Plz help me 2 find and discuss 4 important issues of corporate governance?

Question

i'd really really appreciate ur help.thank u

Answer 1

Board Matters

- Other than charting corporate strategy, the Board of Directors is chiefly responsible for monitoring managerial performance and achieving an adequate return for shareholders, while preventing conflicts of interest and balancing competing demands on the corporation. Most governance guidelines and codes of best practice assert that the Board should explicitly assume responsibility for the stewardship of the corporation and emphasise that board responsibilities are distinct from management responsibilities.

- Being primarily responsible for the workings of the Board, the chairman’s role in securing good corporate governance is crucial. On the other hand, the Chief Executive Officer (“CEO”), representing management, shall have the general executive responsibility for the conduct of the business and affairs of the company. In carrying out his duties, the CEO should work closely with the Board to implement the corporate policies set by the Board and to realise a common vision for the company.

Remuneration Matters

- The principal objectives on remuneration matters are to facilitate appropriateness, transparency and accountability on the issue of executive remuneration. These are premised on the fundamental principle of accountability to shareholders.

- There should be principles for executive remuneration, which place greater weightage on individual performance of executive directors and key managers, as well as corporate performance, as determinants of remuneration.

- Disclosure of corporate remuneration practices are intended to provide investors complete and meaningful information on the application of the Board's remuneration policies in the context of the performance of the company. These disclosure requirements again promote the fundamental tenets of accountability and fairness. Disclosures will provide shareholders, in an easily understood format, with the information they need to know on the quantum and components of remuneration, in conjunction with the company's performance and stated policies.

Accountability and Audit

- In the area of "Accountability and Audit", the respective roles of the Board and Management tend to overlap. Attention should be drawn to the roles and responsibilities of Management in the corporate governance process, as this will present the roles and responsibilities of the Board in better perspective. Accountability of Management to the Board is stressed, and the importance of providing all (both executive and non-executive) members of the Board with monthly management accounts. Also, "quarterly reporting" is recommended, so that minority shareholders have access to more timely information.

- Firstly, one should emphasise the importance of the independence of the Audit Committee ("AC"). The chairman of the AC should be an independent director and that ACs should establish a practice of meeting with the external auditors and the internal auditors, without the presence of the company's Management.

- Secondly, the importance is emphasised of the internal audit function being independent of the Management as the internal audit function is one of the principal means by which the AC is able to carry out its responsibilities effectively. There should be safeguards to protect the independence of the internal auditor. Accordingly, the internal auditor should report directly to the AC. In practice, the internal auditor's responsibilities often include activities other than internal audit. For the internal audit function to be effective, it is important that the internal auditor is not responsible for auditing its own activities.

- Thirdly, the importance is emphasised of Management's responsibility in maintaining a sound system of internal controls, and the Board's oversight responsibility to ensure that this is done. Whilst the Board collectively shares this responsibility, it is emphasised that it is the AC's specific role to ensure that an annual review of all material controls is conducted.

- The members of the AC should be appropriately qualified, as this will enhance the members' confidence and independence in the committee's dealing with the Management, as well as with both the external and the internal auditors.

- The internal audit function should be adequately staffed, and accorded appropriate standing and authority to enable the internal auditor to gain access to information and the senior members of the management team. This is important for the internal audit function of the company to operate effectively.

Communication with Shareholders

- The AGM is often the main opportunity for small shareholders to be fully briefed on the company's activities and to question the Management on both operational and governance matters. Shareholders have the right to participate in, and to be sufficiently informed on, major corporate developments. Companies should be encouraged to welcome the views and inputs of shareholders, and to address investors' concerns. Additionally, in disclosing information, companies should be as descriptive, detailed and forthcoming as possible, and avoid meaningless boiler-plate statements.

- Close contact between companies and its shareholders might lead to different shareholders receiving different information. In particular, unpublished price-sensitive information may often be disclosed at analysts' briefings and private conversations with major investors. All investors, whether institutional or retail, should be entitled to the same level of communication and disclosure. Further, one of the OECD Principles of Corporate Governance states that processes and procedures for general shareholder meetings should allow for equitable treatment of all shareholders. Such an equitable and equal treatment should be extended to the issue of disclosure. In the event where a company unintentionally or inadvertently discloses certain information to a select group, it should be required to make the same disclosure to the public. This could be done by way of a press release, an announcement on the company's website, or other comparable means.

- The UK Combined Code requires the chairmen of the audit, remuneration and nomination committees to be available to answer questions at the AGM. It is also important that the company's external auditors be present as well, to assist the directors in addressing any relevant queries by shareholders.