Part II of V: Corporate Governance and Strategic Importance
Continuing where Part I left off, the next installation of So You Want to Start your own Space Agency? takes an in-depth look at starting a private space agency in the Caribbean. For astropreneurs that are just discovering this series, part I put forward four factors that will be used to explore and analyze region-specific commercial space agency case studies. The four factors are as follows:
- Corporate governance
- Strategic importance
- Extent of international participation
- Specific industrial and specialized sector
This installment of the series will focus on the first factor, corporate governance in the Caribbean. While originally conceived as being a three-part series, due to breadth of this topic, a thorough analysis requires that each factor receive its own entry.
“With this great future, you can’t forget your past” – Bob Marley
Before this section delves into an analysis of corporate governance with respect to starting a space agency, it is important to remind the readers that the Caribbean is not one unified land in terms of locale and structure. In fact, because the Caribbean is composed of 26 countries and 7000 islands (to be discussed more in the Strategic Importance entry) this creates a precarious situation regarding which Caribbean country should this case study use to analyze whether that same country’s specific corporate governance is best suitable for creating a private space agency.
As stated in part I, this series is part investigative journalism, part informational piece. With that in mind, it is important to recognize where the Caribbean has been and currently is in terms of establishing a private space agency and corporate governance structure.
Starting with the former, the most analogous case of establishing a private space agency in the Caribbean would have to be the Caribbean Spaceport (CSP). Proposed in 2005, with the support of governmental, business, and academic institutions, CSP was set to be developed and established on the Netherland Antilles island of Curacao. According to the International Space University and Springer Books Spaceports Around the World, A Global Growth Industry, CSP would have set itself apart from other spaceports due to several advantages including Curacao’s fully developed tourism infrastructure and the existing high-tech infrastructure found at Hato International Airport (long enough to deal with launches for suborbital spacecrafts). Unfortunately, the flagship spaceflight company attached to CSP, XCOR Aerospace, filed for bankruptcy in 2017 and any development of CSP has stopped indefinitely.
When it comes to determining best type of corporate governance structure for creating a private space agency, using CSP as an analogy is shortsighted. One reason for this, as stated above, is that the Caribbean is composed of 26 countries that are either individual sovereignties, still reliant on post-colonialism relationships, or an amalgamation of both. For instance, while Curacao became an independent country in 2010, the majority of laws and regulations are based on their Netherlands counterpart. Moreover, in terms of corporate governance history, there has been a recent development of region-specific corporate governance through case law, regulations, and initiatives such as the CARICOM (Caribbean Community) Single Market and Economy. Irrespective of the specific Caribbean country that would be home to the private space agency and based on the information that is available, there are common themes detailed in Suzanne Ffolkes-Goldson’s Commonwealth Caribbean Corporate Governance that the Caribbean nations value in terms of corporate governance that will be explored in the next section. For example, the protection and empowerment of shareholders, the impact on government agencies, and the role and responsibilities of directors and officers in companies and in government agencies.
“Not only does corporate governance function as a way for a company to police itself, but it helps facilitate productive, entrepreneurial, and sensible management that allows a company to achieve long-term success.”
Corporate governance in the Caribbean has been limited to a few country-specific initiatives and the development of some specific country codes. It was only in 2006 when Jamaica became the first country in the Caribbean to develop a country-specific Code on Corporate Governance. As a result, Jamaica has one of the most comprehensive guidelines and codes structuring corporate governance in the Caribbean. It is fitting to use Jamaica’s findings as a starting point in determining how corporate governance is best suitable for creating a private space agency.
According to the Private Sector Organization of Jamaica’s (PSOJ) first Corporate Governance Code for Micro, Small, or Medium Sized Enterprises, corporate governance is simply described as “the system by which enterprises are directed and controlled”. It must be noted that despite the reference to size in the Code title, those terms are used broadly. While each of the factors used to explore and analyze region-specific commercial space agency case studies are important in and of themselves, corporate governance sets the foundational structure for the private space agency. Moreover, as detailed in the Code, what makes this PSOJ’s Code comprehensive is that it is based on benchmark characteristics that are directly applicable to companies formed and registered under the Companies Act of Jamaica 2004. While not a mandate, the PSOJ encourages companies to fully adopt the Corporate Governance Code to help foster growth through corporate governance. Astropreneurs that are interested in Caribbean investment, specifically in Jamaica, should review the Code.
Due to the breadth of the subject matter, this series cannot address every area of corporate governance found in the Code. The PSOJ code concentrates on the following six areas of corporate governance:
- Policies and Procedures
- Board of Directors/Advisors
- Transparency and Shareholder Relations
- Control Environment
- Stakeholder Relations
- Family Business Governance
However, it is worth noting that out of the six areas, the only two sections that are highlighted are board of directors/advisors and transparency and shareholder relations.
In terms of establishing a board of directors, large complex companies such as a private space agency need the board of directors because they are fundamentally responsible for governing the company as well as approving all corporate policy decisions that may influence the achievement of the company’s goals. In addition, as found in corporate governance laws in the United States, the PSOJ suggests that the board of directors adopt a board charter that establishes its roles, responsibilities, and frequency of meetings. Again, like US law, every member of the board of directors owes a duty of care to the company. As a result, a director must have regard to the interests of the company’s shareholders and employees when fulfilling his/her duty as a director.
Regarding transparency and shareholder relations, the Code states that as companies grow, they must adopt procedures for transparency and disclosure of operations and material information. One reason for transparency procedures the PSOJ states in the Code is to satisfy requirements of stakeholders. Transparency has the potential to boost investor confidence and generate investment that will lead to economic growth. Due to the international nature of the space industry, the importance on transparency can not be understated. As stated, not only does this increase investor confidence, but in the case of the space industry, it helps avoid any violation of international space treaties.
As stated earlier, discussing corporate governance in the Caribbean is difficult because a) corporate governance is not uniform among the Caribbean and b) for the most part, corporate governance is either not codified or has recently been codified in the last two decades among most Caribbean nations. In the case of Curacao, an independent nation and the proposed site for the Caribbean Spaceport, their laws regarding corporate governance are extensions of laws in the Netherlands. With that said, to establish a private space agency in the Caribbean, the location must be in a country that has corporate governance laws in place to foster corporate growth.
Stay tuned for part III for an analysis regarding strategic importance in terms of autonomy of access to space and market access to commercial space.
Posted by Mclee Kerolle