Corporate Governance Assignment Essay

1. admittanceCorporate entities of all types need a governing body. In the reason of a company, this is its venire of theater coachs. Corporate entities governed by a progress of directors give the central challenge of the agency issue. Whenever a principal has to rely on agents to handle his or her business, administration issues arise. (Tricker 2012) Presently, integrated government work onivity is an evolving concept as such there is zero(prenominal)fixed definition. However, somatic administration has been delimitate as, the trunk by which companies argon directed and controlled. (The Report of the Cadbury Committee on The Financial Aspects of Corporate arrangement The grave of Best Practice 1993) upstart high-profile bodily failures, s shtupdals and, in many cases, administrator corruption, encounter focused global regulatory and public attention on the need for having appropriate corporal brass section commonplaces and fargons. (Leblanc 2005) As such, much emphasis is being placed on display panel evaluation.The principles-based model of incarnate political science is applied in race countries. Under this model companies are implyd to radical that they present followed the governance principles laid down in the codes or to explain why they have not. (Tricker 2012) Guyana being a Commonwealth country is subject to this self-regulatory framework of in incarnate governance. This paper used the OECD Principles of Corporate Governance (2004) as the instauration for reviewing the governance of democracy coast (Guyana) exceptional. As such the paper is organized as follows 1) explanation of the bases of review, 2) overview of democracy rely (Guyana) limited, 3) a review of the dining t qualifieds responsibilities, 4) recommendations for advances and 5) conclusions.2. Bases of Review in that respect is no solitary model for good corporate governance, what constitutes good corporate governance will progress with the ch anging circumstances of the company. Established, codes and guidelines can swear bulge as sound guidance for companies who care to be good corporate citizens. (Du Plessis, McConvill & Bagaric 2005) The OECD Principles of Corporate Governance (2004) are a set of internationally recognised and accepted guidelines that pave the way for establishing good corporate governance indoors an organisation. Succinctly,put the OECD recommendations in accordance with the OECD Principles of Corporate Governance (2004) are as follows The rights of shareholdersThe equitable discreetnessment of shareholdersThe role of stakeholders in corporate governance apocalypse and transparencyThe responsibilities of the get on withto act in good faith, diligently, and with careto overlay all shareholders fairlyto hold in compliance with the lawto review and guide corporate strategyto use up, compensate, and monitor mark executivesto monitor governance practicesto ensure integrity of accountancy and pe cuniary systemsIn conducting a review of the wag of directors, it would be wise to assess along the guidelines stipulated as the responsibility of the tabular array in the OECD Principles of Corporate Governance (2004). Additionally, ensuring that the circuit get on complies with the national Companies Act, follows the rules set out in the company constitution and adheres to industry regulations indicates conformance to good corporate governance principles.3. Discussion3.1. Overview of the nation money box (Guyana) exceptionalnation margin (Guyana) hold is one of the largest and oldest commercial brims in Guyana. The bank was initially a state owned institution, British Guyana situate, which was sold to foreign investors thus fitting the Royal banking company. Further, transition saw the Royal Bank being resold to the administration of Guyana leading to the establishment of the National Bank of Industry and Commerce particular. In 1997 res publica Bank circumscribed of Trinidad and Tobago purchased absolute absolute majority shares of the company and later renamed it state Bank (Guyana) Limited. (History of nation Bank 2015) 3.2. prudentness 1 To act in good faith, diligently, and with care There are two key elements to the fiduciary vocation of climb on members the duty of care and the duty of loyalty. (Tricker 2012)The duty of care requires bill of fare members to act on a fully certain basis, in good faith, with due diligence and care. (OECD2004) At land Bank (Guyana) Limited the duty of care is established as the board comprises of majority item-by-item directors , whose extensive experience in both business and finance leave alone invaluable input into the decision making of the company. Additionally, in retentiveness with the banks culture of broad disclosure the executive director ensures that all pertinent information relevant to the banks operations is provided to members of the board of directors. (Republic Bank (Guyana) Limited 2014)The duty of loyalty is of central importance, since it is the basis of executing opposite corporate governance principles. (OECD 2004) At Republic Bank (Guyana) Limited the duty of loyalty can be seen in the banks related party insurance underscores the need for all legal proceeding done with related parties and affiliates to be done on the same legal injury and conditions as with a non-related party. Directors are required to disclose their interest in related party proceedings and to recuse themselves from considering or approving transactions in which they have an interest. (Republic Bank (Guyana) Limited 2014)3.3. Responsibility 2 To treat all shareholders fairlyRepublic Bank (Guyana) Limited is a subordinate word of Republic Bank Limited. As at December 31, 2014 the stock holdings of Republic Bank Limited in Republic Bank (Guyana) Limited was 51.1%. The OECD guidelines aim this principle is of particular importance in companies, such as Republic Bank (Guyana) Limited, who is the controlling shareholder and thus by de facto is able to select all board members. A sound corporate governance