Non-Executive Directors – NBC Institute

FM – May 2018 – L3 – SC – Q7 – Corporate Governance and Financial Strategy

Corporate governance issues in relation to non-executive directors, shareholder-director conflicts, and bond covenants.

Question

Nkata Plc. is a large publicly quoted company. The directors are currently debating a number of issues, including the following: (i) The role of non-executive directors in corporate governance. (ii) Conflict of interest between directors and shareholders. (iii) Bond covenants usually imposed by lenders.

Required:

a. Discuss the role of non-executive directors in the corporate governance of a listed public company.
(4 Marks)

b. Identify and discuss three areas where the interests of shareholders and directors may conflict, leading the directors to pursue objectives other than maximizing shareholders’ wealth.
(6 Marks)

c. Identify five examples of covenants that might be attached to bonds and discuss briefly the advantages and disadvantages of each to companies.

Answer

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Tags: Bond Covenants, Corporate Governance, Financial risk management, Non-Executive Directors, Shareholder Conflict
Level: Level 3

Topic: Corporate Governance and Financial Strategy
Series: MAY 2018

CSME – May 2022 – L2 – SB – Q4 – Corporate Governance

Analyze governance roles in public companies, focusing on the CEO, Chairman, and non-executive directors.

Question

Chief Etido has recently increased his shareholdings in Food Plc, a leading manufacturer of some fast-moving consumer goods (FMCG) in the country, to over 51%. As his close friend, he recently approached you for advice on how to actualize his ambition of becoming both Chief Executive Officer and Chairman of Food Plc as he is in several other private limited liability companies.

Required:

a. Advise Chief Etido on the possibility of becoming both the CEO and Chairman of a public limited liability company like Food Plc, as provided for by the Code of Corporate Governance. (2 Marks)

b. The roles of the following in a public limited liability company:

i. The CEO (5 Marks)
ii. The Chairman (5 Marks)

c. His responsibilities on the board of directors, if he chooses to become a non-executive member instead. (8 Marks)

Answer

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Tags: Board of Directors, CEO, Chairman, Corporate Governance, Non-Executive Directors
Level: Level 2

Topic: Corporate Governance
Series: MAY 2022

SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

Question

Prestige’s Board acknowledges that by adopting and implementing the highest standards of
corporate governance, this sets the standards and values for the entire Company. The
Company seeks to comply with best practice in all areas of corporate governance and
continues to review the Company’s procedures to maintain proper control and
accountability.
Required

There are nine members on Prestige’s Board of Directors. They include the Chairman, Chief Executive, three executive directors, and four non-executive directors (NEDs). Describe and explain four broad roles for NEDs identified in the document published in the UK in 2003, known as the Higgs Guidance.

Answer

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Tags: Accountability, board roles, Corporate Governance, Non-Executive Directors
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2024

SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

Question

NSL’s current corporate governance structure consists of three executive directors and one non-executive director, with the CEO serving as the chairman of the board. The board, as presently constituted, may have its strengths and weaknesses.

Required:
i) State and explain TWO (2) agency costs that the company would avoid as postulated by Agency Theory of corporate governance that “agency costs do not exist when the owners and the managers are exactly the same individuals.”
(5 marks)

ii) Explain TWO (2) roles that the non-executive director, Daniel Aidoo, ought to play on the board as identified by the document, Higgs Guidance (2003), to strengthen NSL’s board.
(5 marks)

Answer

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Tags: Agency Costs, Corporate Governance, Higgs Guidance, Non-Executive Directors
Level: Level 3

Topic: Professional practice and codes of ethics
Series: NOV 2023

BL – Nov 2022 – L1 – SA – Q11 – Corporate Governance

Identifying the number of non-executive directors required in the audit committee of a company.

Question

How many members of the audit committee of a company must be non-executive directors?

