Dated: 9th July, 2011 , Dr. Md.

Anwarul Kabir Associate Professor Department of Accounting And Information Systems University of Chittagong. Subject: Submission of Term Paper Report. Dear Sir, I am very glad to submit my term paper on Role and effectiveness of Non- Executive Director / Independent Directors and an overview which is prepared as a prerequisite for the 4th year B.B.A. program. This report has been prepared on the basis of the findings out of the research work, which includes collection of secondary data, and study on relevant books and publications. I have studied on relevant is sues and tried to highlight the impact of its over the economy of Bangladesh and all around the world. I have also tried to reflect all the findings of my study in this report to the point to make it a rich one. I would like to express my gratitude for your kind guidance in completion of the report assigned for me. I sincerely hope that this report will meet your expectation and will serve its purposes. Yours sincerely, Md.Rokibul Hasan Class Roll 4795 Exam Roll 2006/04 Session ---2008-2009 Department Accounting And Information Systems

University of Chittagong.

PREFACE

A term paper is a research paper written by students over an academic term or semester which makes much of the course. It is generally intended to describe an event, a concept, or argue a point. A term paper is a written original work discussing a topic in detail, usually several typed paged in length and is often due at the end of a term. It will demonstrate what we have personally learned and developed during the term. It helps a student to critically think on a topic, find out problem and enhance analyzing capacity. As a student of B.B.A, I have been also assigned to prepare a term paper on Role and effectiveness of Non- Executive Director / Independent Directors and an overview. I think it will help me in future regarding how to find information about the NonExecutive Director. It also helps me to know regarding the responsibilities, functions, scope and the limitations of the NonExecutive Director.

ACKNOWLEDGEMENT

While conducting this study I was supported and encouraged by many. I would like to express my heart felt gratitude to them.

First of all, I would like to express my heartiest gratitude to my honorable teacher and supervisor of this study, Associate Professor Dr. Md. Anwarul Kabir . I was enriched by his kind encouragement and cooperation. It would have been impossible for me to complete this study successfully without his responsible guidance, instruction, persuasion and advice.

Executive summary
In this report at first I try to discuss brief description of the Non- Executive Director. Then I discuss about objectives scope & methodology and limitations of the study. In chapter two, I describe the findings of the study accompanied by various case studies. Afterwards I discuss various problems solving method of transportation with one example which is solved by different methods. Then I put conclusion and finally references for elections expected by end-2008. For FY2009, future economic performance will depend on the Governments ability to deepen the economic reforms recently started.

The

developments

are

assessing

Bangladesh

to

improve in the following sectors figured out bellow:

Contents

Particulars

Pages
1 2 3

Letter of Submission.. Preface.. Acknowledgement.. Contents Executive Summary Body of the paper

Chapter-1 Introduction 1.1. Problem Statement 1.2. Objective Of the study 1.2 (a) Role of NEDS in all around the world and in BD. 1.2(b) Effectiveness 1.3. Methodology of the study 1.3(a) Scope, Countries, Documents. 1.3(b) Nature of the study- Desk of the study

1.3(c) data Collection- Secondary data of data 1.3(d) Analysis and Interpretation.

Chapter-2: Findings of the study 2.1 Rules and regulation regarding the appointment of Appointment Non- Executive Directors 2.2 Qualification of the Non- Executive Directors 2. Performance of the Non- Executive Directors

3. 4. 5. 6.

Remuneration of the Non- Executive Directors Contribution in the overall activities of the organization Limitations of the Non- Executive Directors Conflict between the Executive and NonExecutive Directors

