Corporate Governance: 1434282

Introduction

               The main objective of ABC International Limited is to exist at the forefront of the market and have developed and implemented several management practices and policies. Such management practices and policies considers as the quality regulation for every sector. The company guaranteed that its business will be conducted with the zero harm policy to all individuals and the climate. The standard of services and products are consistently and reliably maintained. In the company competing for the prevailing series of goods is significant, exempt in the military area where various impediments exist (Kabir and Rahman 2016). Furthermore, numerous novel technologies include computer-based structure, wireless communication, and telecommunication structure convergence, which might have planned execution for the company. Nevertheless, novel contestants into the industry might include telephone companies, computer manufacturers, and broadcasting networks, suppliers. The company ingresses some specialized electrical constituents from Australia, the United States, and Japan, and manufactures other tools and gather all systems and products in the Shenzhen factory. According to the company’s Chairman in his report to stakeholders, it is anticipated that PRC will upkeep its prudent method to stable monetary and financial policies for improving and strengthening the efficacy of austerity measures (Ali 2016). The enterprise will advantage from the development of intra-structural ventures at industry and government margin and also from the elevating disbursing power of consumers. According to the current report in the economic press expressed that the stakes of the company competed up yesterday with a bullish submission from Smith Barney, Salmon. Nevertheless, it is recognized that the company has built a solid impression concerning their achievement in bringing electrical resolution for Commercial trade.

Body of Analysis

Duty, responsibilities, and competence of the director of ABC International Ltd

   The company performs through two panels of individuals that is directors and shareholders. The panel of directors is in the authority of the complete administration of the business of the company. they make the operational and strategic determination of the ABC International Ltd. Moreover are accountable for guaranteeing that the enterprise fulfills its constitutional obligations. In the position of director, Y.K. Chan is to take part in the board conferences to permit the company board to take decisions and ensure that the obligations of the company are satisfied. The directors are regarded as the agents of the enterprise, employed by the stakeholders to administer its regular affairs (Shamsabadi, Min and Chung 2016). The fundamental regulation is that the director must conduct combine as a company’s board however typically the panel may also assign certain authority to separate directors, or to the group of the panel.

As a director, Mr. Chan requires to do the following

  • act within authority
  • promote the achievement of the enterprise
  • exercise autonomous judgment
  • exercise within reasonable skill, care, and diligence
  • evade disagreement of interest

The competency for becoming a company director involves

  • industry that includes knowledge and experience of the market in which the ABC International Ltd operates
  • professional or technical knowledge and expert knowledge to aid with continuing attributes of the role of the board
  • governance that involves the crucial governance understanding and knowledge all directors must possess in case they are to be efficient panel members (Qu et al. 2018)
  • Behavioral competencies and attributes permitting distinct panel members to apply their skills and knowledge to operate well as team associates and to communicate with prime stakeholders.

  In the context of the financial position of ABC the latest account of the board chairman reported that profit in 2004 had anticipated at $237,632,000, however that profit was lower than expectation of the analyst at $6, 693,000 owing to off write-offs of outdated stocks. The enterprise did not disburse a dividend, ploughing back gains into the development of product and prolonging production capacity. According to the Hong Kong financial statement, the shareholding balance in ABC at current is the following. Goldbarb that is enterprise registered in Bermuda is 39.8%, Transelec is about 15.6%. The investment reportage entails that Goldbarb is the holding enterprise concerning the investment of the founding company in ABC and Transelec is the joint venture associate of Australia. Moreover, Transelec is a completely owned company subsidiary registered in Delaware in the US and enlisted on the New York Stock Exchange.

In the context of governance issues, the company considers the roles of CEO and Chairman must be distinct to facilitate for parting of responsibilities. The shareholder must have the avenue to take part in the vote, general assembly and must be provided with adequate statement promptly to make informed decisions on voting.