A. 6
B. 5
C. 4
D. 3
E. 2

Answer

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Tags: Corporate Governance, Non-Executive Directors
Level: Level 1

Topic: Corporate governance framework
Series: NOV 2022

AA – Nov 2018 – L2 – Q2b – Regulatory Framework and Audit Responsibilities

Identifies corporate governance weaknesses in Proper Banking Ltd and provides recommendations to address them.

Question

b) Proper Banking Limited (PBL) is required to comply with corporate governance principles to maintain its listed status and banking license due to the current banking crises in Ghana.

The Finance Director decides on the amount of remuneration each director is paid. Currently, all remuneration is in the form of an annual bonus based on profits. Yaw is considering setting up an audit committee but has not undertaken this task yet as he is very busy. A new sales director was appointed a year ago. She is yet to undertake her board training as this is normally provided by the chief executive officer, and this role is currently vacant.

Koffie Quartey is the chairman of PBL. Until last year, he was the Chief Executive Officer. Koffie is unsure if PBL needs more non-executive directors as there are currently four non-executive directors out of the eleven board members. He is considering appointing one of his close friends, who is a retired executive council member of a Non-Governmental Organization (NGO), as a non-executive director.

The shareholders are many and, due to their large numbers, the directors believe that it is impractical and too costly to hold an annual general meeting of shareholders. Instead, the board has suggested sending out the financial statements and any voting resolutions by email for shareholders to vote on the resolutions via email.

Required:
In respect of the corporate governance of Proper Banking Limited:
i. Identify and explain FIVE (5) corporate governance weaknesses; and (10 marks)
ii. Provide a recommendation to address each weakness. (5 marks)

Answer

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Tags: Audit Committee, Board Structure, Corporate Governance, Director Remuneration, Non-Executive Directors
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2018

FM – May 2018 – L3 – SC – Q7 – Corporate Governance and Financial Strategy

Corporate governance issues in relation to non-executive directors, shareholder-director conflicts, and bond covenants.

Question

Required:

a. Discuss the role of non-executive directors in the corporate governance of a listed public company.
(4 Marks)

c. Identify five examples of covenants that might be attached to bonds and discuss briefly the advantages and disadvantages of each to companies.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bond Covenants, Corporate Governance, Financial risk management, Non-Executive Directors, Shareholder Conflict
Level: Level 3

Topic: Corporate Governance and Financial Strategy
Series: MAY 2018

CSME – May 2022 – L2 – SB – Q4 – Corporate Governance

Analyze governance roles in public companies, focusing on the CEO, Chairman, and non-executive directors.

Question

Required:

a. Advise Chief Etido on the possibility of becoming both the CEO and Chairman of a public limited liability company like Food Plc, as provided for by the Code of Corporate Governance. (2 Marks)

b. The roles of the following in a public limited liability company:

i. The CEO (5 Marks)
ii. The Chairman (5 Marks)

c. His responsibilities on the board of directors, if he chooses to become a non-executive member instead. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Board of Directors, CEO, Chairman, Corporate Governance, Non-Executive Directors
Level: Level 2

Topic: Corporate Governance
Series: MAY 2022

SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accountability, board roles, Corporate Governance, Non-Executive Directors
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: MAR 2024

SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

Question

ii) Explain TWO (2) roles that the non-executive director, Daniel Aidoo, ought to play on the board as identified by the document, Higgs Guidance (2003), to strengthen NSL’s board.
(5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency Costs, Corporate Governance, Higgs Guidance, Non-Executive Directors
Level: Level 3

Topic: Professional practice and codes of ethics
Series: NOV 2023

BL – Nov 2022 – L1 – SA – Q11 – Corporate Governance

Identifying the number of non-executive directors required in the audit committee of a company.

Question

How many members of the audit committee of a company must be non-executive directors?

A. 6
B. 5
C. 4
D. 3
E. 2

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Governance, Non-Executive Directors
Level: Level 1

Topic: Corporate governance framework
Series: NOV 2022

AA – Nov 2018 – L2 – Q2b – Regulatory Framework and Audit Responsibilities

Identifies corporate governance weaknesses in Proper Banking Ltd and provides recommendations to address them.

