Individual Assessment Study blockStudy Block 1 (January 2018)Date issued28/11/2017Due date09/3/2018Time29th/Jan/2019Delivery:Email/ submit to Turnitin via Moodle before deadlineWeighting50%Marks out of50InstructionsComplete this cover sheet and attach to you your assignment. This assignment must be your own work. Collusion, copying or plagiarism may result in disciplinary action. We advise that you keep a copy of this assignment. Refer to Course Outline for specific instructions Refer to following website for reference related resources: http://www.cite.auckland.ac.nz/index.php?p=quickciteStudent NameYue QiuStudent ID No1000035873Cohort numberCohort 1LecturerDr. Dennis GriffinClass time8:30 MondayStudent declaration:I confirm that: This is an original assessment and is entirely my own work. Where ideas, tables, diagrams etc. of other writers have been used, I have acknowledged the source in every case. This assignment has not been, nor will be, submitted as assessed work for any other academic course.Signature of student: Date26 th /Jan/2019 1. Introduction This report discusses corporate governance and leadership through case studies. Three New Zealand companies were selected as examples of case studies, namely Fonterra, Synlait Milk, and Ngai Tahu Holdings Limited. Founded in October 2001, Fonterra is now among the world’s largest dairy exporters and processors, providing high-quality dairy products(Fonterra, 2019). Synlait Milk is one of New Zealand’s five largest independent milk processors, mainly engaged in the production and processing of milk powder (Synlait, 2019). NgaiTahu Holdings Limited is an investment company with a focus on seafood, tourism, capital, farming and property. These three companies have completely different ownership structures, and Ngai Tahu Holdings Limited’s owner is Maori (NgaiTahu, 2019). This report analyzes them from the following aspects. The first is the ownership structure, followed by governance and leadership models, the boards’ legal and social responsibilities to legislation and compliance, Treaty of Waitangi, ethical lessons/corporate social responsibility, ecological sustainability, and financial sustainability. Finally, this report makes corresponding recommendations. 2. Ownership Structure Fonterra uses a cooperative model and its shareholders are very fragmented. The considerable number of shareholders are with only a small number of shares (Carroll&Buchholtz, 2012). At heart of Fonterra is an exclusive co-operative structure, in which all shareholders are required to be farmer. The company is partly listed on NZX. As per this, the public depositors may purchase only financial rights related to the financial performance of company by the stakeholder’s fund of Fonterra(Wilson, 2017).Fonterra is owned by approximately ten thousand five hundred New Zealand dairy farmers and the shareholding ratio of each dairy farmer’s shareholder is less than one per cent (Farrar, 2001).In this way, the farmers have hundred per cent control and ownership over the company. In the case, where any other person or company wants to purchase the milk, then it is only possible after the negotiation with company, not with farmers. It decreases the negotiating powers of the purchaser and increases the control of company over the supply and price of dairy products internationally. The structure also permits for the company to attain operational scale, owning over fifteen billion dollar of the assets and certain biggest dairy plants of the world(Barry, Lepetit&Tarazi, 2011).Since the individual farmer is a shareholder of Fonterra and there is the perfect quality traceability mechanism, it ensures that the fundamental interests of the individual farmer and company are consistent(Painter, 2010). In addition, Fonterra faces the challenge of finding suitable and/or innovative structures to capture external capital (Hanson, Dowling, Hitt, Ireland &Hoskisson, 2014). However, ownership structure of SynlaitMilkis different that of Fonterra, which is sole proprietorship. In year 2018, Synlait Milk’s top three shareholders were Bright Dairy, A2 Milk Company and Mitsui & Co. Ltd., with the share percentage of 39.04%, 9.11%, and 8.38%, respectively. It has a unique owner, Bright Dairy. Bright Dairy became the owner of Synlait Milk on October 26, 2010 with a 51% stake inSynlait Milk Limited (Synlait,2019). Bright Dairy had made payment of eighty two million dollars for having the fifty one per cent stakes in the marketing and processing assets of private Canterbury processor that means top three biggest dairy entities of the nation, will be majorly and expressively foreign owned. These three domestically-owned co-operatives are Tatua, Fonterra and Westland Milk. It is different