Ronan Horgan, chief executive of specialist SME lender CapitalFlow: ‘I knew that if I wanted to add value and enhance the credibility of the company, good corporate governance would be valuable'

“One of the first things I learned was best practice for boards is to have an independent chair separate from the CEO,” he explains. “I was chair and CEO of CapitalFlow at the time. Even from an administrative point of view, combining both roles was quite stressful. That led me to appoint a non-executive chair. That changed the dynamic completely. It allowed me to attend our board meetings as the CEO and it allowed the chair to manage the agenda, time, and the board administration.

“Our first chair has now been succeeded by a woman with a lot of experience in financial services regulation. It’s great to have a woman on board. Our board was all male and we needed to get a better balance there. That’s another thing I learned: the need to have diversity of thought and backgrounds on boards.”

Horgan was prompted to do the UCD Diploma in Corporate Governance by, among other things, the rapid growth of CapitalFlow over the years.

“We started in 2016 with just a few of us and the backing of Pollen Street Capital, private equity investor. Today we employ 81 people in our offices in Santry and Baggott Street,” he says. “My expertise is in SME finance, having spent most of my career with Bank of Scotland Ireland in that area. I have always been very interested in business finance and credit lending in general. No two businesses are the same and the different personalities involved have a big influence as well.”

We went from a greenfield site very quickly to a point where we were about to be taken over by a regulated bank

That growth and success saw the business being acquired by Dutch Neobank Bunq in the summer of 2021. “The journey from start-up to acquisition over the last five or six years was very interesting,” Horgan notes. “We went from a greenfield site very quickly to a point where we were about to be taken over by a regulated bank. That led me to think a lot more about governance and the sort of structures we would need in future. Having seen so many company crashes in the past, I didn’t want to repeat those mistakes.

“I had completed an Advanced Diploma in Management Practice through the University of Ulster about 10 years ago and really liked it. I always wanted to do something else, and I didn’t want to pick areas I was already good at like marketing or leadership. Corporate governance was a natural choice. I knew that if I wanted to add value and enhance the credibility of the company, good corporate governance would be valuable.”

Horgan chose the Smurfit Diploma in Corporate Governance for a number of reasons. “I had heard Prof Niamh Brennan, the programme director, talking about it on the radio. That was one reason. Another was the international aspect of the programme. It looks at best corporate governance practice not just in Ireland but overseas as well.”

The course content and structure also suited Horgan. “I’m not great on theories; I’m much more focused on practice, and the programme brought corporate governance down to a very practical level. It wasn’t just based on theoretical exercises; we did a lot of work on real world examples. We looked at different international companies and all aspects of corporate governance such as how you present financial information, ESG metrics and so on. The lecturers were all skilled in different areas and the group exercises were brilliant.

“Working in a group suited me better for most of the assignments and peer pressure always helps! We had Teams calls at the weekends to do the group projects along with two major written exams in May and December as well.”

The best practice insights he gained had an immediate impact on CapitalFlow and its governance structures. Apart from the appointment of an independent non-executive chair, a number of critically important board subcommittees were established. “We now have audit, remuneration, and regulatory and compliance committees with non-executive directors actively involved in all of them. That brings an extra layer of independent oversight.”

It becomes very easy for people in the business to agree with you. Having the right structures in place means you always get asked the difficult and challenging questions

Horgan explains the fundamental importance of having those independent viewpoints on board. “When you are the CEO of a start-up which has been doing well for six years, a lot of decisions come through this central person. It becomes very easy for people in the business to agree with you. Having the right structures in place means you always get asked the difficult and challenging questions. The CEO is reporting to the board, not to himself.”

That makes for better decision making, he adds. “It can be all too easy for a CEO to get to a point where they think every decision, they make is brilliant if they don’t have strong independent thinking around them and aren’t subject to challenging questions.”

Those independent voices also bring additional expertise. “We are in a situation where inflation is high and interest rates are rising. And there will be other headwinds to face. Having diversity of thought and people from different backgrounds with experience of different areas of business on the board helps to deal with those challenges.”

Horgan has no hesitation in recommending the UCD Diploma in Corporate Governance to others but does add a caveat. “I was concerned that the course would have a large concentration on law, compliance, and regulation. But while we covered all those subjects and topics, the programme covers so much more about good corporate governance in companies.

“I would definitely recommend it to people. But you need to dedicate time to it. You need to put the work in to get the best out of the programme.”

Click here for more information on UCD’s Diploma in Corporate Governance, commencing September 6th 2022