Evaluate Dutech’s Corporate Governance

Saved Recents Uploads My Answers Account Products Home Essays Drive Answers Texty About Company Legal Site Map Contact Us Advertise ©2016 StudyMode. com Home > Essays > Evaluate Dutech’s Corporate… Evaluate Dutech’s Corporate Governance Audit, Auditing, Board of directors By allank Oct 6, 2011 1462Words 381Views Page 6 of 6 Dutech Holdings Ltd is a company that has been making large amounts of profits over the years since its incorporation in 2006. At 2009, its net profits amounted to RMB 58. 4 million. This would mean that it would have the necessary resources to ensure proper corporate governance.

The objective behind corporate governance through the reporting and practices is to enhance the long-term shareholder value and interests of other stakeholders by enhancing corporate performance and accountability. General overview of the Annual Report on Corporate Governance Dutech adopts a highly prescriptive approach towards tackling the issue of corporate governance. Dutech follows closely to the requirements set out by the Singapore Code of Corporate Governance so that they would not deviate too much from the intended purpose of adopting Corporate Governance.

It must be conceded that Singapore companies would tend to adopt the Singapore Code of Corporate Governance with a presriptive mindset because the idea of corporate governance has been fairly new to companies in Singapore. This method eases the employment of corporate governance in the company, especially when the Code provides specific guideline, such that they need not devote too much resource or effort to the initial setup of corporate governance. Approach The Singapore Code of Corporate Governance consists of four main principles: 1. Board Matters 2. Remuneration Matters

3. Accountability and Audit 4. Communication with Shareholders One must contend that, as much as “adequacy” comes into play, there is no fixed benchmark. By definition, “adequate” would mean “satisfactory or acceptable in quality or quantity”- Oxford Dictionaries. This would imply that the adequacy of practices is controversial because different classes of stakeholders would have different standards of quality or quantity that they deem acceptable. Board Matters Firstly, Mr Johnny Liu Jiayan is the company’s Chairman, CEO and Controlling Shareholder of the company.

In this case, Mr Liu wields unfettered powers of decision, which he may abuse and work it to his personal gain. Its leadership structure may be better having a Chairman separate from its CEO so that the Chairman can keep the CEO’s management abilities in check and the CEO’s actions can be regulated to be made accountable to the Board of Directors. ? However, advantages can accrue to Dutech by not hindering the decision-making process. This can be evident from the pace the company managed to recover from the drop in profits from 2008.

The company’s ability to quickly innovate and hedge in raw materials is a good example of doing without the separation of functions between the CEO and the Chairman. Secondly, it must be noted that Mr Liu Bin, Dutech’s Vice Chairman is Mr Johnny Liu’s brother. It may be a worrying issue if the brothers decide to collude for the wrong reasons as they have very strong controlling power over the company. Furthermore, it is not specially noted in the Annual Report that there can be potential conflicts of interest.

This presents an issue of adequacy and weakness, diluting the strength and independent element of the Board. In light of this issue, weakness can also be seen in the composition of the Board. There is still a high degree of non-independence in the top positions of the Board, since the Lius are substantial shareholders (holding 57. 51% shares indirectly), holds executive position in the company, and are highly paid. It must be commendable that the Nominating Committee is made up of fully independent directors, thus effectively ensuring the proper evaluation of the Board’s performance.

In this sense, it would be difficult to find biased assessment of any director in the company, increasing shareholder’s confidence in the company’s operations. Even so, the company did not disclose the process of assessing its directors individually, making this level of assessment rather flawed and inadequate. Details regarding the method of assessing the individual directors are of high importance in Dutech especially because the Chairman and Vice Chairman are kins. Remuneration Matters It is commendable that the Remuneration Committee is fully made up of independent directors.

This is above the minimum requirements of “a majority of RC members to be independent”. This can give assurance to the various stakeholders of the company because the level of remuneration is believed to be set at a more appropriate rate, such that the non-independent directors are not excessively paid. It is required that performance-related elements form significant proportion of the total remuneration package. Instead, Dutech has low proportion of performance-related elements. The CEO, Mr. Johnny Liu, has 28% of his remuneration tagged to Bonus.

