Business and Economic Commentary
The attempt by Banks DIH Holdings Inc to impose a 15 per cent cap on shareholder voting power through a by-law was never a technical governance adjustment. It was a fundamental challenge to settled principles of company law, shareholder rights, and the constitutional hierarchy established by the Canadian-modelled Guyana’s Companies Act. That hierarchy is the law (Act) – the Company’s Articles – and the Company’s By-laws (if any). Unlike the old Companies Act, by-laws are not compulsory.
From the outset, the proposal was misconceived. It attempted by by-law to do what the law permits by an amendment of the Articles by special resolution, and to limit voting rights attached to issued shares through vague notions of “acting in concert”.
The company answered a well-meaning call for restraint with costly newspaper advertisements that read more like a diatribe, personally attacking the writer rather than addressing the core legal defect – the impermissibility of altering entrenched shareholder rights by secondary by-laws. None of this cures illegality. Shareholder democracy is preserved by obedience to the law, not by rhetoric.
The High Court has now decisively vindicated that position. Justice Sandil Kissoon held the proposed by-law to be prima facie unlawful, ultra vires the Companies Act, and incapable of lawful ratification, reaffirming that articles confer rights while by-laws remain subordinate.
The ruling is significant beyond Banks DIH Holdings Inc. It reaffirms the rule set out in section 26 of the Companies Act that companies – private or public – with a single class of shares cannot abandon one share, one vote, and that directors cannot assume investigative or enforcement powers reserved by statute to regulators.
Equally important is what this episode reveals about institutional discipline. Guyana’s corporate environment is still maturing, and that process depends on respect for the rule of law, not improvisation. Novelty and good motives do not excuse illegality.
There remains a simple, lawful path for any company genuinely concerned about ownership: propose an amendment to the articles, comply strictly with the Companies Act, disclose fully to shareholders, and secure the requisite supermajority. And importantly, follow the law and provide for a buy-out of dissenting shareholders. Anything less undermines confidence – not only in the company, but in the market itself.
The High Court’s intervention was therefore not an intrusion into corporate affairs, but a necessary reaffirmation of legal boundaries. Companies are creatures of the Companies Act. They must follow the law and recognise the hierarchy of the company’s constituent documents.
Like DDL, the Banks group has a particular governance problem with the composition and posture of the board. It is a stacked board that appears to labour under the mistaken belief that its primary obligation is loyalty and fealty to the Company’s chairman rather than the high standard of fiduciary duties to the company. Directors are trustees of corporate power, required to exercise independent judgement in the best interests of the company.
Their duty is not even owed to the parent company as an abstract entity. Section 96 of the Companies Act is explicit: “In determining the best interests of the company, directors must have regard to the interests of the company’s employees in general as well as to the interests of the shareholders.” The statute does not permit the subordination of those interests to security of tenure, personal allegiance, historical sentiment, or internal power arrangements.
When boards forget this, governance fails. And when governance fails in a publicly traded company, confidence drains away, shareholders vote through the disposal of their shares, and share price falls.
Wasting money on full page ads might massage egos. They do nothing for the promotion of shareholder value.