Bluebird Enterprises Co (Bluebird) is a retail company planning to list on a stock exchange within the next six months,
and management has been advised by the company’s auditors about the need for compliance with corporate
governance provisions. In particular, the finance director is looking to recruit non-executive directors as he understands
that Bluebird will need to establish an audit committee.
The finance director has two potential non-executive directors whom he is considering approaching to join the board
of Bluebird. Antony Goldfinch is currently an executive sales director of a listed multi-national banking company; he
sits on an audit committee of another company as a non-executive director and is agreeable to being paid a fixed fee
which is not related to profits. Jacob Mallard is currently a finance director of a small retail company, which does not
compete with Bluebird; he has expressed an interest in a fixed seven year contract and he is the brother of Bluebird’s
(a) Explain the benefits to Bluebird Enterprises Co of establishing an audit committee. (4 marks)
(b) Discuss the advantages and disadvantages of appointing:
(i) Anthony Goldfinch; and
(ii) Jacob Mallard
as non-executive directors of Bluebird Enterprises Co.
Note: The total marks will be split equally between each part. (6 marks)
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