The Nomination Committee in Maltese Listed Companies

Abstract

The aim of this study is to examine the Nomination Committee (NC) in Maltese listed companies. The study achieves this by assessing the Maltese regulatory framework relating to this Committee, as well as its roles, status and effectiveness. A predominantly qualitative mixed methodology was employed to achieve these objectives. Twenty-five semi-structured interviews were held with two financial analysts, two MFSA representatives, eight audit firm representatives and 13 representatives of Maltese Listed Companies (MLCs) Research findings show that the NC is not as yet not well established among MLCs. There is a particular lack of insistence on the part of local regulatory authorities, as well as substantial resistance from listed companies, with regard to the adoption of this committee. Furthermore, most NCs in such companies are not performing all of the roles listed in their Code while the roles currently performed may need to be carried out in a more structured manner. Yet it is highly worthwhile for such companies to devote more attention to the NC, this being one of the best possible bastions of appropriate corporate governance. The change in the status of the NC from being merely recommended by the Code of Principles of Good Corporate Governance to becoming mandatory by the Listing Rules is increasingly called for. In this way, Maltese listed companies will need to embrace such a change. It is hoped that this study will contribute towards fostering more awareness about the NC and the corporate governance of Maltese listed companies.

Board Diversity in Selected Large Maltese Family-Controlled Businesses and its Implications on Corporate Governance

“…This suggests the increased likelihood of the FB Board being more diverse (ibid.). Baldacchino et al (2021) remark that age-diverse Boards in Maltese Listed Companies (MLCs) provide a variation of skills which enhance problem-solving. This generational shift also reduces the likelihood of experiencing complacency in the boardroom (Mahadeo et al, 2012).…”

“…The recently approved Directive 2022/2381 requires the Boards of listed companies within the European Union (EU) to have at least 40% of the underrepresented sex among non-executive directors, or else 33% of the underrepresented sex among all directors by 30 June 2026 (EU 2022). Baldacchino et al (2021) denote that gender diversity in MLCs improves the problem-solving skills in the boardroom. Kim and Starks (2016) further remark that female directors improve the efficacy of the Board's advisory role.…”

“…Moreover, female members prove beneficial in strategy development (Francoeur et al, 2008). However, Baldacchino et al (2021) remark that a person's competences, not their gender, ultimately determines whether or not they are suitable for the Board. Moreover, gender quotas may lead companies to bypass them (Campbell and Bohdanowicz, 2018).…”

“…Moreover, gender quotas may lead companies to bypass them (Campbell and Bohdanowicz, 2018). Hence, rather than establishing hard quotas, it may be more effective to increase awareness by considering teleworking and other sorts of technology (Baldacchino et al, 2021) or else soft law development (Kang et al, 2023). Lau et al (2016) and Singh (2007) remark that foreign directors may expand a firm's network internationally.…”

“…Board of Directors (Board) diversity is a crucial measure which determines whether, and to what extent the Board functions effectively (Booth-Bell 2018). However, although Baldacchino et al (2021) note that each diversity aspect taken into account has a positive impact on many corporate governance (CG) factors, with any negative influences being minimal, family businesses (FBs) may perceive Board diversity as a danger to their existence (Mubarka, Kammerlander 2022). This may lead them to rather appoint directors from a less diverse pool of family members (Jorissen et al, 2017).…”