Corporate Governance

Growth for YCP was brought about the company’s operational strategies. Among them is that the company introduced products that consumers were aware of in the relevant markets. To top up to this advantage, the company offered lower rates compared to the competitors. Most competitors would not adjust to these rates since it would alter their operating plans and strategies completely. Lower rates worked as a form of social responsibility to consumers hence loyalty was built.

Corporate governance in YCP was not effective. This is because the relationship between the board, management and shareholders was not properly defined. The board took in all the information that was presented by the management without questioning anything. They had the responsibility of representing the shareholders and their interests. Corporate governance failed since these bodies did not execute their respective duties as expected.

Based on this case, both large and small shareholders would not have significant contribution in the governance. Kong and Watson had more than 50% of the company’s shares. To this effect, they seem to have had common interests. Going with the voting rights that come along with majority shareholding, they would manipulate anything to suit their interests during the AGMs.

On the face of it, the structure of the board looked perfect before the company went public. All stakeholders had their representatives including the small shareholders. However, the true nature of the board reflected that the structure was unstable. This is because the top shareholders in the company were at the helm of all the activities of the board. As a result, conflict of interest might arise anytime there is a dilemma.

Among the information that the board would have had is the actual projections of the project backed with significant facts. Sources to fund these projects ought to have been outlined clearly too. The actual reserves would have been tabled since they would act as a backup if things did not go as planned. Depending merely on Kong’s word was a great mistake.


Tricker, R. I. (2012). Corporate governance: principles, policies and practices (2nd ed.). Oxford: Oxford University Press.

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