-Name: _Joncle____________ Class: __C1____ Peer Checked by: _________
Corporate Governance Report Outline
ith rapid development of economic, the social has lager demand for coal and steel to W
support social operation. In response to this challenge, the structure of a company in the mining and metal industry is becoming complicated. The scale of company is becoming larger. At the same time,
Rapid economic development ? Large demand for coal and steel ? Complicated structure of mining and metal industry ? Urgent needs to good CG
Identification of a problem/issue:
Many large companies failed in earning management
Corporate governance appeared and eases the problem between managers and shareholders Purpose:
This report will define corporate governance and explain its importance to a company, then the report will explain the main focus of the principle and why it is relevant to mining and metal industry, finally the report will evaluate how well FMG ‘s corporate governance statement communicates information on these principles.
2. _Define corporate governance and explain its importance to a company
TS: corporate governance is a science of management and good CG is important to mining and metal industry.
SS1: corporate governance is a science that study corporate power how to arrange to make the
company health operation
Evidence: Eric think that CG is the framework of rules and these rules determine the distribution of power (Eric.M, p.3).
SS2: corporate governance is an important issue for companies.
Evidence: 1.good CG can reduce the failure of EM (Bitner.L.N. 2007, p.8).
2.good CG is necessary to restore public trust and confidence (Bitner.L.N. 2007, p.4).
3.-many business failed due to poor risk management and negative cash flow;Mark
Licciardo FCIS, 2011, p1)
3._Explain the main focus of the principle and why it is relevant to mining and metal industry The ASX corporate governance council was convened in august 2002 to develop recommendations which reflect international good practice.
3.1 principle2- structure the board to add value
TS:The board should establish the board and its committees.
SS1: focus on: The board need do suitable decision, the major of board or chair should be different from CEO
Evidence: The board should establish a nomination committee and the roles of board should
independent in CEO.(ASX, 2010, pp.16-18)
Mining and metal industry usually need large cash, if the board is not independent, there will be financial problem.
3.2 principle3- promote ethical and responsible decision-making
TS: the ethical and responsible principle is important for mining and metal industry.
SS1: Focus on: the company should establish a code of conduct.
Evidence: ASX suggests to construct a code of conduct and disclose the code . (ASX, 2010, p.25)
The mining and metal Industry is very complex and a code of conduct is needed to make the company operate healthy.
3.3 principle7-Recognise and manage risk
TS: Risk management is essential for a company
SS1: Focus on: a company should establish a sound system of risk oversight and management and internal control.
Evidence: ASX suggest a company to make risk analysis and internal control (ASX, 2010, pp.33-35)
SS2: mining and metal industry need risk management.
4. Evaluation of ___FMG_________ Company’s Corporate Governance Statement
Introduction to FMG
In less than a decade, Fortescue has gone from strength to strength through its unparalleled growth. Listed in the S&P/ASX50 share index, Fortescue has firmly established itself as one of the world's leaders in iron ore production and sea-borne trading.
4.1 TS: principle2 is reflected clearly in the CG statement
SS1: the board of Fortescue established a nomination committee.
Evidence: The governance structure at Fortescue has a nomination committee that is responsible for remuneration policy and practice and Board Member Nomination (CG statement, 2013,p.39).
SS2: the role of chair and CEO is not a same people
Evidence: Fortescue’ chair is Mr Andrew Forrest and the CEO is Mr Nev Power (CG statement, 2013, p.39-44).
4.2 TS: principle3 is reflected accurately in the CG statement
SS: Fortescue establishes a code of conduct.
Evidence: The Board has established a Statement of Matters Reserved for the Board which states that the key responsibilities of the board(CG statement, 2013,p.39).
4.3 TS: principle7 is reflected clearly and accurately in the CG statement.
SS: Fortescue establishes a sound system of risk oversight and management and internal control.
Evidence: The primary focus of the Group’s risk management governance structure and internal
control systems is to identify, assess and mitigate material business risks with the aim of enhancing value to shareholders and protecting assets(CG statement, 2013,p.47).
Re-statement of the statement of purpose:
This report defines corporate governance and explain its importance to a company, and explains the main focus of the principle and why it is relevant to mining and metal industry, and evaluates how well corporate governance statement communicates information on these principles.
Summary of main ideas:
Recommendations for the company
Research limited. More principle needed
ASX Corporate Governance Council, Corporate Governance Principles and Recommendations with
Bitner L., Dasher, A., ‘Examining Corporate Governance Policies As a Routine Part of Financial A
nalysis’, Commercial Lending Review; May/June 2007, pp.3-4
Licciardo M. Back to Basics Governance-Is Your Company's Framework Functioning as It Should?
[J]. Keeping Good Companies, 2011, pp.196-197
Woodside, Annual report 2013, pp.47-59
FMG ‘s annual report in 2013
Mark ,2010,’ corporate governance’