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Corporate Governance - Assignment Sample

   

Added on  2021-04-21

10 Pages2134 Words77 Views
Running head: CORPORATE GOVERNANCECORPORATE GOVERNANCEName of the StudentName of the UniversityAuthor Note

CORPORATE GOVERNANCE1IntroductionCorporate governance refers to the mechanisms employed by corporations for theiradministration and management. This is mainly in the hands of the executive officers and theBoard of Directors. Corporate governance principles refer to certain ethical standards that thecompany must adhere to in order to ensure the rights of all stakeholders are adequatelysafeguarded (Tricker and Tricker 2015). In Australia strong corporate governance principleswere formulated by the Australian Securities Exchange’s (ASX) Corporate Governance Councilfollowing the corporate governance failure in the HIH Insurance fraud scandal (McCahery,Sautner and Starks 2016). The council formulates corporate governance principles which shouldbe ideally incorporated into the framework of all corporations functioning within the jurisdictionof the Australia Commonwealth (Claessens and Yurtoglu 2013). The third edition of theseprinciples is the latest recommendation. These principles seek to device a transparent and ethicalstructure through various disclosures and other mechanisms that enhance the financial andethical accountability. The following paragraphs will seek to identify the corporate governanceissues in a given set of circumstances in light of the principles formulated by the ASX’sCorporate Governance Council and recommend two discussions in relation to the saididentification.Governance IssuesRed Health Limited (RHL) is a public limited company that is a majorly ownedsubsidiary of Blue Health Limited (BHL). Marcel has been recently appointed as a director ofRHL and was previously engaged as the Corporate Relations Officer of the company. During her

CORPORATE GOVERNANCE2tenure she was tasked with answering shareholder concerns and in many situations wascompelled to not adequately address these concerns. The shareholder concern in question allegedvarious activities that were in contravention of the ASX’s Corporate Governance Principles.These are:A non-executive director, namely, Carlos is allegedly involved in bribery of officials inanother jurisdiction. These have also been reported in the media. There are also reports ofdrug testing without consent in the facility in addition to environmental concerns andchild labour allegations.There are investigations regarding inflated profits being reported. There are also concernsraised in the public domain by auditors about the accuracy of the financial statementsdisclosed by BHL which are ratified by internal audit teams.There were bonuses paid to the Directors under the head of “lack lustre annualperformance” which appear to be in the financial-self interest of the directors andexecutive management.These are thus the corporate governance issues identified within BHL along with non-disclosures (Marcel being compelled to not address concerns of shareholders). Discussion 1Analysis of the Corporate Governance issues in light of the ASX’s Corporate GovernanceCouncil’s recommendations (3rd edition):The third edition of the ASX’s Corporate Governance Council’s recommendationsprovide for eight principles which should be ideally incorporated into the framework of a

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