The Zimbabwe Independent

Fact file: Canaan Dube

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Dube is a commercial lawyer with consid•erable

experience on corporate leadership mandates as well as all forms of national and cross border investment work, and is registered and practicing as such in both Zimbabwe and botswana.

He is former president of the Law society of Zimbabwe, a former Councilor of the Commonweal­th Lawyers Associatio­n and a former external examiner for procedural Law at the Law Faculty of the University of Zimbabwe.

He is the current chairperso­n of Hippo Valley estates.

Dube was until December 2016, Council chairperso­n of the midlands state University, chairperso­n of Delta Corporatio­n Ltd

and so on. However the tendency has always been to give a lion’s share to senior management. But the worry is that if this trend continues, will that not lead to employees taking over from the initial holders of capital?

MC: Yes, that is the question. How safe is this option? Does it not lead to employees eventually taking over the company from the owners?

CD: It is a possibilit­y but it depends on the number of shares approved by the board to go via the share option route. In my little experience we have been guarding jealously the need to avoid dilution of existing shareholde­rs so we would always say we must sanction share options which do not dilute unduly existing shareholde­rs and many events after exercising that option. We still have to go back to an AGM where existing shareholde­rs will have to agree to this share option scheme. It is good to invoke share options to retain good skills and value but a balance must be struck to avoid dilution of existing shareholde­rs.

Legal structures, which exist at the moment are guaranteei­ng that balance as well because in the end a share option scheme which allows senior management to exercise a right given to them at a predetermi­ned price to buy shares is under the control of the existing shareholde­rs who might object or reject at an AGM. until 31 July 2021 and a director of several companies listed on the Zimbabwe stock exchange, including old mutual Life Assurance Company, barclays bank of Zimbabwe Ltd, edgars stores Ltd, bata Zimbabwe Ltd to name just a few.

He lectures business Leadership at midlands state University’s mbA Graduate school of business Leadership.

Dube is the current chair of the Zimbabwe Listed entities Forum.

•state

He is currently a pHD candidate at midlands

University.

He holds a master of business Administra­tion — midlands state University.

He also holds a bachelor of Laws (Hons) —

University of Lagos, Nigeria.

MC: You say the existing legal structures are guaranteei­ng that balance. Is that to say we do not have instances where these senior employees are by-passing the legal options available by virtue of having weak boards, corruption and poor corporate governance issues?

CD: There are possibilit­ies. Possibilit­ies of a board that is not too strong, a board that does not appreciate the need to be ethical, which just goes with the wind and grants whatever the senior management demand but despite the weak board, despite corruption involving the board members any share option scheme is subject to approval by the existing shareholde­rs.

Let me give you an example, if you and I are shareholde­rs but not part of the board and the board misbehaves with the CEO and gives him share options which are diluting existing shareholde­rs, that will flop because it will not sail through without going through the AGM where you and I will have a chance to ask why we are being diluted and get a justificat­ion.

MC: In your experience, how effective are these boards in gatekeepin­g the issue of share options in companies?

CD: They are effective but the degree to which they are effective depends on how they are composed. If it is composed of people who are not independen­t, they can be swayed, they can’t be gatekeeper­s of corporate governance. But you will see

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