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Syllabus B: Organisational structure, culture, governance and sustainabilitySection ASyllabus BCorporate Governance
ACCA · Question 08 · Syllabus B: Organisational structure, culture, governance and sustainability
A family-owned manufacturing business is preparing for an Initial Public Offering (IPO). To comply with corporate governance codes, they are appointing several Non-Executive Directors (NEDs). Which of the following is a primary role of an NED in this context?
A family-owned manufacturing business is preparing for an Initial Public Offering (IPO). To comply with corporate governance codes, they are appointing several Non-Executive Directors (NEDs). Which of the following is a primary role of an NED in this context?
Answer options:
A.
To manage the day-to-day operations of the manufacturing plant.
B.
To provide independent scrutiny of executive management decisions.
C.
To represent the interests of the founding family exclusively.
D.
To prepare the detailed daily financial ledger entries.
How to approach this question
Recall the definition and purpose of a Non-Executive Director in corporate governance.
Full Answer
B.To provide independent scrutiny of executive management decisions.✓ Correct
Non-Executive Directors (NEDs) are not involved in daily management. Their role is to provide independent oversight, constructive challenge to the executives, and strategic guidance, ensuring good corporate governance.
Common mistakes
Confusing the roles of Executive Directors (who run the business) with Non-Executive Directors (who oversee the executives).
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