CHAPTE R-1

Body of the paper Introduction

Non-executive directors are not employees of the company and are not involved in the daily management. They may be former senior executives of the company or they may be brought in from outside in order to provide an independent voice. A central figure in the market-based system of corporate governance that has emerged in the UK is the non-executive director. Best practice for the governance of public companies is that one-third of the board should comprise non-executive directors. Of these, the majority should be independent of management this means that, for example, they should not be former executive directors of the company and free from business or other relationships that could materially interfere with the exercise of their independent judgment. Non-executive directors are expected to discharge certain important functions in relation to the management of the companies to which they are appointed. These include, specifically, setting the remuneration of the executive directors and, more generally, monitoring the stewardship of the company's affairs by its executive management including the executive directors. The modern nonexecutive director of a public company is thus rather different from his historical counterpart. In the past a non-executive director might have been expected to do no more than to give the company the benefit of being associated with a person of his reputation and distinction but now they are expected to do rather more to justify their position. This creates a new context within which the general duty of care and skill operates and makes it appropriate to consider the effectiveness of that duty as a mechanism for holding non-executives themselves accountable. It also raises the question whether the role and function of the modern day non-executive director as perceived by market standards has had an impact on the content of that duty so as to make it more rigorous than it was when non-executive directors were simply figureheads.

10

The balance between the monitoring and strategic functions of the modern nonexecutive director is an issue that has important implications when a connection is made between market expectations with regard to the role of non-executive directors and their legal duty of care and skin: viewing non executive directors as monitors paves the way for laying blame and, potentially, legal responsibility for failure to detect and rectify underperformance or abuse by the executive management on them; but it is more difficult to say that the non-executive directors are responsible for the failings of their company when their role as strategists is emphasized in preference to their monitoring function. Non-executive directors tend to be drawn from a group comprised of persons who are themselves executive directors of other companies, or who otherwise have significant managerial experience. This has led some commentators to doubt whether, in view of the very likely professional and social contacts that potential non-executive directors have with the executive directors, as well as shared standards and perceptions of acceptable business practice, they can truly be regarded as independent. The thesis will discuss and evaluate about whether non- executive Directors (NeD) play an important role in promoting and establishing effective corporate governance practice

11

1.1Problem

statement:

The importance of the problem section in the study cannot be overestimated. It provides the rationale or motivation for conducting the project. It explains why the project is necessary. If the researcher cannot provide a convincing statement of need, then there is no justification for proceeding. The statement of the problem is so important in researches that it should be stressed regardless of the point value assigned to it in the reviewers evaluation form. That is, even when the reviewers evaluation form allocates only a small percentage of the total allowable points to the problem section (, & , 2003). The statement of the problem lays down a guide to follow in all that comes after. The problem statement has to follow logically the purpose statement. It may be expressed as a question or a statement, preference depending on the individual researcher, other people guiding the research, and the nature of the topic. The statement gives direction to the study, gives essential information about the scope of the study, and suggests, without giving details, how the study will be carried out. The statement must be clear, concise, and unambiguous ( & 2003).

The criterion measure of appropriateness is whether the methodology will yield useful evidence with regard to the statement of the problem. Thus, the choice is always directly related to the problem statement. The purpose of any instrument should be to help produce or gather data to answer questions raised in the problem statement ( & 2003). There are different factors that contribute for a business to be successful. One factor is the strategies the business use; another factor is its brand name and image, moreover a factor can be the quality of the product and lastly a factor that contribute for a business to be successful can be the relation of the company with the society. Businesses will not be successful if its employees will not be managed well for the achievement of the companys
12

goal. The business will not be a success if it does not have employees belonging to the good type. Good employees are not easily acquired; non executive directors have to make use of appropriate corporate governance practices that will bring out the best in the employees. .In lieu of this the papers will evaluate the roles the non executive directors play in promoting and establishing effective corporate governance practices.

1.1 Objectives of the study:

Typical research questions concern the effects of marketing instruments and household-specific characteristics on various marketing performance measures. Recent advances in data collection and data storage techniques, which result in large data bases with a substantial amount of information, seem to have changed the nature of marketing research ( & 2001). The research questions referred to the information that the researcher intended to question while the objectives will focus on the problems that should be clarified in order to gather the intended information. The aims and objectives of the study include
1. To examine the views of NeDs on the changes recommended, now

implemented in the revised code;

2. To discover how NeDs might add value to company board structures and

processes both in terms of company performance and accountability.

3. To record the changes in NeD practices made in response to the new corporate

governance initiatives recommended by the report (2003);

4. To better understand corporate governance structures and behaviors of

companies;

13

5. To contribute to the research and development of theory in corporate

governance with reference to NeD roles and responsibilities to Boards; and finally
6. To offer a comparative analysis of different NeD experiences of the effort to

improve their corporate governance processes and practice.

