Corporate Governance and Management: Gold Limited Report

This report analyzes the corporate governance practices of Gold Limited, a multinational corporation, examining the impact of different governance models. It explores the influence of the American Sarbanes-Oxley Act of 2002, contrasting its rule-based approach with the principle-based approaches of the UK and Australia. The report delves into how the board can be influenced in exercising its governance power, particularly concerning executive remuneration and accounting methods. It differentiates between corporate governance and management, outlining the key elements of each. The analysis considers factors such as transparency, integrity, and internal monitoring, and the report concludes with recommendations for Gold Limited to improve its governance framework, emphasizing the benefits of a rule-based approach for ensuring fair financial reporting and effective management.

MBA- CORPORATE
GOVERNANCE

INTRODUCTION
The corporate governance plays a very important role in the organisation which is will
decide the organisation's success. The corporate governance can influence the management
decision and also the activities and planning of the management depends upon corporate
governance. Corporate governance sets rules, laws, of business and also how these all are
operated, controlled and also regulated in the organisation. Here the organisation is taken as Gold
limited, where the impact of the corporate governance is shown (Cohen, Holder-Webb and
Khalil, 2017).
QUESTION 1
Gold limited is a multinational corporation that is operating in many locations.. The
American Sarbanes-Oxley Act of 2002, came into force to protect the investors from any fraud
reporting of financial statements by the corporation. This act came in to force just because of
fraud activities done by companies such as Enron, Tyco etc. They showed high profits and which
resulted in more and more investment by the investors. This act questioned the CPA and the
licence of the CPA was taken away. This act set strict rules to the Accountants and Auditors.
This Act is of USA.According to the American mandatory Corporate governance regime which
is rule based and it is very different from UK and Australia which is Principle based as taking
into factor the approach of the corporate governance. Under the UK the substantial shareholder
can be a director which is independent unlike US which consist of minimum 3 independent
directors. UK and Australia do not include performance related remuneration which in
happening in the Gold limited where the accounting method is used as conservative accounting
methods which is not considering the performance of the CEO or understating the performance
of the CEO(Dignam and Galanis, 2016). It will ultimately result in remuneration problem to the
CEO. Contrasting the US laws which allows Remuneration on performance basis in the form of
stock option.
UK and Australian corporate governance is principal based in which company’s directors
describe the way they have applied principles of corporate governance in language of their own
which is different in USA where the company have to do it by set rules. Principle approach is
beneficial because the director of the company is not required to follow the set rules rather they
can use their own approach to deal with stating the approach Which involves the report to be
having more meaning rather than specific details involved in it. In UK the practice of code can
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be changed easily compared with the statuary requirements. Which can be beneficial as the code
can be updated when any condition change and it is also useful when the expectation of the
shareholder and others changes(Gendron, 2018). A rule based approach results in tick-boxes
mentality whereas the principal based approach results in encouraging directors of the company
to be a follower of spirit of code the meaning of which is simple as under the rule based
approach the director follow, rather than following the spirit they follow the rule based approach.
principle based approach has some problems such as it can result in forming or making some
statements which are meaningless and of no use to the company. The principle based approach
can also result in non compliance of specific code requirement which is necessary for the
company to be followed on regular basis.
As per the SOX Act, 2002 in the corporate governance, it is statuary rule based and need
strict compliance of it consistent. This act requires that all companies which are listed in the US
have to include the certification of the annual report which do vouching of the accuracy of the
financial statements and such certification must be signed by the principal executive officer and
also the principal financial officer and which is not under the UK and Australian law (Goel,
2018).
The rule base approach looks more sound in the Gold limited as if the rules are set then
every thing will be clear and which will also result in fair presentation of the picture of the
company in the financial statements. Which will ultimately result in no remuneration problem
which currently it is seen in the Gold limited and also no issue of 'disgraceful conduct' which is
there more or less which is claimed by the director of the SH to the CEO David. Hence, The
Gold limited should focus on Rule based approach because it is beneficial for them in a way to
do proper management of the organisation(Jain and Jamali, 2016).
QUESTION 2
The board can be influenced when exercising its governance power. As here in the Gold
limited it is seen that raising the remuneration point of the David to the executive director can
influence the board. Which resulted in Grace as an executive director to raise this point to
remuneration committee by concerning this point with Cecil who is the chairperson of the GL.
Which, ultimately resulted in vote in favour of David. Due to conservative accounting approach
it resulted in raising the point to the audit committee because performance of the CEO was not
evaluated. Then this resulted in positive financial statement's preparation(June, 2018). Grace
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which was in favour of raising the remuneration of the David, she was shocked because the re
remuneration was not working out for David even discovery of the gold which happened just 6
months after David joining inspire of his resignation from where David was working earlier.
When exercising the governance power the board can be influenced by changing the salary of
salary or re remuneration of David, may lead to termination of David etc(Mascarenhas, 2018).
