Question 1 – Do you see the selection of Directors at Manfold Toy’s as entirely suitable to an ethical standing? Why?
Many relevant corporate governance issues arise regarding the composition of Manfold Toy's board of directors. With respect to the main purpose of a board of directors, we need to reflect on whether the elected directors were the best possible representatives of stockholders interests. Additionally, we should analyze to what extent were the elected directors eager to accomplish their responsibilities/duties. To begin the analysis, we should study the process of director’s election to the Company's board. Taking into account that 68% of Manfold Toy stake belonged to Joseph Wan, founder and chairman of the company, he held enough majority to decide on the board composition. The remaining stake was insufficient to refuse Joseph choices. Thus, Joseph choices could not be refused by the other shareholders, even if they believed there could be better representatives of their interests on the board.
According to the Chartered Financial Analyst (CFA), a global association of investment professionals, “Board members owe a duty to make decisions based on what ultimately is best for the long-term interests of shareholders. In order to do this effectively, board members need a combination of three things: independence, experience and resources”. Manfold Toy's board was composed by three INEDs (Independent Non-Executive Directors). These directors should comply with the rules of independence towards the company, so that they are able to effectively perform their duty: ensure that the interest of the shareholders are preserved in executives’ acts. However, if they are dependent in any way to the Company, their decisions and acts will have external undesirable influences. Fred Wong Sau-lim, one of the Company's Independent Non-Executive Directors since 2001, and Chairman of the Audit Committee, was the Director of On Yee Exports since 2000. On Yee Exports had...
Please join StudyMode to read the full document