from the cooperative model of Fonterra that shows the interests of various shareholders, Synlait Milk is only for the interest of Bright Dairy. As according this, by considering the interest of farmers, the government of New Zealand required that the shares of Synlait Milk acquired by Bright Dairy did not include the farmland assets (Pooch, 2008). The investment of Bright Dairy is very beneficial for Synlait Ltd and country. The company will increase the manufacturing of great description baby formula powder and use of selling specialty of Bright Dairy to sell at great level in China.Because Bright Dairy is third biggest dairy entity by volume. It has two hundred ten farms in China. Synlait takes approximately twenty per cent of the milk from Fonterra, the regulatory requirement of Dairy Industry Restructuring Act, and new ranchers had already come up to this entity that must decrease the dependence on Fonterra milk to approximately ten per cent while the new drier was constructed. In fact, the New Zealand government is more supportive of overseas investments that do not harm their basic interests. Although, the acquisition is only the factory, the farm is 100% owned by the previous shareholder of Synlait Milk (Lee, 2004), so the milk source of the farm will still be 100% supplied to SynlaitMilk. Ngai Tahu yearly gives contribution in excess of two hundred million dollars to an economy of South Island. Ngai Tahu has involved in present day trading activities since year 1950, while the Ngai Tahu Maori Trust Board had per annum income of approximately twenty thousand dollar to put to asset and distribution by the iwi. Ngai Tahu used the earning to invest again and raise the base of assets. From the starting, the financial policy of Ngai Tahu included reinvesting unevenly two third of earning and upholding the firmly made focus on distribution policy to render help to tribal members with the help ofscholarship and educational grant. Ownership structure of NgaiTahu Holdings Limited is unlike the above two companies, and it is controlled and operated by the NgaiTahu Charitable Trust. According to the characteristics of the trust, NgaiTahu Charitable Trust can invest in both the capital market and the industrial sector, while Synlait Milk and Fonterra may face difficulties in doing the same thing because of industry restrictions. In order to maximize the return of investors, NgaiTahu Holdings Limited achieves the diversification of investment fields so that it can, to a certain extent, effectively reduce investment risks (NgaiTahu, 2019). However, some rules of trust may block the way out of the beneficiary dispute (Cant, 2010). When the beneficiaries have an equity dispute, Synlait Milk and Fonterra can solve it through transfer of equity (Ugwu, Onyishi&Rodríguezsánchez, 2014), but for NgaiTahu Holdings Limited, the regulations of trust often prohibit the transfer of equity, blocking the solution of the dispute (Ngo, 2004). In October 2001, it is stated that the stake of Ngai Tahu in Ryman had reduced to twenty per cent. Further, in June 2003, the stake of Ngai Tahu was weakened down to sixteen per cent on the issuance of new stakes. In year 2007, NgaiTahu traded six per cent of the stakes of Ryman to international asset firm, Babcock & Brown, for two dollar per stake, receiving the residual shareholding down to 6.5 per cent. Furthermore, in year 2008, shareholding of the company had increased to eight per cent. It was also stated in October 2013, that Ngai Tahu had the six per cent shareholding. As per the Companies Office Ngai Tahu Capital openly have 4.84 per cent of Ryman Healthcare on or after year 2016. 3. Governance and leadership models Corporate governance, which Fonterra defines as the “operation between shareholders, directors and management of the company, as set out in the constitution, formal policies of the company and the general law”, takes pride of place, organizationally speaking. Fonterra is devoted to the high norms of leadership and corporate governance. The high standard of leadership is central to the governance of company. The company focuses on the manner which motivates the stakeholder’s interest, great balance between role of management and BOD, communication between significant shareholders and proper risk management to achieve the determined goals. Fonterra renders the working atmosphere to reward and support the people in fair way. Fonterra also develops the governance development programs to provide assistance to the stakeholders of company. Fonterra’s governance and leadership model is the UK/Commonwealth model (Tricker, 2015). Fonterra currently has 13 directors, 9 of whom are elected by dairy farmers and 4 by existing directors and approved by