Manfold Toy Essay

Question 1 Do you see the weft of Directors at Manfold take ons as entirely suitable to an ethical standing? Why?Many relevant corporate governance issues arise regarding the composition of Manfold Toys board of directors. With keep to the main purpose of a board of directors, we need to reflect on whether the elected directors were the best possible re shewatives of stockholders interests. Additionally, we should analyze to what extent were the elected directors eager to carry through their responsibilities/duties. To begin the analysis, we should study the process of directors election to the Companys board. Taking into account that 68% of Manfold Toy stake belonged to Joseph Wan, founder and moderate of the company, he held enough majority to decide on the board composition. The remaining stake was insufficient to refuse Joseph choices. Thus, Joseph choices could not be refused by the other shareholders, up to now if they believed there could be better representatives of th eir interests on the board.According to the Chartered Financial Analyst (CFA), a global association of investment professionals, Board members owe a province to make decisions based on what ultimately is best for the long-term interests of shareholders. In order to do this effectively, board members need a combination of trio things independency, experience and resources. Manfold Toys board was composed by three INEDs (Independent Non-Executive Directors). These directors should comply with the rules of independence towards the company, so that they are able to effectively perform their duty ensure that the interest of the shareholders are preserved in executives acts. However, if they are dependent in any way to the Company, their decisions and acts will have external undesirable influences. Fred Wong Sau-lim, cardinal of the Companys Independent Non-Executive Directors since 2001, and Chairman of the Audit Committee, was the Director of On Yee Exports since 2000. On Yee Exports had exclusive rights to distribute Manfold Toys products in Australia & New Zealand, which accounted for 17,8% of Manfold Toys sales.According to the independence rules for INEDs (HKEx), Fred could not be a Manfold Toys director due to its crinkle relationship with the company. The Hong Kong Exchanges and Clearing (HKEx) state that independence is key to ensure a director behaves fairly and with integrity. Due to its closerelationship with Joseph, Fred was aware of major operational actions that two senior executives were told to take in order to improve the financial statements for the audit. As Chairman of the Audit committee, Fred did not accomplish his role of monitoring the internal governance of the company. Fred should have ensured that the information present on the companys accounts was accurate and reliable (HKEx), making him fail its INED responsibility of advocating shareholders interest (Rosenstein and Wyatt, 1990 Byrd and Hickman, 1992).Fred also violated the fundame ntal doctrines of the Code of Ethics for sea captain Accountants. He was not honest, has he did not disclosed the relevant financial information of the Company. With its position in On Yee Exports, he carried conflict of interest, which disallows him to be aim in its functions. Moreover, he disclosed confidential informationacquired as a result of his professional position in On Yee Exports to Manfold Toys Chairman, violating the principle of confidentiality.Fred was uncorrectly elected, not in the eyes of Joseph, to both of his positions on the board. He was not independent to the company, and thus should have never become part of the Audit Committee. in that location are other directors violating the independence rules and compromising the effective accomplishment of its duties. For instance, Maggie Mok Su-yee, the Chairman of Big Capital, was performing a millionaire consulting work on Manfold Toy for Mitchell & Meyer, the possible in store(predicate) buyer of the first.Furth ermore, Sherona Leung Ka-yi, an Independent Non-Executive Director since 2003, Chairman of the Remuneration Committee and Member of the Audit Committee was the President of charity organization We Care. Joseph was the biggest contributor to its charity organization. This business relationship between Sherona and Joseph violates the independence guidelines as well. Sherona would have incentives to behave in a way that would please Joseph, so that he continues to feed her charity organization.To resolve Non-Executive Directors should be independent to pursue their functions and responsibilities correctly. However, they entailed familiar or businessrelations with Manfold Toy and rules for independence were not respected. Due to the violation of ethical standings in the selection of INEDs , they are not complying with its main duty, the defense of shareholders interests. Thus, the selection of Directors at Manfold Toys is not suitable to the ethical standings.