Corporate governance is defined as a set of rules and standards provided within an organizationto guide the operations of an organization. Quality governance in any organization encourages investors to make investments. Companies enlisted on ASX have the mandate to promote goodgovernance. The ASX corporate governance council outlined the principles and the recommendations oncorporate governance for companies listed in the ASX. The ASX principles and recommendations were introduced in 2003 and have been edited severally to take care of emerging financial challenges. In 2012, the ASX council made changes in the on the principles and Recommendations to incorporate the developments and structures in the new edition.
TABCORP Holdings limited and Australian Agricultural Company limited are some of the companies that have been enlisted on the
The company has an Independent reporting service to prevent, spot and make the appropriate responses to any form of wrong doing in the company. The company has hired aspecial team to ensure that the team is able review the employees’ actions. All this measures ensure that the reputation of the company is not tarnished due to internal misconducts (KotlarskyOshri&Willcocks, 2014).
The organization makes continuous disclosure of the information. The company has outlined the framework that the management should use disclosed information to the investors in accordance with the law disclosure requirements .The company has general manager is responsible for the conducting the procedures for the disclosure of Information (KotlarskyOshri&Willcocks 2014).
The organization has initiated risk controls framework. The organization has come up with the committee that is mandated tomanage theRisks of the organization. The framework includes the procedures and guidelines set for managing the operations of the organization. The framework outlines the possible risks that are likely to occur and the possible methods to combat and manage the risks involved (KotlarskyOshri&Willcocks 2014).
The company has outlined the corporate social responsibility structure and approach.Senior executive’s ensureto ensure that there is proper reward for salaries, incentives plans and the legislative demands for remunerations are met for all employees (KotlarskyOshri&Willcocks, 2014).
The management has been establishing measures for Shareholder Engagement. The company has streamlined the communication procedures and procedures in order to make continuous disclosure of information for shareholders. This has been possible through the websites, sending unveiling yearly company reports, emails and through (KotlarskyOshri&Willcocks 2014).
Australian Agricultural Company
This is a listed public company. The board of directors is responsible for corporate governance of the company. The company has aboard charter that serves as aguideline to promote Betterstandards of corporate Governance in the company and in all its branches across the country (Mallin, 2016). In order to comply with the ASX principles and recommendations, Australian Agricultural Company has adopted some of them in its operations (Mallin, 2016).
The company has an established management framework.The company has established aboard structure that has been mandated with specific duties. The company has been safeguarding the integrity of the company reporting. Also, the company has been disclosingreliable and timely information to all stakeholders. The company ensures that the remunerations procedures are in accordance with the stipulated law requirements (Mallin, 2016).
The Board Composition, the Diversity and The Overall Performance for ASX listed Companies
Tabcorp Holdings Limited
TABCORP Holdings Limited has been making several changes in the board from 2015 to 2017. Difference in the management structure has an effect on the returns of the company. The board of the company must include thechairman, the managing directors and the Chief executive officer. It is a requirement for company to have a maximum of 12 members acting as the directors and a minimum of three directors. The board can appoint any person to fill a vacancy. Apart from managing directors other directors can hold an office for a maximum of three years. The 2017 financial year yielded great profits for the company. This was as result of the company making an agreement with Tatt Group to merge the two businesses to diversify the gambling industry. The board for both companies has high expectations to improve the financial position for year ending 2018. The Nomination committee together with directors can approve or eliminate the persons in position for the CEO and the managing director. There was an improvement in revenue earnings by 1.5% from year 2015 to year 2016. However, there wasa drop in net profit after tax for the year ended 2016 by 43.6%. During the year 2017 the company was able to make improvements in the business growth. The company made various investments and it was also able to manage business risks and makevarious regulatory compliances. There was a significant improvement in revenue which rose 2.1% for the year ended 2017(Fernando 2012).
The Australian Agricultural Company
This company has been undergoing different changes in the board composition. The size of the board is determined through the approval of the directors. The law stipulates that in any company there must be at least 3 directors and a maximum of nine directors. Also, the secretary, the CEO is among the members of the board. Each member has his specific responsibilities .The Corporation Act outlines that the board is composed of non-executive directors, the chairman of the board is must be appointed from the none executive directors of the company (Miglani 2014).
