determining staff compensation.
The remuneration for the Board, however, is guided by section 12(5) of the Act which states that the Chairman and the other Commissioners shall be paid such remuneration and allowances, in respect of their office, as the President may determine from time to time.
Internal Controls
The Internal Audit activity is responsible for assessing the design and the effectiveness of the Commission’s System of Internal Controls. This activity is also responsible for reporting compliance issues to the Executive Management and to the Board.
Internal Audit
The Internal Audit activity provides independent, objective assurance and consulting services that add value and improve the Commission’s operations. It helps the Commission to accomplish its objectives by bringing a systematic, disciplined approach to the evaluation and improvement of risk management, controls and governance processes.
The Commission’s Internal Audit activity is guided by the Department’s Charter and reports functionally to the Chairman of the Audit and Finance Committee and administratively to the CEO. Further, the Internal Auditors have no authority over, nor responsibility for, the activities they audit.
