COVENTRY AUTOMOBILE

Coventry Automobile

Coventry Automotive

Introduction

The company is facing issues with the chairman of the company, Sir Richard Lambton. Although, he has been performing well and has been doing well for the company, the non-executive directors are still dissatisfied with them and they want to change the chairman of the company. The problem that the members face is that they do not have a strong reason for changing the chairman of the company. They want to appoint John Lately, who advises the company on employment matters; however, this is difficult. The non-executive members do not have much power with which they can exercise and change the chairman of the company, until and unless they have strong grounds to do so. This paper will analyse this case with respect to the Cadbury Code, Higgs Code and the Company Act 2006.

Duty to promote the success of the company

According to the section 172 of the Company Act 2006, the directors of the company have to promote the success of the company. They should not take any decisions that is influenced by their own believes. The decision should be based on facts and should be able to work in a manner that will help the company to succeed and grow. In this case, it should first be ensured that the decision that the members want to take related to the change of the chairman of the company is not biased and is not based on the personal interests of the members.

Although, the members are free and independent to take any decision according to the section 172 of the Company Act 2006, but this does not give them the free hand to take any decision they want. They have to work in the best interest of the company and will have to ensure that the decision that they are taking are not in their own interest, but in the interest of the company.

Conflict of Interest

According to the Cadbury Code of the Corporate Governance, it is important for the non-executive members to work for the success of the company. The Chairman of the company should have only one position so that he is not biased and is not in conflict on interest. John Lately is the solicitor of the company; therefore, there is a chance that he might be in conflict of interest. It is better for the company that they give him only one position so that he works in a manner that is in the best interest of the company.

Also according to the Cadbury Code of the corporate governance the person cannot hold two positions in the company. This code is known as the financial aspects of the corporate governance. It oversees the financial aspects of the company. This is how it analyses the different types of issues of the company. Regarding this case i.e. the appointment of the new chairman by the non-executive directors, this code says that the non-executive members do not have much knowledge about what is going on ...