1.2-A: Role of non-executive director all over the world and in Bangladesh:
Role of Non-Executive Director in Corporate Governance Name Professor School Date Introduction A corporation is only an artificial being created by mere operation of law . Although a corporation , as a matter of principle , has a personality distinct and separate from its directors and shareholders ,it cannot transact business through its own . It can only act through a set of representatives . These are the board of directors who are elected and chosen by the shareholders .As the representatives of the company , the Board of Directors of a corporation is given sufficient authority to manage the corporate business . They are vested with the authority to exercise corporate powers , conduct all business and control and hold all properties of the corporation . The supreme authority insofar as the management of the business regular and ordinary affairs of the corporation is vested with the Board of Directors . Thus , the board of directors of the corporation is
14

considered to have the ultimate responsibility overall direction and management of the corporation . In every jurisdiction , corporate directors are expected to perform their duties in the company with the proper skill , care and prudence .The standard of skill , care and prudence is that of an average person occupying the same position . Under the law , there is no distinction insofar as the duties of responsibilities imposed to directors . Thus ,the duties required of a director as set forth under the Companies Act of 2006 apply to all the directors regardless of the nature of their position . These duties are : a ) duty to act within their powers b ) duty to promote the success of the company c ) duty to exercise independent judgment d ) duty to exercise reasonable care , skill and diligence e )duty to avoid conflicts of interests f ) duty not to accept benefits from third parties in connection with his functions in the company g )duty to disclose any interest in the transactions entered into between the director and the company .Corporate Scandals To reiterate , directors have the ultimate responsibility in the overall management of the corporation . Greater responsibility has been imposed upon them in the light of the corporate scandals which were all highly publicized . They are responsible not only for the general supervision of the company but also to its overall financial performance . Indeed ,if the board of directors will not be able to properly perform its function they may find their

15

companies in the state of bankruptcy .With the increased scrutiny of the government authorities and the new laws against illegal corporate activities , the directors of the corporation owe it upon themselves and to the company to practice due diligence in the management of corporate affairs .A . Case of Enron Corporation One of the most infamous examples of corporate scandal is the case of Enron Corporation . Enron Corporation was an energy company based in Texas . Enron was considered as the leading natural gas pipeline in the United States . Its market extended from Australia , Argentina , all the way to the United Kingdom . Before 2001 , Enron employed as many. Moreover, non-executive can a play the following roles: A Non-Executive Finance Director (NED FD) is required to assist an IP rich natural refrigerant/cooling company capitalise on the huge worldwide demand for green refrigerants, cooling and heat pump equipment. Proof of concept has been established with blue chip early adopters, which has resulted in revenue streams. The Non-Exec will join a syndicate of investors led by a well known venture capital firm. The company is based in Hertfordshire. A Non-Executive Chairperson is required to assist an IP rich natural refrigerant/cooling company capitalise on the huge worldwide demand for green refrigerants, cooling and heat

16

pump equipment. Proof of concept has been established with blue chip early adopters which has resulted in revenue streams. The Chairman will join a syndicate of investors led by a well known venture capital firm. The company is based in Hertfordshire. Two Non-Executive Directors (Non-Exec) are required for a mobile barcode content management company, based in the Midlands. The owner has recently won the highly prestigious Birmingham Young Entrepreneur of the Year award. Non-Executive Finance Director (Non-Exec FD) is required for a company producing massively scalable online social games, with a distinct difference, based in the Midlands. Non-Executive Director (Non-Exec) is required for a company producing massively scalable online social games, with a distinct difference, based in the Midlands. A Non-Executive Director (NED) is required for a large healthcare insurance plan company, based in Southern England. AT SHORT LIST STAGE

Two Non-Executive Directors (NEDs) are required for a match funded company that has created a new pulp molding technology, to create packaging of varying shapes and sizes including bottles and other containers.

