Business and Technology · Governance in business organisations

Board Structure, Directors and Committees for ACCA Business and Technology

Updated 11 October 2026 · Fact-checked

The board is the group of directors who run a company on behalf of its shareholders. Executive directors manage day to day. Non-executive directors scrutinise and advise. The chairman leads the board and the CEO leads management. Audit, remuneration and nomination committees, mostly independent non-executives, handle sensitive areas.

Understand Board Structure, Directors and Committees

A company is owned by shareholders but they do not run it. They appoint a board of directors to set strategy, oversee management and be accountable to shareholders. The board is the link between owners and managers, so its structure matters for good governance.

Executive directors are full-time employees who also sit on the board. They run the business day to day, for example the finance director. Non-executive directors (NEDs) are not employees and do not manage daily operations. They bring outside experience, challenge executives and protect shareholder interests. Their value depends on independence.

The NED role is often summed up in four parts: strategy (challenge and help develop it), scrutiny (monitor management performance), risk (check controls and risk management are sound) and people (help decide appointments and pay).

Good practice separates the roles of chairman and chief executive officer (CEO). The chairman leads the board, sets its agenda and makes sure all directors contribute. The CEO leads management and runs the business. If one person holds both roles, too much power sits with one individual and the board may fail to challenge management. Combining the roles also weakens the board's ability to oversee the executive.

Boards delegate detailed work to committees. The audit committee oversees financial reporting, internal controls, risk management, internal audit and the relationship with the external auditor. The remuneration committee sets executive directors' pay and rewards, so no director decides their own pay. The nomination committee reviews board composition and leads the process for new director appointments and succession. Codes of governance generally expect these committees to be made up of independent NEDs, though exact rules vary by country and code.

Key formulas to remember

Role of NEDs (four parts): Strategy + Scrutiny + Risk + People; A memory aid for what NEDs contribute. Use it to structure written or multi-task answers.
Chairman versus CEO: Chairman = leads the board; CEO = leads management; Separation avoids one person holding unchecked power. Good practice, not a legal rule everywhere.
Audit committee: Reporting + Internal control + Risk + Internal audit + External auditor; Usually independent NEDs. It reviews and oversees; it does not prepare the accounts.
Remuneration committee: Sets executive director pay; no director sets their own; Aims to link reward to performance and avoid conflicts of interest.
Nomination committee: Board balance + Appointments + Succession; Proposes candidates for the board for approval.

How to solve Board Structure, Directors and Committees questions

Most questions on this topic ask you to identify a role, match a function to a committee or judge whether a board arrangement is good practice. Use this method.

1Read the question and decide what is tested: a role (executive, NED, chairman, CEO), a committee or a weakness in the board.
2Underline the key facts in the scenario, such as who holds which job, who sits on which committee and who decides pay.
3Ask the governance question: is there independence, balance of power and proper oversight?
4Match the facts to the rule: for example, one person as chairman and CEO breaks the separation of roles.
5Check the wording. Does it ask for the best, the most likely, or all that apply?
6Eliminate options that describe a different committee or role, then pick the one that fits exactly.
7For multiple response, select exactly the number stated and re-read each choice against the facts.

Quickest way: Role and committee matching

When to use it: Use for single-sentence multiple choice questions that ask who does what.

Pay or rewards: remuneration committee.
Appointments, board balance or succession: nomination committee.
Financial reporting, internal controls, internal audit or external auditor: audit committee.
Running the business day to day: executive directors and CEO.
Challenging and monitoring management: non-executive directors.
Leading the board and its meetings: chairman.

Common mistakes in Board Structure, Directors and Committees

Saying NEDs manage the business day to day.
The word director suggests a working manager.
Fix: Remember NEDs are not employees. They scrutinise and advise; executives manage.
Mixing up the roles of chairman and CEO.
Both are senior and the titles sound similar.
Fix: Chairman leads the board; CEO leads management. Link each to its group.
Giving the remuneration committee the job of appointing directors.
Both deal with people matters.
Fix: Remuneration sets pay; nomination handles appointments and succession.
Saying the audit committee prepares the financial statements.
Students assume it is part of the finance team.
Fix: Management prepares them. The audit committee oversees reporting, controls and the auditor.
Treating executive directors as suitable members of key committees.
They know the business best.
Fix: Committees need independence. Executives would be judging their own pay, appointments or work.

Worked examples

Example 1

A listed company has a board of eight directors. The founder acts as both chairman and CEO. Which statement best describes the governance concern?
A. The board cannot form committees
B. Too much power is concentrated in one person
C. Non-executive directors must be removed
D. Shareholders lose the right to vote

Show the solution

Identify the facts: one person holds both the chairman and CEO roles.
Recall the principle: the chairman leads the board and the CEO leads management, so the roles should be separate.
Combining them removes a check, as the person overseeing the board is also the person being overseen.
Test options: A is wrong because committees can still exist. C and D do not follow from the facts.
Option B matches the concern.

Answer: B. Too much power is concentrated in one person.

Example 2

Match each task to the correct board committee: (1) agreeing the bonus of the finance director; (2) reviewing the effectiveness of internal audit; (3) identifying a successor for the CEO.

Show the solution

Task 1 concerns executive pay, so it belongs to the remuneration committee.
Task 2 concerns internal audit and controls, so it belongs to the audit committee.
Task 3 concerns succession and appointments, so it belongs to the nomination committee.
Check that no task is assigned to a committee with a different purpose.

Answer: (1) Remuneration committee; (2) Audit committee; (3) Nomination committee.

Exam tips

Learn the one-line purpose of each committee. Most objective questions are matching tests.
Watch for independence. If a scenario has executives on a committee, expect a weakness.
Use the strategy, scrutiny, risk and people framework for NED questions.
In multiple response questions, select exactly the number stated and check each option against the scenario.
Remember that codes vary by country. Answer using the principle unless the question names a specific code.

Practice questions from Governance in business organisations

Board Structure, Directors and Committees in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Board Structure, Directors and Committees: frequently asked questions

What is the difference between executive and non-executive directors?

Executive directors are employees who manage the business day to day. Non-executive directors are not employees and mainly scrutinise, advise and bring independent judgement to the board.

Why should the roles of chairman and CEO be separate?

The chairman leads the board and the CEO leads management. Splitting them stops one person holding unchecked power and lets the board properly challenge the executive.

What does an audit committee do?

It oversees financial reporting, internal controls, risk management and internal audit, and manages the relationship with the external auditor. It is usually made up of independent non-executive directors.

What is the role of the remuneration and nomination committees?

The remuneration committee sets pay for executive directors so none decide their own reward. The nomination committee reviews board balance and leads the process for appointing new directors and planning succession.