dairy farmers. In the proposed framework, there will be six directors elected by the dairy farmers to ensure that the dairy farmers have control over the board and that there will be five independent directors. According to the regulations of the Fonterra Group, the appointment or resignation of all personnel of the board of directors is decided by the dairy farmers’ share by postal ballot. The shareholder committee has the right to participate in day-to-day business management matters, such as negotiating with the board of directors on important operational decisions like dairy product sales pricing. In such thegovernance and leadership model, Fonterra Group’s shareholding structure and the characteristics of its group decision-making process decide the position of no realregulator. Consequently, the cost of applying governance rights is very high. So, the only factor of meeting of shareholders of company cannot be effective for perpetual set up of the company (Grant, Butler, Orr&Murray, 2014). Synlait Milk’s governance and leadership model is also the UK/Commonwealth model, but the way of management is totally different from Fonterra. Synlait Milk’s Board has eight members, including one member appointed by the board, three independent directors such as the Chairman and four members appointed by Bright Dairy. The corporate governance structure of company considers the best practices for public listed corporations in New Zealand, and the guiding principles issued by New Zealand stock exchange and Australian Stock Exchange. The board of company is liable for determining the planned aims of Synlait Ltd and the policy structure in which businesses are executed. The company’s board is also liable for reviewing the company’s performance and the improvement of the value of shareholders. The board of company has made two standing committees, which is governed by Charters. The board structure is as follows- Graeme Milne – Chairman, Independent Director John Penno – Board Appointed Director Bill Roest – Chair of the Audit and Risk Committee, Independent Director Sam Knowles – Independent Director Hon Ruth Richardson – Chair of the Remuneration and Governance Committee, Bright Dairy Appointed New Zealand Director Min Ben – Bright Dairy Appointed Director Qikai Lu – Bright Dairy Appointed Director Sihang Yang – Bright Dairy Appointed Director (Investor Centre, 2019) In the case, where is a major adverse company event, Bright Dairy will correct it by exercising voting rights on the board of directors (Healy, 2003). The relatively concentrated power of Synlait Milk helps it to promote the convergence of the company’s senior management and shareholders, especially the controlling shareholder, and the agency costs are thus controlled. However, the high concentration of power will lead to the excessive participation of the controlling shareholder in the company, which will lead to more serious interest encroachment (The Times 100 Business Cases, 2011). Consequently, Bright Dairy has 51% shares in Synlait milk ltd. It has highly concentrated power. It can influence the independence of the independent directors, administrators and mediators (Tricker, 2015). Unlike the two companies above, NgaiTahu Holdings Limited governance and leadership model is similar to the continental European two-tier model. Ngai Tahu Holdings Limited aims to motivate the females to join committee and company’s board. It renders the governance advices, devices and data taken from the proficiency of Women’s Affairs Ministry and skilled female directors.As per the overview of company’s board, it is believed that diverse board will be best board. The company tries to make sure the pool of probable directors states the make-up of communities (NgāiTahu, 2019). The board should ensure the transparency. It is believed by the board that it is in the best interest of company to encourage the role of governanceto make the group of directors. The board is responsible to help the nation succeed by strong business.Board of Directors is made up of the 18 members PapatipuRunanga. The Ngai Tahu Holdings Limited Board of Directors represents and benefits Ngai TahuWhanui and PapatipuRūnanga. At the same time, it deals with international tribal policies and issues, while PapatipuRunanga manages issues requiring broader or local consultation. 