Any person aged eighteen or over may be appointed as a director in a Maltese company, and there are no restrictions as to the nationality or country of residence. It is widely recognised that company governance benefits from the appointment of a diverse board of directors, but it is equally important that everyone involved is aware of the role, duties and obligations of a director.
The Malta Financial Services Authority (MFSA) considers the role of director as fundamental to the proper operation of a company, including investment funds and other financial services providers. The board of directors has the power to make decisions that affect the entire company; the persons appointed to this role are collectively responsible for determining the company’s strategy and monitoring its implementation by the management.
Qualities of a director
Acting in the role of a director requires a combination of technical and “soft” skills that enable the incumbent to carry out their duties effectively and in the company’s best interests. It is difficult to make an exhaustive list of all the skills required; however, directors are usually expected to be knowledgeable not only in the business of the company but also in management, legal and regulatory matters, accounting and audit matters, and compliance.
Having direct experience in the industry in which the company operates is a crucial factor for the selection of a director, but the board should also look out for other factors such as curiosity, strategic vision, self-management, as well as a range of education and professional backgrounds to avoid groupthink and encourage independent opinion.
The MFSA also evaluates appointees to directorship roles in terms of their fitness, integrity and probity as part of the approval process. A person’s standing, knowledge of the industry and ability to resolve potential issues are all important considerations to be made.
Appointing non-executive directors
As the corporate governance guidelines published by the MFSA state:
The board should be composed of persons who, as a group, have the required diversity of knowledge, judgment and experience to properly complete their tasks. This may require the inclusion of a number of non-executive directors (including independent non-executive directors).
Independent, non-executive directors carry out similar duties to the executive directors. Their presence on the board enhances the organisation’s ability to tackle a wider range of issues more effectively and gives increased confidence to investors and stakeholders that corporate governance matters are taken seriously and handled in an unbiased manner.
Independent, non-executive directors play an important role in supporting the executive directors in their duties by providing an unbiased perspective about the company’s operations, enriching the board with a more diverse skill set, and intervening to resolve any conflicts that may arise between stakeholders.
The necessity of possessing such a broad knowledge base and specialised skills to execute the director’s role can be seen as a valid reason to consider acting as a company director as a separate profession in its own right. The MFSA recognises this view and encourages directors to avail themselves of the growing number of director and specialist training courses to advance their expertise in this field.
The various duties expected from company directors are explained in more detail in the MFSA’s Corporate Governance Manual.
Corporate governance depends on trust and experience
Benetti Consulting offers the services of an independent director to companies in Malta, especially those in the financial services industry. Dr Clint Bennetti is a qualified lawyer who graduated from the University of Malta with a specialisation in financial services. Dr Bennetti has occupied the role of director with the approval of the MFSA for a number of collective investment schemes, asset managers and company services providers as well as for a number of unlicensed companies in various other industries.