The influence or impact of corporate governance on the organisation board by:
 A good corporate governance can result in evaluating company's fair share price which
can result in no future disputes of the company and no hindrances in overall performance,
right now where the share prices are going up of Gold limited within six months of
entrance of David.
 Integrity is very important which will result in management of risk and also management
of affairs. Will ultimately avoid the lawsuits of the organisation. Due to integrity the
organisation named as Gold limited can develop of code of conduct for the overall
organisation including directors of the organisation as well as executives of the
organisation(Wright, 2015). The Gold limited have to establish proper code of conduct to
avoid any risk which may arise in the future.
 Transparency, is also important and by which the board can be influenced at a greater
extent. If the Gold limited clarifies the roles and responsibilities of the board and also the
management to help the shareholders to have the level of the accountability. The
organisation should also implement the procedures in the financial reporting to present
the fair picture to the investor like here the company should also mention that due to
entrance of David the growth of the organisation have increased and it happened just
because of discovery of new gold by David and the company Gold smith is stating that
the rise in the share price just happened because of the strong leadership of David as a
CEO, but another company known as SH, referring David's conduct is not fair and
considering it disgraceful, and stating that David has disclosed the insider information of
HS which benefited the company Gold smith. If it is all transparent there would no such
nuances to the employees of the company(Shapiro, 2015).
 Internal corporate monitoring will monitor the board of directors to hire them, fire them
and also provide compensation to them, Regular meeting of the board will make all clear
the doubts the employees are having with the company which can be seen in the current
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organisation and also David has discussed the problem of his less compensation as which
resulted in the annual board meeting of the Gold limited and Audit committee is
concerned in it just because of conservative method used by the organisation(Cohen,
Holder-Webb and Khalil, 2017).
 The board can also be influenced by the balancing the power of all the employees in the
organisation. Each group is assigned with its own power and responsibilities can result in
proper management and proper action management, it will affect balancing each
employee's action. One group that is specific will take care of the specific work like the
audit committee will take care of the audit work, the remuneration committee will take
care of the remuneration work and so on. This will clear the responsibility of who is
responsible for what.
QUESTION 3
Corporate governance is different from management and one should not confuse it with
similar meaning. Corporate governance provide guidelines to the management whereas
management is very much different. Here in the current organisation The Gold limited the
management related with the organisation is to follow the corporate governance of
organisation(Gendron, 2018). The meaning of the management is to perform routine work which
is related to daily operation of the organisation. Management supports values and goals of the
organisation which is made by the governing body and should implement them accordingly. The
mangers are hired by these governing body.
Whereas the meaning of corporate governance is to provide framework of regulations and
rules by which company's transparency, fairness and accountability is maintained. The corporate
governance basically includes eight elements in it and are as follows:
The differences can be further explained via the below table:
GOVERNANCE MANAGEMENT
Governance set norms, vision which is
strategic, direction of the organisation, and also
the policies for the organisation. Here in the
Gold limited it is seen it form of conservative
approach used by the organisation Gold limited
Management on the other hand, keep the
organisation working in a line which is with
the goals of the board and the direction which
is set in the form of governance by the
governing body. Here the management in the
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in the accounting and which undermines the
work done by the CEO(Goel, 2018).
Gold limited is process in which David
goes(Jain and Jamali, 2016).
Governance includes overseeing organisational
performance and also management in which
the organisation Gold limited is working. It
ensures that the organisation is working in the
top or the best interest of the stakeholders or
best working in the public interests of the
organisation(June, 2018).
Whereas management merely includes the best
way the management can implement the
decision considering the mission and vision of
the organisation Gold limited. It includes its
own management theories and practises to
achieve the goals set by the governance
body(Mascarenhas, 2018).
It includes and also ensures that the Gold
limited is acting prudent manner, and also
legally and ethically for the organisation Gold
limited(Wright, 2015).
While the management includes operational
policies and decision, keeping the governance
body of Gold limited updated by making them
always informed and also making them
educated(Wright, 2015).
CONCLUSION
In a nutshell here the organisation is taken as Gold limited and it is being related with
corporate governance and management. How the price of the shares goes up and the various
corporate governance of the different nations us as USA, UK and Australia is taken. What
corporate governance is followed by the different nations are mentioned over here like the USA
follows rule based corporates governance and also India follows the same but in UK it is
different, and in UK principle based corporate governance is followed, the differences of both of
them is also mentioned over here. The difference of the management and the corporate
governance is also mentioned over here(Cohen, Holder-Webb and Khalil, 2017). All of this is
correlated with the organisation Gold limited and how does the corporate governance impact the
Gold limited is described in detail. There are various terms which are used in the corporate
governance some of them are Transparency, accountability, participation, responsiveness, etc.
(Dignam and Galanis, 2016).
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