Professional Documents
Culture Documents
CSR-Asmt 2 202201F0710
CSR-Asmt 2 202201F0710
SUBMISSION DATE
10 FEBRUARY 2022
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MPCS7103 – Group Assignment 2
1. Introduction
2. Definition (Conceptual and operational)
3. Content of topics
4. Problems or issues relating to the topic in term of Malaysia and global
contexts
5. Suggestion to handle the problems/ issues (with significant examples)
6. Summary of the topic
7. References
INSTRUCTIONS/WRITING FORMAT;
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TABLE OF CONTENTS
Contents Page
TABLE OF CONTENTS 3
INTRODUCTION 4
DEFINITION 5-7
CONTENT OF TOPICS
8-9
REFERENCES
21
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INTRODUCTION
The board of directors often referred to as "the board" is an executive committee which
monitors these same activities of the business, a non-profit organization, or a
government agency. Government legislation and the organization's own bylaws and
regulations control a board of directors' powers, tasks, and obligations. The number of
members of the board, how they will be elected, and how often they will meet may be
specified by these authorities. In an organization with voting members, the board is
responsible and may be subordinate to the full members of the organization, who
generally elect board members. In a public limited company, the non-executive
directors are elected by the shareholders, and the board of directors has final
responsibility for the management of the company.
The board of directors appoints the CEO of the corporation and establishes the overall
strategic direction. In corporations with scattered ownership, the identification and
appointment of directors (which shareholders vote for or against) are often made by the
board itself, leading to a high degree of self-perpetuation. In a public limited company
with no general participation with voting rights the board is the supreme governing
body of the institution and its members are sometimes elected by the board itself.
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DEFINITION
The function of the Board is to offer leadership to the company and to deliver
shareholder value over time. The Board establishes the company's principles and
standards ensuring that they are consistent with the company's strategic goals and
intended business culture. The management as well ensures the company obligations to
its shareholders and other stakeholders including colleagues, suppliers, customers and
the environment in which the firm operates are understood.
The Board has total control over the management and governance of a team and its
operations, to provide entrepreneurship within a control framework. It is in charge of
approving the group's strategic goals and ensure that the appropriate human and
financial resources are in place to achieve them. The Board's risk management and
internal control mechanisms are also reviewed on a regular basis by the audit
committee.
The company has designed a governance structure that allows the Board of Directors to
concentrate on the major roles and responsibilities that affect the company's long-term
success:
• Board of directors
• Audit Committee
• Nomination Committee
• Remuneration Committee
• Group Chief Executive
• Executive Management Team
• Management Committees
Regular Board and Committee meetings are held every year, and the Directors ensure
that they have enough time to successfully carry out their responsibilities. When
Board-level decisions of a time-sensitive nature must be made, Board meetings may be
called on short notice.
The Board maintains and annually reviews a schedule of matters reserved for its
decision which include but are not limited.
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The functions of Chairman and Chief Executive of the Group are exercised by separate
persons and have clearly defined responsibilities. The division of responsibilities
between the Chairman, the Executive Director of the Group, the Independent Chief
Executive Officer and the Non-Executive Directors is established in writing and is
periodically reviewed by the Governing Council.
Chair
• Leads the Board and sets the tone and agenda, promoting a culture of openness
and debate
• Ensures Board effectiveness and that Directors receive accurate, timely and
clear information
• Ensures effective communication with Shareholders
• It acts on the results of the Board performance evaluation and leads the
implementation of necessary changes
• As Chair of the Nominating Committee, he leads the consideration of any
changes to the Board of Directors
• Holds regular meetings with Non-Executive Directors without the presence of
Executive Directors
• He runs the Company and is in direct charge of the Group Day by day
• Responsible to the Board of Directors for the Group's operational performance
• Responsible for implementing the Company's strategy, including driving
performance and optimizing Group resources
• Primary responsibility for managing the Group's risk profile, identifying and
executing new business opportunities, developing management and
remuneration
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• Maintains a financial control environment capable of providing sound financial
information to indicate the financial position of the Group
• Directs Finance functions and has daily responsibility for Finance, Tax,
Treasury and Internal Audit
• Chairs key internal committees, such as the Risk Committee and the Treasury
Committee
Company secretary
• Responsible for advising the Board, through the President, on all governance
issues
• All Directors have access to the advice and service of the Company Secretary
Non-Executive Directors
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CONTENT OF TOPICS
• Leadership
The choice of a board chair is one of the most important decisions a board and CEO can
make. A thorough understanding of the company, a desire to devote significant time
and effort, and the capacity to lead in both crisis and calm situations are more vital than
ever.
