Dear entrepreneur, loyalty and accountability to your company comes first.

Very many sole proprietorships or partnerships in Kenya have come from humble backgrounds, but with the passion and zeal to become successful, most of these have grown to become some of the most recognizable brands we have today. Some of these companies are currently listed in the Nairobi Securities Exchange.

However with such a shift, the founders of the business normally lose a part of their influence in the daily running of the business due to the new owners also known as shareholders as well as the decision makers particularly the directors and the senior executive officers. Conversely, the dynamics between the decision makers in a limited liability company and a public listed company are like night and day.

In a limited liability company, the directors are largely the owners of the business; therefore it is not out of context when one says that they work for themselves. More so, the decisions they make regarding the company are well thought out because just as much as their decisions affect their businesses so are their personal incomes. On the other hand, a publicly listed company has the shareholders as its owners. However, these kinds of owners have different vested interests, with some being short term while others being long-term interests. Even more, their interests could significantly differ, thereby pushing the company to make decisions that might not even be on the company’s or society’s best interests. That said should shareholders of a public listed company come first when directors engage in decision making? And if yes, which kind of shareholders?

It is for this reason that directors should bring sanity to its fore, and act in a way that shows they are concerned about not only the prosperity of the company but also the long-term interests of shareholders. Even though directors may not principally be representing or even be answerable to the shareholders, they ought to be held responsible for every decision they make, if not accountable. Currently, directors in a Kenyan public listed company are in fact immune from footing any costs accrued from civil suits that arise from their reckless or even poor decisions; and even if they are found to have a case to answer, their criminal prosecution is a rare occurrence. Who doesn’t know that without consequences for our decisions and actions, we are least likely to act with appropriate consideration or concern?

By that, I don’t mean that the directors should always be held civilly or even criminally responsible for their decisions, otherwise most of the risky ground breaking decisions shall not be made a reality. However truth be said, when the directors are made aware of the existence of a consequence, that would not only scare them to make decisions responsibly. For instance, the sheer thought of one of the implications of their reckless decision making is that of personal bankruptcy would surely paralyze them. However, the catch here should be the threshold of the recklessness of their decisions. For instance, if such a decision should bring a once exceptionally performing company to its knees, then the directors should face the music.

Some of the ways that this music could take shape is salary claw-backs, as a lesson to the directors that as much as the company doesn’t prosper, so should you! In instances when such directors are laid off, their track records should always haunt them in prospective companies. However, this is not the case at the moment as directors are moving from one listed company to the other after draining the company’s coffers.  Sadly, this will by no means see the light of day as Boards of Directors are a close knit club where board members of company A also sit on the board of company B. Nevertheless, until the majority shareholders not only concentrate on the value gain of their shares and but also the prosperity of the company; the newly appointed directors will always influence company decisions and strategies that do not essentially benefit all shareholders, the company itself or even the society at large.