Syllabus B: Organisational structure, culture, governance and sustainability — ACCA Practice Question 08

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Recall the primary purpose of an NED in corporate governance: to provide independent oversight and constructive challenge to the executive board.

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B.They must be completely independent of the executive management and the founding family.✓ Correct

Corporate governance principles emphasize that Non-Executive Directors (NEDs) must bring independent judgment to bear on issues of strategy, performance, and resources. To do this effectively, especially in a family-owned firm transitioning to public, they must be strictly independent of the executives and founders.

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Assuming NEDs must be industry experts. While beneficial, cross-industry experience is common, but independence is legally/ethically mandatory for governance compliance.

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Practice the full ACCA BT — Business & Technology Practice Exam 4

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