Multiple directorships within Maltese-equity listed companies : an analysis

Abstract

PURPOSE: The objective of this dissertation was (i) to ascertain the incidence and implications of multiple directorships on the CG of MLCs; (ii) to assess the major determinants of multiple directorships within MLCs, and (iii) to evaluate how the incidence of multiple directorships may be managed. DESIGN: To ensure that the study’s objectives were achieved, a mixed-methods research approach was undertaken. Semi-structured interviews were carried out with fourteen consenting interviewees. FINDINGS: The findings indicate that many MLC directors hold other concurrent directorships, both in private companies as well as in other listed and regulated companies. The broad conclusion was that the consequences of multiple directorships vary depending on the number of concurrent directorships being taken on, the circumstances of the individual, and the corporate context. The limited pool of eligible Board candidates, director’s own ambitions to serve on multiple Boards, and the corporate overemphasis on the quality and reputational capital stemming from multiple Board positions were found to be the major determinants of multiple directorships within MLCs. Additionally, there seems to be strong agreement that NC reviews, Board member self-reviews, and the addition of more detailed guidance in the Code for multi-boarded directors are appropriate steps that may be taken to mitigate the negative consequences associated with director overboardedness. CONCLUSIONS: This dissertation suggests that the regulatory framework in Malta is still quite vague with respect to multiple directorships and requires further strengthening to encourage those in charge to enforce their policies. IMPLICATIONS: This study brings attention to the need for improving CG practices pertaining to multiple directorships within MLCs. The recommendations made are intended to assist MLCs in having more robust CG frameworks and urge the relevant authorities to issue additional guidelines in this regard.