The ownership structure has impacts on the financial performance on any organization. The general public holds 31.28% and gives the investors the investors power to make decisions on major policies such as remunerations for executives and appointment of directors. Private investors hold a stake of less than 2%. They have little influence in the decisions of the company. The insider owners of the company are directly involved in every decisions in the company. They control a larger stake of 43.32%. The institution ownership is only 24.20 which has no strongbargainingpower. Such companies continuously underperform when there is good management and continuouslyunderperform when they are properly managed. Companies that thedirector owned different share values in the company. Earnings per share for basic profit and the diluted profits for the same year were at 1.8cent. During the year 2017 all company there were changes few change in the board management. The directors of the company increased their share wealth in the same year and significant improvements were witnessed in the sharevalues of the company compared to the previous years (Shimeld, Williams and Shimeld, 2017).
Strengths and Weaknesses of the TFS Company Limited
The company was able to recognize and manage risks. With sufficient information the management is able to make better investment decisions. TFS Company was able to perform well in its half financial year. This shows that the management had a good framework within the semi-financial year. The framework was able to consider the risks involved and the investment opportunities available for profitable operations (Fernando, 2012).
The company had a competentboardstructure. The company board has the required expertise and was able to implement its decisions appropriately. It is through the skills and commitment resulted to good performance during the semi financial year. The net profits after tax and the revenues were higher which reflected a strong financial position for the company (Fernando, 2012).
The management is has been making efforts to rebrand the company.It changed the name of the organization from Quintus to TFS Corporation. In order to promote the image of the company, it invited celebrities in the celebrations and also uses the media that in order to communicate possible future growths to the public. Through such actions the company is able to interact with investors (Fernando, 2012).
The management is able to make timely information disclosure. The management has the responsibility to ensure that the financial reports are prepared and communicated to the stakeholders on time. The TFS was able communicate prepare and communicate the financial performance of the company at its half year financial year(Fernando,2012).
Management has the responsibility to set the objectives and goals that are achievable for every company. Also, the management of an organization has the responsibility todisclose financial information that is accurate and timely for all stakeholders of the organization. The TfS management not makes enough research on the investment and therefore it could not make sound decisions before investing in sandalwood (Labelle, 2012).
The company was unethical and irresponsible. It is the obligation of every company to do its operations with at most honesty and integrity. The company was disclosed wrong information to the public and the management did not think about the impacts of the disclosing to the public.
The company denied the shareholders to acquire the right information. Every organization is entitled to provide the stakeholders with the appropriate information so that they are able to make sound decisions on investments. TFS investors were denied the right to acquire the right information. When investors are given misleading information they are discouraged from investing with the same company (Labelle, 2012).
Contributions of Corporate Governance to the demise of the TFS Company
Despite the company being able to make semi- annual profits and revenues, it collapsed for various reasons. The company management overlooked the risks involved in providing misleading information. Before giving ago ahead for release of the information, the company had to factor out the risks involved. In the long run, the company collapsed. The company had unrealistic expectations from the investment on sandalwood. It promised the investors to pay dividend within the first two years after the project initiation and the principal amount was to be paid in full after 7 years that would take more than 15years to start generating profits. There are so many risks involved in the long-term project and the expectationsof the company may not be realistic(Lama and Anderson, 2015).
The investors were not supplied with accurate and reliable information. The misleading information from the management scared away the investors. The company used the media to spread misleading information afterproviding the stakeholders with unrealistic assumptions on investment. Investors lost confidence with the company (Lama and Anderson, 2015).
To sum it up, corporate governance is important for every organization with an aim to grow. Good corporate governance in any organization improves the reputation of the organization, attracts more investor, and ensures that shareholders have confidence in the operations of the organizations. Companies enlisted in the AXS incorporate principles and recommendations into their operations. When such rules are well implemented, company stakeholders are certain that the company risks are mitigated, skilled management is available for the companies, the accurate reliable and timely information is provided, companies have best shareholder engagement means of communication and there is employees are properly rewarded. Also, all companies have an obligation honor shareholdersright to accurate information otherwise the company reputation is at stake when the truth unfolds and may result to company collapse.
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