Furthermore, the top 6 key executives in the company are drawing fixed salaries. ? The remuneration practice of the company may be inadequate because no long-term incentive scheme is employed to align the performance of the top executives and the CEO to the interests of the company, such as share option schemes. Inadequacy in remuneration contracts may inhibit improvement. Accountability and Audit Dutech fulfills the criteria of having all members of its Audit Committee independent and non-executive.

Furthermore, two of the directors have taken mangerial positions in other companies, making their audit work more credible to other stakeholders. Some of its measures may be slightly general, which may not achieve its intended effects. One such example is when Dutech is considering the appointment and re-appointment of external auditors. The criteria for the selection of external auditors are not spelt out clearly in the annual report. This may lead to stakeholders questioning the reliability of Dutech’s choice in appointing Horwath First Trust LLP in terms of cost-efficiency, accuracy and depth of external audit.

It may be a weakness of Dutech that the internal audit function is outsourced to Messrs BDO Raffles Consultants Pte Ltd. They may not be at the company to see the operations of the company to properly assess the risk managements, internal control and corporate governance process. On the other hand, outsourcing of internal audit may also be justified because of the simplicity of operations of the company. By outsourcing internal audit, the company can be advised from a more professional perspective.

Much said, it is still laudable that the AC and the Board cmments on the internal controls and gives assurance to to the various stakeholders that the internal controls are in fact adequate to promise reasonable integrity and reliable financial information to them. Communication with Shareholders and Shareholder Participation The company tackles the issues of communication with shareholders and shareholder participation in an adequate manner as it strives to disclose material information in an adequate and timely manner.

The company has employed an acceptable number of medium such as through annual report, announcements through SGX-ST, advertisements of notice of general meetings and at general meetings of the Company. Transparency of disclosure was also promoted through its active shareholder participation method by allowing shareholders to air their views and ask question during general meetings. ? Conclusion In overall, Dutech is believed to have made a good attempt at enforcing corporate governance especially since it has been incorporated only 4 years ago.

This is in light of the prescriptive approach that Dutech has adopted, making it easier to implement corporate governance into the company. Nevertheless, the trend of Singapore companies incorporating corporate governance into its operations would show that Dutech has made a good step forward. One of the more notable issues is the disclosure of the process that the Board’s performance is assessed. This is because “feedback would allow the board to perform to the best of its capabilities. ” However, we must also acknowledge that “appraisal of individual directors is sensitive as directors are reluctant to comment on board matters”.

Much time will be taken before the full disclosure of such confidential information can be evident in most companies in Singapore. Another similar issue is the reluctance of companies to disclose too much sensitive information. Belkaoui & Kahl (1978) and Wallace & Naser (1995) found that firms with higher profitability tend to disclose less in their annual reports. This is understandable because they may want to avoid rigorous scrutiny by external parties. Yet another issue prevalant in Dutech and many other Singapore companies is that the whistle-blowing provision is not well-developed.

There is little measure to protect in-house whistle-blowers, such as being sued for defamation . Corporate governance within companies can be greatly improved if companies have such measures that promote self-regulatory behaviour. In conclusion, the reporting and practices of Dutech in corporate governance have been rather adequate in meeting the requirements set out by Singapore Code of Corporate Governance (2005). However, it would still be lacking if compared to the other companies such as those in the US where there is great emphasis on corporate governance.

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with MyhomeworkGeeks
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Business and administrative studies
Excellent work ,always done early
Customer 452773, February 21st, 2023
Human Resources Management (HRM)
excellent
Customer 452773, June 25th, 2023
business
Thank you for your hard work and help.
Customer 452773, February 13th, 2023
BUSINESSADMINECO535
excellent work
Customer 452773, October 6th, 2023
LEADERSHIP
excellent job
Customer 452773, August 12th, 2023
Business and administrative studies
excellent work
Customer 452773, March 12th, 2023
Humanities
Thank youuuu
Customer 452729, May 30th, 2021
Business and administrative studies
Thank you for your hard work and effort. Made a 96 out of 125 points Lacked information from the rubic
Customer 452773, October 27th, 2023
Human Resources Management (HRM)
excellent job
Customer 452773, July 17th, 2023
Leadership Studies
awesome work as always
Customer 452773, August 19th, 2023
Business and administrative studies
excellent paper
Customer 452773, March 3rd, 2023
Social Work and Human Services
Great work I would love to continue working with this writer thought out the 11 week course.
Customer 452667, May 30th, 2021
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Close

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes
Live ChatWhatsApp