A shareholder is usually free to appoint the supervisory directors they think are right. Sometimes thresholds have been incorporated. The articles of association may stipulate that the supervisory board appoints supervisory directors. The shareholder’s right to appoint can also be linked to a non-binding or binding nomination by the supervisory board. In the latter case, the shareholder can only appoint the supervisory director who is listed on the nomination.
The background is that the supervisory board is often better placed to assess the suitability of candidates. Another consideration may be (for example in the case of State-Owned Entities) to keep the vehicle behind it (the country) at a distance. Autonomy of the supervisory directors is then of paramount importance.
The Central Bank Statute
At the Central Bank of Curacao and St. Maarten (CBCS), keeping the countries at arm’s length was explicitly laid down in the law. The Central Bank Statute, an Act, sets out the main governance rules of the CBCS. These rules are aimed at maximising the autonomy of the members of the supervisory board and its chair.
Section 25 Subsection 3 of the Central Bank Statute therefore stipulates that the chair of the supervisory board is appointed by the countries jointly by national decree, based on a joint nomination by the Ministers of Curacao and St. Maarten. This nomination is made on the basis of a recommendation by a 5/6th majority of the supervisory board. The sequence is therefore mandated by law: (1) recommendation by the supervisory board, (2) joint nomination based on that recommendation by the Ministers, and (3) appointment by national decree by the countries. Without recommendation no nomination, without nomination no appointment.
A legally valid recommendation was made in April 2021 for the vacant position of chair. Initially, (only) the Minister of St. Maarten had accepted this recommendation. Subsequently, however, the Ministers agreed not to follow the recommendation and to search together for a new candidate.
The law does not allow for this. A new candidate for chair cannot be sought if there has already been a legally valid recommendation. That recommendation must be followed. That is the system of the law, precisely to prevent political influence within the CBCS from becoming too great. The only case in which the recommendation does not (cannot) be followed is when the person on the recommendation withdraws. In that case, the supervisory board has to provide a new recommendation. That is the game that is being played now.
It appears that recently the President of the Court of Appeal has not followed the system of the Central Bank Statute consistently. In respect of temporary appointments, she departed from the recommendations and nominations of all the supervisory directors, except for those regarding the chair. That is regrettable and sets a dangerous precedent. Now, successive governments can disregard legally valid recommendations and have their ‘own’ chair recommended and nominated in case of a vacancy.
This situation has arisen because in the wake of the precarious situation four years ago at the CBCS (all the supervisory directors had left), the governments at the time appointed six new supervisory directors and a new chair in one go. This has created the problem that in the future, the entire supervisory board shall always step down at almost the same time. Then it shall always be one government that shall fill all the vacancies. The solution is to rigorously apply a periodic rotation scheme. Then the replacement of supervisory directors can take place gradually. This would also allow several governments to play a role in these appointments. But please note: in any case, a supervisory director at the CBCS must be able to operate on an independent basis, even when recommending a chair. And a legally valid recommendation must simply be followed.