As the financial manager of a diamond trading company based in Antwerp, you have been tasked with preparing your firm for potential listing on Euronext. The company is closely held with only 5 shareholders, each holding 20 per cent of the companys shares. The shareholders are all directors of the firm and they make up the board of directors. Because of the companys ownership structure, there has been no real consideration of corporate governance issues before.

The share listing will result in the total directors cash ownership falling to 20 per cent of the total firm. This means that 80 per cent will be owned by external shareholders (mainly banks and financial institutions). However, the five directors have informed you that they do not wish to relinquish control of the firm. They have asked you to answer the following with respect to corporate governance issues: (200 points)

How can the board maintain control of the firm while only having 20 per cent of the shares?