Audit Committee

Actual task of the Committee

               The primary task of the audit committee of ABC is to facilitate the mistake of the fiscal reporting procedure, the auditing procedure, the system of internal regulation, and observance with rules and laws. The committee can anticipate to reconsider relevant reporting and accounting concerns and current regulatory pronouncement to comprehend the potential outcome on monetary statements. A comprehension concerning the war management creates internal interim monetary information is required to ascertain whether the report is accurate. moreover reconsider the effect of an audit with external auditors and management, which includes matters necessary to have interacted with the Audit Committee under accepted auditing requisites. Regulation over monetary reportage, information technology safety, and operational concerns comes within the scope of the Committee (Mees and Smith 2019).

Interaction with external auditors

               The Committee arrange a separate meeting with exterior auditors to converse matter that the auditors or committee considers to be discussed confidentially. The Auditors also reconsider suggested audit methods and deal coordination of the auditing effort with interior audit staff. When the interior audit operation exists, the committee will reconsider and accept the review staffing, audit plan. Then they meet with interior auditors on a periodic method to converse matters of issue that may evolve. The committee has power over external auditors and its budgets. Thus by the means of the said safeguard, the financiers will rely on the monetary report released by the enterprise (Richardson, Taylor and Lanis 2016).

               The enterprise has observed the standard of optimum practice as specified in Appendix 14 of the Listing Rules over the accounting year as mentioned in the Annual report. The committee was formulated with the reference terms that handle with its duties and authorities as specified in Paragraph 14 of Appendix 14 of the Rules. It includes reconsidering the financial reporting procedure of the company and interior audit process and revised audited monetary statements. Two autonomous non-executive directors have been employed to the committee and a third member is being sought actively.

               All members of the audit committee must be autonomous. Independence is required to eradicate insiders from stimulating the performance and omission of the committee and the function of the exterior auditors. The enterprise functioning in expert niches must have to fulfill the identical audit committee structure and disclosure requisites as enterprise functioning in the conventional market. This is as the enterprise in expert niches is hampered by the identical disagreement and for accoutering deception as traditional enterprise and therefore must comply with the requirement of monetary expert as traditional enterprise. In situations, the same is not possible they must reveal such defects to financiers to caution the likelihood of influence of management on the auditing committee (Yarram 2015).

Board structure

               The panel of directors comprised of non-executive directors and executive directors. The executive directors are full-time staff and thus have two sets of obligations and relationships. They function for the enterprise in a high-ranking capacity, generally concerned with relevant functional commercial areas and policy matters (De Silva Lokuwaduge and Armstrong 2015). ED are usually employed by the panel of directors. On the other hand, Non-executive Directors (NEDs) are not staff of the enterprise and are not engaged in regular activities. The main functions of NEDs are as follows

  • To contribute to the strategized plan
  • To check the conduct of the EDs
  • To furnish an exterior perspective on threat management
  • To handle people concerns, such as the upcoming structure of the board and the settlement of conflicts.

               The significant proportion of NEDs must be independent. Attributes to be regarded in evaluating their autonomy include their financial, business, and other assurances. Moreover, other attributes are directorship and shareholdings and engagement in dealings associated with the enterprise. Nevertheless, holding stakes in the enterprise does not essentially compromise independence. NEDs must have high moral standards and conduct with integrity and probity. They must aid the executive members and regulate their activities, expressing a willingness to question, listen, challenge, and debate.

               According to the current annual report the company comprises of 6 EDs and 2 NEDs. The board of the company assign task to the director’s committee to more efficiently handle with specialized or complex concerns and to utilize the director’s time competently. The board committee suggests performance to the entire board which retains mutual accountability in the field of decision making (Nadarajah et al. 2018).  

Board style and Involvement of the Board

               The size and composition of the board plays a significant role in the operative functioning of the cord. The style of operation of the board comprise of representative board, Rubber stamp board, and professional board. The panel of directors in the company is accountable for establishing strategic direction and for guaranteeing long term conduct in the governance environs. The board may adopt direct accountability for undertaking strategic decisions in the emergency period or when encountered with succession decisions of CEO.