• Relationships
High-performing governance necessitates time and intentionality, as well as a
trustworthy and honest relationship between the board and senior management team.
• Optimization of meetings
Time is a valuable commodity for volunteer board members, and it must be used wisely
to optimize board and committee meetings. This will necessitate the management
team's as well as the trustees' attention and work.
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Support that is strong. Investing in backstage support is critical for the other six factors
of board effectiveness to succeed. Strong administrative support and well-defined
protocols are essential for high-functioning boards.
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PROBLEMS OR ISSUES RELATING TO THE TOPIC
Finally, and perhaps most crucially, the roles and obligations of board members are
usually unclear. The board's five main responsibilities should be to establish the
organization's mission and overall strategy, as well as to modify both as needed monitor
management and hold it accountable for performance select, support, evaluate, and, if
necessary, replace the executive director or CEO develop and conserve the
organization's resources and finally, advocate for the organization and build
community support.
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• Information Overload: Everyone has information, learn how to connect
the dots better
Businesses used to pay a lot of money to get access to information. That has
significantly decreased. The key questions now are: What does the data say?
What does this imply? And how do we put it to use? Businesses as a whole are
evolving. The boards must change. What boards must do is take on a new level
of leadership, anticipating what will produce value, how that will influence the
business, and determining if the necessary leadership is in place to make those
critical day-to-day operational decisions. Future boards must have a new
perspective on the future and think with a different level of expansiveness,
involvement, and opportunity creation.
It ultimately comes down to talent and succession, which are inextricably
linked. Talent begins at the top and works its way down to the lowest levels of
the organization. To properly foresee all of these difficulties, different types of
thinking will be required in the boardroom. The need for diversity in the
boardroom to do that successfully and foresee things has never been greater, not
because it's a noble cause, but because it will need quick thinking and a wide
range of perspectives to do so.
• Risk Management: Figure out what’s an opportunity and what’s a threat
The distinctions between competing markets have never been blurrier in today's
global and active economy. Is Amazon, for example, a consumer brand because
it offers everything from groceries to garage door openers? Or is it a
technological firm, given that it owns and operates the legions of computer
servers that enable e-commerce, both its own and that of others? With so much
overlap, it's impossible for board members to tell whether the interruptions are
helping or hindering the organization's progress.
• Handling individual director performance issues
Enhance the process of evaluating directors. Members believed that making the
yearly director review more robust would aid in the early detection of
performance difficulties. Directors noted that having a strong, candid process
requires confidentiality, and that having outside counsel oversee the evaluation
process would strengthen the processes confidentially. In addition to the yearly
evaluation, do regular assessments throughout the year. Boards often take too
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long to respond to signals of underperformance by directors, which some
directors believe is due in part to an overreliance on the yearly assessment
process. Outside of the review process, directors suggested offering regular
feedback to identify and solve performance concerns more rapidly.
• Corporate Governance Risks in Subsidiaries
The Enron incident, one of the most well-known examples of corporate
governance failure, demonstrated how a lack of sufficient compliance
inspections in subsidiaries can spell doom for a large corporation and a
well-known audit firm. Today's issues in corporate governance include strong
corporate governance processes and policies for subsidiaries. The operations of
subsidiaries can have a direct impact on the parent company's reputation, which
does not have as much visibility into the subsidiaries' activities as it would want.
Mitigation: The board of directors faces issues that can be addressed by a good
risk management approach that allows management to continuously detect,
assess, and manage risks. Dynamic risk management software is an effective
tool in many organizations for detecting and eliminating various types of
irregularities before they cause long-term damage. Start using Risk Oversight
right away.
• Shareholder activism
The danger of shareholder activism puts pressure on board members to be
responsive to their shareholders' needs. The board should be well-versed to
effectively handle activist requests. Activist shareholders will not always be
correct in their demands, but they will not always be incorrect. As a result, while
dealing with shareholder activism, board members will have to rely on their
own judgement and expertise of the company. Board members should be aware
of the risk factors that make companies more vulnerable to activist shareholders
and be prepared to defend against them if necessary. If, for example, a
shareholder launched a vote no campaign, the board may be asked to interact
with investors and major stakeholders.
