Essay on Corporate Governance : Dick Smith 's Board Of Directors

1253 Words Jun 2nd, 2016 null Page
Question 2 (a)
Corporate governance are the rules and systems, based on which a company is run to ensure that a company always runs in the best interest of its stakeholders. These rules prevent managers in an organisation from participating in a self-interested manner that could be damaging to the company and its stakeholders.
During the time DSH was issuing its prospectus, the company would need a diversified board of directors to prevent corporate governance issues. The board should consist of members who have industry relevant experience. Dick Smith’s board of directors should have a balance of executive and non-executive members to ensure there is balance of power across the board. A CEO or CFO is usually an executive director of a company. Non-executive directors are not involved in company management and provide an outsiders view and expertise to the business. Since CEO’s or CFO’s might put management best interest before shareholders, non-executive directors should conduct some meetings privately to ensure stakeholder’s interests are protected. Sometimes executive and non-executive directors are prone to bias as they are driven by what they believe are the best interests of the company. This is why independent directors are an important part of the board. Independent directors are able to provide an unbiased and objective perspective on the decisions on all parties in the business as they have no ties to the business, ensuring corporate governance and reconcile the…

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