JPX’s Corporate Governance

Arrangement
o Family business culture
o Two-tier board (family members on the upper tier)
o AGM’s dominated by family members
o No non-executive directors
o Board committee structure unlike that of listed companies
o Head of departments – Directors who are not invited to board meetings

Reasons as to why considered inadequate to Chemco :

o Unitary Structure
o Different board committee structure
o Only few corporate governance requirements fulfilled
 Potential Risks of Acquisition
o Company’s Reputation
• JPX is based outside Europe.
• JPX is a Public Limited Company unlike Chemco.
• JPX is does not have a professionally sound structure (Compliance with CG Guidelines).

o Corporate Social Responsibility

• JPX has a negative impact on the local environment.
• JPX doesn't produce any voluntary environmental reports.

o Cultural Differences
• Both companies are located in different regions.
• Staff and employee interaction could be an issue.
• Body Language of the staff.

o Structural Differences
• Different board Structure
• Different board committee structure
• Different Corporate Governance arrangement
 Unitary Boards
Advantages :
• Closer relationship
• Better flow of information
• Goal congruence
JPX’s Case :
• Proper unitary board will bring in NEDs.
• Management will be able to present their ideas and problems.
• Nomination’s committee will balance the family business culture.
• Managing directors ‘ roles will be enhanced.
• The members formerly placed in the lower tier will now be
motivated and there will be equitable treatment.