• Managing board-CEO communication
The board of directors has a complicated relationship with the company they
govern. Although board members lack the consistent information required to
actively lead the business, they must still demonstrate leadership and be willing
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to make major decisions about the company, such as whether the CEO is
performing well or whether the business is performing for its stakeholders, and
provide guidance based on those decisions. Small difficulties that may have
been prevented with board advice can readily snowball and become big
impediments over time if supervision is too low. The board should
communicate with the CEO and other senior personnel on a frequent basis to
provide the best possible counsel. The board should be willing to do more than
just give mild monitoring and should ideally provide guidance or push back on
CEO decisions if they believe the company isn't performing well for
stakeholders.
• Guiding business communication
The board is a key element in a company's communication strategy the tone and
style of an organization always comes from the top. As a result, the board
needs to fully understand the company's mission and goals so they can properly
guide management on how the business should communicate. A lack of board
supervision might lead to muddled or contradictory brand communication.
Board members can help guarantee that the organization is able to communicate
effectively and consistently in this area. Board members should also be aware of
some of the most typical board communication blunders that might derail a
company's communication strategy.
• Following board duties
This is one area where nonprofit and for-profit boards differ slightly. While
most company boards believe they are bound by two primary duties: care and
loyalty, nonprofit boards are frequently believed to be bound by a third:
obedience. This responsibility requires board members to ensure that the
nonprofit complies with all applicable laws and regulations, as well as the
organization's bylaws, and to look for ways to use their resources, insight, and
connections to help the nonprofit achieve its objective.
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SUGGESTION TO HANDLE THE PROBLEMS AND ISSUES
A board has little hope of providing effective governance, let alone visionary and
strategic leadership, if it’s still held back by some basic sources of dysfunction. The key
to overcoming dysfunction and optimizing function is to first identify the source of the
challenge. Most of the resources on improving board effectiveness tend to focus solely
on the structural aspect of governance policies, procedures, Roberts Rules of Order,
bylaws, statute, fiduciary duty, etc. for overcoming dysfunction. But it’s the human
element that’s the real challenge. How well board members play in the sandbox
together is far more important than processes, policies and procedures which are often
completely ignored in the heat of battle.
The key to overcoming dysfunction and optimizing function is to first identify the
source of the challenge. Functional challenges fall into three main categories which
often work in combination with each other. There are key strategies, each different, for
addressing the three categories of dysfunction:
In reality, most board challenges contain elements of all three categories. All three may
be and usually are present, reinforcing each other. The key to solving the challenge is
identifying the primary category driving the dysfunction and address it first. Here are
examples with all three elements present, with the primary driver listed first:
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iii. Structural: A board with a constituency-based structure (i.e., fixed geographic or
special interest representation), might evolve a divided/parochial culture in which
an individual board member believes their fiduciary responsibility is to the
constituency they represent and not to the organization as a whole, lobbying for
disproportionate resources and special attention.
In the first example, if the board addressed the divisive individual’s behavior
directly, the need to address the cultural and structural dynamics arising in
response to the behavior might be mitigated or eliminated.
In the second example, if the board came to a group agreement to adopt a
mission-driven, strategy-focused culture, followed by adopting a Strategic Plan, it
would improve its ability to say “no” to an individual’s personal agenda that
doesn’t fit the mission/strategic focus.
In the final example, if the board were to adopt a competency-based selection
process vs. fixed constituency-based representation, the confusion over who board
members represent a constituency vs. the organization as a whole could be
eliminated.
Board participants are normally elected through the business enterprise's shareholders
at the annual shareholders' meeting. Nominations are voted on through a unique
nomination committee created through impartial outdoor directors. Boards normally
attempt to stagger director phrases to limit the variety of elections in a year. Board
participants may be eliminated or fired however it's far discouraged. Many in their
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contracts encompass what is called a “golden parachute clause” that calls for the
business enterprise to pay the director an advantage if they're eliminated from their
position. Some forums element fitness-to-serve protocols of their bylaws and
foundational regulations which can result in a director's expulsion if broken.
Inside Directors: Inside administrators are enterprise personnel whose enjoy brings
price to the board. They aren't compensated due to the fact they're regularly already a
C-degree executive, primary shareholder or a union representative.
