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Care International Hospital LTD

The document contains a student's answers to questions about the case study of Care International Hospital Ltd. It summarizes that: 1) Poor corporate governance under the dominance of the CEO/Chairman Dr. Aftab Ahmed has led to issues like lack of board oversight and independence that have contributed to the company's deteriorating performance. 2) Main problems include CEO-Chairman duality, a closed board with family/friends, unskilled board members, and financial control issues causing unrest. 3) Board committees exist but are ineffective due to dependence on the Chairman and lack of independent director functioning.

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HUSNAIN MURTAZA GHULAM
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72 views3 pages

Care International Hospital LTD

The document contains a student's answers to questions about the case study of Care International Hospital Ltd. It summarizes that: 1) Poor corporate governance under the dominance of the CEO/Chairman Dr. Aftab Ahmed has led to issues like lack of board oversight and independence that have contributed to the company's deteriorating performance. 2) Main problems include CEO-Chairman duality, a closed board with family/friends, unskilled board members, and financial control issues causing unrest. 3) Board committees exist but are ineffective due to dependence on the Chairman and lack of independent director functioning.

Uploaded by

HUSNAIN MURTAZA GHULAM
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ASSIGNMENT

NAME: WALEED ATIF IRSHAD

ROLL NO. SP20-BAF-014

Care International Hospital Ltd (CIH)

QUESTION 1 To what extent do you agree with the following statement, with reference to the case
study: "Poor corporate governance leads to poor performance in the long-run"?

ANSWER

-Dominance of a single individual i.e. Aftab Ahmed creates poor corporate governance compliance. This
means that the board and management are forced to obey the verdict of the CEO and Chairman, Dr.
Ahmed.

- Lack of board engagement and insufficient control function is one of the main reasons for poor
performance as it has caused extensive staff turnover.

- The initial performance of the company over the last two decades was quite good until the first three
years; the company's financial position deteriorates, leading to the long-term collapse of the
organization

QUESTION 2 List and briefly discuss the main problem the company is facing.

ANSWER

• The CEO-Chairman duality has created major problems as oversight of the CEO's functioning is
neglected. It also creates an obstacle for directors and committees to act independently and
conscientiously.

• Independence is overlooked in the sense that board and committee members consist of a closed
group of friends and family, which defeats the purpose of fair decision-making.

• Board members are unskilled and have significantly no operational expertise.

• Brother Dr. Aftab mishandles the financial control function, which has caused staff turnover and
general unrest among employees.
• The board meetings are conducted for the sake of formality of completing the procedures rather than
generating fruitful discussions.

QUESTION 3 What role was being played by the various board committees? How effective are these
committees? If they are not effective, where do you place the blame for their ineffectiveness?

ANSWER

Committees which were formed: - audit committee, HR committee and executive committee.

Despite being dependent on the decisions of the chairman, the executive committee has been given
ample scope of powers to approve routine operations, but evidently has not been doing so since recent
years.

> Two of the directors are totally absent and disregarded, and no notice has been taken so far.

> Lastly, none of the director’s act independently to fulfill their duties efficiently or with due care,
contrary to the aim of creating committees in the first place.

QUESTION 4 Do you agree with the observation made by GM finance that if the board committees
start functioning independently, things will improve a lot? How?

ANSWER

GM HR's perception is valid. The independent work of directors represents better compliance with
corporate governance and the code of conduct. This will also have an impact on the minority interest of
stakeholders where directors operate independently. Independent output by the board and committees
will ensure integrity, financial monitoring, compliance with corporate governance and better good
reputation of the organization.

QUESTION 5 How do you evaluate the role of ABC bank Ltd in the whole situation? Are they being
careful about their own investment or are they acting on behalf of all stakeholders?

ANSWER

The role of ABC Bank Ltd is crucial as they are the main lenders to the company. Their decision to win as
an external consultant of their own choosing was a rational one. According to the process of hiring an
external consultant in such a short period of time, following the current financial situation of the
company, she showed a certain degree of support towards the stakeholders and their own investment.
QUESTION 6 Do you think Prof. Bilgrami's report should be shared by ABC bank by other stakeholders?
Why?

ANSWER

Report prepared by prof. Bilgramim must be shared by all stakeholders and investors as it is a joint stock
company. This will provide stakeholders with an outline of the company's support for fairness, integrity
in operations and accountability to the interests of the stakeholder community.

QUESTION 7 Write professor Sardar Bilgrami's report for submission to CIH as well as ABC Bank Ltd, A.

The corporate governance report will include a statement of general procedures and compliance, board
composition, and financial statements of the company.

• In a statement on the disclosure of management and compliance procedures, Professor Bilgrami


details the abuse of power by Dr. Aftab, indicating the dual role of CEO and Chairman.

It is believed that the composition of the board is unfavorable. Despite the formation of committees and
the appointment of directors, technically none of them is acting as an independent executive director.

• Board performance monitoring feature is not beneficial as all directors and members follow the orders
of Dr. Aftaba, while having no opinion of their own.

• Additional disclosures will include risk management, the internal control function and compliance with
standards, the company's relationships with external and internal stakeholders, and the nature and
future prospects of the organization. The higher the level of compliance with corporate governance, the
greater the company's prospects for growth and sustainability.

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