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June 2016 (Tangerine)
C.G Weakness Recommendations
The BOD composition is not balanced NEDs should be at least 50% in board and include 60% EDs and 40% NEDs. as that any strategic decision like EDs are in dominant position as they director remuneration can be set may become dominant in decision independently. making like deciding their own salaries etc. The chairman and one of the NEDs are The two members should be replaced former EDs of Tangerine Co. They may and appointed independently or they be introduce familiarity threat and can be NEDs of the company after five they may evaluate the performance of year’s cooling period, independent EDs or decide the remuneration based NEDs will ensure remuneration on the past relationship. decision based on independent measures. Other members of audit committee The audit committee need had prior experience in sale or improvement by adding at least one production area, they may not be in independent NEDs having membership have not related experienced position of professional accountancy body so to discuss and resolve auditor’s issue that review of FS and solving auditor’s or may not be able to review FS. issues can be enabled addressed. All of the EDs are occupying post for Tangerine should facilitate re-election four years. Due to dominancy they of director after every 3 years so that may take those decision which may due to directors rotation, chances of turn in their personal interest, not in dominancy can be reduced and goal- interest of shareholders. congruence decisions can be taken. The head of the audit committee was The head should be replaced by previously ED and may not be another independent NED who should independent and he may overlook not have any financial or non-financial material misstatements in FS based on interest in Tangerine in order to past relationship or if his previous job support independent scrutinisation. has impact on FS. Q.188 SAXOPHONE ENTERPRISES C.G Weakness Recommendations Finance director is undertaking review The independent NEDs should whether or not company complies scrutinize the work done by EDs an with corporate governance. Finance review whether or not company director not supposed to be complies with corporate governance independent in reviewing corporate principles. governance principles implications as he may ignore misstatement in finance department. Bill Bassoon is chairman of Saxophone, The chairman of Saxophone should be last year he was ED. He may not be independent NED. So a neutral independent and open risk of self- practice will be carried at position of review threat, as mentioned he may chairman and there should be 5 year’s overlook his own misstatements in FS gap for ED to be a NED for same or controls as his previous job was ED. company. There are currently 3 NEDs out of 8 Saxophone should consider to include executive directors. So, 8 EDs may 50% NEDs as compare to executive dominant their decision over 3 NEDs, directors. So, that neutral and which might be in their own interest unbiased decision could be taken in rather than shareholder’s. interest of shareholders. Bill Bassoon chairman of Saxophone He should not be appointed as NEDs considering to appoint hi close friend because of inappropriate experience as NED who is retired chief executive and not independent. Another person of manufacturing company. He has should be appointed as NEDs who is inappropriate experience and no independent and has relevant independent to take proper decision in experience. interest of shareholder. The finance director, Jessie decide the The remuneration of EDs should be set remuneration of each director. The by remuneration committee finance director is not supposed to be comprised of 100% NEDs to avoid any independent as he may set high conflict of interest. remuneration for himself or misusing her position for personal motives.
