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Analysis Of Nathans Finance

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Executive Summary The purpose of this analysis to review corporate governance structure of Nathans Finance and to discuss key issues and risks that affected to its failure. The key points covered are as follows: o Nature of Nathans Finance o Corporate governance structure and whether it meets the best practise for the organisation. o Business risks and its links with the directors o Misstatements of financial statements or account balances significant to related party transactions o Identification of issues related with board formation Background Nathans Finance (Nathans) is a failed finance company which was part of the VTL Group – a group involved in Vending Technologies. Following the groups listing on the stock exchange positive earnings were reported however this did not last and both Nathans and VTL (Parent) were placed into receivership in 2007/2008 respectively. It was discovered that 97% of loans were to VTL. Essentially the investors’ funds have disappeared with VTL showing no assets and have negative shareholders’ funds of $135.3m. VTL Group was listed on the NZX in November 2000 selling 7.5m shares at $1. Following the float, 74.6% of shareholdings were held by founding shareholders but had only contributed 6.25% of the dollar value of capital. Two of the initial shareholders held 66.4% of the shareholding and held chief financial officer and executive director of operation roles. In 2001, Nathans was formed as a fully owned subsidiary and piggy backed off the name of an unrelated party ‘Nathan Finance’ without ‘s’ at the end. Nathan was a well-established Finance company that was later renamed ‘Nationwide Finance’ and included in the Allied Nationwide Finance Group. The directors of Nathans w... ... middle of paper ... ...e risk of directors becoming unnecessarily risk averse. That would not be in the interests of shareholders or the wider community. References and Bibliography Financial Markets Authority. (2014, April 01). FMA. Retrieved from FMA Web Site: http://www.fma.govt.nz/laws-we-enforce/enforcement/prosecutions-and-proceedings/finance-company-cases-before-the-court/#Nathans%20Finance Gaynor, B. (2009, January 31). NZHerald Business. Retrieved from NZHerald website: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10554397 MinterEllisonRuddWatta. (2012, October 29). Minterellison. Retrieved from Minterellison: http://www.minterellison.co.nz/files/uploads/Documents%5CWhitepapers/CorporateGovernanceWhitePaper2012update.pdf NZ, S. C. (2004, March 04). FMA. Retrieved from FMA Govt NZ: https://www.fma.govt.nz/media/178375/corporate-governance-handbook.pdf
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