system requires that shareholders can actively participate in, and exert influence on, corporate strategic decision-making. If knowing well, this can be done effectively through one-year general meetings and proxy voting. Additionally, shareholders have a right to participate in, and be sufficiently informed on decisions concerning fundamental corporate changes. (Duhamel 2002) Republic Bank (Guyana) Limited adheres to the OECD principle in several ways.The company host an yearbook general meeting to which all stakeholders are given due honoring of. Also, in accordance with the banks by-laws, three directors retire from the board yearbookly and may offer themselves for re-election at the banks annual general meeting. The company too issues an annual plow and quarterly monetary statements to stakeholders and the general public.Pursuant to the mand ate to ensure that the interests of the various stakeholders are considered the board of directors meets, at a minimum, on a quarterly basis tour the Executive Sub-Committee of the Board, comprising seven Board members, meets monthly for the remaining months. (Republic Bank (Guyana) Limited 2014)3.4. Responsibility 3 To ensure compliance with the lawThe board of directors of Republic Bank (Guyana) Limited is committed to proper standards of corporate governance and maintaining these standards at the highest level. Continuous monitoring of the banks systems and procedures is done to ensure that standards are in keeping with the best practice as determined by the principles of corporate governance. The bank is also guided by the Recommendations for a Code of Corporate Governance issued by the Guyana Securities Council, and charge Guideline No. 8 on Corporate Governance issued by the Bank of Guyana under the billet of the Financial Institutions Act 1995. In appurtenance the Bank is compliant with lapse Guideline 10 on the Public Disclosure of Information. (Republic Bank (Guyana) Limited 2014)3.5. Responsibility 4 To review and guide corporate strategy As stated in the banks Annual report of 2014 Of critical importance to the board of directors is the responsibility to approve and review the banks strategic plan and within this context, to approve annual budgets, including capital expenditure. The board retains the responsibility for reviewing and approving credit applications above a specified limit. In keeping with the expectation of the board of directors the performance of each Management policeman is also assessed against all key performance areas which among early(a) things may allow in financial targets.The performance of all management officers is reviewed by the Board of Directors on an annual basis. Additionally, taking into account the increasing need for risk assessment, the board of directors has established a risk management committee, known as the other risks committee. 3.6. Responsibility 5 To select, compensate, and monitor key executives As stated in the annual report of 2014, the managing director and management team are nominate by the board of directors. Each management officer has a pen mandate and is required to execute the stated functions as outlined therein. The managing directors responsibilities and authorities aredocumented and approved by the board of directors.3.7. Responsibility 6 To monitor governance practicesMonitoring of governance practice involves continuous review of the internal structure of the company, monitoring and disclosure of corporate governance practices on a regular basis, self-assessment by boards of their performance as well as performance reviews of individual board members and the CEO/Chairman. (OECD 2004) At Republic Bank (Guyana) Limited, the board of directors approves the organisational structure for the Bank which ensures a reportage structure with prudent and effective con trols. The board of directors comprises nine directors including one executive director. Of the eight non-executive directors, five are independent. Republic Bank (Guyana) Limited adheres to the recommendations of the Supervision Guideline No. 8 on Corporate Governance issued by the Bank of Guyana under the authority of the Financial Institutions Act 1995 regarding its board structure.The board is comprised of an executive director and a majority of independent directors. (Republic Bank (Guyana) Limited 2014) Further, as suggested in the OECD Principles of Corporate Governance 2004, with single tier board systems, the objectivity of the board and its independence from management may be modify by the separation of the role of chief executive and moderate, Republic Bank (Guyana) Limited chairman is a non-executive director. The managing director of Bank (Guyana) Limited is the only executive director on the board. Additionally, in the annual report of the bank a statement of the ban ks corporate governance practice is make public. 3.8. Responsibility 7 To ensure integrity of accounting and financial systems Several committees have been set up by Republic Bank (Guyana) Limited to ensure integrity of accounting and financial systems. These committees are 3.8.1. The audit committeeThe audit committee of the board meets at least quarterly to review the banks system of internal control, financial reporting process, audit and examination process, and compliance with statutory and regulatory laws. When necessary, the audited account Committee is responsible for reviewing the independence, competence and qualifications of the External Auditors. 3.8.2. The compensation committeeThe compensation, which meets at minimum once per year, is responsible for formalising the banks remuneration policy for staff. 3.8.3. The other risks committeeThe other risks committee, which meets quarterly, is responsible for reviewing policies and procedures and ensuring that the Bank is not uncovered to unnecessary risks with respect to its operations. 