Dick Smith

It was a pleasure to meet with you last week. This memo is in regard to your concerns that you mentioned during our meeting and my recommendation for each one. Please review this memo and call me if you have any questions. 1) John Smith tax issues: a. How is the $300,000 treated for Purposes of Federal Tax income? Gross income means” all income from whatever source derived, including (but not limited to the following items: Compensation for services, including fees, commissions, fringe benefits, and similar items…..” (http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._61._Gross_income_define d#Location_in_Internal_Revenue_Code) According to IRC Publication 3402 Taxation of Limited Liability Companies “an individual owner of a

As Canadian Coalition for Good Corporate Governance indicates that the good governance of a corporation is essential to creating long-term sustainable value and reducing investment risk. In other words, the high quality performance of board directors plays a key role in the success of a corporation. We evaluate it based

In large corporations the success or failure of the company is the responsibility of the board of directors. According to Richard DeGeorge, “The members of the board are responsible to the shareholders for the selection of honest, effective managers, and especially for the selection for the CEO and of the president of the corporation.” (p. 202). The board members have a moral responsibility to ensure the corporation is run honestly, in respect to its major policies, and to ensure the interests of the shareholders are satisfied. The next responsibility within a corporation is the responsibility management has to its board of directors. DeGeorge writes, “It must inform the board of its actions, the decisions it makes or the decisions to be made, the financial condition of the firm, its successes and failures, and the like.” (p. 202). The management of the corporation is morally obligated to

The appointment of independent directors became very necessary, as shareholders looked for a way by which management became more responsible and accountable, and as such; the need for independent directors, who would not only checkmate the excesses of the board of directors, but also have the interest of the company and the shareholders at heart.

The first section of this essay focuses on the possible causes of corporate failures including dominant CEO, poor strategy decision and the failure of internal control. Secondly, it discusses how the third edition of corporate governance principles and recommendations could be applied to prevent the causes of the failure. The 1st, 2nd, and 7th principles along with specific recommendations will be mentioned in this section. However, the context is concerned solely with the causes stemming from Dick Smith itself.

The breakdown of Dick Smith Electronics has aroused wide concerns in Australia since it brought losses to the related parties at different levels. This essay focuses on analyzing how the company could have possibly avoided the failure if it had applied the third edition of ASX Corporate Governance Principles more effectively.

The board of directors consists of the audit committee of a company. The audit committee is responsible for recommending the Board for the independent auditing firm retained for the coming year, subject to stockholder ratification. What’s more, they meet the independent auditors, the company’s

Companies hire directors to act on their behalf and manage the corporation based on their values and organisational culture. Directors are individuals who are appointed to act in the corporation’s best interest. They are given the responsibility to manage the company and also the authority to exercise power in order to run the organisation efficiently and effectively. There are some cases where shareholders may revoke

Other steps the board should have taken in order to improve overall corporate control include the recognition that the governance of risk is the Board’s responsibility, and not that of the CEO. This initiative would have enhanced collective responsibility for the company thereby avoiding exploitations of the company’s information for personal benefit. Moreover, the board of management ought to have acknowledged that they had a right to elect a new CEO. Owing to the fact that the board can employ their desired executive based on merit, getting rid of the incompetent head would have enhanced the long-term performance of the company.

Non-executive directors are independent of management in a firm, they play an important role in the supervision works. They need to obtain the independent information about the management and control of the directors in the company, thus they would require the external auditors to provide the financial information they needed. Peel and Clatworthy (2011) also use the EDBS (ratio of non-executive directors to total directors) as independent variable. The proportion of non-executive director for these 165 firms could be calculated by the number of non-executive directors divided by the total number of directors. Moreover, both of

Breeden’s notion was that improving the board performance goes beyond having members with the right experience and background. He proposed that the CEO and chairman are independent of each other to encourage a separation of leadership and board independence. He defined having

The sponsors of the Hample committee were the London Stock Exchange the confederation of British Industry (CBI), The Institute of Director (IOD),The Consultative committee of Accountancy Bodies (CCAB). The National Association of Pension Funds (NAPF) and the Association of British insurers (ABI). The Committee submitted its final report in June 1998. The Final report of the committee containing recommendation is divided into seven chapters:- Corporate governance, Principles of corporate governance, Director’s renumeration, The role of shareholders, Accountability and Audit, Summary of conclusion and

Due to the fact, the board dismissed Steven Sewell from CEO because his characteristics are not suitable with the characteristics of new board. This reason is very subjective and unreasonable. This paper would not examine the unreasonable reason from the board of FDC as above, but will observe the fact that the removal of a director by the board is not the first time happened. There are some previous cases which are similar to the FDC case in which directors were dismissed by the board, such as in the case of Allied Mining & Processing Ltd v Boldbow Pty Ltd (“Allied v Boldbow”), Central Exchange Ltd v Rivkin Financial Services Ltd (“Central v Rivkin”), and Scottish & Colonial Ltd v Australian Power & Gas Co & Ltd (“Scottish v Australian Power”). In those three cases, the decision by the judges is considerably different. In Allied v Boldbow and Central v Rivkin, the judges state that Section 203D does not replace any other power of removal possessed by the company. Therefore, a company could regulate in their constitution to dismiss a director without the need for a vote of shareholders (in defined circumstances). Conversely, in Scottish v Australian Power, the judges emphasise that Section 203D is mandatory, and therefore, the process of removal a director must follow Section 203D. Due to those cases, it is clear that there are pro and contra about the dismissal of a director as stipulated in the Section 203D. One side argues that

The new concept of having an Independent Director is a welcoming step for corporate governance in India. The changes have been made so as take a step in the right direction. An Independent Director is expected to enhance corporate governance and ensure the management and affairs of the companies are conducted in the interest of stakeholders. It is expected that these changes will thwart corporate scandals in future and insulate shareholders interest.

Keywords: Board directors, strategic change, decision making, board size, audit committee, board of directors, corporate governance, directors of corporations, firm performance, corporate boards and efficiency, firm value, board composition, board leadership structure, firm size, outside directors, inside directors, independent boards,