T17 Corporate Governance

Thanks for your reply I'm doing for Uber Really tensed whether should I go for period 39 or 40

Sorry 14munashe I didn't mean to panic you as you should be ok if you used the OECD code systematically in your work. (The basic fact is they try to insist on a code of some sort) The point I was trying to make is that not all CG issues are covered by a Code particularly in some developing nations where the big challenge to CG comes from systemic corruption. So being expected to apply a Code is not realistic or appropriate for many of the issues. I find some of the markers do not really seem to understand CG - which is quite ironic really and they try to apply a straight jacket of 'one size fits all' when clearly it doesn't. I have a resubmitting student who is in Sri Lanka and she was told in her previous feedback to apply the UK Code. We actually tried to do it but it just didn't work as the Code is silent on bribery, corruption, inside trading and barely touches on fiduciary duties which are the issues in her chosen company. It is not a case of telling students in the Info Pack to apply a Code it is more a case of OBU ensuring their markers are up to the task in hand and up to speed on how CG works (or more appropriately doesn't work) outside the UK so that they can adopt the correct approach in their marking when confronted with Topic 17s on overseas companies. As I said earlier - restricting the choice of overseas students by insisting on the application of a Code is wrong and is INDIRECT racial discrimination (because it places a racial group I.e non British at a disadvantage because it means they could have more difficulty in passing if choosing a company from their own country if they can't apply a code). I encourage anyone who has been failed because of this where a Code, like in my student's case just doesn't fit their company's problems and circumstance to contact me as it needs to be flagged up with the University's authorities. It is a form of prejudice and as explained, puts overseas students at a disadvantage when they choose a domestic company and as such it is illegal under UK LAW.

Hello miss Gillian I have chosen Uber. what do you think about this company? a number of CG scandals are out there and it's a hotcake item for this topic, I reckon. But, the major problem is not a number of information is available for this company. Like no information about number of NEDS, the number of board meetings and all those stuff which could be linked with the CG Code. But they have badly performed in terms of good CG. Their management has serious issues. what're your thoughts on this?

yes there are a lot of CG issues prevalent here in Uber. Be guided by the CG Code (where possible) is my advice when structuring your work (as the marking team is too inflexible to consider that this is not always appropriate). For example use the 2016 Code principles (Leadership,Effectiveness, Accountability, Remuneration and Relations with shareholders) or the newer 2018 Code (Leadership, Division of responsibilities, Composition, Audit, risk and internal control and Remuneration - note the UK Stewardship code now deals with relations with shareholders) The Board members are set out here https://www.uber.com/en-GB/newsroom/leadership/ So I suggest that you find out about all of them by conducting internet searches and rate their independence using the Provision 10 of the 2018 Code [and also look at Part 3 of the same Code]. You might also consider the proposal to increase the board size to 17 (which would be considered excessively large in the UK - though the Code does not prescribe an actual number, most UK Boards are comprise about 10 directors) You could introduce some critical thought with this by looking at Janis 1972 and 'Group Think' and how large boards tend to promote this.

Hi Gillian, Another rounding up question please????. When outlining the code in Part 2 (Business models and limitations) is it really necessary to explain each provision. I have explained each provision with about 3 or 4 lines and I feel it ate on my word count unnecessarily which i could have used to add more flesh in part 3. I would like to know your advice on the provisions part if we should explain the provisions or merely state them since we are going to discuss them in Part 3 anyway. Not sure if my problem is clear. Thanks for your help once again.

thank you very much, Miss Gillian, First of all a big thank you to say that yes Uber has serious corporate governance issues. I have chosen this company on the basis of the trending topics on twitter and business journals, had no idea before. I wanted to come up with something fresh and updated. Uber has recently become a public company and this also taken into consideration in my research. but the main focus is on the former CEO who had a very aggressive approach and for that reason, Uber had serious difficulties in CG. thanks once again for the suggestions yes, I have structured in the same manner as you have mentioned. Also followed 2016 UK CG code. ( mentioning about Leadership, Effectiveness, Accountability, Remuneration and Relations with shareholders) and also included stakeholder and agency theory. " leadership, Division of responsibilities, Composition, Audit, risk and internal control and Remuneration – note the UK Stewardship code now deals with relations with shareholders)" all mentioned in my research.

