Emmy’s Toys Ltd

Introduction

Companies are mostly managed by the board of directors who foresees the companies mission and vision of the owner. The shareholders are responsible for the appointments of the board of directors. The report contains the structuring of board members, remuneration of board members, roles of board members, and corporate governance code.

Structuring board of directors

As per the recent version of the UK Corporate Governance Code, excellent administration ought to be at the core of how a board is organized or structured. A study in the UK provides guidelines on how many directors should be on the board (Rathod, 2018). In organizing and structuring board of directors of Emmy’s Toy Ltd, here are a couple of evident recommendations:

1. It should have an odd number in order not contain a tie while voting
2. It should mainly hold parties that strongly support the vision of Emmy’s Toy Ltd, so there are minimal or no fights in the boardroom or being constrained in non-wanted directions.
3. The numbers should be manageable, approximately 5 to 11, so it becomes easy to schedule meetings. Finally, individuals should bring genuine incentives to the story, for example, specific industry, range of abilities, or startup skill, to assist with maintaining a strategic distance from known entanglements, or a Rolodex of critical connections that can be useful to you(Deeb, 2014). Hence, the selection of the right board of directors of Emmy’s Toy Ltd will bring company expertise in crucial areas such as finance, management and technology, and specialized knowledge.

Remuneration of the board of directors

For the most part, the company has permission to set up the remuneration. However, it ought to be guided, having considered the obligation and duty of the job, which every director plays and market demand of the company (Alexander Kostyuk, 2016). Director’s remuneration ought to be set to offer adequate motivations to the commitment by the director while not trading off his freedom.

Then again, Directors’ compensation, ought to be connected to the organization’s outcomes, since this will bring the Directors’ advantages more into line with those of the shareholder, which it is tried to boost (Alexander Kostyuk, 2016). It is highly recommended that remuneration involving stock options and shares of the company to internal directors and executives.

It is the duty of the board of directors to change the remuneration to each organization’s conditions. Therefore, Emmy’s Toys Ltd needs to review remuneration policies more to ensure that the structure and amounts are commensurate with the directors’ duties, risks, and responsibilities.

Role of the board of directors

The board of directors has a crucial and essential role in setting the strategic direction and governance and of the company. Therefore, the major responsibilities of the directors are outlined below.

The main responsibilities of the board are clearly outlined in company law. These involve supervising management, defining strategies, naming, and removing independent auditors electing and removing the CEO (THE BRAZILIAN INSTITUTE OF CORPORATE GOVERNANCE). The activities of the board of directors should be further specified in an internal instruction clarifying its responsibilities and roles.

The board of directors plays the role of the establishment of the company’s mission and purpose. Since essentially everything the board does bases on the crucial vision and mission, the governing body takes incredible consideration in shaping strategic vision articulations that include the association’s objectives. The board should join points of view from every individual on the board.

The Board of Directors should try to maintain the organization’s qualities and the proprietors’ standards and purposes in the organization’s exercises. These issues ought to be examined, inspected, and endorsed in gatherings of the Board of Directors. The directors approve the company’s code of ethics.

Corporate governance code

Most companies around the world that ventures in stock exchange are required by the government to report on how they have applied the corporate governance code. Emmy’s Toys Ltd is expanding and starting trading on the stock exchange; likewise, as a corporate company should have good governance and practices that support good governance. Emmy’s Toy Ltd corporate governance code will set out the standard of good practice, which relates to issues such as remuneration, board development, and composition, relation with stakeholders, accountability, and audit (Cuomo, Mallin & Zattoni (2016, p222-241). You should report on how will apply the main principles of the good corporate governance code’s provision and if not indicate an explanation

There are five main pillars and principles of good corporate governance that make up the corporate governance code.

Leadership is one of the pillars. This code requires the company to have an effective board of directors that is capable of providing excellence in the leadership of the board (Price, 2019). The board of directors in Emmy’s Toy limited are collectively responsible for the success of the corporation, which includes the short term, and long-term success of the company. The code clearly states that no one individual should have total decision-making powers on the board. For strong leadership, there should be a clear division of the responsibilities between the executive and the board of directors. The executives are responsible for the daily running of the company, and the board of directors is responsible for overseeing the company and strategic planning. The chairperson of the board is responsible for the leadership of the board and ensures effectiveness in all its roles and responsibilities. Non-executive directors should help develop successful proposals on strategy and constructively challenge the board.

To add on to leader, effectiveness is another principle. The board and its members should have a composition that encompasses knowledge and independence of the company, experience, and appropriate and striking balance of skills for them to perform their responsibilities and duties effectively (Price, 2019). There should be a formal, transparent, and rigorous procedure in appointing new directors to the board. The board of directors of Emmy’s Toy Ltd should allocate sufficient time to the company to fulfill its responsibilities and duties effectively. Directors should regularly refresh and update their skills through education and training and receive comprehensive induction on joining the board.

On the third pillar is accountability. This implies that the directors are aware that they are liable for their choices and activities in overseeing and leading the organization before the shareholders hold them responsible (Price, 2019), and they will subject themselves to assessment as per best practices.

Remuneration is another pillar. Directors should not take part in setting their remuneration (Price, 2019). Emmy’s Toy Ltd should have a transparent and formal procedure for developing remuneration packages and remuneration policies.

The last point on the main principles of corporate code of conduct is stakeholder relationships. The board should take advantage of its general meetings to communicate with shareholders based on their strategic planning and its objectives (Price, 2019). They should ensure that communication is satisfactory.

Conclusion

The salary package suggested for the chair of the Emmy’s Toy Ltd is not appropriate. The company should first consider and agree on the factors mentioned above in the report in remuneration of the board of directors.

References

Alexander Kostyuk, M. S. (2016). The Theory and Practice of the Director’s Remuneration. Howard House, Wagon Lane, Bingley BD16 1WA, UK: Emerald Group Publishing Limited.

Cuomo, F., Mallin, C., & Zattoni, A. (2016). Corporate governance codes: A review and research agenda. Corporate governance: an international review, 24(3), 222-241.

Deeb, G. (2014, October 11). How To Structure Your Board Of Directors Or Advisory Board. Retrieved from Forbes: https://www.forbes.com/sites/georgedeeb/2014/10/11/how-to-structure-your-board-of-directors-or-advisory-board/#37f767c93777

Price, N. J. (2019, March 14). What Is the Corporate Governance Code? Retrieved from Diligent: https://insights.diligent.com/corporate-governance/what-is-the-corporate-governance-code

Rathod, L. (2018, July 05). Best Practice for Board of Directors Structure. Retrieved from Deligent: https://diligent.com/en-gb/blog/best-practice-for-board-of-directors-structure/

THE BRAZILIAN INSTITUTE OF CORPORATE GOVERNANCE. (n.d.). IBGC. Code of Best Practice of Corporate Governance, 6.