4. The boards’ legal and social responsibilities 4.1 Board of directors – In Fonterra, There are eleven members in BOD. Seven members are selected from the base of stakeholders and rests are selected by the company’s board. Further, they are approved by the shareholders at the Annual General Meeting. The BOD plays an important role in the company. These directors are required to make sure that company’s board has proper skills competencies to run the company in effective manner. The directors have relationship of supplier with the company. To achieve the goals of company, they fulfill the requirements of NZX for the independence. It is required by the directors to maintain this independence for their term(Spiller, et.a l, 2011). The BOD of Synlait Milk includes eight members (Synlait, 2018). The BOD of company is devoted in developing the top class business of nutrition in the world. The members of Board play a significant role in increasing the value of shareholder. The directors are devoted to achieve the targets of company. There are six members in the BOD of Ngai Tahu. The board of directors of the company has major role in achieving the success. The members of board are responsible for the strategic decisions and operational performance. They have mission to make the company top leading company(McBeth, 2018, 09 19). 4. 2 Legal responsibilities of members of Board – The members of BOD of Fonterra are required to conform to legal requirements for the disclosure of interest and in house securities code of conduct of company that administers the administration and directors in dealing personally with Fonterra securities and related corporations. There legal responsibilities cover the overseeing Fonterra, good control and liability to conform to compliance process (NZX, 2017). The Board of Synlait Milk has various legal responsibilities to perform. The chairman of company has various governance roles in the scope of company. The board members are responsible to review various important accounting issues and reporting issues such as unusual transaction. They are also required to review the external auditors and the administration of the company. The board of directors of company is required to ensure the legal compliances. They also review the financial statements of company as per legal requirements (Orange, 2015). The legal responsibilities of members of board of Ngai Tahu involve acting on behalf of, and being responsible to, the Shareholding Ministers, completion of regulatory expectation under the Companies Act 1993, the Animal Products Act 1999, TeRunanga o NgaiTahu Act 1996 and helping to develop the strategic policies (NZX, 2018). 4.3 Code of ethics of company- Fonterra is devoted to high standard of management and corporate governance of the company. It is required by the company to become the most trusted supplier of the dairy products. The company is required to get the faith of workers of the company, shareholders including farmers and customers. It is possible only in case of right doings on daily basis(McBeth, 2018, 09 19). The code of conduct of Synlait Milk has stated the ethical standards and professional standards, which are required to expect by the employees of the company at workplace. The code of ethics of company help the workers to understand the procedure of carrying out the obligations in ethical manner and legally (Miceli, Near & Dworkin, 2013). Further, the Code of ethics of company renders the guidance on the norms of behavior or conduct. It ensures the credibility and accountability of TeRūnanga within NgāiTahu Whānui. The company is devoted to maintain the high degree of personal integrity and moral conduct in all the activities(Hanson, et. al, 2014). 4.4 Legislation and compliance In 2001, New Zealand enacted the Dairy Industry Adjustment Act2001, one purpose of which was to provide a credit union of a wholly-owned subsidiary of the New Zealand Dairy Board to convert it into a company. Fonterra was formed under the influence of this law. The Dairy Industry Adjustment Act 2001 assists and governs shareholders (farmers) of the company (Carroll & Buchholtz, 2012).In addition, Fonterra is required to comply with the Consumer Protection Act 1993, the Fair Trade Act 1986, the Resource Conservation Act 1991, the Commercial Law 1986, and the Animal Products Act 1999 (Cao, Maurer, Scrimgeour &Dake, 2003).The Dairy Industry Restructuring Act 2001 permitted the Fonterra group’s formation. The Dairy Industry Restructuring Act 2001 has regulations to motivate the well-organized functions of dairy marketplaces in New Zealand by administrating and governing the Fonterra’s activity to make sure dairy goods and services marketplaces are contestable (Grant, et. al, 2014). The committee recommended that they and the Financial Markets Authority (FMA) be the best candidates for the mandatory Fonterra implementation of the Inter-Doam Exchange Program (TAF) in the Act (Financial Markets Authority, 2014). Fonterra has conceded that there are “management problems with its Chinese joint venture partner, Salu that is involved in the danger milk powder disgrace.This shows