The summary reviews the board structure, processes and effectiveness of Guardian Holdings Limited (GHL). Key points include: 1. The board structure follows a UK model but the audit committee is in violation of OECD principles by having the chairman sit on it, creating a conflict of interest. 2. Board processes are affected by issues of director independence as the chairman's shareholding has increased, breaching the company's constitution. 3. An evaluation of board effectiveness gave a rating of 7.75/10 but identified the audit committee issue and constitution breach as significantly impacting shareholder confidence. Recommendations include scheduling an emergency board meeting to address removing the chairman from the audit committee and the constitution breach,

1. Cooperate Governance
Review for Guardian
Holdings Limited
Author : Mahlon Hinds
BSc. Computer Science, MBA (Fin)

2. Table of Contents
EXECUTIVE SUMMARY ............................................................................................................... 6
INTRODUCTION ............................................................................................................................ 7
REVIEW OF Guardian Holdings Limited BOARD…………………..……..…………………..….8-10
A. Board Structure ……..………………………………….……………………..…………………8
B. Board Processes………………………………………………………………….………………..9
C. Board Effectiveness…………………………….………………………………………………..10
CONCLUSIONS…………………………………………..……………………………………………..11
RECOMMENDATIONS………………………………………………………………………………...12
REFERENCES………………………………………….……………………………………...….……..13
APPENDICES……………………………………………..……………………………………..….14&15

3. EXECUTIVE SUMMARY
Dear Chairman,
Good cooperate governance ensures astute risk management, transparency and accountability
which inevitability optimizes company performance whilst creating value for its shareholders or
owners.(Principles of Good Corporate Governance, www.shareholder.com) A board of directors
with good structure, process and leadership from the chairman, will be effective resulting in the
aforementioned ideals.
A review of Guardian Holdings Ltd (GHL) board revealed a Contravention of generally accepted
OECD principles, a breach of the company’s constitution and the overall confidence among
investors may be affected.
I have recommended an emergency director meeting and have stipulated what immediate matters
must be placed on the agenda. The pivotal role of the company Secretary, how corporate image
can be restored and the required director training and development needed were all outlined in
my recommendation.

4. INTRODUCTION
This report reviews the board of Guardian Holdings Limited (GHL) structure, processes and
overall effectiveness. The three major areas of concern are Contravention of generally accepted
OECD principles, Breach of the company’s constitution and Overall confidence among investors
may be affected. The impact of these issues was explored and recommendations were made
because if these issues are not dealt with it can affect the well being of the organization.
Company Background:
Guardian Holdings Ltd (GHL) is the parent company for an integrated financial services group
with a focus on life, health, property and casualty insurance, pensions and asset management.
The company has continued its growth path showing real strength, dependability and endurance
with net profit of 425M and a 29% increase in shareholder earnings. However, during 2010
Guardian (GHL) experienced a significant change in its ownership structure with the acquisition
of 13% ownership going to The International Finance Corporation (IFC). Now more than ever
the company’s leadership comes under the microscopic view of shareholders.

5. REVIEW OF Guardian Holdings Limited BOARD
A. Board Structure
Guardian Holdings Limited board is made up of eight (8) non-executive directors and two (2)
executive directors, ten in total (see appendix 1). This tends to follow the UK model which is
known for a board size of 8-12 directors, very high chairman/CEO separation and a high
number of outside directors. (Tricker 2009 pg 68)
The board committees that currently existing are: an audit committee, a nominating
committee, a remuneration committee and a corporate governance committee. The first three
are recommended codes of good practice; however GHL must be careful of duplicating effort
with its nominating and corporate governance committees. (Tricker 2009 pg 72)
A further examination of the membership of these committees revealed the audit committee
is in violation of OECD. The OECD principles of corporate governance speaks about
‘transparency and accurate disclosure made on all matters’, having the chairman of the board
sitting on the audit committee even if he/she is an independent director (which is not the
case) creates a definite conflict of interest and therefore is a violation of the OECD. Also, this
matter contravenes the standards for boards and their audit committees stipulated in the
Sarbanes-Oxley Act. (Tricker 2009 pg 157-160) See appendix 2.
B. Board Process
Board process is defined as how directors make decisions and the behavior of the individual
directors themselves. (‘The Coming Revolution in Corporate Governance’ Ivey Business
Journal 2001.) In view of these established parameters I have identified director competence
and director independence as key factors affecting the board process. These are discussed
below.
B1.1 Director Competence
In reviewing the profiles of the directors of Guardian Holdings Limited (GHL) I found them
all to be well reputable. Their knowledge, skills and experience provide necessary