A Non-Exec Chairman is required for an early stage clean tech sector electric car company who now have two vehicles

17

on the road under trial with the Technology Strategy Board and are based in Oxford, with facilities in Devon and the North East. A Non-Executive Director (NED) Fund Raising, required for an exciting early stage clean tech sector electric car company who now have two innovative prototype vehicles on the road under trial with the Technology Strategy Board and are based in Oxford, with facilities in Devon and the North East. A Non-Executive Director (Non-Exec) is required for a company supplying energy saving refrigerator blinds to the food retail sector, based in Northampton. AT SHORT LIST STAGE A Non-Executive Chairman is required for a company supplying energy saving refrigerator blinds to the food retail sector, based in Northampton. AT SHORT LIST STAGE

A Non-Exec Finance Director (NED FD) is required for a webbased educational publishing company providing current affairs based educational material to 9-16 year olds, based in London. Proof of concept has been established with over 1,000 subscribers in countries all over the

1: 2-B: Effectiveness of a non-executive

18

director:
Whilst researchers extensively investigate executive incentives, very little appears in the literature on the effect of outside-director skin in the game on board monitoring and thus firm performance. Utilizing a unique panel dataset, we observe a sizeable positive relationship between non-executive director ownership and firm performance. Companies with just one standard deviation greater non-executive director ownership, perform 28.2% better than the mean, as measured by Tobins Q. We also show that the effectiveness of monitoring improves as one reduces both board size and the proportion of outside directors. Greater skin in the game possessed by executive board members also improves firm performance over most but not all ownership ranges. We subject our results to a powerful event study: do investors recognize that outside and inside director skin in the game protects investors during a calamity, namely the Global Financial Crisis (GFC)? Yes, the relative stock price decline is far less for incentivized boards during the GFC, consistent with the panel data results utilizing Tobins Q. These results during a calamitous period have the added advantage of casting doubt on the reverse causality argument: directors of better performing firms have sufficient foresight to choose to hold more equity. but thrive. And nothing less should be demanded of them than that.

19

The best organizations of all sizes, in both the for-profit and not-for profit sectors, are looking for active, engaged, and independent board members, and they encourage a climate in which having those people on the board can bear fruit. These board rooms are environments in which board members are comfortable, and indeed required, to ask hard questions, challenge the status quo, and step up to assist in areas where they can. Independent board directors should bring independence in word and deed and a fresh perspective to the organization. Proactive board directors engage and reach out. They ask questions inside and outside of the organisation and seek advice from fellow board members, senior executives, staff and investors to gain a fuller understanding of the challenges their organization confronts, as well as the resources and capabilities it has (and needs) to master them. This implies a number of different strategies.

20

First, and especially at the point when joining as a new director, I have found it useful to reach out to existing directors and get to know them beyond their bios and outside of the structured board setting. Getting to know my fellow non-executive and executive board directors contributes to building board cohesion and can make a real difference in avoiding confusion and misunderstandings in the heat of the board room. Boards function better when the people around the table know and trust one another and feel that they are moving in the same direction. Second, this focus on people does not stop at the board room. Today's board directors must engage much more broadly and deeply - both inside, and outside, the organization. By being approachable and reaching out to people, board members are able to talk with, and especially listen to, senior managers, staff, and investors. They need to, understand and respect their views, and help harness their passion and commitment to the organization, thus ensuring its endurance and robustness. Importantly, hearing the voices from the stakeholders directly means nonexecutive board members can form their own ideas and perspectives on the information they are receiving in board papers and reports. Third, understanding the nuts and bolts of the business also means, and indeed requires, asking the hard questions. It means not being satisfied with simply asking the questions, but following through and doing something with the answers. In my case, I have a special interest in finance, risk, and the audit committee, so for me that means being comfortable asking the hard questions about the numbers, past, present, and future.
21

Fourth, non-executive board directors need to keep an eye on the global factors that shape the broader landscape in which their organization operates from government regulation to customer expectations to a constantly shifting competitive environment. This outside independent perspective is indeed one of the greatest assets board members can bring to the table. Keeping on top of these developments is necessary, and, in our electronically and humanly networked world, it is more possible than ever. Equally important is seeking and recognizing opportunities for the organization to shape the environment in which it operates. This has meant great gains and enormous strides in boardrooms around the world, from a better understanding of new forms of communication like social media, to helping the organizations keep up, innovate, and move into issues around corporate social responsibility, sustainability, and other areas that will help future proof the organization. To bring things back to the board room: sensitivity to local and global issues, internal and external matters, and understanding the human and material assets of the organization and how new ideas can be introduced and integrated into the organization are core components of the proactive approach. In a nut shell, as an active, engaged, and accountable non-executive board member, board directors must constantly strive to have the best possible understanding of the business the organization is in, and the one it wants to be in; and what the organization is, and what it wants to be.

