THE COMPANY SECRETARY MASTERCLASS THEME: CORPORATE SECRETARY AS THE BOARD S COMMUNICATOR NOVEMBER 16-17, 2017

Transcription

1 THE COMPANY SECRETARY MASTERCLASS THEME: CORPORATE SECRETARY AS THE BOARD S COMMUNICATOR NOVEMBER 16-17, Institute of Certified Public Secretaries of Kenya (ICPSK) 1

2 ABOUT ICPSK Established under the Certified Public Secretaries of Kenya Act 1988 (Cap 534). The core mandate of the Institute is to promote the practice of good governance in all sectors. More than 3,300 Members competent in matters of governance, corporate secretarial practice, compliance, management and administration. Nov 2

3 CORPORATE SECRETARY AS THE BOARD S COMMUNICATOR By CS Winnie Jumba & Karanja J.N Nov 3

4 Course Outline SESSION 1 Introduction and Objectives Case Study Discussions SESSION 2 Communication with the Board Communication with Management Communication with Shareholders Stakeholder Engagement SESSION 3 Corporate Communication Corporate Communication policies DAY 2 SESSION 4 Disclosure of information Disclosure Barriers Information Disclosure Policies SESSION 5 Managing Confidential Information Ethical Dilemmas facing Corporate Secretaries in Communication Case study discussions on Ethical Dilemmas in Communication Nov 4

5 SESSION 1 Introduction and Objectives Case Study Discussions Nov 5

6 Objectives of the session By the end of this module, participants will be able to: Describe best practices to maintain communication with management, shareholders and stakeholders Explain the drivers for disclosure and greater transparency Analyze the procedures for managing policies related to confidential information 6

7 Pick n Pay If you had been the corporate secretary of Pick n Pay, what role would you have played in this incident? 7

8 Tea Break Nov 8

9 SESSION 2 Communication with the Board Communication with Management Communication with Shareholders Stakeholder Engagement Nov 9

10 The Communicator Management Shareholders Other stakeholders 10

11 Communication with Management The corporate secretary: Communicates board decisions to management Acts as a channel for information to and from management and the board Liaises with management on implementation of decisions made/actions requested by the board 11

12 Activity: Skills Required What skills does a corporate secretary require to fulfil the role of the board s communicator to management? 12

13 Skills Required Respectful, diplomatic and effective communication Active listening Bringing issues to the surface Describing common concerns and interests Generating alternative solutions Emphasizing commercially minded approaches Respecting confidences Showing appreciation for all parties Disagreeing constructively 13

14 Benefits of Good Communication with Shareholders Holds organization accountable through greater transparency Builds trust, goodwill, reputation and confidence Required by laws, regulations and corporate governance best practice Helps investors make informed decisions to buy or sell a company s shares Increases access to external financing Leads to higher valuations and better share performance Reduces the risk of corporate crises and scandals 14

15 The Role of the Corporate Secretary What is the role of the corporate secretary with: Institutional shareholders? Private shareholders? Investor relations officer? 15

16 Dialogue with Shareholders Best practice is for shareholders and boards to engage in dialogue Information disclosure/reports General meetings One on-one meetings Websites Social media Communications policy for the board 16

17 Activity: Shareholder Dialogue Which method of communication would you use for each type of shareholder? Registered shareholder (members) Beneficial shareholder Nominee shareholder (custodians) Institutional shareholder Overseas shareholders 17

18 Engagement with Stakeholders The Board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company. The Board should take account of the legitimate interests and expectations of its stakeholders in its decision-making in the best interests of the company. The King Code of Governance Principles (King lll) South Africa (2009) 18

19 The Role of the Corporate Secretary Explain to the board the business case for stakeholder engagement Liaise with management to ensure that the board is aware of who the company s stakeholders are Advise the board on any reputational risk aspects to stakeholder engagement Liaise with management to ensure that polices and plans are developed and implemented to enable the company to engage effectively with its stakeholders Engage with stakeholders that are the responsibility of the corporate secretary Advise the board on reporting requirements for different stakeholder groups 19

20 Stakeholder Mapping Useful technique for analyzing a company s relationship with its stakeholders Matrix can be developed that suggests the type of relationship the company should have with a particular stakeholder Stakeholders are communities, individuals and organizations who have an impact on or are impacted by the organization 20

21 Stakeholder Mapping LEVEL OF INTEREST LOW LEVEL OF POWER HIGH HIGH KEEP SATISFIED KEEP INFORMED INVOLVED AND CONTRIBUTING MINIMAL EFFORT KEEP INFORMED LOW 21