6. competencies to provide clear vision and astute direction for the company. This is consistent
with Commonwealth Association for Corporate Governance (CACG) which subscribes to
board appointments that provide the right mix of proficient directors, each of whom is able to
add value to the company’s strategic direction. Also as the Cadbury Report put it, the board
should include directors of sufficient caliber and number for their views to carry significant
weight in the board strategic decisions. (Tricker 2009 pg 160,169) However as palatable as
this may sound, it was noted that more could be done to develop director’s competencies in a
global context. This has become very critical since the company’s ownership structure have
changed with 13% ownership going to the international financial conglomerate IFC.
B1.2 Director Independence
The Cadbury Report suggested that non executive directors should bring an independent
judgment to bear on issues of strategy, performance, resources, key appointments and
standards of conduct, thereby providing independent judgment. They must provide an
independent voice playing the role of a watchdog protecting the interest of all stakeholders.
(Tricker 2009 pg 271)
There is a burning issue that is affecting the independent perception stakeholders will want to
have of their directorship. In 2008 the company’s constitution was amended to increase the
maximum shareholding for an individual standing director from 4% to 6%. The chairman’s
shareholding for that period was just over 4%. Now, in the 2010 financial report the
chairman shareholding is now at 6.29% with beneficial interest in the largest substantial
shareholder Tenetic Limited. (See appendix 3) Would the directors of Guardian Holdings
Limited move to amend the company’s constitution again? Are the directors going to break
their silence on this issue? Would the chairman make the necessary adjustments and show
real stewardship? (Tricker 2009 pg 224) The answers to these questions can regain or further
decrease stakeholders’ perception of an independent directorate and will inevitably affect
shareholders confidence.

7. C. Board Effectiveness
Board effectiveness is not only determined by board structure but it also depends on how
directors make decisions and the independence of individual directors themselves. i.e. (Board
Process) (improving‐board‐effectiveness, www.icsa.org.uk). Therefore, in measuring the
effectiveness of Guardian Holdings Limited (GHL) I have created a checklist of key
characteristics of GHL board structure and board process. Each item on the checklist was
then rated on a scale of 1-10 and the total score given. (Mapping Your Board's Effectiveness,
Harvard business school, http://hbswk.hbs.edu) See Table 1.1.
CHARACTERISTICS
RATING
Appropriateness of Corporate Governance model : board size, board
structure, chairman/CEO separation and director type i.e.(executive, non- 10
executive, independent)
Management of board committees: committee type, committee structure,
committee effectiveness.
5
Note# A low rating because of the chairman sitting on the audit committee.
Competency of board members: Knowledge, Skills and Experience.
9
#Note competencies within a global context are now needed to provide
continued visionary leadership.
Perceived Independence of board members: Judgment on issues of strategy, 7
performance, resources, key appointments and standards of conduct.
# Note rating is still high baring the serious issue of breach of standards of
conduct. i.e.( Violation of GHL company’s constitution by the chairman)
Total
31
Average
7.75
Table 1.1
An average rating of 7.75 out of 10 shows that the GHL board is still effective. However the
audit committee issue and the constitution breach is greatly affecting its effectiveness rating.

