Etok Restaurants Sdn. Bhd. (Etok) runs a chain of fast food restaurants which are all in the East Coast Malaysia. The company is wholly owned by the Razin family, and has a Board of directors consisting of three executive directors, a non-executive Chair, Johan Ahmad (who has recently joined the board) and one other independent non-executive director. The company has a few hundred employees, many of whom are young in age. It has been running an advertising campaign for its restaurants, including a campaign on social media.

The Chief Executive, Darwish Razin, has been developing a proposal for the company to diversify and develop a new business of supplying some of the companys products directly to supermarkets. He wants to discuss this proposal, and the significant financial investment that would be required in new staff, equipment and marketing, at the next Board meeting. Darwish has told Johan that the Board does not need to discuss the risks relating to the proposed new business because the executive management team have already considered the risks and are happy that they can be managed.

Johan has also been discussing Etoks approach to corporate social responsibility (CSR) with Darwish, who explained that the company had made a number of charitable donations in recent years, that moving to non-plastic items in the restaurants would be more expensive and that he thought that rather than focusing on CSR issues the Board should instead focus on the companys profitability. Johan is not happy with Darwishs response and wants to discuss at the next Board meeting how the company should approach CSR issues.

REQUIRED:

Johan has asked the Company Secretary of Etok, Dini Irsyad, to prepare two briefing notes for him before the next Board meeting:

(a) Discussing the Boards role in relation to considering the risks of the proposed new business before it approves the proposal and explaining how the management team should have identified and assessed risks relating to the proposed new business.

(b) Analysing the advantages to Etok considering CSR issues as part of its business strategy, including the types of CSR issues that could be considered and how the Board could measure the success of any CSR initiatives.