TFS Corporation (ASX Code TFS), renamed Quintis (ASX Code QIN) on March 22 2017, was Australia's largest grower, plantation manager and producer of Indian Sandalwood. On the 27 Febuary 2017 TFS announced half year results to the market and in a media release titles "ExponentialGrowth in Indian Sandalwood Sales Driving Transformational Year". The media release presented half year revenue of $152.6 million, half year net profit after tax of $28.3 million and a strong cash balance at 31/12/2016 of $89.8 million. The media release made many positive predictions about the future growth potential and the share market valued the company at over $600 million. On March 22 2017 the rebranding of Quintis was celebrated in Melbourne during the time of the Grand Prix at a gala event hosted by Adam Gilchrist and Daniel Ricardo. The celebration had however been soured by the release that week of a report by the US based short selling firm Glaucus (https://glaucusresearch.com). The report questioned the value of TFS(Quintis) and pointed to a failure in corporate governance. The share price collapsed and in May 2017 the company was suspended from trading on the ASX. In January 2018 Quintis entered bankruptcy. In October 2018 Quintis emerged from administration as a private company after a $145 million cash injection from investment giant BlackRock. The cash injection gave Blackrock majority ownership of the new private company. (https://www.abc.net.au/news/rural/2018-10-31/quintis-recapitalises-with-$145-million-from-blackrock/10447738). All public shareholders of Quintus lost 100% of the value of their investment, which only 18 months earlier had been valued by the market at over $600 million.

(i) The corporate governance disclosures at TFS (Quintis) from 2015 to 2017 reveal that the company adhered to most of the ASX principles of corporate governance. Yet the spectacular demise of TFS (Quintis) suggest that corporate governance failed. Discuss whether compliance with the ASX principles ensures a company is well governed.

(ii) Discuss how failure of the board of directors (principles 1 & 2) and failure of the ethical culture (principle 3) at TFS (Quintis) contributed to the demise of the company. Students should review the corporate governance disclosures at TFS (Quintis).from 2015 to 2017.

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