that Fonterra violated the Fair Trade Act 1986. The Fair Trade Act 1986 promotes the dairy goods safety and consumer protection (Farrar, 2001). Synlait Milk stated that in the harvest of raw milk, dairy farmers, dairy farm managers and operators operate under Risk Management Programs. In addition, Synlait Milk strives to meet some general requirements such as Good Operating Practice, Hazard Analysis Critical Control Point and more. From Synlait Milk’s announcement and media reports, there were no quality problems with Synlait Milk and no violations of FMA principles or other laws, indicating that it is performing well and has been complying with relevant laws and regulations (Financial Markets Authority, 2014).The waiver from rule 3.3.8 (a) given in para 15 is subject to governance condition. To grant the waiver, NZXR considered that complete and correct disclosure of Governance Arrangements of Synlait Milk and impact of waiver provided should be stated in offer document to aware the shareholders about non-standard government. NZXR also considered that disclosure of governance arrangement’s material aspects should be given in annual report. These governance arrangements should be adopted by the shareholders by accepting the constitution before to IPO. Beside this, the Companies Act 1993 governs the board of the company(Healy, 2003). As a listed company, NgaiTahu Holdings Limited, like Fonterra and Synlait Milk, must comply with the Company Act 1993, FMA principles, and so on. At the same time, NgaiTahu Farming is also subject to the Animal Products Act 1999. However, as a Maori company, NgaiTahu Holdings Limited must also comply with the TeRunanga o NgaiTahu Act 1996, while Fonterra and Synlait Milk are not subject to this law (NgaiTahu, 2019). By reviewing the FMA website announcements and online news, no report are found that NgaiTahu Holdings Limited was illegal (Cant, 2010).Moreover, the section 42 of Maori Trust Boards Act 1955 states that it shall be the responsibility of each adult person who is a member of Ngai TahuWhanui to ensure that his or her name is included in the roll. Te Runanga o Ngai Tahu Act 1996 binds the executives and every individual including board and company, whose right are influenced by the provisions of TeRunanga o Ngai Tahu Act 1996. Te Runanga has a responsibility to ensure the statutory relationship. NgaiTahu Holdings Limited welcomes new health and security legislation.Hence, the company fulfils the responsibilities in complying with the laws (Governance New Zealand) . 4.5 Treaty of Waitangi Fonterra complies with the Treaty of Waitangi (Jacobs, 2000). In 2017, Fonterra announced the appointment of TiakiHunia as general manager of Maori Strategy. As Pouhere Maori, Tiaki will play an important role in continuing to advance Fonterra’s Maori strategic commitment and strengthen Fonterra’s dual cultural capabilities (Hill, 2010; Stqokes, 1992). He will be responsible for the entire enterprise, thus leading, establishing and implementing Fonterra’s vision of building strong partnerships with Maori to jointly develop a sustainable, healthy and prosperous community (S. Linck, Netter, &TinaYang. 2008). Fonterra provides an extensive network, valuable experience and expertise for the entire Maori and major Maori industries, which means that Fonterra takes social responsibility regarding the Treaty of Waitangi.The treaty principles defines the partnership, participation and protection. The principles states the work together with iwi, whanu, hapu and Maori groups to make sure Maori person and their powers are secured and admired.The participation involves the Maori communities in design, administration, governance and application and assessment of the research including Maori people.Further, the protection includes security of board, Maori communities and their rights. The boardensures the compliance with laws by the treaty of Waitangi. However, Synlait Milk’s annual reports and announcements did not cover content related to Māori, but through searching for news by Google, there was information about Synlait Milk’s cooperation with the Maori factory Miraka Ltd (Stuff, 2010). This is a Maori-owned company and it had built milk processing lines for Synlait Milk at Dunsandel in the South Island. This shows that Synlait Milk does not have a special strategy related to the Treaty of Waitangi, but it does not exclude Maori as a partner.However, Synlait Milk makes focus on becoming the supplier of choice to certain leading milkbased health and sustenance corporations.Therefore, it can be seen that Fonterra is doing better than Synlait Milk in terms of taking social responsibility regarding the Treaty of Waitangi. NgaiTahu Holdings Limited, as a Maori company, is