22 Stakeholder Mapping Questions For a company you are familiar with, answer the following questions in your role as the corporate secretary: Who are the stakeholders you have to engage with in your role? Where do you think they are currently positioned in the matrix? Should any of the stakeholders be in a different quadrant? Are there too many stakeholders in a single quadrant? If so, how would you move the position of any of the stakeholders? 22

23 Activity: Stakeholder Engagement What information do the stakeholders you have identified need? What are their specific interests in it? Are there any other stakeholders that you would expect to be interested in company information? Why? 23

24 Examples of Stakeholder Requirements Employees Ability to pay salaries, wages, and benefits Suppliers Capacity to pay a debt for goods or services provided to the entity Creditors Future cash flows, the security of debts Governments, agencies, and regulators Efficient allocation of economic resources, regulating, taxation, national statistics Customers Supply of quality goods or services Equity investors Cash flows and share price The public Variable interests Development Partners Impact of use of funding 24

25 Activity: Methods of Communicating Identify methods of communicating with stakeholders. What are the merits and disadvantages of each method? 25

26 Questions Nov 26

27 Please complete the Evaluation Form Nov 27

28 Lunch Nov 28

29 SESSION 3 Corporate Communication Corporate Communication policies Nov 29

30 Objectives of the session Be an honest broker of information and communication between the Board and executive management. Engage with Directors to understand the type and quantity of information they need. Process, package and distribute all information to the Board in a systematic way. Identify the purpose of specific information and the optimal format and process of presenting it. Develop standard templates Consider appropriate means of communication Ensure you have a proper records management process 30

31 Corporate communication is the total communication activity generated by a company and directed at all relevant target groups to achieve its planned objectives and create favorable relationships with stakeholders on which the company depends. Nov 31

32 Corporate Stakeholders Top management The Public Customers Production Unit HR Employees Finance Media PR Government Customer Service Investors 32

33 Why do corporations need to develop effective communication? Nov 33

34 Examples of why Acquire resources they need in order to operate. Communicate with different stakeholders. Communication with employees to increase their loyalty. Influence the environment within which they operate. Retain their license to operate. Improve the image. Encourage all employees to work together to support the company's objectives. Develop the corporate branding. 34

35 Need for Communication skills gain the acceptance for the organization's goals. Develop a shared vision of the company within the organization. Establish and maintain trust in the organization's leadership. Initiate and manage the change process. 35

36 Tools of Corporate Communication The most important practices to achieve Corporate integrated communications are: 1. Use of integrated marketing communications (Consistent messages e.g Tag lines) 2. Application of visual identity systems (Consistent themes - use of common names, logos, sounds, packaging, furniture, building design and even smells) 3. Depending on team work 4. Adoption of a centralized planning system (Standard structure of reports, presentations, e.t.c) 36

37 Activity 5 minutes What will happen if the organizations' departments are not coordinated in the way of creating consistency messages? How can organizations limit fragmentation in their communications? 37

38 Rationale for Communications Dept Open doors by connecting staff with reports, graphic designers, and other communication professionals. Be a sounding Board by offering feedback and suggestions. Do research on target audiences. Gather intelligence Advocacy for the Firm Launch special projects. 38

39 Fostering best practises in effective communication Nov 39

40 Foster openness and Transparency Transparency is imperative in interactions between the Board and staff as well as exchanges between Board members and external stakeholders. Note: Some issues will require confidentiality. Accountability Board proceedings should be professionally captured and published as part of the organisation s commitment to openness and transparency. 40

41 Foster Sound Decision making Effective communication is a vital success factor for the Board to be empowered to make sound informed decisions. This encompasses supporting the Board s decision making by providing quality information and data, providing a strong forum for exchange and dialogue and recording past decisions accurately to feed into the deliberative process. 41

42 Support Board s in their Role Board members deserve strong support to be positioned for success and add value through their governance role. This support should be provided through the tenure of the Director s role from the recruitment phase, which should be based on clear and accurate information about the role, to orientation, to focused support support for particular roles such as Chairmanship. 42

43 Effective Board Staff Communication Board members should have access to value adding briefings and analyses from senior staff. A respectful relationship should be established between the staff and the Board based on trust and clear understanding of responsibility. Staff communication to the Board should generally be mediated through the CEO. Dos: face to face communications, teleconferences Don ts - for decision making 43

44 Position Board members as Ambassadors Board members play an important role as ambassadors of the organization at the community level. They should be supported in that role with practical tools such as key messages and updates on important public files. Board members may be called upon to support public communication, e.g media interviews. 44

