To assess your ability to: Asad decided to establish Saudi Construction Inc. as a corporation. He did so mainly to reduce his and his associates personal liability. After three years of operation, he and his partners took the company public to raise capital to support their aggressive growth plans. Now, Asad is trying to understand the governance model in corporations and the roles and responsibilities of shareholders, directors, and officers. Saudi Construction Inc. has shareholders all over the world and the lawyers keep telling him that communication is critical to avoid trouble. Operations need to be much more formal and they need to have regular Board of Directors meetings. Asad has heard the lawyers talk about proxies and proxy fights and he wants to understand what all that means. s operations team has identified a number of key strategic merger and acquisition candidates, yet this is all new to him and he wants to understand what the options are for handling mergers, who has to approve them, what happens after companies merge, and so forth. s operations team is screaming at him they need to buy a company in the next quarter to meet their growth objectives, so he needs to learn the basics fast. He worries about lawsuits. The officers of the corporation are out making deals all the time and some suppliers questioning whether the officers have the authority to sign and bind contracts for the company. The directors want him to clarify what authority different officers have over the corporation. Furthermore, a couple of difficult shareholders want to second guess and challenge every decision the officers and the Board make, and Asad thinks its only a matter of time before someone take legal action. He doesnt understand what standards (or test) a judge would use to figure out whether the shareholders have a valid claim and whether they are entitled to damages. Asad is feeling a lot of stress. Part of his frustration is because he thinks judges dont know business and shouldnt be in a position to tell him and his associates what to do. But hes also frustrated because he has the feeling he should slow down and do things by the book but slowing down means missing out on very good business deals. Plenty of the directors and officers have said they will make the deals themselves if Saudi Construction cannot. Asad really likes the money he is making, but his frustration and the pressure hes under to make his deadlines are becoming overwhelming. Meanwhile, his business associates are telling him to ignore all the shareholders and administrative issues. (You may refer back to 10-2: Case Study Scenario #1 as needed.)