Transparency and accountability

               The board of the company expresses accountability by facilitating statement to shareholders concerning the performance of the organization (Tricker and Tricker 2015). The board of the company has decisive authority for the company and ultimate accountability for its performance and activities. This implies they should present a reasonable representation of the activity of the organization. Furthermore, take charge of the impact of their activities and the performance of the company. accountability prevails in an association among two parties where one party expects another and the other party is obliged to facilitate statement (Ahmed et al. 2017). The statement concerning how they have fulfilled these anticipations or encounter the impact of miscarrying to do the same. Two constituents of accountability is answerability and enforcement. Answerability implies facilitating justification and information concerning how one’s conduct incline with expectation. Enforcement implies being subjected to and approving the effect of miscarrying to carry out these said anticipations. As the accountability involve several parties, it is significant there is lucidity about who is answerable to whom. The manner the answerability is attained will usually establish in the governing documents of an organization such as the constitution and laws that implement it. It is relevant that policies and documents that allow answerability are made obtainable to significant stakeholders.

               Under the requirement of transparency, the enterprise is transparent as they permit others to view and comprehend the method they function authentically. To attain transparency, the company must facilitate statement concerning its governance and activities to shareholders that is complete, accurate, and made obtainable promptly (Abdullah, Percy and Stewart 2015). One of the methods the company can exhibit answerability to shareholders is over publication of the yearly report. A yearly report is a documentation that involves performance and governance information concerning the company in a particular reporting tenure as the following

Listing requirement

               Supporting the prior phase and mature enterprise, the Listing Rules of ASX establish requisites a company has to fulfill to list on the market of ASX. They are reinforced by the doctrines that guarantee the standard of the industry ASX functions. To enlist on ASX, an enterprise should satisfy the minimum criteria of admission that includes free float, structure, size, and number of stakeholders.

Corporate social responsibility

               In ABC International Ltd, CSR is a self-governing commercial framework that aid the enterprise to be socially responsible to itself, its shareholders, and the communal. Thus to attain CSR, the company to be accountable socially, it first require to be responsible to itself and stakeholders. CSR necessitates the enterprise to regard the concerns of all shareholders that involve suppliers, investors, employees, consumers, and the community at large in running its business. Enterprise involves in CSR for several factors that involve the capability to operate by recognizing risk, harm, opportunity that affect their growth. By effectively regulating CSR, companies attain benefit over-improved research, employee development, market position, risk management, and government relations.

Trust between board members

               The trust among the board members are developed by the following means

  • demonstrate competence
  • conduct with integrity
  • explicit reasonable care for another

Conclusion

               Thus it can be summarized that Mr. Chan is the executive director of DimSum. He has no prior knowledge of serving a position on the company board. He holds no stakes in ABC International Limited, however ready to contribute HK $ 100,000. Mr. Chan is eligible to serve the position of directors. The company complied with the listing requirement and maintain sound accountability and transparency. The Board of Directors is conferred authority to conduct on behalf of the company. They must therefore approve full accountability concerning the power that is conferred. The panel of directors is accountable for supervising the administration of the company affairs, business, appointment of CE, and regulating the conduct of the company. In doing the same it is obligatory to perform in the optimum concern of the company (Lianget al. 2016). As accountability goes correspondingly with responsibility, the panel of directors accountable to the shareholders concerning carrying out duties by the company. moreover, there is a disclosure of matters concerning the performance of the organization that must be accurate to guarantee that financiers have access to a financial statement that accurately mirrors the monetary position of the company. thus ABC complies with the doctrine of resilient corporate governance and there is a trust relationship among the board members of the company.

References

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Ahmed, A., Monem, R.M., Delaney, D., and Ng, C., 2017. Gender diversity in corporate boards and continuous disclosure: Evidence from Australia. Journal of Contemporary Accounting & Economics13(2), pp.89-107.

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De Silva Lokuwaduge, C., and Armstrong, A., 2015. The impact of governance on the performance of the higher education sector in Australia. Educational Management Administration & Leadership43(5), pp.811-827.

Kabir, H., and Rahman, A., 2016. The role of corporate governance in accounting discretion under IFRS: Goodwill impairment in Australia. Journal of Contemporary Accounting & Economics12(3), pp.290-308.

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Tricker, R.B., and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices. Oxford University Press, USA.

Yarram, S.R., 2015. Corporate governance ratings and the dividend payout decisions of Australian corporate firms. International Journal of Managerial Finance.