22

On that basis we can help devise feasible and viable strategies to get from one to the other, and contribute to guiding the organizations on whose boards we sit into a successful and sustainable future - and to do the job we have been hired to do.

1.3Methodology of the study:

To prepare this paper, main emphasize has been given on the secondary data. No primary data have been collected. So the following are the sources of data collection such : 2 3 4 5 6 7 8 Government publication Previous research literature National and international publication Publication of the different offices World bank magazine Asian development report Internet, Newspapers

1.3-A: Scope, Countries and Documents:

All corporate entities, no matter what size or status, will benefit from the experience that a good non-executive director can bring. Non-executive directors play a key role in corporate decision making. They can make valuable contributions in determining corporate strategy and can provide guidance on achieving strategic goals and the allocation
23

of corporate resources to support strategic plans. The independence, objectivity and business acumen of nonexecutive directors complements the detailed knowledge and experience of executive With the publication of the revised Combined Code, the creation of the ODCE and the passing into law of the Companies (Auditing & Accounting) Act, 2003, it is opportune to refocus on the role of the non-executive director and their role in good corporate governance. Any person undertaking an appointments a nonexecutive director should possess a wide variety of skills extending beyond business and financial acumen .They should be able to work in harmony with their executive colleagues, maintaining their integrity and taking a stand if appropriate. They should possess the "sixth sense", seeking additional information when they believe that there are insufficient facts on which to base a sound decision and be prepared to "go it alone" if necessary. A non-executive director can bring important benefits to any corporate entity, whether large or small. It is essential that the non-executive director operates as part of the overall board, and not in isolation from executive management. There are potential pitfalls, such as appointing non-executive directors who lack the skill set or independence to be properly effective. However, these pitfall scan be avoided. The Boardroom Centre, an organization that assists companies in the sourcing and appointment of non executive directors, commits itself to

24

ensuring that appropriately skilled non-executive directors are matched with suitable organizations. It provides a valuable service in helping more companies to benefit from the skills and experience that a non-executive director can bring. Whilst the importance of the non executive director in monitoring good corporate governance cannot be overstated, it is vital that this role is not seen as compensation for failings in the other functions and processes that contribute to an effective corporate decision making process. It is important that the non-executive director, who is a member of the board and owes primary responsibility to the company ,is not undermined or set against executive management in a desire to increase this monitoring role.

Non-executive directors are viewed in contrast to executive directors, although, as Will be seen in the following, they do not solely fulfill opposite tasks. NonExecutive directors are non-employed directors of a company "who is not an Executive director and, therefore, does not participate in the day-to-day management of the firm. He or she is usually involved in planning and policy

25

making, and is sometimes included to lend prestige to the firm due to his or her standing in the community. Non-executive directors are expected to monitor and challenge the performance of the executive directors and the management, and to take a determined stand in the interests of the firm and its stakeholders. They are generally held equally liable as the executive directors under certain statutory director". The independent director holds all characteristics of the latter, but is reaching beyond by fulfilling further criteria on its status of independence. The standing as an independent authority is detailed through various guidelines and recommendations, partly identical, partly differing. The Australian Stock Exchange Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations

1.3-B: Nature of study and desk study:

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The research process onion of , & (2003) will guide the study in order to come up with the most suitable research approaches and strategies for this study. The research process onion will be used as a basis to show the conceptualization of the most applicable research approaches and strategies that will lead to the gathering of the necessary data needed to answer the research questions stated, as well as to arrive to the fulfillment of this research undertakings objectives. Any approach that attempts to describe data might be referred to as a descriptive method. There is a range of sophistication possible in any description whether quantitative or qualitative. The simplest quantitative description reports the data in raw form. As the description gets more sophisticated, the researcher groups the data and presents it in tables and figures. The use of descriptive statistics is merely a convenient way of description. Data are reported in tables organized to give a suitable overall picture at a glance. These simplify the description and lend meaning to data which in raw form is hard to interpret ( 1998)

