Essay on Flight of funds

This case pose six questions or decisions that need to be made. Undoubtedly, these decisions must include the interest of stakeholders, shareholders and the leadership of the company. I will not explore all six decisions but will attempt to explore one decision in detail, giving the viewpoints of the stakeholders, specifically who should help with this decision, make a recommendation on how to move forward. One major point of discussion in the case was

It is a most important duty of fiduciary duty. The decision makers within the company should act in the interests of the company. The easiest way to observe with this duty is not to engage in transactions that involve a dispute of interest. We often call these "self-dealing" transactions. The concept is that the directors are dealing with the selves, and may not reach an agreement that is fair to the company. An alternative, that is accepted in most countries because a flat ban on self-dealing transactions can be impractical, especially for smaller firms, is to have self-dealing transactions approved by a uninterested decision maker. That decision maker can be uninterested directors, uninterested shareholders or sometimes both.

The management system should be well structured in the means of communication and to take corrective actions against the mistakes done by the employees to overcome the fraud activities done, so that a heavy loss can be stopped from happening. If the trader goes beyond the trading limit he has to seek permission from two to three higher officials.

Numerous reports on corporate governance have emphasised the desirability of increasing the number of outside directors on boards. An equally important and related issue is a growing insistence that the role of chairman and chief executive should be separate, though on this issue there is less unanimity in the U.S. than in other countries.

Firstly, the proportion of non-executive directors would be a significance independent variable from this research. Zhang and Yu (2016) indicates that independent directors means that there is no material connection among directors and companies, shareholder and officer of a related company. According to their research, it can be illustrated that if the firm is operating within a lower information environment, the connection between board independence and audit fees would be significantly. On the contrary, when the information environment is strong, there will be a positive relationship between the board independence and external audit fees (Zhang and Yu, 2016). Nevertheless, Moradi et al (2012) had received a significant and negative

As member of the board of directors they are bound by a duty of loyalty. They must act in the best interests of the corporation and the shareholders.

The most common fiduciary duties are the requirements to act in the principal’s interest and the duty of honesty. For example, most company codes of conduct requires the board of directors and the management to carry out their duties with all necessary care and be truthful to the interests of the business establishment. This requirement goes line in line with the corporation law that terms this as interest of the company. The company’s interest, in that legal set up is all interests that the management has to consider when performing its duties on behalf of the

One of many duties of a director is set under s131 of the Company Act 1993. This section of the act let know that directors must act in good faith and in what the director believes is the best interest of the company. Traditionally, the word company foretold under this section have been regarded to devote solely to the company’s shareholders. However, this notion is seen as immoral. This is because according to the notion of corporate social responsibility, business must behave ethically, represents a broader recognition of stakeholders and must take into account economic, social and environmental inputs in the way it operates. Hence, people against the notion of shareholder primacy suggest that the director should also take into account the interest of a wide range of shareholders (e.g. customers, employees, the society as a whole) in order to be deemed as moral. This conflicting opinion raised the question, “To whom are the directors responsible?” This paper will explore a number of corporate governance practices (i.e. agency theory and stakeholder theory) that are related to this issue. It begins with the explanation of each theory and the discussion of ethical and societal concerns they put forward, followed by the advantage of shareholders and the disadvantage of other stakeholders regarding remedies of director’s breach of duty from a legal viewpoint and ends with a recommendation that would best reflect a good governance practice that is consistent with the corporate

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.

The following will be implemented to be help ensure the well-being of the company in the event of incident:

Have to deal with conflicts of ideas and interests within the management. It is the duty of Director to act in a good faith and for the benefits of the company.

Lastly, another question that should be evaluated is “What should the executive chairman, Raphael Le Masne, do next?” Le Masne should first develop his leadership skills. One leadership style that Le Masne may want to

The concept of independent directors can be traced to the developed economies of the West with the United Kingdom and the U.S.A. sharing credit for its evolution during the 1950s even before legislation mandated the induction of independent directors to ensure that corporate entities did not make depredations into the public interest driven by the profit motive alone at the cost of other values. This is what gave rise to the concept of Good Corporate Governance which again owes its origin to the developed economies of the Western Hemisphere .

Corporate directors are binding by the law of duties expressly to act properly in interests of the company when performing their functions and exercising their power. Law terms not only promote good corporate governance to eliminate agency costs but also enforce fiduciary duties of directors to corporates. Despite the importance of complying with duties, Hong Kong directors, with interlocks a common situation, are challenged by the media on their capacity of standards compliance and high-quality performance for all directed corporations.

The director should act in good faith and for the welfare of the company in proper use. The duty requires more than just a normal sense of honestly, it demands directors to implement independent judgment in light of relevant facts, views, materials when assessing for the welfare of the company.