1. Marathon Gyms Sdn. Bhd. (Marathon) is a private, unlisted company which operates around 30 gyms in Malaysia. It has a small team of staff at its head office and the rest of its staff are based in the individual gyms. The shareholders are the family who founded the business. The Board of Marathon consists of a non-executive Chair, a non-executive director, a Managing Director and a Finance Director. There is also an Executive Committee of senior managers below the Board but there are no Board committees.

The Marathon business is struggling financially. The eight gyms that are on smaller sites with fewer facilities have not been doing well, and five of these have been loss making over the last year. The Executive Committee at Marathon has recently been carrying out a strategic review of its operations and has concluded that the company should focus on its larger gyms. The Executive Committee is therefore proposing that Marathon should close all 8 of Marathon’s smaller gyms. This would involve making the 40 staff at those 8 gyms redundant and some of the towns where the gyms are based would lose their only local gym facility. The Executive Committee is preparing a report to seek Board approval for the new strategy, including the gym closures, at the next Board meeting.

In order to broaden its skill-set, the Board has recently agreed to appoint two new directors. Hamdan Ahmad and Suziana Shah who will be joining in a few months’ time. Hamdan is to be the executive Sales Director. He has had a lot of experience as a director of other companies, particularly in the travel business, but has not been involved in a gym business before. Suziana will be appointed as a new non-executive director and is well-known in the gym business as a social media influencer but has not been a director of a company before.

 
REQUIRED:

You are the Company Secretary of Marathon.

(a) Prepare a briefing note which explain how the directors of Marathon should approach their statutory duties to act with reasonable skill, care and diligence and to exercise their business judgement (including the interests or expectations of stakeholders) when considering whether to approve the closure of the 8 smaller gyms.

 
(b) Discuss how you would prepare induction programmes for the two new directors of Marathon when they join the Board, including the objectives of the induction, the factors you would take into account and examples of any three key elements that you would include.

Answer rating: 100% (QA)

a Briefing Note To Board of Directors Marathon Gyms Sdn Bhd From Company Secretary Date Insert Date Subject Approach to Statutory Duties and Consideration of Gym Closures As the Board of Directors con... View the full answer