45 Functions of Corporate Communication Produce Profit Cut costs Reduce Risk 45

46 Overview of Stakeholder Communication Channels 1. STAKEHOLDER Members COMMUNICATION CHANNELS Seminars, bilateral contacts, website, letters, correspondence, newsletter, media publications/interviews, corporate presentations, speeches, other publications, brochures, leaflets and advertisement 2. Investors/General Public 3. Regulators, Government and Regulators Publications, road shows website, media publications/interviews, press releases, investor presentations, other publications, brochures, leaflets and advertisement Authorities Knowledge sharing sessions/seminars, visits, website, newsletter, media, market reports, publications, Annual Report), brochures, leaflets and presentations 4. Media 5. Staff Board of Directors Shareholders Press releases, interviews, speeches, workshops/seminars, website Intranet, s, debriefings and information sessions, staff meetings, website, letters , letters, Board and Committee meetings , letters, General Meetings 46

47 Content Development & Structure Adequately capturing meaning Nov 47

48 Communication Policy Content Structure 1. POLICY AREA Purpose 2. Scope 3. Objectives a guideline for the broad dissemination of information pursuant to all applicable legal requirements. 4. Disclosure of Information Policy statements Commitment to timely, accurate, and complete disclosure of material information in an appropriate manner. Recognition to meet the disclosure expectations of external stakeholders Continuous disclosure obligations prescribed by securities legislation. ISSUES TO ADDRESS To establish guidelines for the Company for communications by the Company, including the release of material information about the Company to the general public, media, customers, bondholders, potential investors, and other stakeholders Will target all Company personnel with respect to all information (general, confidential, or material) in whatever form or means 48

49 Communication Policy Content Structure 5. POLICY AREA Confidential Information 6. Media Relations, Public Comments, and Designated Spokesperson(s) 7. Electronic Communication ISSUES TO ADDRESS Strict confidentiality restrictions Access to confidential material information Responsibility of the authorized persons who should be aware of their confidentiality obligations. How media relations and enquiries will be coordinated. A restriction on the officers to manage media relation activities. e.g the CEO. Identify the primary spokesman for the Company on matters of corporate governance, e.g the Chairman. A statement that any other personnel are not authorized to serve as spokespersons. Provide an escalation process. A guideline on how information will be released. A process of managing routine information requests from the public. A process of responding to rumours. The policy will direct how all communications, including electronic communications, website, , internet intranet, e.t.c must comply with securities laws 49

50 Communication Policy Content Structure 8. POLICY AREA Internet Discussion Forums, Chat Rooms, Bulletin Boards, And Electronic Mail 9. Closed Periods And Reporting Significant Events 10. Investor Relations 11. Consequences of Non compliance ISSUES TO ADDRESS The policy will restrain personnel from participation. This is due to the immediacy of electronic information. The policy will also direct officers authorized to post on the firm s official social media forums. The organ for setting guideline for the content of such postings will be identified by the policy. The policy will limit the communications disseminated to the public during a closed period. E.g, communications may be limited to commenting on publicly available or non-material information. The policy will also define the officers to be contacted in reporting significant events e.g. Legal Actions, Deaths, and Unusual Incidents. Coordination of investor relations activities. Compliance with legislation Protocol followed before announcing material information, Process of documenting correspondence with investors Circulation of reports, especially provided by a service provider. Internal disciplinary actions External violation of laws 50

51 Questions Nov 51

52 Please complete the Evaluation Form Nov 52

53 End of Day One Nov 53

54 SESSION 4 Disclosure of information Disclosure Barriers Information Disclosure Policies Nov 54

55 Activity: Disclosure Barriers Pick an organization that you are familiar with and identify: What information should and should not be disclosed? Why? To whom? What challenges does the organization have in disclosing the information? 55

56 Information Disclosure Policy Authorized persons Disclosure rules Public information Information provided to shareholders and other stakeholders Confidential information Insider information Disclosure committees 56

57 Activity: Information Disclosure Policy Discuss in plenary the model policy Does your organization have such policies? If so, are they similar or different? Would it work in your jurisdiction? Why? Why not? What barriers might you face in introducing such a policy into your organization? How might you overcome them? 57

58 Case Study: Managing Confidential Information Organica Futura, a company producing organic plant- based cosmetics, is in the process of acquiring a business that develops pharmaceuticals from plant sources Divide into groups to prepare a presentation to the board about how, as the corporate secretary, you plan to manage the confidential information about this project 58

