Violet Ltd Case Study: Problem Analysis and Recommendations

This report analyzes the case of Violet Ltd, a public listed company seeking to raise capital for expansion. The analysis identifies several key problems, including the dual role of the chairman and CEO, gender imbalance on the board, communication issues between the board and management, and concerns regarding director appointments and potential conflicts of interest. The report proposes solutions such as appointing separate individuals for the chairman and CEO roles, ensuring gender equality on the board, exploring various methods for raising share capital, and holding Peter accountable for any misuse of company resources. The report recommends lifting the corporate veil to identify the true beneficiaries of non-profit tenders, preventing Peter from serving as a director if he has acted against the company's interests, and appointing competent officers to meet company objectives. The report concludes with references to relevant academic sources on corporate governance.

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Student’s name
Professor’s name
Subject
Date

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Relevant facts and key problems
Following the case presented, the important facts include; violet ltd being a public listed entity or
company that wants to raise its capital. The company trades under the name, Indigol. According
to the plan, the need to open 10 more branches forms the rationale of need to raise additional
capital. In addition, the board has adopted a market strategy of coming up with limited
proprietary company.
Analysis of two to five key problems
Following the facts of the case, issues that exist in the company include: Mr. Peter acts as a
chairman and as a Chief Executive Officer (CEO). This is a problem as it contributes to the issue
of conflict of interest between balancing the duty of a chairperson vis a vis that of a CEO. In
addition, there is a gender issue regarding the board’s composition, as it comprises a majority of
male unlike females. This does not take into account the equality requirement as provided for by
international laws. Further, the fact that Peter is playing two roles; it has raised the issue as to
how the company is being run and managed (A.O., 2012).
On the other hand, communication between the board and management has become of concern.
The concern is that, they are not able to agree on how to properly manage the company. In
addition, the issue regarding the appointment of directors is of concern to the company. Further,
there is the issue of Peter using his position as an independent director for his own benefit. This
has called for investigation by the regulator. The investigation will look into the issue of making
profit from a company that has been established for non- profit purposes (Baxter, 2014).

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Solutions /changes
Regarding the issue of Peter serving in both capacities, the management has to ensure that it
appoints another person to take over one position so as to ensure that the interest of the company
is promoted unlike those of individuals in the company. Subsequently, the issue of gender, the
management has to ensure that the gender issue is taken into account. This can be done by
appointing more women to take up the various positions. In return, this will ensure compliance
with international laws (Christensen, Kent and Stewart, 2010). On the other hand, the issue of
raising share capital can be done in various ways, first since the company is a public listed
company, it can invite members to subscribe to its shares so as to raise more capital. In addition,
the company can raise additional capital through way of debentures. In regards to the issue of
contracts, Peter should be answerable to the company. He should disclose the secret profits made
and asked to remit them to the company. In addition the corporate of veil should be lifted so as
to establish the real owner of the company (Lange, Ramsay and Woo, 2018).
Recommendation of solution
The following recommendations are made to the company and the regulator; the corporate of veil
should be lifted so as to establish who is behind the non-profit organization award of tenders.
Peter should cease to carry own the duties of a director since he not used the companies
resources for its best interest but his own. The board should ensure that the management of the
company reflects gender equality. Similarly, competent officers’ should be appointed to ensure
that the company meets its set objectives.

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References
A.O., H. (2012). "Corporate Practices and Conduct": Setting Standards for Corporate
Governance in Australia. Corporate Governance: An International Review, 1(4), pp.196-196.
Baxter, P. (2014). Corporate governance ratings and financial performance: evidence from
Australia. International Journal of Corporate Governance, 5(3/4), p.178.
Christensen, J., Kent, P. and Stewart, J. (2010). Corporate Governance and Company
Performance in Australia. Australian Accounting Review, 20(4), pp.372-386.
Lange, H., Ramsay, I. and Woo, L. (2018). Corporate Governance and Anti-Takeover Devices:
evidence from Australia. Corporate Governance, 8(3), pp.227-243.