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The Assignment is based on Wesfarmers, a leading retail and consumer Giant in Australia and other parts of the world. From its origins in 1914 as a Western Australian farmers' cooperative, Wesfarmers has grown into one of Australia's largest listed companies and employers. Its diverse business operations cover: supermarkets, department stores, home improvement and office supplies; coal mining; energy; insurance; chemicals and fertilisers; and industrial and safety products. The primary objective of Wesfarmers is to provide a satisfactory return to its shareholders.
The company aims to achieve this by:
satisfying the needs of customers through the provision of goods and services on a competitive and professional basis;
providing a safe and fulfilling working environment for employees, rewarding good performance and providing opportunities for advancement;
contributing to the growth and prosperity of the countries in which it operates by conducting existing operations in an efficient manner and by seeking out opportunities for expansion;
responding to the attitudes and expectations of the communities in which the company operates;
placing a strong emphasis on protection of the environment; and
acting with integrity and honesty in dealings both inside and outside the company
Wesfarmers as a company maintains a high rate of professionalism and also has a very good and sound Corporate governance in place to add to the ethics and value of the company.
The Board of Wesfarmers Limited is a strong advocate of good corporate governance. The Board is committed to providing a satisfactory return to its shareholders and fulfilling its corporate governance obligations and responsibilities in the best interests of the company and its stakeholders.
The responsibilities of the board includes various decision making , Strategy making and chalk out plans for its day to day activities. The main view point of the board are as follows:-
Oversight of the Wesfarmers Group, including its control and accountability systems
appointing (and removing) the Managing Director
Where appropriate, ratifying the appointment (and the removal) of senior executives
Providing input into and final approval of senior executives' development of corporate strategy and performance objectives
Reviewing, ratifying and monitoring systems of risk management and internal compliance and control, codes of conduct and legal compliance
Monitoring senior executives' performance and implementation of strategy
Ensuring appropriate resources are available to senior executives
Approving and monitoring the progress of major capital expenditure, capital management, acquisitions and divestments approving and monitoring financial and other Reporting
Reviewing and approving the remuneration of the Managing Director and senior executives
Appointing, re-appointing or removing the company's external auditors (on recommendation from the Audit Committee)
Monitoring and overseeing the management of shareholder and community relations.
The Board has conflicts of interest as a main point in their constitution and Corporate governance and stress in that point and make no compromise on that issue as it is a very sensitive matter to be kept a tab on. Some of the values laid down in the constitution of Wesfarmers Ltd are:-
Directors are required to avoid conflicts of interest and immediately inform their fellow directors should a conflict of interest arise. Directors are also required to advise the company of any relevant interests that may result in a conflict.
The Board has adopted the use of formal standing notices in which directors disclose any material personal interests and the relationship of these interests to the affairs of the company. A director is required to notify the company of any new material personal interests or if there is any change in the nature or extent of a previously disclosed interest.
Where a matter in which a director has a material personal interest is being considered by the Board, that director must not be present when the matter is being considered or vote on the matter, unless all of the other directors have passed a resolution to enable that director to do so or the matter comes within a category of exception under the Corporations Act 2001.
The company has a firm Ethics policy which each and every Team-Member has to follow and adhere to the Work Ethics and policy of Wesfarmers are as follows:-
Primary objective is to provide a satisfactory return to shareholders.
• satisfying the needs of customers through the provision of goods and services on a competitive
and professional basis;
• Providing a safe and fulfilling working environment for employees, rewarding good performance
and providing opportunities for advancement
• Contributing to the growth and prosperity of the countries in which it operates by conducting
existing operations in an efficient manner and by seeking out opportunities for expansion
Code of Conduct:
A Code of conduct is very important for any business module to company to be successful in its area of operation and Wesfarmers as a company has been very keenly perfect in this area of management thus being very successful in all the aspects and frontiers of its business.
The Code Of Conduct policy followed by Wesfarmers are:-
The Board has adopted a Board Code of Conduct to guide the directors and promote high ethical and
professional standards and responsible decision making. In addition, the company has adopted a
Code of Ethics and Conduct for all employees (including directors)
The Code of Ethics and Conduct is aimed at maintaining the highest ethical standards of corporate behaviour and accountability across the Group. Employees and directors are expected to respect the law; respect confidentiality; properly use Group assets, information and facilities; value and maintain professionalism; avoid conflicts of interest; act in the best interests of shareholders; contribute to the company's reputation as a good corporate citizen; and act with honesty, integrity, decency and responsibility at all times.
Allowing Companies to Fail:
While discussing such an sensitive matter it is very important to consider various factors before letting a company close down its operations. When a company fails in its objectives , its nature of business it indirectly means that there was some kind of malfunction in the Corporate governance of that particular company. Corporate governance thus plays a vital role in the structuring and functioning of a company. When the corporate governance of a company is questioned all that first comed into picture is its Top-Management and the Board of Directors, even if either of the two fail in their roles to provide proper service the company may tend to get into a fix. Allowing companies to fail in such a situation is ideal and the government intervenes in such matters to provide relief to all the investors, creditors, Debtors etc. to save the company from liquidation. Example, ENRON was a company that was is such a problem where its Corporate governance was in question . It was the leading service provider in the United States and was also listed on the Prestigious Nasdaq. Another classic example where a corporate governance was questioned is Lehman Brothers. The company did not find enough support from its Management finally leading to closing down of its operations and having to liquidate and file a Bankruptcy petition with the Fed in America.
