Mr. Bond is the CEO and board chairman of James Limited. He appoints and maintains a board of 6 executive and 2 non-executive directors, one of which is his cousin.

The board sets performance targets for the senior managers in the company but there are no formal targets for the directors and the company doesnt have a remuneration committee. Mr. Bond carries out a review of board policies annually in conjunction with the non-executive directors.

Salaries for the executive directors are set and paid by Mr. Bond based on his assessment of all the board members, including him. There is no formal measure of actual performance of individual directors.

Internal controls in the company are monitored by the senior accountant, although detailed review is assumed to be carried out by the external auditors; James Limited doesnt have an internal audit department. Annual financial statements are produced, providing detailed information on past performance.

Required:

a. Explain why James Limited doesnt meet international codes of corporate governance and how it may cause a problem for James Limited. (12 marks)

b. Recommend any changes necessary to implement those codes in the company. (13 marks)