Question

b) Proper Banking Limited (PBL) is required to comply with corporate governance principles to maintain its listed status and banking license due to the current banking crises in Ghana.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Committee, Board Structure, Corporate Governance, Director Remuneration, Non-Executive Directors
Level: Level 2

Topic: Regulatory Framework and Audit Responsibilities
Series: NOV 2018

Question Tag: Non-Executive Directors

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FM – May 2018 – L3 – SC – Q7 – Corporate Governance and Financial Strategy

Corporate governance issues in relation to non-executive directors, shareholder-director conflicts, and bond covenants.

CSME – May 2022 – L2 – SB – Q4 – Corporate Governance

Analyze governance roles in public companies, focusing on the CEO, Chairman, and non-executive directors.

SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

BL – Nov 2022 – L1 – SA – Q11 – Corporate Governance

Identifying the number of non-executive directors required in the audit committee of a company.

AA – Nov 2018 – L2 – Q2b – Regulatory Framework and Audit Responsibilities

Identifies corporate governance weaknesses in Proper Banking Ltd and provides recommendations to address them.

FM – May 2018 – L3 – SC – Q7 – Corporate Governance and Financial Strategy

Corporate governance issues in relation to non-executive directors, shareholder-director conflicts, and bond covenants.

CSME – May 2022 – L2 – SB – Q4 – Corporate Governance

Analyze governance roles in public companies, focusing on the CEO, Chairman, and non-executive directors.

SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

BL – Nov 2022 – L1 – SA – Q11 – Corporate Governance

Identifying the number of non-executive directors required in the audit committee of a company.

AA – Nov 2018 – L2 – Q2b – Regulatory Framework and Audit Responsibilities

Identifies corporate governance weaknesses in Proper Banking Ltd and provides recommendations to address them.

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Question Tag: Non-Executive Directors

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FM – May 2018 – L3 – SC – Q7 – Corporate Governance and Financial Strategy

Corporate governance issues in relation to non-executive directors, shareholder-director conflicts, and bond covenants.

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CSME – May 2022 – L2 – SB – Q4 – Corporate Governance

Analyze governance roles in public companies, focusing on the CEO, Chairman, and non-executive directors.

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SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

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SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

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BL – Nov 2022 – L1 – SA – Q11 – Corporate Governance

Identifying the number of non-executive directors required in the audit committee of a company.

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AA – Nov 2018 – L2 – Q2b – Regulatory Framework and Audit Responsibilities

Identifies corporate governance weaknesses in Proper Banking Ltd and provides recommendations to address them.

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FM – May 2018 – L3 – SC – Q7 – Corporate Governance and Financial Strategy

Corporate governance issues in relation to non-executive directors, shareholder-director conflicts, and bond covenants.

You're reporting an error for "FM – May 2018 – L3 – SC – Q7 – Corporate Governance and Financial Strategy"

CSME – May 2022 – L2 – SB – Q4 – Corporate Governance

Analyze governance roles in public companies, focusing on the CEO, Chairman, and non-executive directors.

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SCS – MAR 2024 – L3 – Q6c – Strategy, stakeholders, and mission

Describe and explain the four broad roles of NEDs identified in the Higgs Guidance (2003).

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SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

You're reporting an error for "SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics"

BL – Nov 2022 – L1 – SA – Q11 – Corporate Governance

Identifying the number of non-executive directors required in the audit committee of a company.

You're reporting an error for "BL – Nov 2022 – L1 – SA – Q11 – Corporate Governance"

AA – Nov 2018 – L2 – Q2b – Regulatory Framework and Audit Responsibilities

Identifies corporate governance weaknesses in Proper Banking Ltd and provides recommendations to address them.

You're reporting an error for "AA – Nov 2018 – L2 – Q2b – Regulatory Framework and Audit Responsibilities"

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