Credit Corp Group: Analysis of Corporate Governance, Ethics, and Board

This report provides an in-depth analysis of the corporate governance practices of Credit Corp Group (CCP), an Australian debt buyer and collector. It examines the company's structure, including the composition of the board of directors, the ratio of independent to dependent directors, and the role of the chairperson. The report explores the significance of board orientation in providing new members with crucial information about their roles and responsibilities within the organization. Furthermore, it delves into the company's interpretation of communication through the lens of legitimacy theory, analyzing how CCP interacts with its stakeholders and the broader community. The report concludes by highlighting CCP's adherence to corporate governance principles, its ethical business conduct, and its commitment to transparency in its disclosures. Key aspects covered include the remuneration report, the role of independent directors in maintaining objectivity, and the company's commitment to financial inclusion. The analysis is based on the ASX Corporate Governance Principles and Recommendations.

Running Head: ETHICS AND GOVERNANCE
ETHICS AND GOVERNANCE
Name of the Student
Name of the University
Author Note

1ETHICS AND GOVERNANCE
Executive Summary
The growing number of corporate scandal has marked question on role played by company’s
board of directors. This has resulted into emergence of corporate governance, which helps in
providing clear understanding of board and senior management’s responsibilities and roles
and ethical conduct of the organization. Moreover, board orientation is practice to provide
new board member with important information regarding corporation and the roles and duties
of the members. In addition, the theory of legitimacy in organization is based on assumptions
of existence of social contract between society and company. Therefore, this assignment
includes discussion regarding corporate governance of Credit Corp Group, board orientation
as well as legitimacy theory. It has been concluded that Credit Corp Group follows principles
of the corporate governance in the organization by ethically conducting the business and
making disclosures.

2ETHICS AND GOVERNANCE
Table of Contents
Introduction................................................................................................................................3
Background of the Credit Corp Group...................................................................................3
Discussion..................................................................................................................................4
Corporate Governance at Credit Corp Group........................................................................4
Board Orientation...................................................................................................................7
Interpretation of Communication using Theory of Legitimacy...........................................11
Conclusion................................................................................................................................12
Reference..................................................................................................................................14

3ETHICS AND GOVERNANCE
Introduction
Corporate governance is the way companies are controlled and directed for promoting
accountability, fairness and the transparency. The corporate governance structure describes
responsibilities and rights of important agents in companies and engagement procedures in
corporate affairs. The structure of the governance explains allocation of rights as well as
responsibilities among different participants of the company and it specifies procedures and
rules of engagement in company’s affairs (Francis, Hasan & Wu, 2015). Further, corporate
governance evolution is the result of various unethical practices as well as miss-governance
prevailed in various companies around world. Moreover, the process of the orientation of
board is used for providing insights of business organization as well as current issues to the
new board members. In addition, legitimacy theory provides justifiable factors regarding
environmental information disclosures (Arora & Sharma, 2016). Therefore, this assignment
includes discussion regarding analysis of corporate governance in Credit Corp Group, board
orientation and company’s interpretation of the communication using legitimacy theory.
Background of the Credit Corp Group
Credit Corp is the Australian debt buyer as well as collector company. It purchases as
well as collects the debs in Australia, United States as well as New Zealand. Credit Corp
Group is one of the largest providers of the sustainable financial operations in the segment of
credit-impaired consumer such as longer-term plans of repayment with the goal for
improving the financial situations of the customers. The company works with the customers
with the help of adopting the flexible approaches for agreeing about affordable plans as well
as solutions of the repayments. Credit Corp is the limited purpose business, while focusing on
the one segment; it delivers the results effectively as well as efficiently. The company is
engaged in purchase of debt, collection and consumer lending. The segment of lending is
consists of debt ledger purchasing as well as consumer lending. The segment of debt ledger

