‘Tutorial 3 (Week 4} Lecture 3 Question 1 (1301) KcoLove Homes Dom Long (‘Dom’) and Kathy Long (‘Kathy’) run a private company in the UK, SSSWSMeUgTOmes, that specialises in the installation ot REESE The company was established about 30 ‘years ago as a construction company specialising in family houses, but has moved into solar panelling because of the of Dom and Kathy for . They have been married for 30 years and have a Long and a is working for a major. firm and Ril is the of a listed company. are joint awners of| of the shares in the company. Keith son owns 5% (even though he is not involved in the comy business) and the remaining 10% are owned by aoe ‘of the company. The company’s have been falling during the last three years, partly because of the ae conditions but also because Dom and Kathy have decided to RGB HGH for their workin order to encourage more people to buy solar panels and thereby protect the environment. In their view, the environment ‘matters more than money. ‘Dom and Kathy have been talking with their son (Keith) and daughter (Mary) about the company and their aspirations for the future. said that he was enjoying his job and had been spending a lot of time the policies of the company that he works for. When Dom replied that he did not know what corporate governance was, Keith said that @ovemianee was different in publicly quoted companies compared with family-controlled businesses, and gave an explanation of the main issues with corporate governance. ‘Gif then went on to say that he was SiBIEOUS and would like to be the Sf88tBF of a PUbliSiyquoted company one day. Dom and Kathy said that they would be delighted to bring both Keith and Mary into their company, and would be willing to plan for it to become a quoted company. They said that KGifhi could be involved in of the business, and ‘Nii would be able to combine the roles of company Jawyee and ‘on a part-time basis. Keith replied that if they were serious about taking the company on to the stock market, Dom and Kathy would have to consider a wide range of issues and plan to make substantial changes in the company. ‘One year later, Dom and Kathy are preparing for BGOUS¥eIMOMmes' AGEHOH on the Cecland Stock Exchange and, at present, is concentrating on audit procedures. It needs to establish an and also address some issues with regard to its external auditors. The current are willing to continue their appointment but concerns have been raised by the Long’s SSA they family members in respect of Khoo & Co’s independence, due to the amount of have carried ont for Feol ave Homes in the past Keith is of the opinion that new auditors should be appointed and that the appointment should be put, out to tender. Dom disagrees and would like, Khoo & Co to remain, in order to provide continuity You are the financial accountant recently employed by EeoLove Homes to prepare the IPO documentations for public listing. BBDMA034 STRATEGIC BUSINESS LEADER, TQuestion 1 (Continued) Required: (a) Dom Long has requested you to prepare a report for the Long family on the following matters, (i) Explain, with reference to EeoLove Homes, how Qpiponite BOveTHanee GIES between large quoted companies and family-run companies, @@% identify the major corporate governance challenges that family-run companies may face, (410 marks) Professional skills marks are available for demonstrating analvtical skills in advising Long family on the changes in corporate governance issues for a public listed company. (marks) (i) Explain the SISUSRHSRICOMMIES GO discuss its influence on Long family if EcoLove Home is public listed. (6 marks) (b) Prepare a paper to advise on how EcoLove Homes should deal with the issues raised in respect of the current auditors, Khoo & Co. (Tmarks) (Total: 25 marks} BBDMA034 STRATEGIC BUSINESS LEADER, 2