The research will use the descriptive method to evaluate the NeDs role in promoting and establishing effective corporate governance practices. Descriptive research tries to explore the cause of a particular event or situation. In addition, such method tries to describe present conditions, events or systems based on the impressions or reactions of the participants of the research ( & 2002). Furthermore descriptive research utilizes observations and surveys. For this reason, the study calls for the use of this approach because it is a goal of the study to gather first hand information from the company managers and other people knowledgeable about the NeDs role in promoting and establishing effective corporate governance practices

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1.3-C: Data):

Data

Collection

(Secondary

The primary source of data will come from Database surveys, Questionnaire surveys, Boardroom observations and Interviews that will be conducted with the help of the respondents. The primary data frequently gives the detailed definitions of terms and statistical units used in the survey. The primary source of data will give actual responses from various people who encounter different kinds of things. The primary source of data will provide answers not found in written documents or other written source of information. This kind of data will give a further understanding of the situation.

After gathering the primary data, the information will be reviewed to see if the data is appropriate for the study. Afterwards the strength and weakness of the data will be evaluated. The secondary source of data will come from researches done by the organization, previous studies and surveys. Acquiring secondary data are more convenient to use because they are already condensed and organized. This kind of data can be found anywhere. The researchers work for same organization and because of this they would have access to the needed data at any time needed. It saves more time and effort.

1.3-D: Analysis and Interpretation of data:

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After data collection the next thing to be done is data presentation, interpretation and analysis. It is important that the research output be presented in an organized, coherent and understandable manner so that those who will read the research can propose important decisions about the results of the study. This chapter intends to discuss the information acquired from the survey and interview done for the research. The main objective of the study is directed towards evaluating the Non executive Directors role in promoting and establishing effective corporate governance practices. Primary research and secondary research was used for this study. Primary research was done using questionnaire; the questionnaire was be given to the participants, which compose of members and staff of different public companies.

Data analysts have turned to data mining techniques when the size of their data has become too large for manual or visual analysis. What makes the analysis of these data sets challenging is not just the size, but the complexity of the data. Data sets provide a very rich environment for the application of data mining ( 2003). Data gathered will be analyzed through frequency distributions. This procedure of analyzing the data will give way to reviewing the data categories and the number of referrals in each category. With relation to data analysis, the indicators that will be used in evaluating the study aside from the ideas of the respondents include the age of the respondent; the gender of the respondent, the social status of the respondent; the educational attainment of the respondents; the position of the respondents in the company and the number of years the respondent served as an employee of the non executive director in the company.

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CHAPTE R-2
30

Findings of the study:

1. Rules and regulation regarding the appointment of Appointment Non- Executive Directors 2. Qualification of the Non- Executive Directors 3. Performance of the Non- Executive Directors 4. Remuneration of the Non- Executive Directors 5. Contribution in the overall activities of the organization
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6. Limitations of the Non- Executive Directors Conflict between the Executive and Non- Executive Directors
The key findings of the research of other web sites and discussions with potential users of the exchange and staff of other federal agencies are discussed below. 2.1 Most individuals with experience in developing web sites are willing to share lessons learned, and those considering the development of web sites would like to identify opportunities to work with others to save time and money.
2.2 Most individuals and organizations that participated in the discussions

supported the concept of a national web site and expressed the belief that local, state, and federal brown fields programs could benefit from such a web site; however, at the time the study was conducted, they were not able to make firm commitments to provide either information for the web site or operational resources.
2.3 Currently, national web sites contain minimal information about individual

brown fields properties; the operators are exploring methods of obtaining additional information about such properties and keeping that information current.
2.4 Some states currently operate web sites dedicated to listing brownfields

properties. Other states have web sites of environmentally impaired sites, in which brown fields properties are included as a subse to this report is a list of states that were contacted to determine whether they have collected or plan to
collect information about Brownfield properties and make that information available to the public. 2.5The web site designs that several states have developed could serve as a basis for other entities developing similar web sites. Using those web sites could keep to a