8. CONCLUDIONS
Guardian Holdings Limited (GHL) has been the recipient of many awards regionally even
labeled by the World Financial Magazine ‘company of the decade’, only possible through
visionary leadership from its board of directors. A review of its board however, has revealed a
definite conflict of interest with its chairman sitting on the audit committee. This is not only a
clear breach of governance principles but is potentially disastrous because the audit committee is
to act as a bridge between the independent external auditors and the board avoiding the
possibility of powerful directors being too close to their auditors and resolving issues before they
reach the board. (Tricker 2009 pg 282-284)
Also the breach of the company constitution by GHL chairman has cast aspersions as to whether
the company directorship is independent. Lord Cairns an agency theorists said in London High
Court in 1874 ‘no man, acting as agent, can be allowed to put himself into a position in which his
interest and his duty will be in conflict’. This is an opportunity for the chairman to prove wrong,
stewardship theorist who argue that, this is what most directors actually do. (Tricker 2009 pg 223
& 224)
The effectiveness rating for GHL although being relatively high clearly revealed the great impact
the aforementioned issues is having on shareholder confidence. This will indeed affect the
company image and inevitably its profits. Mr. Chairman you and the board of directors must act
immediately so that Guardian Holdings Limited (GHL) can continue to show Leadership,
Strength and Endurance.

9. RECOMMENDATIONS
The recommendations below are placed in an order of priority.
1. An emergency director meeting must be scheduled by the chairman in which he should
place the following on the agenda:

Removal of the chairman from the audit committee

Breach of the company constitution. Outline what is the breach, how it occurred
and possible solutions.
2. As The UK Combined Code outlines, the Company Secretary must play a more active
role in ensuring compliance with company’s legislation, corporate governance codes and
advising on and guiding board and board committee procedures. (Tricker 2009 pg 292294)
3. A committee must be set up to draft an action plan to improve GHL damaged corporate
image. They must be given a set time frame to report to the board.
4. Attention must be given to director training and development ensuring their competencies
is fine-tuned in globalized context.

10. REFERENCES
1. Corporate Governance principles, policies, and practices Bob Tricker 2009 : pg 68, pg
72, pg 157-160, pg 160,169, pg 271, pg 224, pg 224, pg 282-284, pg 223 & 224, pg 292294,pg 7-12, pg 25-38, pg 57-65, pg 90-96, pg 120-139.
2. Principles of Good Corporate Governance, www.shareholder.com [accessed March 08
2012]
3. ‘The Coming Revolution in Corporate Governance’, Ivey Business Journal 2001.
4. Improving‐board‐effectiveness, www.icsa.org.uk [accessed March 08 2012]
5. Mapping Your Board's Effectiveness, Harvard business school, http://hbswk.hbs.edu
[accessed March 08 2012]
6. Guardian Holdings Limited, http://www.guardianholdings.com [accessed March 10
2012]
7. How to Review Your Association's Governance System, http://www.asaecenter.org
[accessed March 08 2012]
8. Board&OrganizationalGovernance,http://iog.ca/en/knowledge-areas/boardorganizational-governance [accessed March 12 2012]
9. Corporate Governance, http://www.ibisassoc.co.uk [accessed March 08 2012]
10. Corporate
Governance:
Its
scope,
concerns
&
theories,
http://cog.kent.edu/lib/turnbull4.html [accessed March 08 2012]
11. Effective governance for complex organizations, http://www.changeboard.com [accessed
March 08 2012]
12. Board Process - Corporate Governance, http://www.gsk.com [March 12 2012]
13. Board Effectiveness, http://www.npccny.org/info/goi51.htm [March 08 2012]
14. CharacteristicsofEffectiveBoards,http://www.trusteemag.com/trusteemag_app/jsp/article
display.jsp?dcrpath=TRUSTEEMAG/PubsNewsArticleGen/data/2006March/0603TRU_
FEA_Characteristics&domain=TRUSTEEMAG [March 12 2012]
15. BoardEffectivenessEvaluations|TheParagonGroup,http://www.theparagongroup.com/volu
nteer-development [March 10 2012]

11. APPENDECIES
APPENDIX 1
Directors’ as at December 31, 2010
Name
Position
Mr. Arthur Lok Jack
Director/Chairman
Mr. Peter Ganteaume
Director
Mr. Jeffrey Mack
Director/Senior Manager
Mr. Imtiaz Ahamad
Director
Mr. Douglas Camacho
Director/Senior Manager
Mr. David Davies
Director
Mr. Philip Hamel-Smith
Director
Mr. Antony Lancaster
Director
Dr. Aleem Mohammed
Director
Mr. Selby Wilson
Director
APPENDIX 2

12. APPENDIX 3