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Loonies on your Board

  • September 20th, 2007

Shareholders and company directors might be chortling at the PC lunacy in this morning’s Audrey Young story about Crown Law advice that it is a breach of the Bill of Rights to have a rule entitling a Board to toss out a director who goes loopy enough to be committed.

The scoffing might not last. The opinion reasoning is not confined to the government sector. And many if not most committee and board constitutions, as well as most laws constituting boards, contain that old provision.

Sure, at this stage it is only Crown Law’s advice, the same outfit as managed to tell the Attorney General that the Electoral Finance Bill was not an attack on the most important free speech of all – citizen/voter speech to each other at election time.  Citizen/voters are now “third parties” in Parliament’s new jargon.

But the fact that Crown Law come up with these things with a straight face, and some one as shrewd and cynical as Dr Michael Cullen feels obliged to announce it as the word of the law, shows the way the current is flowing.

Constitution drafting should start taking account of that currrent. My drafting will now reserve more arbitrary powers for a Board majority to toss out troublesome members.

Not so good for preserving challenge in free and frank Board discussion, but better, perhaps, than having to tolerate a loony in your midst until you’ve proved how how badly he affects you.

For 150 years employment law has been largely kept out of the shareholder/company/director relationship. Freedom from its idiotic dismissal remedies has been to the benefit of them and all of us who depend on effective company governance.

That happy state might be ending.

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