The two-tier board structure : an apt option for Malta?

Abstract

This thesis explores, from a review of existing literature, problems of effective corporate control in the context of a company and highlights how a two-tier board structure could help reduce agency problems that arise from the separation of ownership and control in general. The general problems associated with the separation of ownership and control are reviewed within economic and legal contexts and from the specific perspective of foreign inward investment into Malta. I find that there is general consensus that alternative legal systems of corporate control have their merits and have been largely successful in the countries in which they operate. However whilst the two-tier board system offers advantages from a corporate control perspective, the one-tier board system offers advantages from an efficiency perspective. Which aspects of management and control of a company deserve priority are industry specific and conclude that the present policy of one size fits all board structure many not be the best policy for Malta. To offer a choice could encourage further inward investment and better run local companies.