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Ethical and responsible decision-making

Prepare a memorandum to the board of directors of HMI outlining and supporting your recommended course of action for addressing the issues at the Mines 1 and 2. The memo should include the following: a) Identify the corporate governance issues at HMI’s mines. * The issue: On one hand, the diverting power into provincial electrical grid has resulted in an overlook for its own operations. On the other hand, a significant portion of these earnings is going into executive bonus pool for distribution to senior management.

* This has demonstrated the company’s management has been corrupt in some respects, especially the earning should be used to solve the company’s own operation problem. * The company is lack of social responsibility in a way which the management has paid insufficient amount of money to address the environmental damage. Additionally, the company has bribed the political figure in order to bury the truth. b) What measures are required to eliminate the shortcomings you have identified in (a)?

Ensure you specify the requisite corporate governance requirements that must be adhered to. According to the 8 principles of ASX. The company should make a few improvements to rectify the misconducts. These recommended measures are as below:

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* Promote ethical and responsible decision making Companies should promote ethical and responsible decision-making. * Safeguard integrity in financial reporting. Companies should have a structure to independently verify and safeguard the integrity of their financial reporting. * Make timely and balance disclosure

Companies should promote timely and balanced disclosure of all material matters concerning the company * Companies should establish a sound system of risk oversight and management and internal control. c) Suggest ways to monitor compliance with corporate governance requirements. * Establish sound, transparent and compulsory reporting system. Stringent transparency in all important matters (in particular regarding conflict of interests, third party transactions); Timely disclosure of the annual report (also in English);Reporting of non-financial risk related information * Set up audit committee.

To ensure sufficient audit quality: True independence of auditors including an open and transparent tender process as well as prohibition of most non-auditing services. * Allow public bodies to monitor and interfere in company’s compliance issue. Public bodies like ASX, Government. d) Recommend the philosophy and approach of Heavy Metal Inc. to the shareholder The company should respect the right of shareholders Companies should respect the rights of shareholders and facilitate effective exercise of those rights. e) paramountcy vs.

corporate social responsibility debate and make recommendations to the board of directors on both of the above situations under separate headings. The board of directors should establish audit committee to monitoring financial and non-financial performance of the company. Regular disclosure of management respective roles and responsibilities and achieve transparent corporate governance is important. The board of directors should establish sound risk management system that able to guide the company in the right direction and minimize the risks.

Implement the authorization to make ethical and social responsible decision and judgment on behalf of the company. f) What criteria would you use to establish corporate guidance failure? The criteria I adopt this time is ASX “Principles of corporate governance” 1. Lay solid foundation for management and oversight. 2 Structure the Board to add value 3 Promote ethical and responsible decision making 4 Safeguard integrity in financial reporting. 5 Make timely and balance disclosure 6 Respect the right of shareholders 7 Recognize and manage risk. 8 Remunerate fairly and responsibly

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