14munashe - you should provide some overview of CG and the development of Codes in Part but then focus on the principles/ provisions that are relevant to the weak governance to your organisation (because otherwise as you say it eats up the word count and in fact doesn't really add much value). With my own students I get them to use the main relevant provisions/principles as the framework for their evaluation in Part 3 and as there is nothing much to say about those provisions that are not relevant they are not covered. For example what is the point about commenting on attendance at meetings per se? This would however be relevant if the meetings were infrequent and many directors had been absent and/or if the Board members had so many directorships and responsibilities elsewhere that they could not possibly have given full attention to meeting preparation and making a proactive contribution (as was the case at Patisserie Valerie); or the scope of the meeting would be too much to be accomplished in one day (e.g.the agenda for some of the Carillion audit committee meetings is too intense for it all to be satisfactorily covered in one meeting and shows that more frequent meetings would have been required to cover the issues diligently) So in short - use the code as a framework but put the emphasis on appropriate evaluation of relevant provisions/ principles in the proper context (like the examples I have given) rather than routiely going through them one by one

So helpful. Thank you so much Gillian. You just made my life easier.

I have just one day to submit my analysis but I am concerned about one thing. I chose topic 17 for my RR and have added shareholders analysis (by applying mendleow's matrix) in it. Can you please tell me is this unnecessary?

Sorry I forgot, can you please suggest me any good models that can be used in topic 17? and If the stakeholders analysis must not be part of it, what can I consider adding instead?

I also applied Mendelow's Matrix on stakeholder analysis. I am submitting mine today. All the best

Hi Gillian and Trephena! I have decided to go with topic 17 for my obu rap for P40. I am quite interested with selecting of Nissan for my project. Is it a wise choice? Nissan seems to have quite a bit CG failures. Also can i use UK codes, OECD principals for analysis alongside Mendlows. Japan has adopted CG quite recently I only found really short codes of practice for cg by their stock exchange. This my first research report so if you can please share some basic guides for searching for information. Also do i have adequate time for preparing a good rap? Thanks a lot in advance

Yes this sounds like it would be suitable. What I would suggest is that you discuss the Japanese CG Code in Part 2 explaining that as it was only recently introduced that you will be focusing on the UK CG Code and the OECD Principles as examples of best practice and comparing Nissan mainly with those as the Japanese Code has its limitations (only comparatively recently introduced and because of the Japanese nature of doing things - see below). However as you are doing a Japanese company I would advise you to research a little into some of the specifics of Japanese culture and their structure for Boards so that you show breadth of research. For example more than in any other country there is sense of 'duty' and 'loyalty' towards the company. This has both its advantages and disadvantages in that Board has strong cohesion and less independence than boards found in other countries. You could discuss this in terms of it encouraging a 'Groupthink' attitude and suboptimisation of decisions. Whistleblowing is another concept that you could briefly look at because although it is an important element of good governance in the West, in Japan it conflicts with the sense of loyalty etc. and it does not come naturally to the Japanese to 'betray' their bosses and colleagues. Also there is a certain amount of distrust even in Japanese companies that operate overseas, with foreign managers. (You could even perhaps if relevant make brief comparisons with what happened to the British CEO of Olympus [Michael Woodford] when he discovered severe irregularities in the accounts of the Olympus and tried to get the Board to investigate. The interesting difference with the Woodford and Carlos Ghosn is that the former was actually trying to uphold good governance whereas the latter is charged with having breached good governance. However the fact that the Board of Olympus were found guilty was quite remarkable and does show that slowly Japan is beginning to recognise that good governance is important for the long term sustainability of companies (see UK CG Code). One final suggestion: I recommend that you arrange your work so that it is either structured mainly round the principles as set out in the UK CG Code 2016 or the OECD Prinicples as this will give you some basic headings to work with. [Note this does not mean that you ignore the OECD Code in preference to the UK Code or v.v. it is just to help you structure your work and ensure that you cover sufficient. You can still bring in the aspects of the other code under the main headings where relevant. As you are dealing with best practice this is acceptable as too it would be if you used the latest UK CG Code (2018) for clarification purposes - perhaps on what best practice sees as 'independence' for example. Yes there is time to do a good RAP for May if you plan your work well and recognise that a good report needs time and effort so don't procrastinate!