4ETHICS AND GOVERNANCE
purchasing is engaged in the purchasing of debts of consumer at the discount to the face value
from the providers of credit and with aim to recover amount in the excess of purchases price
over receivables collective life cycle. Further, lending business of consumers offers different
financial products to the credit-impaired consumers. The company acquires outstanding debt
of consumer from banks of Australia and New Zealand, utility of financial services and
providers of telecommunication. The product of the company includes Trove Capital,
ClearCash, CarStart Finance, Wallet Wizard and Credit 2U (Creditcorpgroup.com.au. 2019).
The company is offering favorable market with the stock price rising up by 16.63%.
The company is performing consistently well, which is irrespective of difficulties in market.
It has confirmed favorable condition of market in US, which allows company for accelerating
their strategy of US with the investment in almost forty percent higher in relation to financial
year 2018. Further, the Australian financial system is resilient as well as it is having the
ability for withstanding the adverse shocks that continues to strengthens. The diversified
financial industry is consists of collection of the companies, which offers wide variety of the
products as well as services (Creditcorpgroup.com.au. 2019).
Discussion
Corporate Governance at Credit Corp Group
The changes in the business environment across worldwide have resulted into
popularity and application of the corporate governance concepts. The today’s market is
consists of dynamic business that have shifted the market to focus more on transparency in
the business. Hence, now the business organization is more focused on application of
corporate governance in order to build confidence of different shareholders and stakeholders.
The corporate governance system brings transparency in business, enhances confidence and
accountability of business (Azeez, 2015).

5ETHICS AND GOVERNANCE
In Credit Corp Limited as well as their subsidiaries maintains policies as well as the
practices for complying closely with ASX Corporate Governance Principles and
Recommendations. The Group’s board of the directors has the responsibility for the corporate
governance. They monitors as well as guides business and the affairs of Group by whom they
are being accountable and for whom they are being accountable that is on behalf of
shareholders. The corporate governance statement of Credit Corp Group Limited is approved
by the board and is structured in accordance with the ASX Corporate governance principles
and recommendations as per amendments of 2014. In Australia, Credit Corp is the largest
provider of the sustainable financial services in segment of credit-impaired
(Creditcorpgroup.com.au. 2019).
Board Members Composition
The independent directors are Donald McLay, Eric Dodd, Leslie Martin, Robert Shaw
and Richard Thomas. Moreover, dependent directors are Thomas Beregi, Matthew Angell
and Michael Eadie. Hence, the ratio of independent over dependent board of directors is 5:3.
Further, chairperson of the company is independent director. Donald McLay is both
chairperson and independent director. In Credit Corp, the proportion of independent director
is more in comparison to the dependent director. If the number of independent director is
more then it helps in bringing new insights as well as balance to the team
(Creditcorpgroup.com.au. 2019).
Board and Chairperson Report
The chairperson in his report has stated that in the turbulent year for the Australian
financial services companies, the company Credit Corp stands out as the values-driven
organizations that confidently look forward to the period of the increased growth and
opportunity (Capezio et al. 2014). The company strives for providing sustainable finances to
growing numbers of the Australian who are unable for accessing credit from the major

6ETHICS AND GOVERNANCE
providers. The company provides record of promoting the financial inclusion that is over
200,000 Australians that have received loan from the company since it has commenced the
operations of lending. The company takes the opportunities for increasing the investments as
well as growing its capacity (Azeez, 2015).
The CEO in his report has stated that company commits for creating the sustainable
advantageous encapsulated in theme of “standing out” has produced stronger result with
positioning of the company for realizing the opportunities for growth in future. The company
pursues the strategy of diversified expansion. It is with the help of operating across the ranges
of the market. Credit Corp has drove 18 % increase in the new volumes of the customer loans
that has helped in growing total book of loan by 16% as well as put on the track for the
another year of stronger growth of profit in this segment at the end of 2020 (Zabri, Ahmad &
Wah, 2016).
Remuneration Report
The director remuneration policy of the Group is designed for providing fair
remuneration, which is suitable to the responsibilities of directors, skills, knowledge as well
as performance, which aligns better with strategy of business for ensuring the success of
long-term of Group. The directors’ fees are fixed and it is not linked with the Group
performance. This helps in ensuring directors independence (Buallay, Hamdan & Zureigat,
2017). In addition, the remuneration levels of the executive are reviewed on the annual basis
as well as with the reference to the movements of the market. The remuneration committee
gives recommendations to board regarding the policies of the recruitment, retention as well as
procedures for the senior executives, packages of senior executives that consist of annual
incentives as well as long-term incentive plans and remuneration levels and framework of
director. Moreover, the fixed remuneration packages of the senior executive is in line with
those paid for the roles with the equivalent responsibilities by the companies of similar

