Liyala Sdn Bhd is a successful family-run business. The board of directors is le

Question

Liyala Sdn Bhd is a successful family-run business. The board of directors is led by the founder of the company, Liyala who is both chairman and CEO. The other board members, a finance director and two non-executive directors, are also Liyala’s brother and daughter. The members of Liyala family own all the share capital of the company. The company does not have a company secretary, and its auditors are a local firm of accountants in the town where Liyala has its head office. Liyala is proud of his entrepreneurial success. He has been prepared to take big risks with the company’s strategy in order to grow the business and, when necessary, he has been willing to cancel the annual dividend to shareholders to spend money on investment or to accept temporary decline in profits for the sake of longer-term success. He is aware that the company does not have a good reputation as an employer, but he believes that the company exists for the benefit of the Liyala family and employees should be grateful to have their jobs. Liyala wants to retire in a few years’ time. He would like his daughter to take over the running of the company, but he would also like to take the company public. He is aware that the governance of the company have to undergo substantial change for this to happen, but he does not want to retire until all changes have been made and the company’s shares are being traded on Bursa Malaysia.

Required

a) Explain how the board’s attitude to its shareholders and other stakeholders will need to change if Liyala Sdn Bhd goes public

b) Giving your reasons, identify the main aspects of governance that the board of Liyala Sdn Bhd will have to consider before the companies goes public, and suggest changes that will have to be made.

Explanation / Answer

Answer A:- currently all the policies of the management have been taken up for the sake of the success of all their family members and the business at large , there were no signs of prosperity of their employees and the benefits that should have been passed to them in the running of the business .If the organisation want to go to public than they must ensure the well being of all their stakeholders keeping in mind the overall objectives of the organisation. They must involve the opinions of all the shareholders while framing the significant policies of the organisation , should declare the dividends at regular intervals to satisfy the needs of the small shareholders at large.

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