Hello, I would like to choose Sports Direct plc as a co. with weak CG but they have changed their name to Frasers Group Plc w.e.f 17th Dec 2019 but many of the CG issues arose before this date . What do I do with regards to the name change ?? Thanks in advance for replying .

Hi Gillian, I am planning on submitting my research project in May 2020. I have chosen topic 17 and Bombardier as my company. Bombardier is a Canadian based company with operations around the world including UK. I have read this on their website "Bombardier has corporate governance policies and practices which comply with and, in certain instances, even surpass, the requirements of: National Instrument 52-110-Audit Committees (as amended “NI 52-110”), which sets out rules regarding the composition and responsibilities of public company audit committees, National Policy 58-201 Corporate Governance Guidelines and National Instrument 58-101-Disclosure of Corporate Governance Practices." I am currently using the Canadian National Policy 58-201 which outlines the guidelines that Canadian Companies should follow. Is this appropriate or should I be using the OECD or the UK governance code? Your response is greatly appreciated. Thanks, Mahindra

@sufiya - Simply call your company Sports Direct and mention in your conclusion that one of the consequences of the weak governance is that they are now operating under the Fraser Group brand as the latter has a better public image. Most of the issues occurred between about 2014 and onwards so you are fine doing this company for P40 and P41

@mahindra89 - Your report should compare what the company says it did (annual report) with what it actually did (reported in the media and/or perhaps in government reports) and make comparisons with best practice, So that means looking at the Canadian National Policy 58-201 and the principles and provisions of other Codes that have been held up as being examples of good governance potentially aspects of either or both the OECD and UK Codes where relevant. You need to focus on what the company has done wrong and any changes that have been made in the light of this - see this for a few ideas https://businesslawblogsite.com/2017/05/11/serious-governance-problems-at-bombardier-2/ Also consider the impact of the weak governance on the various different groups of stakeholders

Thank you for replying @trephena I have few doubts and highly appreciate your response. I am wondering how to frame Part 3 of my Project. There are many issues so how do I address them ?. For eg. the mistreatment of Employees and Failure to disclose Related Party Transactions etc. Maybe a structured format as such ?? Secondly, The FY 2019 annual report is published and is the latest one. So around 2018 Sports direct acquired house of Fraser that went into administration but it was later addressed that it was a wrong move and it made a negative impact in FS. After the annual report FY 2019 was published, around December 2019 there were some positive impacts such as rise in share price due to house of fraser acquisition and it will be only reflected in 2020 Annual Report which is not yet published. Should I address this issue as initially they faced criticisms from shareholders but now the acquisition is not a bad move? Once again, thank you for your prompt response.

Sorry for the delay in getting back to you. If you look through previous posts you will see that it is a good idea to use the headings from the UK CG Code (2014 or 2016 they are both very similar) to help structure your work. Use the Principles as headings and then discuss what the Code says (in brief i.e. main points), what the company says it did from its annual reports and compare these with the reality of what SP actually did. Go through each principle like this in turn. The issues with the employees relate to poor corporate culture and leadership and weak strategy and risk analysis so you could deal with these when looking at what the Code says about each of these. Related Party transactions would go under Principle C - Accountability The House of Fraser issue is again poor strategy and evidence of lack of effectiveness of the NEDs and Board (Principle B) - probably as the Board of SP is not really independent no-one dared to stand up to Mike Ashley. You can also bring this point out when discussing the role of the Chairman as the Code envisages that the chairman should be independent and capable of standing up to the Board and that no-one (e.g. the CEO) should have 'unfettered powers'. Discuss the impacts of the 'bad move' both with Principle E and also when you do your stakeholder analysis (which could come towards the end just before the Conclusion)