32

minimum the resources necessary to develop new web sites. It appears that the Commonwealth of Pennsylvania has the most comprehensive web site of brownfields properties in the nation. Second is the state of New Jersey, which has developed a comprehensive database to be used as the basis for a web site. Massachusetts also has a web site of brown fields information; however it includes only a limited number of sites. to this report shows the items of information the three states are interested in collecting and the number of properties in their systems. Appendix C also includes a comparison of the items of information for each of the three states, to the items of information included in the prepared by EPA. 2.6 There is a national database for properties potentially available for redevelopment under the DoD Base Realignment and Closure (BRAC) program; however, the information in it may not be complete because local redevelopment authorities (LRA) have primary responsibility for managing the transfer of DoD properties at their level, and thus maintain information about their assigned properties. EPA held discussions with several LRAs that were developing web sites. Representatives of those LRAs indicated a willingness to continue discussions about the development of a national web site.

33

CHAPTE R-3

34

Conclusion:
Corporate governance makes sure that an organization makes appropriate and justified decisions that will lead to success. It intends to use needed strategies to
35

set good examples for the employees to do what should be done not only for the company but for the environment. With the corporate governance can be done with more focus by the NeDs. The suggestions by the helped the NeD gather more concentration for them to implement changes to corporate governance practices. NeDs will be guided by the suggestions of the Higgins report into determining whats best for the company and how they can provide better service to their respective companies.

3.1 Summary of the findings:

Majority of the respondents agree that NeDs should meet at least once a month. This shows that the respondents think that it is vital and important for the NeDs to meet at least once in a year so that they can compare and then discuss about what changes should be done in the way the firm is managed. The participants in the study believed that a meeting between NeDs can help create necessary changes to the company. They believe that only the meeting between NeDs can make the better implementation of strategies. Majority of the respondents believe that prior to appointment potential new NeDs will have to carry out due diligence on the board and on the company. The respondents have the notion that prior to appointment potential new NeDs will have to carry out due diligence on the board and on the company. They believe that before NeDs will be accepted they should be well tested and they should have the outmost concern not only for their own welfare but for the welfare of the organization. The respondents think that the intentions of the NeDs have to be known before hiring them.

36

Majority of the respondents agrees that the current two three years term of the NeDs is enough. The respondents believe that the NeDs year of term is enough for them to create the changes needed by the company. The participants think that longer terms of tenure might not be good for both the company and the NeDs. The participants believes that when the NeDs do their job well, they should be given extensions for their tenure. Majority of the respondents agree that the NeDs should remember that they will have enough time to meet the things expected of them. This shows that the respondents believe that the NeD should be reminded that before making any other appointment with other organizations they should do their obligations and the things that the company expects of them. The respondents think that the NeDs should first fulfill what they need to do for them before they offer services to other organizations. This can help in building a better sense of loyalty to the NeD and it can lead to the achievement of goals of the company through a focused NeD. Most of the respondents dont believe that the non executive director should have more than one directorial role. This shows that respondents want the NeD to focus their attention on only one company. Having directorial roles on two or more companies may lessen their focus on the company and the strategies they intend to use might not be properly implemented.

Most of the respondents believe the remuneration of NeDs should be high enough to attract outstanding and desirable NeDs. The participants believe that if a company wants to have the best kind of NeDs they should offer good remuneration that will satisfy the needs of those kinds of individuals. The participants think that in order to get the best NeDs they should offer a remuneration that no one can resist. Majority of the respondents dont believe that resignation should be the last option of any NeD. The respondents dont think resignation should be used as a last option of the NeD when they have problems with the company. They believe that resignation should not be an option and it will only be used when the NeDs have a valid reason. The respondents believe that other options can be used by
37

the NeD when he/she has issues with the company. Most of the respondents agree that the NeD should attend management meetings to know the issues, concerns and problems of the shareholders. This shows that the respondents believe that the NeD should be informed of the different issues and concerns t he shareholders have so that they can change their strategies and have better relationship with the shareholders. Majority of the respondents believe that NeDs should still have directorial functions in smaller listed companies. The respondents believe that NeDs should be allowed to have directorial functions in smaller listed companies.

3.2 Concluding comment: 3.3 Recommendation

Appendix
1.Books 2.Internet 3. Articles

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39