We have seen significant corporate governance failures in the Caribbean Community (CARICOM) over several decades - Jamaica in the north of the Caribbean, with the Financial Crisis (mid-1990s); and in the south, the CLICO/CL Financial meltdown of Trinidad & Tobago (T&T), (2008-2009). Barbados was not spared; there was the Trade Confirmers Limited debacle of 1987.

The CL Financial failure not only impacted the T&T economy, but it reverberated to Barbados and throughout the islands of the Organisation of Eastern Caribbean States (OECS); essentially all CARICOM member states.CL Financial was a major conglomerate in CARICOM with businesses not only in the financial services sector but also in energy, real estate, manufacturing, agriculture and forestry, retail and distribution, and media and communications.

In his academic paper, Ron Sookram (2016) cited a failure of regulatory oversight, inadequate legislation, poor regulatory enforcement, in addition to poor governance, as reasons for the failures and crises that occurred in the three previously mentioned markets in the Caribbean.

Soverall and Persaud, 2013[1], in the instance of CL Financial, cited, besides the obvious financial vulnerabilities, its failure was compounded by a weak legislative and regulatory framework regarding the holding company, CL Financial, which was not subject to formal regulatory oversight. There was also a failure of internal governance, when practised.

The taxpayers of these territories bore a significant cost to put these failures right, and the governments of CARICOM had much work to do in restoring confidence to the capital markets, so citizens of CARICOM would be comfortable to participate, once again, in these markets.

The resulting fallout from CL Financial’s failure illustrated the link between securities legislation, regulatory oversight, and corporate governance practise. To mitigate the risks associated with similar reoccurrences of corporate failures of this magnitude, Governments need to address the following question: “What is the Influence of Securities Legislation on Corporate Governance Practise and Codes in The CARICOM Region?”  

To address this question, the following areas require the attention of CARICOM Governments:

  • Integration of capital markets in the CARICOM region;
  • The role of securities legislation in facilitating integration of capital markets;
  • The role of corporate governance in facilitating integration;
  • The impact of securities legislation on corporate governance practise on codes within CARICOM.

Integration of Capital Markets

Under the “Revised Treaty Of Chaguaramas Establishing The Caribbean Community Including The CARICOM Single Market And Economy”[2] (the Treaty), Article 44(d) of the Treaty states the requirement of “the establishment of an integrated capital market in the Community;”. Integration of the regional capital markets would therefore require a corporate governance framework that is uniform across the Region.

The Role of Securities Legislation

Building strong capital markets is a challenging endeavor that encompasses various intricate components, such as robust and effective securities legislation. This point was emphasized during the June 2018 meeting of CARICOM's Council for Finance and Planning (COFAP), where it was contended that the lack of a unified regional capital market hampers economic growth and restricts the capacity of governments and the private sector to mobilize financial resources.

In recent years, there has been a global effort to establish regulations for securities to foster the advancement of contemporary financial markets. Notably, organizations such as the IMF and the UNIDROIT Geneva Convention on Substantive Rules for Intermediated Securities have played a role in this endeavor. Against this backdrop, CARICOM has directed its attention towards the growth and regulation of a regional securities market, aiming to integrate it into a unified capital market. The primary goal has been to formulate comprehensive legislation that encompasses the entire CARICOM region and facilitates the establishment of an integrated capital market.

The Role of Corporate Governance

The definition of corporate governance is a body of rules that manages the relationship between the principals (or shareholders) and agents (Board of Directors and Senior Management) of the company to ensure the interest of the company is protected while concurrently considering the interest of other stakeholders including, inter alia employees, creditors, regulators, market participants, public.

The advantages of robust capital markets, and the involvement of companies therein, in developing economies are widely recognized. Apart from enhancing the efficient distribution of resources by working alongside commercial banks and the role they play in financial intermediation, they can enhance the ability of economic actors to handle financial risks and withstand unforeseen challenges. Furthermore, well-established capital markets promote financial integrity among companies through market discipline and require adherence to globally accepted standards in areas such as accounting practices, transparency, and governance, among others. However, despite these advantages and the fact that they promote the practice of good corporate governance, capital markets in the majority of emerging economies, including the CARICOM region, continue to be limited and underdeveloped.

Securities Legislation, Corporate Governance & CARICOM – Gaps to be Filled

Unfortunately, there is a scarcity of academic work regarding the nexus between securities legislation and corporate governance practise and codes within CARICOM. Further research and exploration of these topic areas could help policy makers determine what improvements can be made to securities legislation to improve corporate governance practise within CARICOM thereby facilitating the attractiveness of capital markets to regional and international investors.


Transforming corporate governance practices in CARICOM can facilitate the regional integration of capital markets. Securities legislation is the lens through which we must view this transformation resulting in entrenching, “Security in Securities”.

Marlon E. Yarde
DBA Candidate, Edinburgh Napier University, Business School
Managing Director, Barbados Stock Exchange Group

[1] A Study of Corporate Failure and the Political Economy of Financial Regulation in Trinidad and Tobago and the Caribbean, International Journal of Humanities and Social Science. 2013

[2] Signed by Heads of Government of the Caribbean Community on July 5th,2001 at their 22nd Meeting of The Conference in Nassau, The Bahamas