Gibraltar: Wanted: A Boardroom Robot (But The Age Of Men Is Far From Over)

Last Updated: 28 November 2016
Article by Nigel Feetham

In an age of rapid technological advancements, Nigel Feetham discusses the future of the boardroom.

One of my professional and academic interests is in the field of analytical technology and its use in business. Earlier this week I asked myself the question, could a robot (technically, a computer software) ever be appointed as a director of a company? I immediately turned for inspiration to the modern equivalent of the ancient oracle at Delphi (the Google search) and found a recent news item reporting that a Hong Kong company had appointed a computer program as a member of its board of directors. The software, known as 'VITAL' (Validating Investment Tool for Advancing Life Sciences) is a predictive analytics tool for investing. It was, however, pointed out that 'VITAL' had not yet been given a vote on the board of directors nor likely to be in the near future.

Clearly the original story was not intended to be taken literally. A computer software (or algorithm) does not have the requisite legal status for appointment as a director of a company. That is not to say that a computer cannot be programmed to take decisions on behalf of a company. In fact, in the corporate world that happens regularly.

Indeed, computers are widely used across all major industries to assist senior management and directors with important decisions. Some companies trading in the financial markets even rely almost exclusively on computers. But they still have to be programmed and maintained by humans, and spectacular (and very costly) computer errors have been known to have occurred. Computers are also used extensively in insurance and banking for risk management, including risk selection, pricing, investment and much more.

But in today's business world computer software is nothing more than a tool. Its interaction with humans is limited by the program that created it. While they appear to be very smart, they do not have 'awareness' in the human sense (referred to by computer experts as consciousness). A super computer like Watson, for example, clearly demonstrated that a computer can outsmart humans in major quiz competitions but only because it has the capability to scan through millions of sources of information (data) per second to build its knowledge. So too have chess playing computers already beaten world champions. And if all that was not enough, a computer (Nautilus) has been developed as a tool to predict future events using historical news data from the last 30 years. In reality similar computer software has been used by actuaries and modellers over many years to identify and predict business trends. At the heart of any computer generated prediction sits data; that is historical information. A computer simply analyses the available data and is able to identify trends which a human analyst could only do at a considerably slower speed and with a higher margin of error.

Still, we are far from a situation where computers can take over the functionality of a boardroom. Aside from the obvious legal status impediment, in the regulated sector it is inconceivable in today's regulatory environment that a regulator would allow a computer software to pass the 'fitness and propriety' test required of senior managers and directors. But if technology advanced to the point where a computer achieved the level of awareness of a natural person, it would certainly open up the debate. One leading scientist has confidently predicted that this will happen by 2029. Such a development would have profound impact in our society, not just in terms of technological advancement but also in how we think about the whole question of ethics and indeed in the potential constitutional implications.

Most (if not all jurisdictions) have, as a matter of law, recognised companies (and other business forms) as 'legal' persons. As such, companies have all the rights and responsibilities enshrined in law (but, logically, not all the legal rights of a human being). © Hassans 2014. All rights Reserved

For example, a company can enter into a contract like any person can, it can acquire property in its own name, and it can even be appointed as a 'corporate' director and exercise all the rights, and have all the obligations, of a director under applicable law. The obvious difference between a legal and natural person is that a legal person can only act through its human directing minds.

The question therefore arises, if the law already recognises the legal fiction of the company as a 'person', would it ever be too far fetched to confer on a 'computer' (with or without the physical appearance of a human robot) a similar legal status? An obvious observation is that even humans have not always enjoyed the equal status they have had in modern times. Indeed, consider the legal history of slavery. Under ancient Roman law, slaves were regarded an item of personal property (a res) to be bought and sold and they did not therefore have the legal status and rights of 'free' citizens. While today slavery (in all its forms) would be viewed as the bygone era of a barbaric age, it was (regrettably) part of our history for thousands of years.

Of course, the evolution of the modern corporate form has not been without its difficulty and the limited company only developed as a result of the needs of early capitalism, while the abolition of slavery became a moral imperative of a civilised society and even then it still took many more years to achieve full recognition of legal rights for all humans irrespective of race, gender and religious beliefs. So if historical information (data) is a reliable means to predict future outcomes, our own history tells us that the evolution of the law in the field of artificial intelligence can be expected to be slow and not without controversy were scientists ever able to awaken the consciousness of a computer to match human emotional intelligence.

We started this article by asking the question, could a robot realistically become a director of a company? Clearly the answer is no, or at least not for now. There are currently regulatory, legal and technological reasons why a computer could not sit on the board of directors qua director, less still be able to participate in board room decision-making outside what they are already programmed to do. Whether this will always be the case would, in theory, depend on how far computer technology advances. I do not myself see it happening in the foreseeable future. But what we are more likely to see are advanced computer systems being used at boardroom level to assist human directors with their own decision-making.

That could well be the next evolutionary step for the makers of robotics. A boardroom 'Watson' that is able to answer questions from directors on all aspects of the company's business (such as financials, operations, investments), while at the same time report to the board on matters of compliance and analyse data to make business predictions, cannot be too far into the future. In fact, the technological capability for that exists now and senior management in large companies already use sophisticated computer systems that on the press of a button help to analyse data across all business units.

In this regard, the day of the 'boardroom robot' where the board members themselves turn to a computer program for real time answers to questions may be almost upon us. In the same way as in many companies the 'company secretary' attends board meetings to assist the board it is not inconceivable that a 'robot' (a computer) may in future do likewise.

I can see a boardroom of the near future using some of the same technological features becoming increasingly popular today (such as iPads replacing paper board packs and video conferencing instead of telephone conference), but also having a voice activated computer system capable of answering questions or indeed presenting information to the board. It must be emphasised, however, that this would be a tool to assist the board; it can never be a substitute for the directors' own personal judgement. In that sense, the time of the boardroom robot has come, but the age of human directors is far from over.

www.gibraltarlaw.com

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