Session9

HongHuatcase
 Boardcomposition
Principle2:needstrongandindependentelementonthe
board,whichisabletoexerciseobjectivejudgmentoncorp
affairsindependently,inparticularfrommanagementand
10%shareholders.Noindiv orsmallgroupofindividuals
shouldbeallowedtodominateBoardsdecisionmaking.
HowmanyID?Guideline2.1and2.2
MayreconsiderLHHsappointmentasChairman if
ChairmanandCEOnotrelatedthen1/3insteadofID
Mayneedtoappointoutsiderstositontheboardand
considerreplacingsomefamilymemberssoifco
complieswithGuidelines2.1and2.2boardsizewillnot
betoolarge
NeedIDforregulatoryrequirements201B minimum2out
of3membersofAC
 Boardcomposition
NeedIDforNC(Guideline4.1),RC(Guideline
7.1),AC(Guideline12.1) couldbesameIDs
whositinallthreecommittees.
MayneedleadID(Guideline3.3)ifLHHstays
onasChairman
AppointmentofEllen:Guideline2.3(d).HHto
explainwhyEllenisindependent.
Attheveryleast,mustlookfor2newIDstofulfil
ACstatutoryrequirement.
 Boardsconductofaffairs
Principle1:Everycoshouldbeheadedbyan
effectiveboardtoleadandcontroltheco.
Managementremainsaccountabletotheboard
BoardsroleinGuideline1.1(b),(c),Guideline1.2
NonexecutiveroleinGuideline2.7
Motherandyoungerbrotherinapositionto
constructivelychallengeplansputforwardby
managementorassessmanagements
performance? Probablyneedtoreplacethem
withpeoplewhohavetherelevantskillsetsto
takeontherole.
 Mixofcorecompetencies
Guideline12.2Atleast2membersofAC,includingAC
Chairman,shouldhaverecentandrelevantaccountingor
relatedfinancialmanagementexpertiseorexperience
Guideline2.6Balanceanddiversityofskills,experience,
genderandknowledgeofco.Corecompetenciessuchas
accountingorfinance,businessormanagement
experience,industryknowledge,strategicplanning
experienceandcustomerbasedexperienceofknowledge.
Needpeoplerelevantexpertiseinbusinessdevelopmentin
thenewbusinessesandcountriesthatthecompanyhas
identifiedasnewgrowthmarkets?
 ChairmanandCEO
Principle3Cleardivofresponsibilities
betweenleadershipofboardandexecutives
formanagingcos business.Nooneindiv
shouldrepaconsiderableconcentrationof
power.
LHHfinalsayonmatters.Suggestclearer
divisionofresponsibilitiesbetweenChairman
andCEO?SuggestLHHstepdownas
executivechairman?
 Roleofchairman
Guideline3.2onrole.
ReviewLHHsappointmentasChairmanifhe
isnotingoodhealthandwishtotakethings
easy.
 Training
Guideline1.6Dirtoreceivetraininginareas
suchasaccounting,legalandindustryspecific
knowledge
Adequatetrainingfordirectorstobetterfulfil
theirroles.
 Appt ofFC
Guideline11.3Boardhastocommenton
whetheritreceivedassurancefromCEOandCFO
:
(a) Thatfinancialstatementgivestrueandfairview
ofcos operationsandfinances;
(b) Regardingeffectivenessofcos riskmanagement
andinternalcontrolsystems
Iffamilycontinuestohavestrongboard
representationandinfluence,shouldreviewappt
ofLBLasFC?ProsandconsofherbeingFC.