59 Questions Nov 59

60 Please complete the Evaluation Form Nov 60

61 Tea Break Nov 61

62 SESSION 5 Managing Confidential Information Ethical Dilemmas facing Corporate Secretaries in Communication Case study discussions on Ethical Dilemmas in Communication Nov 62

63 Module Objectives By the end of this module, participants will be able to: Describe best practices to maintain communication with management, shareholders and stakeholders Explain the drivers for disclosure and greater transparency Analyze the procedures for managing policies related to confidential information 63

64 Nov 64

65 Confidential information and trade secrets Confidential information is considered as information that must be kept secret. Confidential information may refer to personal information (e.g. journals, pictures), professional information (e.g. information supplied in the course of professional duties) and information in the context of business, commerce or trade (i.e. trade secrets). 65

66 How to assess a trade secret Be unknown to the business circles that normally deal with that kind of information; Confer some sort of economic benefit because it is secret; Be the result of reasonable efforts to maintain its secrecy. Examples: Information relating to formulas, patterns, devices or other compilation of information that is used for a considerable period of time in a business (e.g. CocaCola recipe); Technical information used in the manufacturing process for production of goods, including software used for various business purposes (e.g. the ZARA s IT system to shorten the production cycle); Marketing, export or sales strategies, or a method of bookkeeping or other business management routines or procedures (e.g. list of key suppliers and/or buyers) 66

67 Forms of protection As a general rule, trade secrets are protected under obligation of confidence and their theft is considered unfair trade practice. Example of Obligation of Confidence is a Non Disclosure Agreement or insertion of Confidentiality clause in an agreement. 67

68 Safeguards Protection policy: be explicit on the means used by the company to keep confidentiality, such as administrative, physical and technical controls. Protection management programme - such as archives, safes or other appropriate locked rooms; IT protection. Employee awareness and training Non disclosure and non compete agreements. Employee activity monitoring/testing. Document marking Confidential 68

69 Consequences of Breach Breach of confidentiality Breach of contract Unfair business practice for third parties. 69

70 Ethical Dilemmas facing the CS in Communication Nov 70

71 I have no problem with ethics. I merely ask myself whether I would mind if my mother read about this in the press. Company chairman of a major British public company Nov 71

72 Role of the Company Secretary Advise the board and senior management against bad governance and unethical practices Assist the board to establish standards of ethical behaviour Embed ethics throughout the organisation using a code of ethics, training and appraisal tools Monitor the implementation and ongoing use of the ethical values and code of ethics Recognize and alert the board to matters of ethical misconduct Be aware of how ethical values are changing over time and also from country to country 72

73 Why Boards are taking greater interest in ethics A wider shareholder franchise Socially responsible investment Globalization Political initiatives Corporate misgovernance: abuse of positions by managers, corporate scandals The development of the Internet and social media Recruitment of talented staff Anti-corruption tool 73

74 Cultures hindering Good Governance ISSUES TO ADDRESS 1. POLICY AREA Weak or non existent law enforcement Unregulated environment e.g informal sector Weak regulatory framework - supervision and enforcement Weak monitoring and watchdog organisations Underdeveloped consumer bodies 2. Abuse of shareholder rights 3. Corporate directors lack of commitment 4. Skills Ignorance Lack of protection of Minority shareholders Impunity Lack of ethical framework Incompetence Poor quality of Board oversight Large power distance and paternalistic leadership Lack of qualifications Ignorance on the part of stakeholders Government interference Weak corporate governance structure Absence of independent directors (objectivity and conflict of interest) Ownership concentration (lack of competition) Corruption Lack of accountability Inadequate controls Poor reporting structures Independence Lack of transparency 74

75 Ethical dilemmas, also known as a moral dilemma, are situations where there is a decision to be made between options, neither of which resolves the situation in an ethically acceptable fashion. Nov 75

76 The ethical radar Integrity Professional behaviour Confidentiality Objectivity Personal competence and due care 76

77 Activity 10 minutes Case Study on Ethical Dilemma Presentations 77

78 Establishing ethical practices Adopting ethical principles and values, e.g Honesty Transparency Integrity Trustworthiness Respect Truthfulness Teamwork Loyalty Exemplary behavior Signing a Code of ethics 78

79 Questions Nov 79

80 Please complete the Evaluation Form Nov 80

81 Lunch Nov 81

82 Please contact.. The Secretary (ICPSK) CPS Governance Centre Kilimanjaro Road Upper Hill P. O. Box Nairobi Kenya Tel: /2, , ; Website: Nov 82

83 Thank You Nov 83