Most powerful forums get their paintings accomplished via committees that document
to the whole board. Setting up a small organization of administrators selected for his or
her applicable knowledge has tested to be a powerful manner to look at complicated
issues. Audit, compensation, and nominating committees so as in their current upward
thrust to prominence overshadow the older govt committee whose characteristic tended
to turn out to be that of the complete board. None of those more recent committees is
designed to look at useful resource allocation. This interest is the very essence of
manipulation over the company’s future. The formation of a company goals or
approach committee of the board is a crucial first circulate to contain the board
withinside the approach (application for the future) of the company. Such a committee
typically capabilities first-rate if its contributors are outside, impartial administrators,
and therefore freed from the emotional commitments which competing claimants for
scarce assets unavoidably develop.
Board Committees
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•audit committee
•remuneration committee
•nomination committee
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SUMMARY OF THE TOPIC
Authority
To administer the Group's operations, the Board shall exercise all rights not otherwise
exclusively reserved for the shareholders.
The Board has the right to ask Management for adequate administrative support and to
have separate and independent access to senior management. The Board has the
authority to summon any member of the Group's management or any employee to a
meeting and to respond as quickly and completely as possible to any director's
questions.
The Board has the authority to conduct or direct any investigation necessary to carry
out its responsibilities, and it has the authority to retain, at the Group's expense, such
legal, accounting, or other advisers, consultants, or experts as it deems necessary from
time to time in the performance of its duties.
Membership
The Board will appoint the chairman of the Board, who will be responsible for
providing leadership to the Board and ensuring that it functions efficiently and
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effectively. The Chairman's and Chief Executive's functions must be distinct and not
shared.
Directors must attend Meetings of the board and any Board Committees on which they
represent on a regular basis, actively voice their views on issues discussed at the
meetings, and stay informed about the Board's powers and tasks, as well as their own
responsibilities as directors, and the Group's conduct, commercial activities, and
innovation.
The Board may form committees as it sees fit to help it carry out its duties. The Board
must develop, accept, and implement guidelines and operating rules regulating the
purpose, roles and responsibilities, composition, power, and functioning of the
following Committees:
Strategy and Budget Committee, Audit Committee, Risk Committee, Nomination and
Remuneration Committee, and Audit Committee.
Management's Delegation
The Board delegated authority and power to the Chief Executive to conduct the Group's
day-to-day business and affairs, subject to the Board's specified delegations and
constraints from time to time. The Chief Executive has the authority to transfer
authority and power to management members as he or she sees fit.
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The Chief Executive was given authority and power by the Board to run the Group's
day-to-day operations, subject to the Board's specific delegations and limits from time
to time. The Chief Executive has the power to delegate authority and power to
management members as needed.
Meetings
The Board should meet at least six times per year. The meetings will be scheduled to
correspond with significant dates in the Group's financial reporting cycle and other
concerns, as needed.
On at least a yearly basis, the Board of directors shall review and evaluate its process
and performance with the support of the Nomination and Remuneration Committee.
From time to time, the Board will monitor and evaluate the adequacy of its Mandates.
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REFERENCES
1. https://www.albaraka.com/en/corporate-governance/the-board-of-directors/intr
oduction-to-the-board-of-directors#:~:text=The%20Board%20of%20Directors
%20(the,operational%20performance%20of%20the%20Group.
2. https://s24.q4cdn.com/628382107/files/doc_downloads/gov_docs/Governance
-Guidelines-as-of-November-4-2019.pdf
3. Khurana, R. (2002). Searching for a corporate savior: The irrational quest for
charismatic ceos. Princeton, N.J.: Princeton University Press.
4. Kayla Matthews - Owner of Productivity Bytes, Monday, March 16, 2020. 5
Challenges Among Board Directors and How to Overcome Them.
https://www.insightsforprofessionals.com/management/leadership/5-challenge
s-among-board-directors
5. Greve, H. (2004 May). Searching for a corporate savior: The irrational quest for
charismatic ceos reviewed work(s). American Journal of Sociology, 109(6),
1542-1544.
7. Daniel Kim| December 10, 2015 , Concerns & Challenges Faced by Board of
Directors.
https://www.auditboard.com/blog/concerns-of-the-board-of-directors/
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