Assume that XY is a listed company, which manufactures clothes. The following information is released from the published annual report:

1. The Board of Directors is consisting 10 members 3 are Independent 5 non-executive and 2 are executive.

2. Audit committee is consisting of 3 members: 2 are independent and 1 non-executive. No one has previous experience In the same industry

3. The CEO is the chairman of the board of directors and his qualification is a bachelor's degree in design.

4. CFO qualification: a bachelor degree in accounting freshly graduated name : (Jean Philips Fournier )

5. Ownership structure:

ABC company 7%

Bill philips fournier 7%

A national bank owns 5%

Luke Bill Philips 5%

Jason Bill Philips 5%

The remaining is for minority shareholders

6. The financial statements show that during two successive years, there are losses.

7. The salary of the CEO seems to be high.

8. The external auditors expressed a qualified opinion.

Important note:

• The CEO does not own an equity stake in the company.
• The 3 independent members in the board want to quit the company
• The bank refuses to give the company an important loan.

Instructions :

1. Discuss the potential governance problems related to the actual situation of the CEO (give at least two problems)

2. Discuss the potential governance problems related to the actual situation of the CFO (give at least two problems)

3. What are the potential governance problems that the company may face, other than those related to CEO and CFO? (give at least two problems)

4. Is there any risk of corporate failure?, explain (give at least three risks, with explanation)