itself protected by the Treaty of Waitangi (Spiller, Pio, Erakovic&Henare, 2011).Now, NgaiTahu Holdings Limited takes socially responsible for NgaiTahu. Foran example, its subsidiaries NgaiTahu Seafood, NgaiTahu Tourism, NgaiTahu Capital, NgaiTahu Farming and NgaiTahu Property were established for the benefit of Maori (Katene, 2010). As the largest Maori listed company in New Zealand, NgaiTahu has made an important contribution to the maintenance and guarantee of the interests of NgaiTahu under the Treaty of Waitangi (Wyeth, Derrett, Hokowhitu, Hall, &Langley, 2010). Both Green Party as well as Maori party criticize the Treaty settlement by stating that the executives have so much powers in the negotiation that settlements conveyed at Kiwi stage avoid hapu’s powers and that settlement reimbursement is too ungenerous. In this way, Ngai Tahu Holdings Limited is very responsible to fulfill the legal and social responsibility in respect of the Treaty of Waitangi. 4.6 Corporate social responsibility Fonterra has always adhered to the corporate social responsibility and actively committed to the public welfare. Fonterra was named one of New Zealand third worst dumpers. For an example, It is the five million dollars a year job, which no one desires.For example, “Fonterra Scholarship” attracts more young people to join the animal husbandry and food industry through the cooperation with key agricultural institutions, thus helping personnel training and reserves in the food industry (Siegel&Vitaliano, 2007). The corporate social responsibility activities of Fonterra are not only the project to assist the group or with objective to enhance volume of sale. However, the corporate social responsibility improves the image of company also. For an example, Fonterra has various corporate social responsibility activities to aid social like “Fonterra Milk for learning centers” movement (Pavlovich, Sinha & Rodrigues, 2016). When Fonterra’s milk tanker collects and transports milk, it begins preliminary safety and quality testing of the milk, and they will also be tested by a third-party testing agency, the New Zealand Raw Milk Testing Laboratory (Goldberg&Porraz, 2002). However, there is some negative news about Fonterra’s corporate social responsibility. For example, at a press conference held on August 3, 2013, Fonterra Group introduced three batches of concentrated whey protein with quality problems. The source of the pollution was a contaminated pipeline at the regional plant in North Island. This case shows that Fonterra needs to improve its product quality management.Synlait Milk does better than Fonterra in terms of corporate social responsibility. Synlait Milk actively explores and establishes a food quality and safety guarantee system that suits its own characteristics from the actual situation. Nowadays, with the further improvement of consumers’ food safety awareness, the food industry is constantly improving the work of food safety management (Lockett, Moon&Visser, 2010). In such situation, Synlait Milk makes efforts to establish a stable and high-quality raw material supply base and provide nutritious, healthy and safe quality products through innovative production (Mcwilliams&Siegel, 2001), thus enhancing competitiveness and guaranteeing food safety. There is no negative news about corporate social responsibility caused by Synlait Milk, so it can believe that the company does a good job in social responsibility. Synlait Milk takes responsibilities for the busine ss es, good governance, proper board structure and state welfare and health of animal, social responsibilities and good quality milk. Different from Fonterra and Synlait Milk, NgāiTahu Holdings Limited’s corporate social responsibility is mainly for the NgāiTahu community rather than the whole society. The purpose of all NgāiTahu Holdings Limited’s commercial operations is to increase the Maori asset base and income, thereby providing more support to whanau and community with charitable purposes (Jamali &Mirshak, 2007). NgaiTahu Holdings Limited values its charitable trust status and assesses annually all expenditures and operations ensure they meet the legal “charity (Mcwilliams & Siegel, 2001).” The BOD of company is liable for and supervises governance and administration of corporate social responsibility. CSR’s stakeholders support the director’s appointment and keep them liable for company’s performance. NgaiTahu Holdings Limited has an annual distribution plan including cultural projects, marae projects, environmental projects, language revival, extracurricular tuition, higher education and scholarships, thus promoting the welfare of NgaiTahuWhānui. Similar toSynlait Milk, there is also no negative news about NgaiTahu Holdings Limited’s corporate social responsibility, indicating that the two companies do better than Fonterra. 