Before 2004, companies and any other bodies corporate were regulated by the Companies Act, 61 of 1973.
During 2004, parliament enacted a law called the Companies Act, 28 of 2004 and its purpose was to provide for the incorporation, management and liquidation of companies.
This act defined a director as any person occupying the position of director or alternate director of a company by whatever name that person may be designated.
In terms of the old act, the business and affairs of a company must be managed by or under the direction of its board of directors who has the authority to exercise all of the powers and perform all the functions of the company, except to the extent that the act or its articles of association provide otherwise.
There were no state-owned enterprises up until 2006 when parliament enacted a law called the Public Enterprises Governance Act, 2 of 2006 as amended by the State-owned Enterprises Governance Amendment Act, 5 of 2008 and lastly the Public Enterprises Governance Act, 1 of 2019, which seems to be repealed.
The purpose of the Public Enterprises Act was to make provision for the efficient governance of public enterprises and monitoring of their performance, and provide for the powers and functions of the minister of public enterprises.
In 2022, the Ministry of Public Enterprises was disbanded and since then such power and functions now resort under the minister of finance.
The Public Enterprises Governance Act defines a board as the board of directors of public enterprises, by whatever name called, holding positions comparable with those of the board of directors of a company.
In terms of the common law principles, directors of a company have a fiduciary duty of care and skill.
It’s weird to note that the Public Enterprises Act did not state the functions and powers of board of directors of public enterprises, but it states the functions and powers of the minister (minister of public enterprises).
Corporate governance is a good practice designed to ensure orderly running of company businesses, ensure equity, ethical standards, and principles of good corporate governance.
The Namibia Securities Exchange adopted the Corporate Governance Code for Namibia (NamCode) to ensure that companies comply with the common law principles and the Companies Act.
In terms of NamCode, the board of directors is responsible for corporate governance and has two main responsibilities namely, to determine the strategic direction of the company and to exercise control over the company.
Importantly, NamCode states that the board of directors requires management to execute strategic decisions effectively.
This article was triggered by reported events bemoaned by some state-owned enterprises executives as reported by The Namibian in that some ministers appear to boss chief executives of state-owned enterprises around.
If true, then such administrative actions by such ministers beg a question of constitutionality and lawfulness of the powers exercised by them over such public enterprises executives.
This is despite the provisions of Article 40 of the Namibian Constitution, which state that the functions of Cabinet members include directing, coordinating and supervising the activities of ministries and government departments, including parastatal enterprises, as well as advising the president and parliament.
This means Cabinet members have a duty of policy making and giving directives to public enterprises, but not to be involved in the day-to-day management of such public enterprises.
It is trite that ministers serve as representatives of the shareholder (state), but their powers are limited to policy making and directives.
An example of such overreach is the reported removal of the Namibia Airports Company board of directors by the line minister.
Such removal is debatable, as it is unclear which provisions of the enabling legislation the minister relied on to remove the board of directors. The Airports Company Act 25 of 1998 only empowers the minister to give directions to the company on matters relating to national security.
The minister is thus not empowered to remove any board of directors from serving on the board of a state-owned enterprise on its own.
If it is true that certain ministers are bossing around chief executives of public enterprises reminding them that they are their ministers while displaying an attitude of authority, I implore such ministers to take cognisance of Article 1 of the Namibian Constitution, which states that Namibia is a sovereign, secular, democratic and unitary state founded on the principles of democracy, the rule of law and justice for all.
– Lucas Tshuuya is a legal practitioner and corporate governance expert.
Follow him at tshuuya@iway.na
