Essential Criteria For Appointment Of Non-Executive Director Of Company

Finance & Accounting

Essential Criteria For Appointment Of Non-Executive Director Of Company

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Assessment Type

Assignment

Word Count

2500 Words

Subject

Accounting

Deadline

4 Days

Assignment Criteria

Assessment Task 1 

Assessment Criteria: 

Demonstration of knowledge of the issues 

High quality written communication of corporate governance concepts Structure and professional presentation of the report 

Required: 

Assume you are employed in a management consulting firm and have expertise as a  corporate governance specialist. Your client is a public company listed on the  Australian Stock Exchange that has requested a one page brief (maximum 250 words)  specifying the essential criteria for a non-executive director to be appointed to the  company's board.  

The client has said; 'Make it brief, I'm too busy to read a long document. You should  follow the ideas of former UK Prime Minister Winston Churchill who stated: 

'To do our work, we all have to read a mass of papers. Nearly all of them are  far too long. This wastes time, while energy has to be spent in looking for the  essential points. I ask my colleagues and their staff to see to it that their reports  are shorter. The aim should be reports which set out the main points in a series  of short, crisp paragraphs…' 

Winston Churchill, Memo to UK War Cabinet, 9 August 1940, During the Battle of  Britain 

Assessment Task 2 

Assessment Criteria: 

Demonstration of knowledge of the issues and evidence of wide  reading to support your analysis 

Demonstration of your ability to apply the knowledge to identify keys  issues leading to your recommendations 

Evidence of sound reasoning and the exercise of professional  judgement to support your recommendations 

Development and statement of concise recommendations for  presentation to the AICD 

Overall structure and professional presentation of the report to the  AICD  

High quality written communication of concepts and terms in ordinary  English as not all readers of the report can be assumed to be specialists  competent in corporate governance  

Case Study 

'As a separate legal person, a corporation has two basic objectives: To survive and to  thrive. Shareholder value is not the objective of the corporation; it is an outcome of  the corporation's activities. While shareholders entrust their stakes in a corporation  to the board of directors, shareholders are just one audience among others that the  board may consider when making decisions on behalf of the corporation. 

These audiences, typically called stakeholders, may also include other financial  stakeholders, such as bondholders, and nonfinancial stakeholders, such as employees,  customers, suppliers, and NGOs representing various concerns of civil society. In the  face of limited resources, no matter how large the corporation, directors must make  choices regarding the significance of the corporation's many audiences.' 

Required 

Assume you have been employed as a corporate governance consultant by the  Australian Institute of Company Directors (AICD). The AICD is concerned that many  company directors hold the opinion that the company's board of directors has a  responsibility to place the interests of shareholders above all other stakeholder  interests.  

Your assignment is to prepare a report to be submitted to the AICD evaluating the  evidence that the responsibility of a company director is to place shareholder interests  above those of other stakeholders. Specifically, the AICD has requested that your  report contain evidence, examples and recommendations for company directors that  will guide them when making board decisions so they are responsive to diverse  stakeholder audiences. The AICD has advised you that they intend to make your  report a public document and it will be uploaded to the website so it can be read by  both corporate governance specialists and non-specialists. 

Assessment Task 3 

Assessment Criteria: 

Demonstration of knowledge of the issues and evidence of wide  reading to support your analysis 

Demonstration of your ability to apply the knowledge to identify keys  issues leading to your recommendations 

Evidence of sound reasoning and the exercise of professional  judgement to support your recommendations 

Development and statement of concise recommendations for  presentation to the Chairman 

Overall structure and professional presentation of your report to the  Chairman 

High quality written communication of concepts and terms as the  Chairman can be assumed to be professionally competent in corporate  governance  

Case Study 

'Countering cyber risk presents a significant strategic challenge to leaders across  industries and sectors but one that they must surmount in order to take advantage of  the opportunities presented by the vast technological advances in networked  technology that are currently in their early stages. Over the past decade, we have  significantly expanded our understanding of how to build secure and resilient digital  networks and connected devices. However, board-level capabilities for strategic  thinking and governance in this area have failed to keep pace with both the  technological risks and the solutions that new innovations provide. 

Boards have a vital governance function, determining overall company behaviour and  setting a company's risk appetite. For boards, action means effectively exercising  oversight by asking managers the right questions to ensure that the boards' strategic  objectives are met. This function is no different in the area of cyber resilience. By  offering the following principles and tools, the Forum hopes to facilitate useful  dialogue between boards and the managers they entrust with the operation of the  companies to which they owe their fiduciary obligations.'

Required 

Assume you have been employed as a corporate governance consultant by a company  listed on the Australian Stock Exchange and ranked within the ASX 200. The Chairman  of the company has decided to address the issue of cyber security at the company board level.  

As an initial step in the process of improving the cyber resilience of the company the  Chairman has employed you to prepare a report that critically analyses how the  company can best integrate its cyber security and resilience protocols to ensure  continued corporate survival and improved business performance. The Chairman has  requested that you submit a report providing examples of best practice and a clear set  of recommendations on how the company should initiate a cyber resilience policy at  the corporate board level. Your report will be tabled at the next board meeting for  board members to review and evaluate your recommendations. 

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Assignment Solution

A non-executive director of the company is engaged in the planning as well as policy-making process (PWC, 2012). He brings autonomous decision, outside the knowledge and fairness on all matters that come across the Board. The lawful requirements of a non-executive director involve diligence, care, authenticity and appropriate use of information and position (Mersky, 2012). This report discusses the criteria which are essential for a non-executive director to be elected to the company’s Board. 

Essential criteria for the appointment of a non-executive director are:

  • Experienced and Knowledgeable

The individual should have wide experience and knowledge which will be needed for the decision making for the company. The receptivity comes with the experience of having worked at a higher-level position of job for above 10 years (Adams, et al., 2010). 

  • Due Diligence and Legal Compliance 

The individual must act ethically, showcasing care, honesty, and integrity in the best interests of the company. He/she must at all times work for the well-being of the company in any situation. There should not be any criminal record of the individual. Further, he should work meticulously in order to comply with the legal issues of the company (Mersky, 2012).

  • Conflict and Risk Management

The individual must have experience in managing risks as well as developing contingency plans. He/she should disclose any personal interests which may conflict with the responsibility of the Board (PWC, 2012).

  • Leadership skill

The individual should have worked at the position in which he/she is wholly accountable for all the entrustment of rights and duties to subordinates under him and stands for guidance and motivation for any action taken by his subordinates (PWC, 2012). 

Conclusion

Hence, the individual for the position of non-executive directors to the company’s Board is anticipated to possess business skills, expertise, experience and knowledge in corporate governance.

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