4.7 Ecological sustainability The New Zealand law defines the environmental responsibilities. Section 17 of the Resource Management Act 1991 describes that everyone has responsibility to ignore, cure or diminish the negative effects on environment rising from the activities continued by or on behalf of those people(Andersson, Shivarajan&Blau, 2005). In addition, Fonterra also promotes the exchange and cooperation between the dairy farming industry and the dairy processing industry through various forms such as forums, training and scientific research to support the long-term ecological sustainable development of the dairy industry (Lindgreen&Swaen, 2010). The implementation of the most stringent food safety standards in New Zealand and the world ensures the safety of every product of Fonterra. However, Fonterra has been fined because it polluted the Rangitaiki River and other smaller waterways by its Edgecumbe plant (TVNZ, 2019). This case indicates that Fonterra is not as good in terms of ecological sustainability as it claims, so this has a negative impact on Fonterra’s reputation. Synlait Milk has committed to decrease the environmental impacts meaningfully over the upcoming period by ensuring the good corporate governance, best board structure and aiming main areas of the value chain. Synlait Milk does a better job than Fonterra in terms of ecological sustainability, Synlait Milk explores the green economy. It adopts a variety of effective energy-saving measures, such as the promotion of energy-saving new light source electrode less lamps, the application of air compressor and water pump flow frequency conversion control technology, the promotion of energy-saving screw units, etc. Each factory has a sewage treatment station and the equipment there are operating normally (Callicott&Mumford, 2010). The sewage treatment capacity is matched with the plant design capacity, and the sewage treatment meets the standard discharge (Svoray, Perevolotsky& Atkinson, 2013). There is no news about the ecological problem caused by Synlait Milk, so it can believe that the company is willing to take responsibility for environmental protection and contribute to the implementation of sustainable development. Like Synlait Milk, NgāiTahu Holdings Limited also attaches great importance to ecological sustainability. For example, in 2018, NgaiTahu Holdings Limited launched the Whaka-Ora Healthy Ports Program for the port of Whakaraupō/Lyttelton (Shrivastava, 1995). The dream of company is that our familial land is secured and the team have living relations with the whakapapa and tradition by the environment. The plan stipulates how the entire port will be managed over the next 20 years – kiutaki tai – improve Mahinga kai value as well as the ecological and cultural health of the port (NgāiTahu, 2019). The program is deeply rooted in the values of NgāiTahu Holdings Limited and strives to meet the wishes of NgatiWike and the wider community. 4 .8 Financial sustainability NZ GAAP was established by permission of financial reporting standards and commanding direction by the former New Zealand ASRB, a self-governing crown entity. Moreover, IFRS are developed for implementation by profit-oriented companies.Fonterra announced its fiscal year results that the total income of dairy farmers’ shareholders has improved significantly. The company confirmed that in the 2016/2017 milking season, 100% of the farmers holding the final cash income of the company was 6.52 New Zealand dollars. However, the net loss for the year ended July 31, 2018 was 196 million, and the share price also fell (Fonterra, 2018). This prompted Fonterra’s board of directors and management to begin to fully reflect on the development strategy in the market. Fonterra will reassess all investments, major assets and partnerships to ensure they still meet the needs of the cooperative today.Financial sustainability of Fonterra is weaker than that of Synlait Milk. As of January 20, 2018, financial data for the first half of 2018 showed that Synlait Milk’s net profit after tax (NPAT) was a record high of a$40.7 million, an increase of 284% year-on-year. As of the end of January, the company’s net debt achieved a sharp drop so the balance sheet was greatly improved, and share prices are also on the rise (Synlait, 2018). This is due to the extensive experience of effective management of Bright Dairy’s board of directors and management in the dairy industry. Synlait’s accurate market positioning has won extremely favorable conditions for the future development of Synlait Milk, consolidating its position in the industry and gaining more