7ETHICS AND GOVERNANCE
market capitalization. Moreover, the levels of remuneration of the comparable organizations
is annually reviewed for the reason of benchmarking as well as allowances and are made for
the different factors that include demands on the time, requirement of the levels of
commitment as well as any of the special responsibilities. Further, annual aggregate cap of
the amount $1.1 was being approved by the shareholders at Annual General Meeting of 2018
(Vo & Nguyen, 2014).
Board Orientation
Board orientation is the method to provide the members of board with precise
information that is required for their part of role. It provides key information to board
members regarding their roles and duties as board and the overview of the organization. The
strategies of board orientation are consists of resources, tools and tips that are designed in
such way that board gears up quickly (Akbar et al. 2016). Further, it contains building cordial
relationships among board members that aids ongoing support and comes to the agreement
regarding the way work needs to be carried out. The orientation of board is the important
process because it requires board members to find answers of the critical questions, for
instance board functions, resources availability, board meetings, principles of operations, way
of the communication and administrative system requirement. Further, this also includes
decision-making as well as problem-solving techniques, legal responsibilities and
requirement of the outside advises regarding planning, financial and legal matters
(Danoshana & Ravivathani, 2019).
It needs to be ensuring that new board members feel integral part of the company.
Board has the primary role to enable enhancement as well as protection of long-term value of
the investors with the help of taking account all stakeholders interests, which includes
employees, customers, suppliers and wider community. Board orientation helps new directors
to contribute fully in the governance of their work in early of their tenure (Siddiqui, 2015).

8ETHICS AND GOVERNANCE
The role of board is not just limited to transfer crucial information but their role is broader in
scope. The orientation of the board results into providing understanding of the roles,
responsibilities and time commitment of the board for the governance role. Further, board
needs to be aware of current goals, challenges and opportunities facing organization
(Bottenberg, Tuschke & Flickinger, 2017). They should be aware regarding major
stakeholders of company and have sense of their own skills, knowledge, experience and
background to contribute towards current board work and organizational goals. Moreover,
they appreciate skills, knowledge and experiences of the other directors as well as functions
of board. They should also know the way of running board meetings and making decisions
(Yang & Wang, 2014).
In case of Credit Corp Group, maximum directors are independent as compare to
dependent directors. The board composition play key role because of the influence on the
decision-making. Moreover, from shareholders-agency theory perspective, there is claim by
the experts that greater proportion of the outside board on the boards acts to monitors
independently in the circumstances where there exists conflicts of the interest in between
managers and shareholders (Arena, Bozzolan & Michelon, 2015). Hence, in Credit Corp
Group, maximum independent director over the dependent director may possess great
advantage to the company by bringing different perspective to company’s management. The
best practice of the good corporate governance encourages addition of the independent
directors to the boards for maintaining objectivity as well as accountability. The board has the
major focus on profits, dividends and growth. The board of Credit Corp Group communicates
with income statement, balance sheet and remuneration report in relation to various strategic
planning as well as performances (Salvioni & Gennari, 2014). The report of remuneration
reflects that how firm growth is reflected in changes in remuneration of executives as well as
overall company’s performances is reflected in income statement and balance sheet changes.

