Corporate Governance Answer 2022

Running Head: CORPORATE GOVERNANCE
Running Head: COMPANY LAW
CORPORATE GOVERNANCE
Name Of the Student
Name Of the University
Author’s Note

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CORPORATE GOVERNANCE
ANSWER 1:
The thesis deals with the merging of the two companies called the Arcelor and the Mittal.
Lakshmi Mittal is the Indian billionaire who emerged as the biggest tycoon of the steel company
with a five month combatting merger with the Arcelor, a company located in Luxembourg. The
merging was happened in 2006 and the new entity was constituted called the ArcelorMittal
which emerged as the biggest manufacturer of steel with annual production of approximately
92.5 million metric tonnes ("Annual Report 2018 on Form 20-F ArcelorMittal". ArcelorMittal).
It was designated as the 123rd position in the Fortune Globe ranking of 500 biggest corporations
in 2017 ("91. ArcelorMittal", GLOBAL 500 - Our annual ranking of the world's largest
corporations, CNN).
The Arcelor and the Mittal have ever followed two different types of governance system
for the foundation of BoDs. While one lays the foundation for the unitary form of Board whereas
the other forms the two-tier form of BoDs. The two-tier BoD (Waweru 2017) are recognized
where the governance of the company is divided into two categories. One dealing with the
managerial head and the other dealing with the supervision head. Both the heads being
independent of each other and their governance (Belot et al. 2014). However, in the unitary form
of BoDs, it has been explained that there has been a single entity or body of governance acting as
the major directive authority for the same.
In the given scenario, Mittal retained the 43.5% of the shares inclusive of the voting
rights and hence, it led to the constitution of the unitary form of BoD in the Company. They are
majority shareholders of the company inclusive of the majority of the voting rights of the

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CORPORATE GOVERNANCE
company. It ensures that the supreme authority of the majority share-holders is retained and that
of the directive is authorized to the supreme shareholders.
In the newly constituted company called the ArcelorMittal, the BoD comprised of the
eighteen members and all of whom were the non-executive members of the Board. The majority
of the Board members are a part of non-executive team of directors while three are chosen from
the representatives of Arcelor and remaining three from the representatives of employees.
However, the majority of such directors are non-executive by nature. However, the nature of
rights and duties inclusive of the corporate obligations of such directors are all laid down in the
Articles of Association of the Company (Jeżak and Bohdanowicz). Thus, the structure of Board
ensures that the Mittal and family are the supreme Monarchs in the procedure of directive with
respect to the affairs of the company.
The unitary form of BoD is well known for its supreme head controlling the state of
organization of the company as a single directive authority. This kind of arrangement has its own
share of advantages and disadvantages. The first advantage enumerates that the unitary form
ensures that independency of the directive authority is maintained by the members of the Board
and the employees of the company. Such direction would be independent and free from all kinds
of ambivalence due to its source of recognition being a single source of directive authority. The
second advantage of the unitary form of Board is that the flow of direction is coming from a
single head and hence, there does not exist a single ground for dispute or ambiguity in any policy
being formulated and passed by the Board. Therefore, the approval for the enactment and the
passing or implementation of any policy is at the sole and sheer will of the major shareholder and
the same is not required from a number people depending upon the advises given to them.
Therefore, the mode of communication improves with the adoption of such model.