business opportunities (Drew &Dollery, 2014). In addition, due to the good company’s current cash flow and asset-liability performance, Synlait Milk has less pressure to raise funds for future expansion. Similar to Synlait Milk, due to the diversified investment strategy adopted by the board of directors and management, NgāiTahu Holdings Limited is in rapid development and the stock price is also on the rise, which is similar to the development of Synlait.For example, in 2018, NgāiTahu Holdings Limited’s total return on equity (inc NTFSL) was 14.9% in 5 year average; total net profit was $149.92 m; distribution to TeRūnanga o NgaiTahu was $61.05 m; operating return on equity (inc NTFSL) was 3.20%; Net operating surplus was $47.75 m (NgaiTahu, 2018). However, NgaiTahu Holdings Limited faces challenges as economic growth prospects slow, asset prices rise and business confidence declines (Sridhar, 2011). Throughout the group, the future will be driven by ensuring that it focuses on existing portfolio with an excellent operation to get the best cash return. 5. Suggestions 5.1 The boards’ legal and social responsibilities Despite Fonterra’s efforts in corporate social responsibility, the milk source pollution incident has a negative impact on its reputation. Therefore, in the procurement of raw materials, Fonterra should strengthen the construction of the milk source base, such as using the corresponding professional and technical personnel to achieve routine testing of the raw milk purchased by the station according to the national standards for dairy quality and safety, so that the milk source is within the control of the enterprise itself. Synlait Milk’s adherence to social responsibility will enable the company to gain the trust of more consumers. It is required by Synlait Milk to make rational use of capital operation to control all quality links from farm to table so that consumers can drink real high-quality milk (Sen& Bhattacharya, 2001). NgāiTahu Holdings Limited has always worked hard for the interests of NgāiTahu. Although, it has severalcompanies with a focus on seafood, tourism, capital, farming and property, in order to take more social responsibilities for NgāiTahu, in the future, NgāiTahu Holdings Limited is required to expand business. The company is required to continue to develop more industries such as clothing industry and catering industry. 5.2 Governance and leadership models In the process of organizational development, Fonterra must train the leadership and management personnel of the Boardsuch as BOD to further improve the service quality and work efficiency of cooperatives (Erlicher&Massone, 2010). In case of failure of board, the directors are responsible. A highly concentrated shareholding structure will result in a decrease in the liquidity of Synlait Milk’s shares. Therefore, it should establish a sound independent director system to protect the interests of shareholders from infringement (Armstrong, Core&Guay, 2014). The good director system works in best interest of shareholders as well as company itself. For NgaiTahu, when making decision for investments, the founders should thoroughly analyze the long-term impact of the trust on the company, and promote the trust to play a positive role in good corporate governance mechanism and proper board structure (Institute of Directors, 2015). 5.3 Ownership Structure The proper ownership structure ensures the good corporate governance in company. Fonterra should strengthen the publicity of the property rights of different farmers in the way of issuing leaflet to each farmer so that more farmers can understand their rights. In this way, farmers can protect them through legal approach when their interest is harmed by the company (Lemmon&Lins, 2003). Synlait has a large number of small and medium investors, in order to protect their basic interests, Synlait needs to disclose information in the form of news released on its website in a combination of regular and non-scheduled manner, including financial accounting information, governance structure status, business status, ownership status, etc., thus helping small and medium shareholders and other market investors to make accurate judgments. Although trusts are being used more widely, trusts are not the perfect equity setting tool for beneficiaries. The setting of NgaiTahu Holdings Limited’s equity must be considered whether it helps resolve disputes and promote or restore beneficiary harmony (Institute of Directors, 2015). 6. Conclusion This report discusses corporate governance and leadership throughthree New Zealand companies as examples of case studies, namely Fonterra, Synlait, and Ngai TahuHoldings Limited. 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