9ETHICS AND GOVERNANCE
The board of Credit Corp Group maintains the ethical conduct by the help of making
disclosures of the company’s performances on the statements on every reporting period
(Wieland & Flavel, 2015).
Orientation Board Composition Board Focus Key Communication
Shareholders Agency
Theory
Total number of
Independent Directors
is 5 out of 8 directors.
The chairperson of the
company is also
independent director.
Therefore, these major
board help in
improving the
company’s
performance with the
objective view of the
heath and operations of
company. In
comparison to the
internal board, the
outside directors are
considered to be more
objective as well as
bring different
perspective to
management of the
The board of directors
of the Credit Corp is
committed towards
strong practices as well
policies and guiding
affairs of group
business on
shareholders behalf.
The whole activity of
the focused towards
growth of corporate as
well as meeting needs
of the shareholders
such as dividends,
profit and growth.
The board of Credit
Corp makes the
disclosures about the
company through
reporting of
remuneration report,
balance sheet as well as
income statement.

10ETHICS AND GOVERNANCE
Credit Corp.
Table: Board Orientation
The orientation of new directors in Credit Corp undergoes program of induction that
includes meetings with the members of the management, chairperson of Board and Chairman
of each relevant committee for gaining the insights into business, culture as well as values of
Group. The company has appointed two new non-executive directors, whose names are
Trudy Vonhoff as well as John Nesbitt. These two directors have brought extensive senior
executive as well as board experience across the ranges of the industries that include banking
as well as financial services. The company is in the view that these appointments will be
bringing wider diversity of the boardroom as well as support of the ongoing objectives of
growth (Helfaya & Moussa, 2017). Hence, following are certain recent highlights of the
information, which can be provided to the new board members:
 Credit Corp has acquired Baycorp Holdings Pty Limited as well as its associated
entities from the Encore Capital Group for the total net consideration of approx
A$65million. Baycorp is the well-established as well as large debt collection and
debt-purchasing operator all across Australia and the New Zealand (García-Sánchez,
Rodríguez-Domínguez & Frías-Aceituno, 2015).
 Credit Corp board wishes for advising that the participating shareholders in Share
purchase plan have allocations scaled back on the pro-rata basis to 39.1 percent of
received application monies. It is in reference to closing of the previously announced
SPP. The new shares issue prices will be A$20.45 per share being prices at which
ordinary shares under fully the underwritten institutional placement (Cucari, Esposito
De Falco & Orlando, 2018).

11ETHICS AND GOVERNANCE
Interpretation of Communication using Theory of Legitimacy
Legitimacy theory is important mechanism that helps to influence perception of the
organization by the stakeholders. The financial market instability and the global financial
market exert greatest pressures on the organization to reevaluate the value system and
emphasizing the importance of legitimacy. In this concern, stakeholders plays important role
in preventing any kind of organizational legitimacy loss (Milne & Patten, 2002). They are
having the role to reduce and prevent organizational legitimacy loss. The companies have
great opportunities of the precise actions at each level of the legitimacy, which is based on
evolution as well as changes in expectation and values of the society. The sustainability of the
legitimacy theory is on the basis of heritage of management. This helps to connect traditional
norms as well as the values with modern ethics (Deegan, Rankin & Tobin, 2002).
Organizational survival majorly depends on the pressures of legitimacy and the way of
managing continuous pressures and challenges. The legitimacy process includes obtaining
approval from stakeholders. The organization opts for voluntary disclosures of social as well
as environmental information in order to legitimate their legitimacy. Moreover, disclosure
made by organization is accompanied by the concrete actions that are realized in the
compliance with values of environmental as well as social aspects (Deegan, 2002).
The Credit Corp Group recognizes the shareholders as well as other interested
stakeholders rights for accessing to the balanced, timely as well as understandable
information that is concerning to the Group’s operations. The directors (CEO as well as the
company Secretary) are responsible for ensuring the communications with the shareholders,
which is disclosed according with the shareholders rights as well as policy of the continuous
disclosures by Group. Moreover, Credit Corp Group helps to provide robust framework of
the sustainability of corporate and the cultural practices for their stakeholders over long-term.
The company has made good progress in sustainability goals and increased local