Someone please help me out, my topic was 17 in recent submittion period 17. The examiner told me that they failed me on a technical aspect that I WAS UNABLE TO SUBMIT A SPREADSHEET which was a requirement of the project. But, my mentor told me that do not need one for this topic. Please guide me on how appeal as I have worked so hard on this project. Following are my remarks: Feedback is provided where a criteria is a Fail Research Report Technical and Professional Skills 1. Understanding of Accountancy/Business Models: Pass 2. Application of Accountancy/Business Models: Pass 3. Evaluation of Information, Analysis And Conclusions: Pass 4. Presentation of Project Findings: Pass Overall Technical and Professional Skills: Pass Graduate Skills 5. Communication: Pass 6. Information Gathering and Referencing: Pass 7. Information Technology: Fail You have not submitted a spreadsheet. It is a project requirement to include a spreadsheet and within it demonstrate your proficiency in generating data from the use of formulae. Overall Graduate Skills: Fail Research Report overall assessment: Fail Skills & Learning Statement 8. Self-reflection: Pass 9. Communication Skills (inc Presentation): Pass Skills and Learning Statement overall assessment: Pass Overall Overall RAP Result: Fail You have produced a competent project and reflective statement but unfortunately this is a technical fail for the lack of the submission of a spreadsheet. Moderator agrees with Marker’s comments

Sorry it was period 39 @trephena @GillianM

This question has been answered elsewhere Please do NOT post the same question mote than once -it is not necessary

@trephena I apologize, I posted the same question to 3 forums as I wasn't sure which forum was the correct one.

@Gillian, I am gonna be writing on Deutsche Bank as suggested by you. I remember you posted some links. I hope it wont be very hard.

Sorry for the delay in getting back to you. I actually think now in most cases it is easier to use a UK case because you can then use the UK CG Code [2016 or possibly the new 2018 version] as your framework - which helps make for a better structure for Part 3. German CG is rather different from the UK system because of the duality of Boards and I don't think the Kodex is set out in quite the same way [there is a lot of detail that I think in the UK would be covered in our legislation and/or in the company Articles and Memorandum of Association] which makes it more difficult to use as a framework. Possibly what you could do, which is something I do if students use a US company:, is use the UK Code as the framework but then compare and contrast what the board did, what it said it did - not always the same thing [see press statements and annual reports] and compare these to the applicable national code [if there is one] but also compare this with the UK Code as an example of 'best practice' So whilst I wouldn't now say don't do Deutsche Bank I think you have to think about how you are going to structure your report so that it flows well and you cover the important issues relating to Board behaviour (culture, integrity, independence and skills & competence) and any relevant legislation such as anti-money laundering and corruption.

Thanks @Gillian I think I will drop the idea of a German company now. I don't want something that would be too complex. Would you suggest or recommend a UK company that I could use?

Hi Ms. @Gillian , im willing to take opic 17 for my obu thesis, it is a big 4 firm that let go a client with money laundering in dubai in 2013, the case is with courts since then, but the final 6 hearing and final word by court was out in 2020. Is this ok to be taken as a case, considering the 5 year frame requirement by topic 17? Your guidance will be highly appreciated.

I spoke with my mentor for the first time. He said writing topic 17 would require primary data. I live in Nigeria, would I be at a disadvantage writing topic 17? I noticed the trend that most students from Nigeria writes topic 8, which uses only secondary data.

Sorry but that is nonsense. I have mentored dozens for students for Topic 17 successfully and only one student has ever used any primary data for her report. Please go to https://www.brookes.ac.uk/acca/for-students/resources-for-rap-students/ and scroll down to the sheet on primary data and it will show exactly which topics normally require primary data - and you will see that for Topic 17 it clearly states 'not essential'.

Hi, Is the wates corporate gov principles model appropriate for using in t17 project?