3.9. Responsibility 8 Corporate Social ResponsibilityEvery board has a duty to formulate the companys strategy, recognizing the risks involved, and part of that process involves determining how the company will behave, in other words, establishing how social responsibility will be exercised throughout the organization. (Tricker 2012, p. 235) At Republic Bank (Guyana) Limited the need to be a good corporate citizen and perform its corporate social responsibility is understood and mirrored in the companys vision which establishes the bank wishes to set a standard of excellence for social responsibility. Corporate social responsibility activities of Republic Bank (Guyana) Limited are conducted under its Power to make a variance program. The Power to Make a Difference programme aims to enhance the tonus of life of disadvantaged persons support healthcare programmes and disability awareness initiatives provide opportunitie s for young people to realise their truest potential through sport, education and the humanities build community spirit and, in essence, help to correct some of societys ills. (Republic Bank (Guyana) Limited 2014) 4. RecommendationsIt was found that Republic Bank (Guyana) Limited in its governance aims to be a good corporate citizen by complying with rules and regulation stipulated at a national level and also meeting international standards of corporate governance. However, there are areas that could stand amendment and as such the following recommendations are made 1) The chairman of the board of directors should be an independent non-executive director. Presently, the chairman of the board of directors of Republic Bank (Guyana) Limited is also the managing director of Republic Bank Limited, the majority shareholder in Republic Bank (Guyana) Limited. Having a connected non-executive director as chairman hinders board objectivity.Since the chairmans interest arealigned with the m ajority shareholder it can be posited that the rights of minority shareholder is at terror of being be overlooked. A non-executive chairman will be able to play a critical role in representing the different constituencies in the company with an impartial viewpoint. (Cossin & Caballero 2013) 2) The compensation committee of the board of directors in addition to formalising the banks remuneration policy for staff, should also be responsible for setting the remuneration policy and employment contracts for board members. This committee of the board should comprise either wholly or a majority of independent directors. (OECD 2004) 3) The bank should establish a nominating committee. The nominating committee offers a check-and-balance mechanism designed to reduce the possibility of a dominant director.The nominating committee should be made up wholly, or mainly, of independent outside directors, to make recommendations on electrical switch or additional members of the board. (Tricker 201 2) 4) A standing committee of the board should be established with significant independent director membership, to recommend policies and to oversee corporate activities on corporate ethics codes, whistle-blowing procedures, and corporate social responsibility (CSR). (Tricker 2012) As suggested in the OECD Principles of Corporate Governance 2004 in fulfilling its control oversight responsibilities it is essential for the board to encourage the reporting of unethical/unlawful behaviour without fearfulness of retribution. 5) Of the nine members of the board only one is female. Republic Bank (Guyana) Limited should enhance board diversity by balancing the gender of the directors on the board. Studies that have validated a performance-based rationale for bringing women on boards. Results have demonstrated that companies with women board members outperform companies with no women directors.(Norris, 2012)5. ConclusionStandards of corporate governance are determined by the measures which companies take for themselves, whether voluntarily or otherwise, to improve the way they are directed and controlled, and by the legal, nancial, and ethical environment in which they work. The governance framework is there to encourage the efcient use of resources and equally to require accountability for the stewardship of those resources. The aim is to alignas nearly as contingent the interests of individuals, of corporations, and of society. (Claessens 2003) The governance of Republic Bank (Guyana) Limited, when reviewed in relation to the functions of the board as presented in the OECD Principles of Corporate Governance 2004 was found to compliant with most. Thus it can be deduced that, in administering both its conformance and performance duties, the board of directors of Republic Bank (Guyana) Limited adheres to best practices as they recognise good governance can play a role in promoting economic ontogeny and business integrity.6. ReferencesHistory of Republic Bank 2015, A bout Republic Bank, viewed 17 Mach 2015, https//www.republicguyana.com/about/history-republic-bank.The Report of the Cadbury Committee on The Financial Aspects of Corporate Governance The Code of Best Practice, Corporate Governance An International Review, vol. 1, no. 3, pp. 124-124.Claessens, S 2003, Corporate Governance and Development, The World Bank, Washington.Cossin, D & Caballero, J 2013, energetic Chairmanship Background Literature Review, IMD University, IMD Global Board Center.Du Plessis, J, McConvill, J and Bagaric, M 2005, Principles of modern-day corporate governance, Cambridge University Press, Cambridge.Duhamel, V 2002, Promoting Shareholder Participation paper presented at The quaternate Asian Roundtable on Corporate Governance, 11-12 November 2002, http//www.oecd.org/corporate/ca/corporategovernanceprinciples/2484854.pdf.Leblanc, R 2005, 20 questions directors should ask about governance assessments. Toronto Canadian Institute of charter Accountants, Toronto.OEC D 2004, OECD Principles of Corporate Governance 2004, OECD Publications Service, France.Republic Bank (Guyana) Limited 2014, Annual report 2014 The power of one, Republic Bank (Guyana) Limited, Guyana.Tricker, B 2012, Corporate Governance Principles, Policies and Practices, Oxford University Press, Oxford.