Reference no: EM133370487

Mrs Kandololo the Chairperson of AFIN427 Investments Plc has been the chairperson for the past ten years. The Board had no sub-committees except for the Nomination Committee which comprised Mrs Kandololo and two other Executive Directors. Mrs Kandololo was also the Chief Executive Officer of the company.

Investments Plc, a company registered with PACRA in Zambia and also listed on the Lusaka Securities Exchange, has been involved in the provision of consultancy services to the Mining Sector for the past ten years. During the last Board meeting, the CEO and the Executive Management team presented a paper to the Board to expand the business into road construction. However, all the 7 Non-Executive Directors (NEDs) voted against the motion while all the 5 Executive Directors voted for the motion. The NEDs were against the proposal to expand the business as they considered it very risky and quite ambitious and the company had no prior experience in the road construction industry.

Following the rejection by the Board to expand the business, Mrs Kandololo wrote to the shareholders directly and called for an extraordinary general meeting (EGM) to discuss the motion to expand the business into road construction. The EGM, was held without any NED being present and the shareholders voted for the motion to expand the business and a second motion to remove all the NEDs from the Board. Mrs

Kandololo, then wrote a letter informing all the NEDs that their term of office as Board members of AFIN427 Investments Plc was terminated with immediate effect. The only board members remaining after this were the 5 Executive Directors comprising CEO, Director Finance, Director HR, Legal Counsel and the Director ICT who were written to by Mrs Kandololo and informed that their board membership had been renewed for another five years. The Director Finance was appointed by the Nominations committee to be the Vice Chairperson of the Board and the sitting allowances for the Board were increased by the Nomination Committee.

The Company's external auditors have been ABC Associates for the past eight years.

The auditors have been providing accounting and tax services to the company. Three years ago, the company set up an internal audit department that was approved by the 2|P a g e

Board and is headed by the Head Internal Audit who reports to the Director Finance. Every quarter, internal audit reports are submitted to the Board for consideration. However, reported weaknesses in internal controls have been acted upon by the management though not on a timely basis. Risk assessments are carried out annually.

1. By reference to the LUSE Code of Corporate Governance, critically assess the corporate governance arrangements at AFIN427 Investments Plc.

2. Explain the term 'board diversity' and the benefits of board diversity in the context of corporate governance.

3. Compare and contrast stewardship theory and stakeholder theories of corporate governance.