Chupa Investment Ltd is a listed company in the Stock Exchange of Hong Kong prin

Question

Chupa Investment Ltd is a listed company in the Stock Exchange of Hong Kong principal activity is sale of financial products in Hong Kong. The company's usually held 3 times a year mainly in January every year to board meetings are the budgeted target for the yearly sales of financial products. There is no make ordinary board meeting to be held in the matters. On acceptance of the post of page introduction about the background, profile and hi Ltd. Before attending the first board meeting, the new director is required to read through the introduction at least once. remaining 11 months, director, each new director is except urgent given a few Investment story on Chupa Mr. Paul Chan, who is the independent non-executive director of Chupa Investment Ltd, is a professional accountant and is also the partner of the audit firm which is instructed as the external auditor of Chupa Investment Ltd. But Mr. Paul Chan is responsible for business consultancy service of his audit firm, not the audit service. Mr. Paul Chan's private business is fully engaged and he is only available to attend the board meetings twice a year and he can only read the board meeting documents during the meeting although he can always make good advice to the board. pa Investment Ltd, Mr. Wong is a registered architecture but Another director of Chu he was sentenced to prison for 3 months for dangerous dri a girl in 2014. 20% Identify weaknesses in relation to corporate governance for Chupa Investment Ltd and make recommendations for improvement.

Explanation / Answer

No ordinary board meetings throughout the year- This is grossly inacceptable as per the corporate governance practices. The common shareholders also hold a lot of intelligence and business knowledge that can serve as a great pointer towards the business decisions of the firm. Also it creates an image of a firm that it is approachable by common shareholders, its listens to what common shareholders say and act accordingly etc. A common practice is to have the ordinary meetings 2-3 times in a year and conducted with all logistics arrangements needed for as many shareholders to come and share their views. More detailed information and walkthrough must be given to every new director rather than so little as their contribution is of enormous value to the firm. The board of directors is like the rudder of the ship and any wrong or overlooked decision could prove to be very fatal to the firm. Mr. Paul Chan seems to be too busy for an independent director’s role and thus this position should be assigned to someone who can do justice to it by providing time and the necessary checks, sanity that independent directors are supposed to bring to the firm. Mr. Chong although has been convicted once but it does not put any question mark on his competence. Unless he is a regular offender and can tarnish the image of the firm, he should be on board. The role of directors is to guide the executive tam in all major decisions and only very capable individuals should be assigned to the board (irrespective of their private lives unless it impacts the firm’s image).

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