When such a situation occurs where the whole economy would be affected due to a companies failure to keep up to its corporate governance and smooth functioning the governments steps in and arranges for a possible takeover in the interest of its Employees, Stakeholders, and small investors which exactly what happened in both the cases referred above.
Helping Companies to Re-gain and defend from Failure:
When a company fails in its operations and activities the one's who get affected are its employees as they tend to lose their jobs, its Debtors as they would be unable to receive the Money from the company due to weak financial situation of the company and finally the most important the small investors who invested in the company by way of Stock Market.
The government immediately comes in to help such company and takes control of situation and manages the company on-behalf of the investors till things settle down and do not return to normalcy. Some of the important decisions taken by Wesfarmers with this regards are as follows:-
The company understands and respects that timely disclosure of price sensitive information is central to the efficient operation of the securities market and has adopted a comprehensive Market Disclosure Policy covering:
Announcements to the ASX
Prevention of selective or inadvertent disclosure
Conduct of investor and analyst briefings
Commenting on expected earnings
Communication black-out periods
Review of briefings and communications.
The policies of Wesfarmers for Risk and management are one of the best in the industry they are as follows:-
Guidelines and limits for approval of all expenditure inclusive of capital expenditure
A Group compliance programme supported by approved guidelines and standards covering safety, the environment, legal liability, risk identification, quantification and reporting, and financial controls
A comprehensive risk financing programme including risk transfer to external insurers and reinsurers
Policies and procedures for the management of financial risk and treasury operations, including exposures to foreign currencies and movements in interest rates
A formal dynamic planning process of preparing five year strategic plans each year for all
businesses in the Group
Annual budgeting and monthly reporting systems for all businesses, which enable the monitoring of progress against performance targets and the evaluation of trends
Directors' financial due diligence questionnaires to management
Appropriate due diligence procedures for acquisitions and divestments
Crisis management systems for all key businesses in the Group.
The directors of Wesfarmers are also required to undergo certqain detail check before becoming the directors of the company such as legal and Federal poloce checks etc all these are required by the ASX as it incolves a lot of confidential information that flows across the company which have to be safeguarded for the privacy of the company and safeguarding the interest of its investos and the Employees . Some of the important policies of the companyt with regards to the Directors in the company are:-
All directors are expected to maintain the skills required to discharge their obligations to the company.
Directors are provided with papers, presentations and briefings on Group businesses and on matters which may affect the operations of the Group.
Directors are also encouraged to undertake continuing education and training relevant to the discharge of their obligations as directors of the company. Subject to prior approval by the Company Secretary, the reasonable cost of continuing education and training is met by the company.
To assist directors to maintain an appropriate level of knowledge, skill and experience in the operations of the company, directors undertake site visits eachyear to a number of Wesfarmers' businesses
All directors have unrestricted access to employees of the Group and, subject to the law, access to all company records and information held by Group employees and external advisers. The Board receives regular detailed financial and operational reports from senior management to enable it to carry out its duties.
Each director may obtain independent professional advice at the company's expense, to assist the director in the proper exercise of powers and discharge of duties as a director or as a member of a Board committee.
All of the Directors in the company are compusorily required to through all the legal formalities as it involves a lot of public interest. Wesfarmers as a company are at the highest place in terms of Corporate Governance and Corporate Strategy, Legal requirement and other documents and policies as guided by the ASX. ASX corporate governance schedule requires all companies listed in on the Exchange to folow the same pattern of Policies as it would enhance its chances better find the defect, Frauds inside the Company and even onnthe stock exchanges. Thus it clearly proves the professionalism of the company in this case Wesfarmers in providing proper docuuments and abiding to all the rules and regulations as laid down by the policy makers, Reserve Bank and the ASX.
Thus it is of great value to have a good corporate governance in place so that all the matters including the decision taking and other important values are safeguarded. A good corporate governance makes it possible to even win the investor confidence and make it possible and very easy to maintain a good and healthy track record about the company. It thus provides the base for any further expansion and capital raising , such as issue of shares , debentures etc. corporate governance hence proves to be an integrate part of any organisation and runs and has to be followed by all the participating members including the Top-Management and the fellow team members for the company to function smoothly in and orderly manner. Wesfarmers has been very successful in this frontier of the business like other Peers in the industry such as Woolworths, Crown etc. Corporate governance strategy undertaken by Wesfarmers thus provides a base for all the employees and insudtry peers setting the Bar high or even raising the Bar higher for competitors to compete with its business function.
ASX. (n.d.). Retrieved september 11, 2010, from www.ASX.com.au: http://www.asx.com.au/about/corporate_governance/index.htm
Wesfarmers. (n.d.). Retrieved september 11, 2010, from www.wesfarmers.com.au: http://www.wesfarmers.com.au/about-us/corporate-governance.html
Ciro,T and Symes,C. (2009).Corporations law in principle (8th ed.).Pyrmont, NSW: Lawbook Co