INCOMPETENT DIRECTORS [To the Editor of the SPECTATOR.] SIR,—Are we
not as investors somewhat—if not entirely— responsible for the method of constititting Boards ? Assume that a competent organizer sets out to tart a new industrial concern and selects from his own class a suitable
team for taking it in charge—(1) a man competent on the accountancy side of the business, (2) another on the sales- manship side and (3) a third on the technical side.
Assume that having got that preliminary organization of the business thoroughly in hand, with these men 6n his board, he proceeds to issue a prospectus to the public to invite financial support. How do we treat it ? Do we have regard to the competency of the proknoter and his team ? Would he not find that we as investors should rally round him with greater alacrity if he had on his Board some persons with titles, or other like qualifications ? If that be so, is our attitude as investors not responsible for the creation of the "dud '7 directors ?
• To overcome what is a real difficulty I suggest on the principle of self-help that an independent Shareholders' Association should be formed with branches all over the country to deal with questions affecting shareholders, and in particular to be organized so as to be able to give sound advice as to the competence of the promoters from the technical point of view rather than from the social.
. An organization of this 'kind could press upon Parliament certain reforms of the Companies Act 1929; in particular that the qualifications of a director should not merely be his financial stake in the concern but his competence to do the work required of him. The register of shareholders should have set forth in it in detail the qualifications that have been sufficient to entitle the director to his position, so that shareholders may know on what grounds his election -has been based. Above all; we investors have to educate ourselves out of the idea that rank or heredity is necessarily a guarantee that our. .money may be safely put into concern.—I am, Sir, &c.;
iNVESTOR.
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